<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date or earliest event reported): December 19, 1997
DEL MONTE FOODS COMPANY
---------------------------
(Exact name of registrant as specified in its charter)
Maryland 33-36374-01 13-3542950
- ----------------------------- -------------------- --------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation File Number) Identification Number)
One Market, San Francisco, CA 94105
------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(415) 247-3000
-------------------------------
(Registrant's telephone number,
including area code)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
-------------------------------------
As previously reported in a Quarterly Report of Del Monte Foods
Company (the "Company") on Form 10-Q filed November 14, 1997 for the
period ended September 30, 1997, the Company and Del Monte Corporation,
its wholly owned subsidiary, entered into an Asset Purchase Agreement
dated as of November 12, 1997 (the "Agreement") with Nestle USA, Inc.
("Nestle") and its subsidiary Contadina Services, Inc., providing,
among other things, for the Company's purchase of certain of
Contadina's assets comprising the Contadina processed tomato businesses
(the "Acquisition").
The closing and effective date of the Acquisition was December 19,
1997. The initial purchase price of approximately $197 million was
funded by (i) Del Monte Corporation's senior credit facility, as
amended and restated as of December 17, 1997 to permit the Acquisition
and increase the amount available for borrowing under the credit
facility, among Del Monte Corporation, Bank of America National Trust
and Savings Association, as Administrative Agent, Bankers Trust
Company, as Documentation Agent, and other financial institutions
parties thereto; (ii) proceeds from an issuance of 12 1/2% Senior
Discount Notes due 2007 under an indenture, dated as of December 17,
1997 between the Company and Marine Midland Bank, as Trustee, (the
"Indenture"); and (iii) an equity contribution from the Company's
majority shareholder. The Acquisition purchase price was determined in
arm's-length negotiations between the parties and was based on its
valuation of the assets to be acquired and the associated contractual
commitments. This description of the Acquisition is subject to, and is
qualified in its entirety by reference to, the provisions of the
Agreement, which is filed as an Exhibit to the Current Report on Form
8-K.
FOWARD-LOOKING STATEMENTS
STATEMENTS MADE HEREIN THAT ARE FORWARD-LOOKING IN NATURE ARE INTENDED
TO BE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF SECTION 21E OF
THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALTHOUGH THE COMPANY
BELIEVES THAT THE EXPECTATIONS DESCRIBED HEREIN ARE REASONABLE, THE
ACTUAL RESULTS MAY DIFFER MATERIALLY FROM ANY OR ALL ANTICIPATED
RESULTS DUE TO FINANCIAL AND OTHER ECONOMIC CONDITIONS AND OTHER RISKS,
UNCERTAINTIES AND CIRCUMSTANCES PARTLY OR TOTALLY OUTSIDE THE CONTROL
OF THE COMPANY, INCLUDING THOSE ATTRIBUTABLE TO THE CONDITIONS AND
TERMS SET FORTH IN THE AGREEMENT, SUCH AS A CONSEQUENCE OF THE DUE
DILIGENCE BEING PERFORMED. WORDS SUCH AS "ANTICIPATED," "EXPECT,"
"ESTIMATE," "PROJECT" AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
FORWARD-LOOKING STATEMENTS.
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Item 7. Financial Statements and Exhibits.
---------------------------------
(a) Financial Statements shall be filed by the Company by amendment
to this Current Report on Form 8-K as soon as practicable, but
not later than March 4, 1998.
(b) Pro forma financial information shall be filed by the Company by
amendment to this Current Report on Form 8-K as soon as
practicable, but not later than March 4, 1998.
(c) Exhibits.
--------
10.1 Asset Purchase Agreement dated as of November 12, 1997, by and
between the Company, Del Monte Corporation, Contadina Services,
Inc. and Nestle. (Exhibits and schedules have been omitted but a
copy will be furnished to the Commission upon request)
-3-
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 5, 1998.
DEL MONTE FOODS COMPANY
(Registrant)
By /s/ DAVID L. MEYERS
---------------------------------------------
David L. Meyers
Executive Vice President, Administration
and Chief Financial Officer
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<PAGE> 1
EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
by and between
Contadina Services, Inc.
as "Seller"
and
Nestle USA, Inc.
as "Parent"
and
Del Monte Corporation
as "Buyer"
and
Del Monte Foods Company
as
"Del Monte Foods"
Dated: November 12, 1997
<PAGE> 2
ASSET PURCHASE AGREEMENT
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II - PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . 9
2.1 Transfer of Purchased Assets . . . . . . . . . . . . . . . . . . . . 9
2.2 Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . 9
2.3 Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Net Working Capital Adjustment . . . . . . . . . . . . . . . . . . . 10
2.5 Prorations. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.7 Rents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Closing Costs; Transfer Taxes and Fees . . . . . . . . . . . . . . . 13
ARTICLE III - CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.2 Conveyances at Closing . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER . . . . . . . . . . 15
4.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
4.3 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 15
4.4 Absence of Certain Changes or Events . . . . . . . . . . . . . . . . 16
4.5 Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.6 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.7 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . 18
4.8 No Conflict or Violation . . . . . . . . . . . . . . . . . . . . . . 19
4.9 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 19
4.10 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.11 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.12 Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.13 Compliance with Law . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.14 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.15 No Other Agreements to Sell the Purchased Assets . . . . . . . . . . 20
4.16 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . 21
4.17 Compliance With Environmental Laws . . . . . . . . . . . . . . . . . 23
4.18 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . 24
4.19 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
i
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<TABLE>
<S> <C>
4.21 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.22 Customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . . . . . . . . . . . . . 25
5.1 Organization of Buyer and Del Monte Foods . . . . . . . . . . . . . . 25
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.3 No Conflict or Violation. . . . . . . . . . . . . . . . . . . . . . . 26
5.4 Consents and Approvals. . . . . . . . . . . . . . . . . . . . . . . . 26
5.5 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VI - COVENANTS OF SELLER AND BUYER . . . . . . . . . . . . . . . . . . . . . 27
6.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.2 Notification of Certain Matters . . . . . . . . . . . . . . . . . . . 27
6.3 Access to Information . . . . . . . . . . . . . . . . . . . . . . . . 27
6.4 Consents and Best Efforts . . . . . . . . . . . . . . . . . . . . . . 28
6.5 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.6 Updated Disclosure Schedules . . . . . . . . . . . . . . . . . . . . 29
6.7 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.8 Covenant Not to Compete . . . . . . . . . . . . . . . . . . . . . . . 29
6.9 Transition Services Agreement . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII - CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . 31
7.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . 31
7.2 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . 31
7.3 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.5 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.6 Purchase Price and Estimated Adjustment Amount . . . . . . . . . . . 31
7.7 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VIII - CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . 32
8.1 Representations, Warranties and Covenants . . . . . . . . . . . . . . 32
8.2 No Actions or Court Orders . . . . . . . . . . . . . . . . . . . . . 32
8.3 HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.4 Certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.5 Corporate Documents . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.6 Ancillary Agreements . . . . . . . . . . . . . . . . . . . . . . . . 32
ARTICLE IX - ACTIONS BY SELLER AND BUYER AFTER THE CLOSING . . . . . . . . . . . . . 32
9.1 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
9.2 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
9.3 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>
ii
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<TABLE>
<S> <C>
ARTICLE X - SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 40
10.1 Survival of Representations, Etc. . . . . . . . . . . . . . . . . . . 40
10.2 Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.3 Tax Indemnifications . . . . . . . . . . . . . . . . . . . . . . . . 44
10.4 Insurance Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . 44
10.5 Exclusive Remedy . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
11.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
11.4 Choice of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.5 Jurisdiction; Services of Process. . . . . . . . . . . . . . . . . 48
11.6 Entire Agreement; Amendments and Waivers . . . . . . . . . . . . . . 48
11.7 Multiple Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 48
11.8 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.9 Invalidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.10 Titles; Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
11.11 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
11.12 Confidential Information . . . . . . . . . . . . . . . . . . . . . . 49
11.13 No Third-Party Beneficiary . . . . . . . . . . . . . . . . . . . . . 51
11.14 Representation of Counsel; Mutual Negotiation . . . . . . . . . . . . 51
11.15 No Reliance on Other Information . . . . . . . . . . . . . . . . . . 51
11.16 Release of Del Monte Foods . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
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EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
- ------- ----
<S> <C> <C>
A Form of Assignment of Contract Rights . . . . . . . . . . . . . . . A-1
B Form of Assignment of Lease . . . . . . . . . . . . . . . . . . . . B-1
C Form of Assumption Agreement . . . . . . . . . . . . . . . . . . . . C-1
D Form of Bill of Sale . . . . . . . . . . . . . . . . . . . . . . . . D-1
E Form of Co-Pack Agreement . . . . . . . . . . . . . . . . . . . . . E-1
F Form of Deed . . . . . . . . . . . . . . . . . . . . . . . . . . . . F-1
G Intellectual Property Purchase Agreement . . . . . . . . . . . . . . G-1
H Indemnification Agreement . . . . . . . . . . . . . . . . . . . . . H-1
I Form of Bulk Paste and Diced Supply Agreement . . . . . . . . . . . I-1
J Form of Trademark License Agreement . . . . . . . . . . . . . . . . J-1
</TABLE>
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<PAGE> 6
SCHEDULES
Schedule
1.1A Products Included in the Business
1.1B Excluded Products
2.2(d) Coupon Programs
4.1 Jurisdictions Where Seller Qualified to Do Business
4.3 Seller and Parent Consents and Approvals
4.4 Certain Changes or Events
4.5 Assets
4.6(a) Encumbrances Relating to Owned Real Property
4.6(b) Assignment or Transfer of Rights Under Lease
4.7 Contracts and Commitments
4.9 Financial Statements
4.10 Litigation
4.11 Labor Matters
4.16 Employee Benefits
4.17 Compliance with Environmental Laws
4.20 Insurance
4.21 Inventory
5.4 Buyer Consents and Approvals
11.12 Confidential Information
v
<PAGE> 7
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement, dated as of November 12, 1997,
is by and among Del Monte Corporation, a New York corporation ("Buyer") and Del
Monte Foods Company, a Maryland corporation ("Del Monte Foods"), on the one
hand, and Contadina Services, Inc., a Delaware corporation ("Seller") and
Nestle USA, Inc., a Delaware corporation ("Parent"), on the other hand.
RECITALS
A. Seller desires to sell certain Purchased Assets (as
defined below), and Buyer desires to purchase such Purchased Assets and assume
certain liabilities, upon the terms and subject to the conditions of this
Agreement.
B. In order to induce Seller and Parent to enter into
this Agreement, Del Monte Foods has agreed to become a party to this Agreement
and to undertake specified obligations herein.
AGREEMENT
NOW THEREFORE, in consideration of the respective covenants
and promises contained herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings. Any of such terms, unless the context otherwise requires,
may be used in the singular or plural, depending upon the reference.
"Accounts Receivable" shall mean all accounts and notes
receivable (whether current or noncurrent), including the customer accounts
receivable (including accounts receivable for any products shipped prior to the
Closing but not invoiced) outstanding as of the Closing Date, and any other
rights to receive payments as of the Closing Date, including all trade accounts
receivable representing amounts receivable in respect of goods shipped,
products sold or services rendered on or prior to the Closing Date, and the
full benefit of all securities of such accounts or debts.
"Action" shall mean any action, claim, suit, litigation,
proceeding, labor dispute, arbitral action, governmental audit, inquiry,
criminal prosecution, investigation or unfair labor practice charge or
complaint.
<PAGE> 8
"Affiliate" shall have the meaning set forth in the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder.
"Ancillary Agreements" shall mean the following: (a) the
Intellectual Property Purchase Agreement, (b) the Trademark License Agreement,
(c) the Copack Agreement, (d) the Supply Agreement, (e) the Assumption
Agreement, (f) the Assignment of Lease, (g) the Assignment of Contract Rights,
(h) the Deeds, (i) the Bill of Sale and (j) all other instruments of transfer
and assumption delivered pursuant to Section 3.2.
"Assignment of Contract Rights" shall mean the Assignment of
Contract Rights, in the form of Exhibit A attached hereto, to be entered into
at Closing by Seller and Parent.
"Assignment of Lease" shall mean the Assignment of Lease in
the form attached hereto as Exhibit B to be entered into at Closing by Seller.
"Assumption Agreement" shall mean the Assumption Agreement in
the form attached hereto as Exhibit C, to be entered into at Closing by Buyer.
"Bill of Sale" shall mean the Bill of Sale, in the form
attached hereto as Exhibit D, to be executed at Closing by Seller and Parent in
favor of Buyer.
"Books and Records" shall mean all business records, tangible
data, documents, management information systems, files, customer lists,
supplier lists, blueprints, specifications, designs, drawings, plans, operation
or maintenance manuals, bids, personnel records, invoices, sales literature,
and all other books and records (collectively, "Information"), in each case to
the extent related to the Business; provided, however, that "Books and Records"
shall exclude (i) all tax returns and all worksheets, notes, files or documents
primarily related thereto, wherever located, (ii) all documents prepared in
connection with the transactions contemplated by this Agreement and all minute
books and corporate records of Seller and its Affiliates, and (iii) all
Information of Seller or Seller's Affiliates to the extent not related to the
Business.
"Business" shall mean the Seller's business of manufacturing,
marketing and/or selling those products listed on Schedule 1.1A and
specifically excluding Excluded Products.
"Closing Date" shall mean (i) December 19, 1997, unless
otherwise extended pursuant to Section 3.1 hereto; (ii) if the conditions set
forth in Sections 7.1, 7.2, 7.3, 8.1, 8.2 and 8.3 are not satisfied or waived
by the party having the authority to waive such condition by December 19, 1997,
the date which is three business days following the first date on which the
conditions set forth in Sections 7.1, 7.2, 7.3, 8.1, 8.2 and 8.3 are satisfied,
or waived by the party having the authority to waive such condition, or (iii)
such other date as Buyer and Seller shall mutually agree upon.
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<PAGE> 9
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations thereunder.
"Confidentiality Agreement" shall mean the Confidentiality
Agreement, dated as of October 1, 1997, between Parent and TPG Partners II
L.L.P. and the Confidentiality Agreement, dated as of October 1, 1997, between
Parent and Buyer.
"Contract" shall mean any agreement, contract, obligation,
promise, or undertaking that is legally binding to which Seller or Parent is a
party or is bound and which relates primarily to the Business, whether oral or
written, but excluding all Leases and Employee Plans.
"Copack Agreement" shall mean the Co-pack Agreement
substantially in the form attached hereto as Exhibit E which shall provide that
Buyer shall produce and manufacture certain products at the Facilities for the
benefit of Seller or Seller's Affiliates.
"Court Order" shall mean any judgment, decision, consent
decree, injunction, ruling or order of any federal, state or local court or
governmental agency, department or authority that is binding on any person or
its property under applicable law.
"Damages" shall mean the amount of any loss, claim, demand,
liability, obligations, damage, deficiency, assessment, judgement, penalty,
cost or expense (including reasonable attorneys' fees), net of any insurance
proceeds or tax benefits received with respect thereto.
"Deeds" shall mean grant deeds, in the form attached hereto as
Exhibit F, conveying good and marketable fee simple title to all Owned Real
Property included in the Purchased Assets to Buyer or its designee.
"Disclosure Schedule" shall mean a schedule executed and
delivered by Seller to Buyer as of the date hereof which sets forth the
exceptions to the representations and warranties contained in Article IV hereof
and certain other information called for by this Agreement.
"Encumbrance" shall mean any claim, lien, pledge, option,
charge, easement, security interest, deed of trust, mortgage, right- of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Excluded Assets," notwithstanding any other provision of this
Agreement, shall mean the following assets of Seller or Seller's Affiliates:
(a) the Excluded Products, including all inventory
relating to the Excluded Products and all raw materials, work in process,
finished products, wrapping, supply and
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<PAGE> 10
packaging items and similar items with respect to Excluded Products, in each
case wherever the same may be located;
(b) all cash, bank accounts, cash equivalents and other
similar types of investments, certificates of deposit, U.S. Treasury bills and
other marketable securities;
(c) all Accounts Receivable;
(d) all refunds, deposits, prepayments or prepaid
expenses (including, without limitation, any prepaid insurance premiums);
(e) all insurance policies, programs, reserves and
related bonds of any nature (and any dividends or claims payable in respect
thereof) covering the Business prior to the Closing;
(f) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind, against any person or
entity, including without limitation any liens, security interests, pledges or
other rights to payment or to enforce payment in connection with the Business
or products delivered by Seller or Seller's Affiliates on or prior to the
Closing Date;
(g) all claims, causes of action, choses in action,
rights of recovery and rights of set-off of any kind against any person or
entity arising out of or relating to the Excluded Assets;
(h) any amounts receivable from Seller or any of its
Affiliates;
(i) all franchise tax registrations and sales and use
Permits of Seller that are not related to the Business;
(j) all properties, excluding Owned Real Property, items
of equipment and other assets and rights that are exclusively used in the
manufacture, transportation, distribution, marketing or selling of Excluded
Products;
(k) all items of machinery, equipment and other assets
relating to centralized distribution, transportation and related services
provided by Parent to Seller in connection with the Business;
(l) all items of machinery, equipment and other assets
relating to research and development and which are owned by Seller's
Affiliates;
(m) all advertising time and advertising space, including
free standing inserts, booked prior to the Closing for periods after the
Closing;
(n) all sales, marketing and corporate services the cost
of which has been excluded from the Financial Statements as described therein;
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<PAGE> 11
(o) all Intellectual Property (as defined in the
Intellectual Property Purchase Agreement);
(p) all Tax refunds (and credits) attributable to periods
prior to the Closing; and
(q) all rights and interests under (including those of
sponsor and administrator, as applicable), and all assets of, any employee
benefit plan maintained by Seller or Seller's Affiliates, or ERISA Affiliates,
including without limitation any Pension Plan, Welfare Plan, or Benefit
Arrangement, except to the extent otherwise explicitly provided in accordance
with Section 9.3 hereof.
"Excluded Liabilities" shall mean all accounts and other
payables (excluding customer deposits accruing, arising out of or related to
customer deposits for Scholle bins), all promotional accruals (excluding coupon
accruals), all accrued wages and related payroll taxes, all workers'
compensation claims filed prior to the Closing Date, all accrued bonuses, all
Incentive Payments, and all inter-company indebtedness relating to the Business
between or among Seller and Seller's Affiliates, in each case solely to the
extent that such Liability is related to the Business, is related to periods
prior to the Closing, and is outstanding as of the Closing Date.
"Excluded Products" shall mean those products of Seller listed
on Schedule 1.1B which are excluded from the Business to be sold by Seller.
"Facilities" shall mean the plants, manufacturing facilities,
warehouses, administration buildings and all other related facilities located
on the real property which is owned by Seller in Hanford, California
("Hanford") and Woodland, California ("Woodland").
"Fixtures and Equipment" shall mean all of the furniture,
fixtures, furnishings, machinery, vehicles purchased by the Business, and
equipment (other than Inventory and Excluded Assets) owned by the Seller or
Seller's Affiliates and located in, at or upon the Facilities as of the
Statement Date plus all additions, replacements or deletions since the
Statement Date in the ordinary course of the Business.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, and the rules and regulations thereunder.
"Incentive Payments" shall mean incentive payments which may
be made by Parent to certain Personnel in connection with the transactions
contemplated hereby.
"Intellectual Property Purchase Agreement" shall mean the
Intellectual Property Purchase Agreement attached hereto as Exhibit G.
"Indemnification Agreement" shall mean the Indemnification
Agreement attached hereto as Exhibit H.
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"Interest Rate" shall mean the prime rate as published from
time to time by Bank of America in the Wall Street Journal.
"Inventory" shall mean all inventory (excluding products
shipped prior to Closing but not invoiced) relating to the Business held for
resale and all raw materials, work in process, finished products, wrapping,
supply and packaging items and similar items with respect to the Business, in
each case wherever the same may be located, but in each case other than the
Excluded Assets.
"IRS" shall mean the Internal Revenue Service.
"Leases" shall mean all leases of real property to the extent
related to the Business as set forth on Schedule 4.5.
"Liabilities" shall mean any direct or indirect liability,
indebtedness, obligation, commitment, expense, claim, deficiency, guaranty or
endorsement of or by any person of any type, whether accrued, absolute,
contingent, matured, unmatured or other.
"Material Adverse Effect" or "material adverse change" shall
mean with respect to the Business or the Purchased Assets any significant and
substantial adverse effect or change in the Business, the financial condition
of the Business, and/or the Purchased Assets, taken as a whole, or on the
ability of Seller to consummate the transactions contemplated hereby.
"Net Working Capital" shall mean Inventory (excluding products
shipped prior to Closing but not invoiced) less total current liabilities of
the Business relating to coupon programs, accrued vacations and customer
deposits for Scholle bins, calculated in accordance with generally accepted
accounting principles applied consistently with the Financial Statements.
"ordinary course of business" or "ordinary course" or any
similar phrase shall mean the ordinary course of the Business and consistent
with Seller's past practice.
"Owned Real Property" shall mean all fee simple interests in
the Facilities.
"Permits" shall mean all licenses, permits, franchises,
approvals, authorizations, consents or orders of, or filings with, any
governmental authority, whether foreign, federal, state or local, or any other
Person, necessary for the conduct of the Business as currently conducted.
"Permitted Encumbrances" shall mean (i) statutory liens for
current taxes or assessments not yet due or delinquent or the validity of which
is being contested in good faith by appropriate proceedings, (ii) mechanics',
carriers', workers', repairers' and other similar liens arising or incurred in
the ordinary course of business and not yet due or delinquent or the validity
of which is being contested in good faith by appropriate proceedings, (iii)
Encumbrances set forth in the preliminary title reports issued by Chicago Title
Company
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with respect to the Owned Real Property, and identified in Schedule 4.6(a),
which Buyer has been provided the right to review prior to the date hereof,
(iv) Encumbrances set forth on Schedule 4.6(a), and (v) other Encumbrances
which in the aggregate do not materially interfere with the operation or
materially diminish the value of the Business as presently conducted or the
Facilities as presently operated.
"Purchased Assets" shall mean all of Seller's and Seller's
Affiliates' right, title and interest in, to and under (i) the Books and
Records, (ii) the Fixtures and Equipment, (iii) the Inventory, (iv) the Owned
Real Property, (v) the Leases, (vi) the Technology and Studies, (vii) the
Permits, (viii) all Contracts, purchase orders or sales orders (including,
without limitation, open orders to purchase raw materials or services) related
exclusively to the Business, or any other Contracts for service and maintenance
of the Real Property, contract packing, packaging equipment and personal
property, and (ix) all other tangible assets of Seller or Seller's Affiliates
to the extent related to the Business; provided, however, that in no event
shall "Assets" include any of the Excluded Assets.
"Regulations" shall mean any laws, statutes, ordinances,
regulations, rules, notice requirements, court decisions, agency guidelines,
principles of law and orders of any foreign, federal, state or local government
and any other governmental department or agency, including without limitation
Environmental Laws, energy, motor vehicle safety, public utility, zoning,
building and health codes, occupational safety and health and laws respecting
employment practices, employee documentation, terms and conditions of
employment and wages and hours.
"Representative" shall mean any officer, director, principal,
attorney, agent, employee or other representative.
"Seller's Knowledge" shall mean the actual knowledge of
Patraea Heynike, Jim Dintaman, Ken Wulff, Rob Wilson, Glenn Patcha or Ted
Leaman, as such knowledge may exist without inquiry into the matter.
"Statement Date" shall mean June 30, 1997.
"Supply Agreement" shall mean the Supply Agreement
substantially in the form attached hereto as Exhibit I pursuant to which Parent
agrees to purchase or to cause its Affiliates to purchase certain products from
Buyer after the Closing.
"Tax" shall mean any federal, state, local, foreign or other
tax, levy, impost, fee, assessment or other government charge, including
without limitation income, estimated income, business, occupation, franchise,
property, payroll, personal property, sales, transfer, use, employment,
commercial rent, occupancy, franchise or withholding taxes, and any premium,
including without limitation interest, penalties and additions in connection
therewith.
"Technology and Studies" shall mean the computerized
maintenance program primarily related to the Facilities, products in
development with respect to products included
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on Schedule 1.1A, sales and marketing materials related exclusively to the
Business, in process research and development related to the Business and
conducted by Personnel, and studies and reports that relate exclusively to (i)
consumers' perceptions of the products included on Schedule 1.1A or (ii) the
Transferred Intellectual Property.
"Trademark License Agreement" shall mean the Trademark License
Agreement in the form attached hereto as Exhibit J which shall provide for an
exclusive five-year license by Buyer to Seller or Seller's Affiliates of the
trademarks transferred to Buyer pursuant to the Intellectual Property Purchase
Agreement for use in connection with the Excluded Products.
"Transition Services Agreement" shall mean the Transition
Services Agreement having the terms set forth in Section 6.9 of this Agreement
pursuant to which Seller shall provide certain services to Buyer for a limited
transition period following the Closing.
1.2 Other Defined Terms. The following terms shall have the
meanings defined for such terms in the Sections set forth below:
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Aggregate Amount 2.4(d)
Assumed Liabilities 2.2
Base Purchase Price 2.3
Benefit Arrangement 4.16(a)
Claim 10.2(c)
Claim Notice 10.2(c)
Closing 3.1
Code 4.16(a)
Collective Bargaining Agreements 9.3(a)
Confidential Information 11.11(b)
Covered Person 9.3(a)
Covered Salaried Person 9.3(a)
Covered Union Person 9.3(a)
Damages 10.2(a)
Employee 9.3(a)
Employee Plans 4.16(a)
Environmental Laws 4.17
Escrow Account 2.3
Estimated Adjustment Amount 2.3
ERISA 4.16(a)
ERISA Affiliate 4.16(a)
ESP 9.3(a)
Extension Option 3.1
Final Purchase Price 2.4(d)
Financial Statements 4.9
Former Employee 9.3(a)
</TABLE>
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<PAGE> 15
<TABLE>
<CAPTION>
Term Section
---- -------
<S> <C>
Hazardous Materials 4.17
Incentive Plan 9.3(a)
Indemnified Party 10.2(c)
Indemnifying Party 10.2(c)
MLIP 9.3(a)
Multiemployer Plan 4.16(a)
Net Working Capital Adjustment Amount 2.3
PBGC 4.16(a)
Pension Plan 4.16(a)
Personnel 4.4(b)
Real Property 4.5
Retirement Plan 9.3(a)
Savings Plan 9.3(a)
Statement of Net Working Capital 2.4
TERP 9.3(a)
Welfare Plan 4.16(a)
</TABLE>
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Transfer of Purchased Assets. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller agrees to sell, convey,
transfer, assign and deliver, or cause to be sold, conveyed, transferred and
assigned, to Buyer, all of Seller's and Seller's Affiliates' right, title and
interest in, to and under the Purchased Assets, and Buyer agrees to purchase
the Purchased Assets and assume the Assumed Liabilities.
2.2 Assumption of Liabilities. Upon the terms and subject to the
conditions contained herein, at the Closing, Buyer shall assume all of the
Liabilities of Seller or Seller's Affiliates (other than the Excluded
Liabilities and the Liabilities of Seller set forth in Sections 2.4(e), 2.5,
2.6 and 2.7) of any kind accruing, arising out of or related to the Business,
whether such liabilities or obligations are related to payment, performance or
otherwise, are liquidated or unliquidated, are fixed or absolute, or are
present, future or otherwise ("Assumed Liabilities"). Without limiting the
foregoing, the following shall be considered Assumed Liabilities:
(a) All Liabilities accruing, arising out of or related
to the Contracts listed on Schedule 4.7 and such other Contracts included in
the Purchased Assets which are not required to be listed on Schedule 4.7 under
the terms of Schedule 4.7;
(b) all Liabilities accruing, arising out of or related
to the employment of Personnel by Buyer on or after the Closing, and all other
Liabilities undertaken by Buyer in accordance with Article IX hereof, including
Liabilities incurred prior to the Closing;
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(c) all Liabilities accruing, arising out of or related
to accrued vacation, sick leave or workers' compensation claims filed on or
after the Closing Date, in each case in connection with the Personnel;
(d) all Liabilities accruing, arising out of or related
to consumer coupons for products of the Business redeemed or submitted for
reimbursement by coupon redemption agents after the Closing regardless of when
issued which relate to the coupon programs identified and described on Schedule
2.2(d); and
(e) all Liabilities accruing, arising out of or related
to customers' deposits for Scholle Bins.
2.3 Purchase Price. At the Closing, in consideration of the sale,
transfer, assignment, conveyance and delivery of the Purchased Assets, Buyer
shall (i) pay to Seller an aggregate amount equal to One Hundred Forty-Six
Million and Five Hundred Thousand Dollars ($146,500,000) (the "Base Purchase
Price") by wire transfer of immediately available funds to an account
designated by Seller, (ii) deposit into an escrow account (the "Escrow
Account") an amount equal to the Estimated Adjustment Amount, and (iii) assume
the Assumed Liabilities. The "Estimated Adjustment Amount" means Seller's
reasonable estimate (which estimate Seller shall provide to Buyer no later than
two (2) business days prior to the Closing Date and set forth the basis upon
which such estimate was made) of the Net Working Capital Adjustment Amount as
of the Closing Date. The "Net Working Capital Adjustment Amount" means an
amount equal to (a) the final closing Net Working Capital as determined
pursuant to Section 2.4, minus (b) $77,400,000. The Base Purchase Price shall
be allocated among the Purchased Assets in the manner required by Section 1060
of the Code and regulations thereunder. Buyer and Seller agree to each prepare
and file on a timely basis with the Internal Revenue Service substantially
identical initial and supplemental Internal Revenue Service Forms 8594 "Asset
Acquisition Statements Under Section 1060" consistent with this Agreement and
the Intellectual Property Purchase Agreement and which gives effect to any
adjustment amount to the Base Purchase Price.
2.4 Net Working Capital Adjustment.
(a) Within sixty (60) calendar days after the Closing
Date, Seller shall deliver to Buyer a statement audited by KPMG Peat Marwick
LLP setting forth its calculation of the Net Working Capital as of the Closing
Date, prepared as described herein (the "Statement of Net Working Capital").
The Statement of Net Working Capital shall be prepared in accordance with the
definition of Net Working Capital. Buyer and an accounting firm selected by
Buyer shall have the right to be present to observe the taking of any physical
inventory in conjunction with the preparation of Seller's calculation of the
Statement of Net Working Capital and may review and examine the procedures,
books, records and work papers used in its preparation.
(b) Unless Buyer, within sixty (60) calendar days after
receipt of the Statement of Net Working Capital, notifies Seller that it
objects to the computation contained therein, specifying the basis for such
objection, Seller's calculation of the closing Net
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<PAGE> 17
Working Capital shall be binding upon the parties. The computation of the Net
Working Capital shall not be disputed as to accounting principles so long as
the principles and procedures used to compute it are consistent with those
described in the definition of Net Working Capital in Section 1.1 hereof. If
Buyer and Seller are unable to agree upon the calculation of Net Working
Capital within sixty (60) calendar days after any such notification has been
given by Buyer or within a mutually agreed to extended time period, the
controversy shall be referred to KPMG Peat Marwick LLP for a final
determination thereof. Such determination shall be binding upon the parties,
absent manifest error. The parties shall share equally the fees and expenses
of such firm.
(c) Upon the final determination of Net Working Capital
pursuant to this Section 2.4:
(i) If the Net Working Capital Adjustment Amount
is a positive number greater than the Estimated Adjustment Amount, then (A)
Buyer and Seller shall cause Seller to be paid out of the Escrow Account an
amount equal to the Estimated Adjustment Amount plus the accrued interest
thereon, and (B) Buyer shall pay to Seller an amount equal to (I) the Net
Working Capital Adjustment Amount, minus (II) the Estimated Adjustment Amount.
(ii) If the Net Working Capital Adjustment Amount
is a positive number less than the Estimated Adjustment Amount, then Buyer and
Seller shall (A) cause Seller to be paid out of the Escrow Account an amount
equal to the Net Working Capital Adjustment Amount plus that portion of the
accrued interest held in the Escrow Account relating to the original balance of
the Escrow Account being paid to Seller, and (B) cause the balance of funds in
the Escrow Account to be paid to Buyer.
(iii) If the Net Working Capital Adjustment Amount
is a negative number, then (A) Buyer and Seller shall cause Buyer to be paid
out of the Escrow Account an amount equal to the Estimated Adjustment Amount
plus the accrued interest thereon, and (B) Seller shall pay to Buyer an amount
equal to the absolute value of the Net Working Capital Adjustment Amount.
(d) All payments pursuant to Section 2.4(c) shall be
delivered in accordance with the instructions of the appropriate recipient, and
all payments pursuant to Sections 2.4(c)(i)(B) and 2.4(c)(iii)(B) shall include
interest thereon for each day from and including the Closing Date, at a rate
per annum equal to the Interest Rate, (i) within the lesser of sixty-five (65)
calendar days after delivery by Seller of the Statement of Net Working Capital,
or five (5) calendar days after Buyer notifies Seller that it does not object
to the Statement of Net Working Capital; or (ii) if Buyer shall have objected
to the Statement of Net Working Capital, within five (5) calendar days
following final determination of the disputed items pursuant to Section 2.4(b).
The Base Purchase Price (A) plus any payments to Seller pursuant to Sections
2.4(c)(i) or 2.4(c)(ii), or (B) less any payments from Seller to Buyer pursuant
to Section 2.4(c)(iii), shall be referred to herein as the "Final Purchase
Price," and the amount equal to the Final Purchase Price plus the IP Purchase
Price (as
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<PAGE> 18
defined in the Intellectual Property Purchase Agreement) shall be referred to
herein as the "Aggregate Amount."
(e) Seller shall be obligated to pay all of the Excluded
Liabilities. Seller shall be entitled to collection and receipt of all
Accounts Receivable, provided that (A) to the extent that a customer takes a
deduction on or after the Closing against an invoice related to products of the
Business shipped before the Closing, which deduction is related to coupon
programs, trade promotions and related activities, or pricing related
activities after the Closing, Seller shall be entitled to be reimbursed by
Buyer for any such deduction and (B) to the extent that a customer takes a
deduction on or after the Closing against an invoice relating to products of
the Business shipped after the Closing, which deduction is related to trade
promotions and related activities and pricing related activities, prior to the
Closing, Buyer shall be entitled to be reimbursed by Seller for any such
deduction. Seller and Buyer shall cooperate in good faith in order to ensure
that Seller receives payment of the Accounts Receivable outstanding as of the
Closing Date and that Buyer receives payment of accounts receivable of the
Business issued after the Closing. To the extent that either Buyer or Seller
receives payment of receivables owned by the other party, Buyer and Seller
agree to promptly (within ten (10) calendar days) remit the proceeds to the
designated bank account of Seller or Buyer, as appropriate. Seller may direct
all trade debtors to make payment on Accounts Receivable outstanding as of the
Closing Date to Seller at a specified address and/or account.
2.5 Prorations. On the Closing Date, or as promptly as
practicable following the Closing Date, but in no event later than sixty (60)
calendar days thereafter, the real and personal property taxes, water, gas,
electricity and other utilities, common area maintenance reimbursements to
lessors, local business or other license fees or taxes, merchants' association
dues and other similar periodic charges payable with respect to the Purchased
Assets or the Business shall be prorated between Buyer and Seller effective as
of the Closing Date. To the extent practicable, utility meter readings for the
Facilities shall be determined as of the Closing Date. If the final real
property tax rate or final assessed value for the current tax year is not
established by the Closing Date, the prorations shall be made on the basis of
the rate or assessed value in effect for the preceding tax year and shall be
adjusted when the exact amounts are determined. All such prorations shall be
based upon the most recent available assessed value of any Facility prior to
the Closing Date.
2.6 Taxes. Except as otherwise provided in this Agreement, all
Taxes in respect of the Purchased Assets and income of the Business for the
period or portions of periods ending prior to the Closing Date shall be borne
by the Seller. Except as otherwise provided in this Agreement, all Taxes in
respect of the Purchased Assets and income of the Business for the period or
portions of periods beginning on and after the Closing Date shall be borne by
the Buyer.
2.7 Rents. Seller shall pay minimum or basic rent under the
Leases through the end of the calendar month in which the Closing Date occurs,
and Buyer shall reimburse Seller for such rent accrued from the Closing Date
through the end of such month as part of the post-Closing proration.
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2.8 Closing Costs; Transfer Taxes and Fees.
(a) Buyer shall pay the cost of all sales, use and transfer
Taxes arising out of the transfer of the Purchased Assets pursuant to this
Agreement and Seller shall reimburse Buyer for fifty percent (50%) of such
sales, use and transfer Taxes. Buyer and Seller shall jointly determine the
amount of any such sales, use and transfer Taxes payable. Buyer shall pay all
costs and expenses (including, without limitation, recording fees and real
estate transfer Taxes and real estate transfer stamps) incurred in connection
with obtaining or recording title to the Purchased Assets. The sales, use and
transfer tax returns required by reason of said transfer shall be timely
prepared and filed by the party normally obligated by law or regulation to make
such filing. The parties agree to cooperate with each other in connection with
the preparation and filing of such returns, in obtaining all available
exemptions from such sales, use and transfer Taxes, and in timely providing
each other with resale certificates and any other documents necessary to
satisfy any such exemptions.
(b) If Buyer or Seller pays any Tax agreed to be borne by the
other party under this Agreement, such other party shall promptly (within 10
business days) reimburse the paying party for the amounts so paid. If any
party receives any refund or credit of Tax to which another party is entitled
under this Agreement, the receiving party shall promptly (within 10 days) pay
such amounts to the party entitled thereto.
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated herein
(the "Closing") will occur concurrently with the closing in connection with the
Intellectual Property Purchase Agreement, and will be held at such hour as the
parties shall mutually agree on the Closing Date at the offices of Latham &
Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, California 90071,
unless the parties hereto otherwise agree. Subject to the next sentence, on or
prior to 5:00 p.m. (P.S.T.) on December 19, 1997, Buyer shall have the option
to extend (the "Extension Option") the Closing Date to January 23, 1998 upon
the payment of a non-refundable amount equal to Two Million Dollars
($2,000,000) by wire transfer of immediately available funds to an account
designated by Seller. In the event that the conditions set forth in Sections
8.1, 8.2 and 8.3 to Buyer's obligations are not satisfied or waived by Buyer by
December 19, 1997, Buyer may exercise its Extension Option at any time three
business days following the satisfaction or waiver by the party having the
authority to waive such condition of the conditions set forth in Sections 7.1,
7.2, 7.3, 8.1, 8.2 and 8.3 of this Agreement. For the purpose of any
calculation or determination required to be made by any of the parties
following the Closing, the Closing shall be deemed to have been effective as of
12:01 a.m. on the Closing Date.
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<PAGE> 20
3.2 Conveyances at Closing.
(a) Seller's Deliveries. To effect the sale and transfer
referred to in Section 2.1 hereof, Seller will, at the Closing, execute and
deliver, or cause to be executed and delivered to Buyer:
(i) the Deeds;
(ii) the Bill of Sale;
(iii) the Assignment of Lease;
(iv) the Assignment of Contract Rights;
(v) the Assignment of Trademarks;
(vi) the Trademark License Agreement;
(vii) the Copack Agreement;
(viii) the Supply Agreement;
(ix) the consents, certificates and other
documents required by Article VIII in form reasonably satisfactory to Buyer;
and
(x) all Books and Records and Contracts, provided
that for the purposes of this section, all Books and Records and Contracts
located at the Facilities shall be deemed delivered to the Buyer at Closing.
(b) Buyer's Deliveries. At the Closing, Buyer and
Operating Company shall deliver or cause to be delivered the Base Purchase
Price to Seller in accordance with Section 2.3, shall deposit or cause to be
deposited the Estimated Adjustment Amount into the Escrow Account pursuant to
Section 2.3, and shall execute and deliver or cause to be delivered to Seller
or Seller's Affiliates:
(i) the Assumption Agreement;
(ii) the Trademark License Agreement;
(iii) the Copack Agreement;
(iv) the Supply Agreement; and
(v) the consents, certificates and other
documents required by Article VII in form reasonably satisfactory to Seller.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PARENT AND SELLER
Parent and Seller hereby represent and warrant to Buyer, as of
the date hereof, and except as otherwise set forth on the Disclosure Schedule,
as follows:
4.1 Organization
(a) Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to conduct the Business as it is
presently being conducted and to own and lease its properties and assets.
Seller is duly qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is necessary under
applicable law as a result of the conduct of its business or the ownership of
its properties, except where the failure to be so qualified or in good standing
would not have a Material Adverse Effect. Schedule 4.1 contains a true,
correct and complete list of all jurisdictions in which Seller is qualified to
do business as a foreign corporation.
(b) Parent. Parent is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
4.2 Authorization. Each of Parent and Seller has all requisite
corporate power and authority, and has taken all corporate action necessary, to
execute and deliver this Agreement and the Ancillary Agreements to which it is
a party, to consummate the transactions contemplated hereby and thereby and to
perform its obligations hereunder and thereunder. Each of this Agreement and
the Ancillary Agreements to which Parent is a party has been (or, when executed
and delivered, will have been) duly executed and delivered by Parent and
constitutes (or, when executed and delivered, will constitute) a legal, valid
and binding obligation of Parent enforceable against Parent in accordance with
its terms except as limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws relating to creditor's rights generally or by
equitable principles (whether considered in an action at law or in equity).
Each of this Agreement and the Ancillary Agreements to which Seller is a party
has been (or, when executed and delivered, will have been) duly executed and
delivered by Seller and constitutes (or, when executed and delivered, will
constitute) a legal, valid and binding obligation of Seller enforceable against
Seller in accordance with its terms except as limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to
creditor's rights generally or by equitable principles (whether considered in
an action at law or in equity).
4.3 Consents and Approvals. Except as set forth on Schedule 4.3
hereto and other than in connection with or in compliance with the provisions
of the HSR Act, no notice to, declaration, filing or registration with, or
authorization, consent or approval of, or permit from, any domestic or foreign
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Seller or Parent in connection with
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the execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby.
4.4 Absence of Certain Changes or Events. Except as set forth in
Schedule 4.4, since the Statement Date and otherwise contemplated by this
Agreement, other than in the ordinary course of business, there has not been
any:
(a) change in the financial condition of the Business
which has had a Material Adverse Effect;
(b) (i) increase in the compensation payable or to become
payable by Seller to any of the officers, employees or agents of the Business
(collectively, "Personnel") whose total base compensation for services rendered
to Seller is currently at an annual rate of more than $100,000, (ii) any
adjustment in the method for calculation of bonus, incentive compensation,
service award or other like benefit granted, made or accrued, contingently or
otherwise, for or to the credit of the Personnel, (iii) any employee welfare,
pension, retirement, profit- sharing or similar payment or arrangement made or
agreed to by Seller for any Personnel except pursuant to the existing plans and
arrangements described in Schedule 4.16, or (iv) any new employment agreement
to which Seller is a party;
(c) addition to or material modification of the employee
benefit plans, arrangements or practices described in Schedule 4.16 affecting
Personnel other than (i) contributions made for 1997 in accordance with the
normal practices of Seller, (ii) the extension of coverage to other Personnel
who became eligible after the Statement Date, or (iii) amendments giving effect
to the covenants contained in Section 9.3 hereof;
(d) sale, assignment or transfer of any of the Purchased
Assets, material singly or in the aggregate, except in the ordinary course of
business;
(e) execution, amendment, cancellation or termination of
any Contract, commitment, agreement, Lease, transaction or Permit material to
the Business;
(f) the execution of any Lease or any incurring of
liability therefor by Seller, involving payments in excess of $100,000 in the
aggregate;
(g) failure to repay when due any obligation of Seller,
except where such failure would not have a Material Adverse Effect;
(h) change in accounting methods or practices by Seller
which would have a Material Adverse Effect on the Financial Statements;
(i) mortgage of any Owned Real Property or any mortgage,
pledge or other material encumbrance of any other material Purchased Assets,
other than Permitted Encumbrances;
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(j) issuance by Seller of, or commitment of Seller to
issue, any shares of stock or other equity securities or obligations or
securities convertible into or exchangeable for shares of stock or other equity
securities;
(k) indebtedness incurred by Seller for borrowed money or
any commitment to borrow money entered into by Seller, or any loans made or
agreed to be made by Seller;
(l) liabilities incurred by Seller involving $100,000 or
more, or any material increase or material change in any assumptions underlying
or methods of calculating any bad debt, contingency or other reserves; or
(m) agreement by Seller to do any of the foregoing.
4.5 Assets. Schedule 4.5 sets forth a complete list of all
material personal property included in Fixtures and Equipment which list will
be corrected prior to the Closing to make certain additions and deletions which
will not, in the aggregate, result in a material diminution in value in the
Business or the Personal Property listed on Schedule 4.5 on the date hereof;
and all real property interests of Seller including (a) all Owned Real Property
and (b) all Leases. Except as set forth on Schedule 4.5, the Owned Real
Property and the property subject to the Leases (collectively, the "Real
Property") is all of the real property which is material to the operation of
the Business. Seller or Seller's Affiliates have good title to the personal
property included in the Purchased Assets, except for such Purchased Assets
which have been disposed of in the ordinary course of business, free of any
Encumbrances, other than Permitted Encumbrances.
4.6 Real Property
(a) Owned Real Property. Accurate and complete copies (including
copies of all documents related to the exceptions listed therein) of
preliminary title reports dated September 15, 1997 with respect to the Hanford
Facility (order no. 86501A-AC) and dated September 5, 1997 with respect to the
Woodland Facility (order no. 1012063-SS) have been previously provided to
Buyer. There is no pending or, to Seller's Knowledge, threatened condemnation
or other form of eminent domain proceeding against all or any portion of the
Owned Real Property. None of the Owned Real Property is subject to any
commitment, right of first refusal or other arrangement for the sale, transfer
or lease thereof to any third party.
(b) Leases. Each of the Leases is in full force and effect and
provides Seller with peaceful and undisturbed possession of the real property
whicre the failure to conform would not have a Material Adverse Effect on the
Business. All utilities reasonably necessary for the operation, use and
occupancy of the Facilities as currently operated are installed to the boundary
lines of the Owned Real Property and are connected with valid Permits.
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4.7 Contracts and Commitments.
(a) Contracts. Except as set forth in Schedule 4.7,
Seller is not a party to (or in the case of clause (iv) below, licensee under)
any written or, to Seller's Knowledge, any oral:
(i) commitment, contract, guaranty, note, loan,
evidence of indebtedness, purchase order (other than purchase orders entered
into in the ordinary course of business) or letter of credit involving any
obligation or liability on the part of Seller of more than $100,000 and not
cancelable (without liability) within ninety (90) days;
(ii) lease of personal property (other than
leases, including without limitation, master equipment leases, entered into in
the ordinary course of business) involving any annual expense in excess of
$100,000 and not cancelable (without liability) within ninety (90) days
(Schedule 4.7 indicates with respect to each lease listed thereon a general
description of the leased items, term, annual rent and renewal options);
(iii) contracts and commitments not otherwise
described above or listed in Schedule 4.7 and otherwise materially affecting
the Business under contracts not in the ordinary course of business;
(iv) material governmental or regulatory licenses
or permits required to conduct the Business as presently conducted;
(v) contracts or agreements containing covenants
limiting the freedom of Seller to engage in any line of business or compete
with any person; or
(vi) employment contracts or severance agreements,
including without limitation, contracts to employ executive officers and other
contracts with officers or directors of Seller.
(b) Absence of Defaults. Seller is not (and, to Seller's
Knowledge, no other party is) in material breach or violation of, or default
under any of the Contracts or other instruments described in (i)-(vi) above,
the breach or violation of which would, either individually or in the
aggregate, have a Material Adverse Effect. Each of the Contracts described in
(i) through (vi) above or listed on Schedule 4.7 is in full force and effect as
of the date hereof and is a valid and binding obligation of Seller as of the
date hereof. Buyer has been provided with a true and correct copy of each
Contract applicable to the Business if such Contract falls within the
descriptions set forth in (i) through (vi) above.
4.8 No Conflict or Violation. Neither the execution or delivery
of this Agreement or the Ancillary Agreements, nor the consummation of the
transactions contemplated hereby or thereby will result in (a) a violation of
or a conflict with any provision of the Certificate of Incorporation or Bylaws
of Parent or Seller, (b) a breach of, or a default under, any term or provision
of any Contract, agreement, indebtedness, lease, Encumbrance, commitment,
license, franchise, Permit, authorization or concession to which Seller is a
party or by which
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the Purchased Assets are bound, which breach or default would have a Material
Adverse Effect, (c) a violation by Seller of any Regulation which would have a
Material Adverse Effect, or (d) the imposition of any Encumbrance, restriction
or charge on the Business or any of the Purchased Assets which Encumbrance,
restriction or charge would have a Material Adverse Effect.
4.9 Financial Statements. Schedule 4.9 sets forth the (a)
historical schedule of product contribution for the Business for the years
ended December 31, 1995 and 1996, respectively, and (b) the statement of
certain assets and liabilities of the Business as of June 30, 1997
(collectively, the "Financial Statements"). The line items set forth therein
have been prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods covered thereby (except as set
forth in the accounting policies described and set forth in Schedule 4.9),
which principles and policies have been applied on a basis consistent with
prior years and the practices and procedures of the Business and Seller, and
present fairly and accurately the information purported to be presented therein
at the dates indicated therein. The Financial Statements relate solely to the
Business and are complete with respect to the Business except as noted in
Schedule 4.9.
4.10 Litigation. Schedule 4.10 sets forth all material orders,
writs, injunctions, judgments or decrees outstanding and in effect, and suits
and litigations and, to Seller's Knowledge, proceedings, arbitral actions,
governmental investigations or labor disputes (other than routine grievance
procedures or routine, uncontested claims for benefits under any benefit plans)
pending or threatened against Seller which (i) could reasonably involve
potential liability to Seller in excess of $100,000, or (ii) could individually
or in the aggregate, have a Material Adverse Effect.
4.11 Labor Matters. Except as set forth in Schedule 4.11, (i)
Seller is not a party to any labor agreement with respect to its employees with
any labor organization, union, group or association, and (ii) within the past
two (2) years, Seller has not experienced any attempt by organized labor or its
representatives to make Seller conform to demands of organized labor relating
to its employees or to enter into a binding agreement with organized labor that
would cover the employees of Seller. There is no labor strike or labor
disturbance pending or, to Seller's Knowledge, threatened against Seller nor is
Seller experiencing a work stoppage or other material labor difficulty. Seller
is in material compliance with all applicable laws respecting employment
practices, terms and conditions of employment and wages and hours. To Seller's
Knowledge, there is no unfair labor practice charge or complaint against Seller
pending before the National Labor Relations Board or any other governmental
agency arising out of Seller's activities.
4.12 Liabilities. To Seller's Knowledge, except for Excluded
Liabilities and Liabilities assumed by Buyer pursuant to Article IX, Seller has
no material Liabilities due or to become due, except (a) Liabilities which are
set forth or reserved for in the Financial Statements, which have not been paid
or discharged since the Statement Date, (b) Liabilities arising in the
ordinary course of business under Contracts and other business arrangements
described in the Disclosure Schedule (and under those Contracts which are not
required to be disclosed on the Disclosure Schedule), (c) Liabilities incurred
since the Statement Date in the
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ordinary course of business consistent with past practice and (d) Liabilities
that are not required to be disclosed because they are not material.
4.13 Compliance with Law. Seller is not in violation of any Court
Order and Seller has not received any notice to the effect that, or otherwise
been advised that, it is in violation of any Regulations, which violation would
have a Material Adverse Effect.
4.14 No Brokers. Neither Parent, Seller nor any of their
respective officers, directors, employees, shareholders or Affiliates has
employed or made any agreement with any broker, finder or similar agent or any
person or firm which will result in the obligation of Buyer or any of its
Affiliates to pay any finder's fee, brokerage fees or commission or similar
payment in connection with the transactions contemplated hereby.
4.15 No Other Agreements to Sell the Purchased Assets. Neither
Parent nor Seller nor any of their respective officers, directors, shareholders
or Affiliates have any commitment or legal obligation, absolute or contingent,
to any other person or firm other than the Buyer to sell, assign, transfer or
effect a sale of any of the Purchased Assets (other than Inventory in the
ordinary course of business), to sell or effect a sale of the capital stock of
Seller, to effect any merger, consolidation, liquidation, dissolution or other
reorganization of Seller, or to enter into any agreement or cause the entering
into of an agreement with respect to any of the foregoing.
4.16 Employee Benefit Plans.
(a) Definitions. The following terms, when used in this
Section 4.16, shall have the following meanings. Any of these terms may,
unless the context otherwise requires, be used in the singular or the plural
depending on the reference.
(i) Benefit Arrangement. "Benefit Arrangement"
shall mean any employment, consulting, severance or other similar contract,
arrangement or policy and each plan, arrangement (written or oral), program,
agreement or commitment providing for insurance coverage (including without
limitation any self-insured arrangements), workers' compensation, disability
benefits, supplemental unemployment benefits, vacation benefits, retirement
benefits, life, health, disability or accident benefits (including without
limitation any "voluntary employees' beneficiary association" as defined in
Section 501(c)(9) of the Code providing for the same or other benefits) or for
deferred compensation, profit-sharing bonuses, stock options, stock
appreciation rights, stock purchases or other forms of incentive compensation
or post-retirement insurance, compensation or benefits which (A) is not a
Welfare Plan, Pension Plan or Multiemployer Plan, (B) is entered into,
maintained, contributed to or required to be contributed to by Seller, and (C)
covers any employee or former employee of Seller (with respect to their
relationship with Seller).
(ii) Employee Plans. "Employee Plans" shall mean
all Benefit Arrangements, Multiemployer Plans, Pension Plans and Welfare Plans.
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(iii) ERISA. "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended, and any lawful rules and
regulations promulgated thereunder.
(iv) ERISA Affiliate. "ERISA Affiliate" shall
mean any entity which is (or at any relevant time was) a member of a
"controlled group of corporations" with, under "common control" with Seller as
defined in Section 414(b) or (c) of the Code.
(v) Multiemployer Plan. "Multiemployer Plan"
shall mean any "multiemployer plan," as defined in Section 4001(a)(3) of ERISA,
(A) which Seller maintains, administers, contributes to or is required to
contribute to (B) which covers any employee or former employee of Seller (with
respect to their relationship with Seller).
(vi) PBGC. "PBGC" shall mean the Pension Benefit
Guaranty Corporation.
(vii) Pension Plan. "Pension Plan" shall mean any
"employee pension benefit plan" as defined in Section 3(2) of ERISA (other than
a Multiemployer Plan) (A) which Seller or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to and (B) which
covers any employee or former employee of Seller (with respect to their
relationship with Seller).
(viii) Welfare Plan. "Welfare Plan" shall mean any
"employee welfare benefit plan" as defined in Section 3(1) of ERISA, (A) which
Seller or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to and (B) which covers any employee or former employee
of Seller (with respect to their relationship with Seller).
(b) Disclosure; Delivery of Copies of Relevant Documents
and Other Information. Schedule 4.16 contains a complete list of Employee
Plans. True and complete copies of each of the following documents have been
delivered by Seller to Buyer: each Welfare Plan covering union employees and
each Welfare Plan providing medical benefits to active salaried employees and
all amendments thereto. Schedule 4.16 also sets forth a true and complete list
of all salaried employees of Seller as of October 27, 1997 and the department,
hire date and annual compensation paid or payable to each such individual, and
a true and complete list of all hourly employees employed by Seller at any time
during the current fiscal year to October 4, 1997, and the plant location, hire
date and gross pay during such period of each such individual. Seller has
provided or, upon Buyer's reasonable request, will provide or make available to
Buyer prior to the Closing Date relevant service, compensation and other
employment-related data, complete, accurate and current copies of the plan
document(s) of each Employee Plan, summary plan descriptions and other
descriptive materials provided to employees and, in the case of an Employee
Plan intended to qualify under Section 401(a) of the Code, a copy of the most
recent Internal Revenue Service determination letter of such Employee Plan's
qualified status.
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(c) Representations. Except as set forth in Schedule
4.16, Seller represents and warrants as follows:
(i) Pension Plans.
(A) No "accumulated funding deficiency"
(for which an excise tax is due or would be due in the absence of a waiver) as
defined in Section 412 of the Code or as defined in Section 302(a)(2) of ERISA,
whichever may apply, exists with respect to any Pension Plan, whether or not
waived.
(B) Seller is not required to provide
security to a Pension Plan under Section 401(a)(29) of the Code.
(C) Seller has paid all premiums (and
interest charges and penalties for late payment, if applicable) due the PBGC
with respect to each Pension Plan for each plan year thereof for which such
premiums are required. Within the past six (6) years, no proceeding has been
commenced by the PBGC to terminate any Pension Plan.
(D) To Seller's Knowledge, each Benefit
Arrangement, Welfare Plan and Pension Plan has been administered and written so
as to comply with all applicable Regulations, except to the extent that failure
to be so administered or written would not have a Material Adverse Effect.
(ii) Multiemployer Plans.
(A) Seller has not withdrawn from a
Multiemployer Plan in a "complete withdrawal" or a "partial withdrawal" as
defined in Sections 4203 and 4205 of ERISA, respectively, so as to result in a
Liability, of Seller which has not been fully paid, except with respect to any
such withdrawal where Seller and a third person have agreed to comply with the
provisions of Section 4204 of ERISA.
(B) To Seller's Knowledge, with respect
to each Multiemployer Plan: (1) no such Multiemployer Plan has been terminated
or has been in reorganization under ERISA so as to result, directly or
indirectly, in any material Liability of Seller under Title IV of ERISA; (2) no
proceeding has been initiated by any person (including the PBGC) to terminate
any Multiemployer Plan.
(iii) Severance or Accelerated Benefits. No
severance payments are payable to any Employees hired by Buyer as a result of
the transactions contemplated by this Agreement. Except for Incentive Payments
and except as set forth in Section 9.3, no extraordinary compensation or
similar payments are payable to any Personnel, nor are any benefits accelerated
under any Employee Plans as a result of the transactions contemplated by this
Agreement.
4.17 Compliance With Environmental Laws. For purposes hereof, the
term "Environmental Laws" shall mean any laws or regulations of any federal,
state, or local
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governmental or regulatory authority enacted or promulgated as of the date of
this Agreement which govern the emission, discharge or release of Hazardous
Materials. For purposes hereof, the term "Hazardous Materials" shall mean any
explosives, radioactive materials, polychlorinated biphenyls, petroleum and
petroleum by-products, "hazardous waste," as defined by Section 1004(5) of the
Solid Waste Disposal Act, as amended ("SWDA"), 42 U.S.C. Section 6903(5), and
California Health and Safety Code Section 25117 as enacted as of the date
hereof, and regulations of the U.S. Environmental Protection Agency ("EPA") and
the California Department of Toxic Substances Control ("DTSC") promulgated
thereunder as of the date hereof, and "hazardous substances," as defined by
Section 101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended ("CERCLA"), 42 U.S.C. Section 9601(14), and
California Health and Safety Code Section 25316 as enacted as of the date
hereof, and EPA and DTSC regulations promulgated thereunder as of the date
hereof. To Seller's Knowledge and except as set forth in Schedule 4.17:
(a) the Purchased Assets are and at all times on and
prior to the Closing Date have been, owned, leased and operated by Seller in
material compliance with all applicable Environmental Laws and all permits,
licenses and authorizations currently in effect and issued by any governmental
or regulatory authority pursuant to any Environmental Laws ("Environmental
Permits");
(b) Seller has not received any written notice from any
governmental or regulatory authority alleging that any of the Purchased Assets
is currently in violation of any applicable Environmental Laws or Environmental
Permits;
(c) there is not and has not been any "underground
storage tanks," as defined by Section 9001 of the SWDA, 42 U.S.C. Section
6991, or California Health and Safety Code Section 25281 as enacted as of the
date hereof, installed by Seller for the storage of Hazardous Materials at any
Owned Real Property or any premises subject to the Leases;
(d) there is no outstanding civil, criminal or
administrative suit, hearing or proceeding relating to the Purchased Assets
pending pursuant to any Environmental Laws;
(e) Seller has not received any written notice of any
alleged Liability pursuant to any Environmental Laws for any "removal" or
"remedial action" as defined in Sections 101(23) and 101(24) of CERCLA, 42
U.S.C. Section Section 9601(23) and 9601(24), and California Health and Safety
Code Section Section 25322 and 25323 as enacted as of the date hereof, arising
from the disposal of Hazardous Materials at or from any of the Owned Real
Property or the premises subject to the Leases;
(f) Seller has not released any amount requiring
remediation or removal pursuant to any Environmental Law or a "reportable
quantity," as defined by Section 102 of CERCLA, 42 U.S.C. Section 9602,
California Health and Safety Code Section 25359.4, or California Water Code
Section Section 13271 and 13272 as enacted as of the date hereof, and
regulations of EPA, DTSC and the State Water Resources Control Board
promulgated thereunder as of the date
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hereof, of any Hazardous Materials at any of the Owned Real Property or the
premises subject to the Leases, in violation of applicable Environmental Laws;
(g) there are no polychlorinated biphenyls in any
article, container or equipment and no friable asbestos-containing materials at
any of the Owned Real Property or premises subject to the Leases, the condition
of which could reasonably be expected to pose a material risk to the health and
safety of any employees, agents, invitees or other persons; and
(h) there are no liens held by any governmental or
regulatory authority pursuant to Section 107(l) of CERCLA, 42 U.S.C. Section
9607(1), or any analogous Environmental Laws with respect to any Owned Real
Property or premises subject to the Leases.
4.18 Capital Expenditures. For the year ended December 31, 1997,
capital expenditures relating to the Business will equal or exceed $6,200,000.
4.19 Payment of Taxes. Parent and Seller have filed all tax
returns required to be filed (or obtained an extension with respect thereto) on
or prior to the date hereof, except for those failures to file or obtain an
extension which would not have a Material Adverse Effect, and all Taxes shown
as due on such tax returns have been or will be paid in a timely manner or have
been accrued for in the Financial Statements.
4.20 Insurance. Schedule 4.20 contains a complete summary of the
policies and binders of insurance and a general description of the type of
coverage currently applicable to the Business or the Purchased Assets. Such
policies are in full force and effect on the date hereof.
4.21 Inventory. Except as set forth in Schedule 4.21, all
Inventory of Seller included in the Purchased Assets reflected in the Financial
Statements is produced and packaged in accordance with all applicable laws,
regulations and orders, is usable and salable in the ordinary course of
business, except for items of obsolete materials and materials of below
standard quality of slow moving Inventory, all of which have been written down
in the Financial Statements to realizable fair market value or for which
adequate reserves have been provided therein.
4.22 Customers. To Seller's Knowledge, since the Balance Sheet
Date, no customer to whom Seller has made in excess of $1,000,000 in sales
during the year ended December 31, 1996, has notified Seller that it will
terminate its relationship with Seller.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
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Buyer and Del Monte Foods hereby jointly and severally
represent and warrant to Parent and Seller as follows:
5.1 Organization of Buyer and Del Monte Foods. Each of Buyer and
Del Monte Foods is a corporation duly organized, validly existing and in good
standing under the laws of the state of its incorporation with full power and
authority to own and lease its properties and conduct its business as its is
presently being conducted. Each of Buyer and Del Monte Foods is duly
authorized, qualified or licensed to do business as a foreign corporation and
is in good standing, in each of the jurisdictions in which such qualification
is necessary under applicable law as a result of the conduct of its business,
except where failure to be so qualified or in good standing would not,
individually or in the aggregate, have a material adverse effect on the
condition (financial or otherwise), liabilities, operations or results of
operations of Buyer or Del Monte Foods.
5.2 Authorization. Each of Buyer and Del Monte Foods has all
requisite corporate power and authority, and has taken all corporate action
necessary, to execute and deliver this Agreement and the Ancillary Agreements
to which it is a party, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Ancillary Agreements to which Buyer or
Del Monte Foods is a party, and the consummation by Buyer and Del Monte Foods
of the transactions contemplated hereby and thereby, have been duly authorized
by all necessary corporate action by Buyer and Del Monte Foods. No other
corporate proceedings on the part of Buyer and Del Monte Foods are necessary to
authorize this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby. Each of this Agreement and the Ancillary
Agreements to which Buyer or Del Monte Foods is a party has been (or, when duly
executed and delivered, will have been) duly executed and delivered by Buyer or
Del Monte Foods, as applicable, and constitutes (or, when executed and
delivered, will constitute) a legal, valid and binding obligation of each of
them, enforceable against each of them in accordance with its terms, except as
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to creditor's rights generally or by equitable principles
(whether considered in an action at law or in equity).
5.3 No Conflict or Violation. Neither the execution, delivery or
performance of this Agreement or the Ancillary Agreements, nor the consummation
of the transactions contemplated hereby or thereby, nor compliance by Buyer and
Del Monte Foods with any of the provisions hereof or thereof, will (a) violate
or conflict with any provision of the [Certificate] [Articles] of Incorporation
or Bylaws of Buyer or Del Monte Foods, (b) violate, conflict with, or result in
or constitute a default under, or result in the termination of, or accelerate
the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any Encumbrance upon any of
Buyer's or Del Monte Foods' assets under any of the terms, conditions or
provisions of any contract, indebtedness, note, bond, indenture, security or
pledge agreement, commitment, license, lease, franchise, permit, agreement,
authorization, concession, or other instrument or obligation to which Buyer or
Del Monte Foods is a party, which violation, conflict or default would have a
material adverse effect on the business of Buyer or Del Monte Foods or the
ability of Buyer or Del Monte Foods to consummate the transactions contemplated
hereby and thereby,
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(c) violate any Regulation or Court Order, except, in the case of each of
clauses (a), (b) and (c) above, for such violations, defaults, terminations,
accelerations or creations of Encumbrances which, in the aggregate, would not
have a material adverse effect on the business of Buyer or Del Monte Foods or
the ability of Buyer and Del Monte Foods to consummate the transactions
contemplated hereby or thereby.
5.4 Consents and Approvals. Except as set forth on Schedule 5.4
hereto and other than in connection with or in compliance with the provisions
of the HSR Act, no notice to, declaration, filing or registration with, or
authorization, consent or approval of, or permit from, any domestic or foreign
governmental or regulatory body or authority, or any other person or entity, is
required to be made or obtained by Buyer or Del Monte Foods in connection with
the execution, delivery and performance of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby and
thereby.
5.5 No Brokers. Neither Buyer, Del Monte Foods, nor any officers,
directors, employees, shareholders or Affiliates of Buyer or Del Monte Foods
has employed or made any agreement with any broker, finder or similar agent or
any person or firm which will result in the obligation of Seller or Parent or
any of their respective Affiliates to pay any finder's fee, brokerage fees or
commission or similar payment in connection with the transactions contemplated
hereby.
ARTICLE VI
COVENANTS OF SELLER AND BUYER
Seller and Buyer each covenant with the other as follows:
6.1 Further Assurances. (a) Upon the terms and subject to the
conditions contained herein, the parties agree, both before and after the
Closing, (i) to use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement and the Ancillary Agreements, (ii) to execute any documents,
instruments or conveyances of any kind which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder or
thereunder, and (iii) to cooperate with each other in connection with the
foregoing. In furtherance and not in limitation of the foregoing, each party
shall promptly supply any additional information and documentary material that
may be requested pursuant to the HSR Act and cooperate fully in connection with
any filing under applicable antitrust laws and in connection with resolving any
related investigation or other inquiry concerning the transactions contemplated
by the Agreement. Either party hereto shall promptly inform the other of any
material communication and requests for information from any governmental
authority regarding any of the transactions contemplated hereby and shall make,
or cause to be made, as soon as reasonably practicable and after consultation
with the other party, appropriate response to any such communication.
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(b) Buyer and Seller shall each use their best efforts to
finalize the Co-Pack Agreement and the Supply Agreement by December 5, 1997.
In the event the parties fail to reach final agreement on such documents, the
Co-Pack Agreement and Supply Agreement shall be executed at the Closing in the
forms attached hereto as Exhibit E and I, respectively.
6.2 Notification of Certain Matters. From the date hereof through
the Closing, Seller shall give prompt notice to Buyer and Del Monte Foods of,
and Buyer and Del Monte Foods shall give prompt notice to Seller of (a) the
occurrence, or failure to occur, of any event which occurrence or failure would
be likely to cause any representation or warranty contained in this Agreement
or any Ancillary Agreement, or in any exhibit or schedule hereto or thereto, to
be untrue or inaccurate in any material respect and (b) any material failure of
Seller, on the one hand, and Buyer and Del Monte Foods on the other, to comply
with or satisfy any covenant, condition or agreement to be complied with or
satisfied by it under this Agreement or any Ancillary Agreement, or any exhibit
or schedule hereto or thereto, and each party shall use all reasonable efforts
to remedy the same.
6.3 Access to Information.
(a) Seller shall cooperate with Buyer and provide Buyer and
its authorized Representatives until the Closing Date reasonable access to the
Facilities, and will permit Buyer and its authorized Representatives to make
such inspections and testing and conduct such interviews and inquiries
including inquiries of Seller's independent accountants as Buyer may reasonably
require in connection with Buyer's review of Seller's business. Buyer shall
conduct all such inspections, testing and other information gathering described
above only (a) at Buyer's sole cost and expense, (b) during regular business
hours, and (c) in a manner which will not unduly interfere with the operation
of the Business. Any and all such information gathered by Buyer as a result
of, or in connection with, such information gathering shall be kept strictly
confidential and shall not be revealed to, or discussed with, any person other
than the authorized Representatives of Buyer who agree to comply with the
provisions of section 11.2 of this Agreement and the provisions of this
Section. In the event the Closing is not consummated, such information shall
be returned to the Seller in accordance with this Agreement. Buyer and Del
Monte Foods shall indemnify Seller and hold it harmless from and against any
and all damages arising out of or resulting from the Buyer's information
gathering pursuant to this Agreement.
(b) In addition, after the Closing, Seller agrees to
cooperate reasonably in connection with the audit to be conducted by Buyer's
accountants with respect to the Business for periods occurring prior to the
Closing which audit will commence after the Closing, and to make its outside
accountants available to Buyer in connection therewith, upon reasonable advance
notice.
6.4 Consents and Best Efforts. Within five (5) business days
after execution and delivery of this Agreement, Buyer, Del Monte Foods and
Seller shall make all filings required under the HSR Act. Seller, Buyer and
Del Monte Foods will, as soon as practicable, commence to take all action
required to obtain all Permits, consents, approvals and agreements of, and to
give all notices and make all other filings with, any third parties, including
governmental authorities, necessary to authorize, approve or permit the full
and
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complete sale, conveyance, assignment or transfer of the Purchased Assets, and
Seller, Buyer and Del Monte Foods shall cooperate with each other with respect
thereto. In addition, subject to the terms and conditions herein provided,
each of the parties hereto covenants and agrees to use its best efforts to
take, or cause to be taken, all action or do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby and to cause
the fulfillment of the parties' obligations hereunder; it being understood that
the obtaining of all requested Permits consents and approvals is not a
condition to any party's obligation to consummate the transactions contemplated
by this Agreement, except for HSR approvals to be obtained as set forth in
Section 7.3 and 8.3 hereof.
6.5 Conduct of Business. From the date hereof through the
Closing, Seller shall, except as contemplated by this Agreement, or as
consented to by Buyer in writing, use reasonable efforts to operate the
Business in a manner consistent with the ordinary course of business and
substantially in accordance with past practice and will not take any action
inconsistent with this Agreement or with the consummation of the Closing.
Without limiting the generality of the foregoing, Seller shall not, except as
specifically contemplated by this Agreement or as consented to by Buyer in
writing:
(a) sell, assign, transfer, convey, lease, mortgage,
pledge or otherwise dispose of or encumber any of the Purchased Assets, the
Transferred Intellectual Property (as defined in the Intellectual Property
Purchase Agreement) or any interests therein, except in the ordinary course of
business;
(b) enter into, extend, materially modify, terminate or
renew any Contract or Lease, except in the ordinary course of business;
(c) acquire by merger or consolidation with, or merge or
consolidate with, or purchase substantially all of the assets of, or otherwise
acquire any material assets or business of, any corporation, partnership,
association or other business organization or division thereof;
(d) in a manner that deviates from their historical
practice (i) delay payment of any material account payable or other material
liability, or (ii) offset any material account payable or material liability to
a person against any account receivable or payment due from such person;
(e) other than with respect to Incentive Payments, enter
into, amend or modify any employment agreement, benefit agreement, severance
agreement, or other agreement with any employee of the Seller in a manner that
results in an increase in cost or grant any increase in the compensation
payable to or to become payable to any employee of the Seller, except such
increases as are required by law, preexisting contracts or compensation
policies or that are in the ordinary course of business and consistent with
past practices; and
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(f) enter into any agreement, or otherwise become
obligated, to do any action prohibited hereunder.
6.6 Updated Disclosure Schedules. From the date hereof through
the Closing Date, Seller and Buyer shall update those portions of the
Disclosure Schedule relating to the representations and warranties contained in
Articles IV and V hereof, respectively, in each case to reflect changes thereto
through the Closing Date except that, with respect to any change which is
material to the corresponding Schedule, such update must be consented to by the
party not requesting such an update.
6.7 Title Policies. Seller and Buyer shall cause Chicago Title
Company to deliver to Buyer on the Closing Date CLTA owners' policies of title
insurance insuring that Buyer, as of the Closing Date, will be vested with fee
title to the Owned Real Property (with the insured amount equal to the
mutually-agreed upon value thereof) and containing exceptions only for
Permitted Encumbrances. Seller and Buyer shall share equally the cost of the
premiums for such policies.
6.8 Covenant Not to Compete. (a) As an inducement for Buyer to
enter into this Agreement, Seller and Parent agree that for a period of three
(3) years after the Closing Date, neither Seller nor Parent nor their
respective Affiliates shall, without Buyer's prior written consent, directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or enter into a joint venture
or partnership with, any profit or non-profit business or organization, which,
directly or indirectly, manufactures and markets products set forth on Schedule
1.1A in any part of the United States ("Competes"); provided, however, that (i)
Parent and Seller may purchase, or otherwise become affiliated with or
participate with, any individual, entity, or organization which, directly or
indirectly, Competes with the Business if not more than 15% of the aggregate
gross revenues of such individual, entity or organization for its most recently
completed fiscal year were derived from the sale of products which compete with
the Business (and Parent and Seller may acquire a controlling interest in any
individual, entity or organization that is engaged in such business, even if
more than 15% of the aggregate gross revenues of such individual, entity or
organization for its most recently completed fiscal year were derived from such
products, so long as Parent or Seller, as applicable, shall use reasonable
efforts to divest, as soon as reasonably practicable, a portion of such
enterprise relating to products which compete with the Business such that the
15% gross revenues test set forth above would not be exceeded after giving
effect to such divestiture); and (ii) Parent and its Affiliates may
manufacture, market and sell any products not set forth on Schedule 1.1A,
including, without limitation, any of the products set forth on Schedule 1.1B,
any Ortega tomato-based Mexican food products and any Chef-mate sauce products.
In the event the agreement in this Section 6.8 shall be determined by any court
of competent jurisdiction to be unenforceable by reason of its extending for
too great a period of time or over too great a geographical area or by reason
of its being too extensive in any other respect, it shall be interpreted to
extend only over the maximum period of time for which it may be enforceable,
and/or over the maximum geographical area as to which it may be enforceable
and/or to the maximum extent in all other respects as to which it may be
enforceable, all as determined by such court in such action.
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(b) Parent and Seller acknowledge that a breach of the
covenants contained in this Section 6.8 will cause irreparable damage to Buyer,
the exact amount of which will be difficult to ascertain, and that the remedies
at law for any such breach will be inadequate. Accordingly, Parent and Seller
agree that if Parent or Seller breaches the covenant contained in this Section
6.8, in addition to any other remedy which may be available at law or in
equity, Buyer may be entitled to specific performance and injunctive relief,
without posting bond or other security.
6.9 Transition Services Agreement. Buyer and Seller will use
their best efforts to agree upon a Transition Services Agreement pursuant to
which Seller shall provide certain services to Buyer following the Closing.
The Transition Services Agreement will provide that Seller will provide the
following services upon terms and conditions to be agreed to by the parties
prior to Closing: order entry and invoicing services; distribution services;
warehousing services with respect to Inventory in Seller's distribution system
on the Closing Date; human resources and payroll services; accounts receivable
collection services; accounting systems and related services; and sales and
marketing services; and any other services reasonably requested by Buyer that
were previously performed by Seller or Seller's Affiliates. The Transition
Services Agreement will provide (i) that with respect to finished products that
constitute Inventory purchased by Buyer, that Buyer is entitled to sell such
Inventory as labeled, (ii) that Buyer shall be entitled to use labels that
constitute Inventory and are not affixed to finished products on the Closing
Date on product packaged prior to July 1, 1998 and to sell such products in the
ordinary course of business, and (iii) that Buyer shall be entitled to print,
or cause to be printed, existing labels and use such labels on product packaged
prior to July 1, 1998 and to sell such product in the ordinary course of
business. The Transition Services Agreement will provide that Buyer will
reimburse Seller for Seller's and Seller's Affiliates' actual cost of providing
such services. The term during which Seller will provide services pursuant to
the Transition Services Agreement will vary depending upon the services
provided between sixty (60) days to a maximum of nine (9) months. Subject to
each party's exercise of its best efforts to reach a mutually acceptable
agreement consistent with the provisions of this Section 6.9, the failure to
perform the covenants set forth in this Section 6.9 shall not be a condition to
either party's obligation to consummate the transactions contemplated by this
Agreement.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to consummate the transactions
provided for hereby are subject to the satisfaction, on or prior to the Closing
Date, of each of the following conditions, any of which may be waived by
Seller:
7.1 Representations, Warranties and Covenants. All
representations and warranties of Buyer and Del Monte Foods contained in this
Agreement shall be true and correct in all material respects at and as of the
date of this Agreement and at and as of the Closing Date, and Buyer and Del
Monte Foods shall have performed and satisfied in all
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material respects all agreements and covenants required hereby to be performed
by it prior to or on the Closing Date.
7.2 No Actions or Court Orders. No Action by any governmental
authority or Court Order shall have been instituted enjoining or seeking to
enjoin or otherwise prevent the transactions contemplated by this Agreement or
the Ancillary Agreements.
7.3 HSR Act. The applicable waiting period, including any
extension thereof, under the HSR Act shall have expired or been earlier
terminated.
7.4 Certificates. Buyer and Del Monte Foods shall furnish Seller
with such certificates of its officers and others to evidence compliance with
the conditions set forth in this Article VII as may be reasonably requested by
Seller.
7.5 Corporate Documents. Seller shall have received from Buyer
and Del Monte Foods resolutions adopted by the board of directors of each of
them approving this Agreement and the Ancillary Agreements to which it is a
party and the transactions contemplated hereby and thereby, certified by its
corporate secretary.
7.6 Purchase Price and Estimated Adjustment Amount. Buyer or Del
Monte Foods shall have paid or caused to have been paid the Base Purchase Price
to Seller in accordance with Section 2.3, and Buyer or Del Monte Foods shall
have deposited or caused to have been deposited the Estimated Adjustment Amount
into the Escrow Account in accordance with Section 2.3.
7.7 Ancillary Agreements. Buyer shall have executed and delivered
the each of the documents set forth in Section 3.2(b).
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer and Del Monte Foods to consummate the
transactions provided for hereby are subject to the satisfaction, on or prior
to the Closing Date, of each of the following conditions, any of which may be
waived by Buyer and Del Monte Foods:
8.1 Representations, Warranties and Covenants. All
representations and warranties of Parent and Seller contained in this Agreement
shall be true and correct in all material respects at and as of the date of
this Agreement and at and as of the Closing Date, and Parent and Seller shall
have performed and satisfied in all material respects all agreements and
covenants required hereby to be performed by it prior to or on the Closing
Date.
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8.2 No Actions or Court Orders. No Action by any governmental
authority or Court Order shall have been instituted enjoining or seeking to
enjoin or otherwise prevent the transactions contemplated by this Agreement or
the Ancillary Agreements.
8.3 HSR Act. The applicable waiting period, including any
extension thereof, under the HSR Act shall have expired or been earlier
terminated.
8.4 Certificates. Parent and Seller shall furnish Buyer with such
certificates of its officers and others to evidence compliance with the
conditions set forth in this Article VIII as may be reasonably requested by
Buyer.
8.5 Corporate Documents. Buyer shall have received from Seller
resolutions adopted by the boards of directors of each of Parent and Seller,
and resolutions of Parent, for itself and as the shareholder of Seller,
approving this Agreement and the Ancillary Agreements to which it is a party
and the transactions contemplated hereby and thereby, certified by Parent's and
Seller's corporate secretary, as applicable.
8.6 Ancillary Agreements. Seller shall have executed and
delivered each of documents set forth in Section 3.2(a).
ARTICLE IX
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
9.1 Tax Matters. Seller and Buyer shall (i) each provide the
other with such assistance as may reasonably be requested by any of them in
connection with the preparation of any return, audit, or other examination by
any taxing authority or judicial or administrative proceedings relating to
Liability for Taxes, (ii) each retain and provide the other with any records or
other information that may be relevant to such return, audit or examination,
proceeding or determination, and (iii) each provide the other with any final
determination of any such audit or examination, proceeding, or determination
that such party reasonably believes may affect any amount required to be shown
on any tax return of the other for any period. Without limiting the generality
of the foregoing, Buyer and Seller shall each retain, until the applicable
statutes of limitations (including any extensions) have expired, copies of all
tax returns, supporting work schedules, and other records or information that
may be relevant to such returns for all tax periods or portions thereof ending
on or before the Closing Date.
9.2 Employees.
(a) Offers of Employment. Effective as of the Closing
Date, Buyer shall offer to hire all of the Employees other than Employees who
are not actively at work as a result of a long term disability. Following the
Closing Date, Buyer shall continue the salaries and bonus payments to such
Employees, at no less than the levels of such salaries
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and bonuses currently paid to employees having similar job classifications
(excluding any amounts payable in connection with the transactions contemplated
by this Agreement), during their continued employment with Buyer, until such
salaries and bonuses are changed by Buyer in the ordinary course of business,
but in no event shall the level of such salaries or bonuses be decreased prior
to ninety days after the Closing Date. In addition, Buyer agrees not to cease
operations at either of the Facilities for any period prior to the first
anniversary of the Closing Date.
(b) Collective Bargaining Agreements. Effective on the
Closing Date, Buyer shall assume all Collective Bargaining Agreements as
defined in Section 9.3. Buyer and Seller shall seek the consent of the
appropriate unions to Buyer's assumption of such Collective Bargaining
Agreements, if necessary.
9.3 Employee Plans.
(a) Definitions. The terms defined in Section 4.16
hereof shall have the same meanings whenever they are used in this Section 9.3.
In addition, the following terms shall have the following meanings whenever
used in this Section 9.3:
(i) Collective Bargaining Agreement. "Collective
Bargaining Agreement" shall mean any agreement between Seller and any union or
other employee representative and which covers the terms of employment of any
of the Personnel, including, without limitation, any offer under which Seller
is operating pending the resolution of any labor dispute in existence on the
Closing Date.
(ii) Covered Person. "Covered Person" shall mean
each Employee, Former Employee, and dependent or qualified beneficiary of an
Employee or Former Employee who immediately prior to the Closing Date is
covered under any Employee Plan in any capacity.
(iii) Covered Salaried Person. "Covered Salaried
Person" shall mean each Covered Person who is an Employee, or the dependent or
qualified beneficiary of an Employee, excluding any Covered Union Person.
(iv) Covered Union Person. "Covered Union Person"
shall mean each Covered Person who is an Employee or Former Employee who is or
was a member of the union covered by the Collective Bargaining Agreement (or
any predecessor agreement), or any dependent or qualified beneficiary of such
an Employee or Former Employee.
(v) ESP. "ESP" shall mean the Nestle USA
Executive Savings Plan as in existence on the Closing Date.
(vi) Former Employee. "Former Employee" shall
mean a person who is not an employee of Seller on the Closing Date but who was
formerly an employee of Seller with respect to the Business.
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(vii) Employee. "Employee" shall mean any person
who is an employee of Seller or Seller's Affiliates with respect to the
Business on the Closing Date.
(viii) Incentive Plans. "Incentive Plans" shall
mean the Nestle USA Long-Term Incentive Plan, any Nestle USA Stock Appreciation
Rights Plan and any Nestle USA Corporate Phantom Stock Plan, as in existence on
the Closing Date.
(ix) MLIP. "MLIP" shall mean the Nestle USA
Management Life Insurance Plan as in existence on the Closing Date.
(x) Retirement Plan. "Retirement Plan" shall
mean the Nestle USA Retirement Plan as in existence on the Closing Date.
(xi) Savings Plan. "Savings Plan" shall mean the
Nestle USA Savings Plan as in existence on the Closing Date.
(xii) TERP. "TERP" shall mean the Nestle USA Top
Executive Retirement Program as in existence on the Closing Date.
(b) Retirement Plan and TERP. Seller and/or its ERISA
Affiliates shall retain the sponsorship of the Retirement Plan and TERP and
Seller, its ERISA Affiliates and/or the trust related to the Retirement Plan,
as applicable, shall retain all the assets of and liabilities attributable to
the Retirement Plan and the TERP. As of the Closing Date, no further benefits
shall accrue for any Employee under the Retirement Plan or TERP. Distributions
under the Retirement Plan and TERP shall be made in accordance with their
terms, as amended, and in general, distributions shall be delayed until such
Employee terminates employment with Buyer.
(c) Savings Plan. Except as otherwise provided herein,
Seller and/or its ERISA Affiliates shall retain the sponsorship of the Savings
Plan, and Seller, its ERISA Affiliates and/or the trust related to the Savings
Plan, as applicable, shall retain all the assets of and liabilities
attributable to the Savings Plan. Effective as of the Closing Date,
contributions to the Savings Plan made by Seller on behalf of the Employees
shall cease and the accounts of all Employees shall be fully vested. The
vested account balances of the Employees under the Savings Plan shall be
transferred to a plan maintained by Buyer in accordance with the following
terms:
(i) Within one month after the Closing Date, but
effective as of the Closing Date, Buyer shall adopt a new defined contribution
plan, or amend an existing defined contribution plan, ("Buyer's Plan") intended
to be qualified under Sections 401(a) and 401(k) of the Code that has features
concerning the timing and method of distributions such that a mandatory
transfer from the Savings Plan to Buyer's Plan of account balances attributable
to the Employees will not cause a violation of Section 411(d)(6) of the Code,
and which credits the Employees with all of their years of service with Seller
for all purposes under Buyer's Plan. Prior to the expiration of the remedial
amendment period under Section 401(b) of the Code, after the Closing Date,
Buyer shall submit Buyer's Plan to the
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IRS for a favorable determination that Buyer's Plan is qualified under Sections
401(a) and 401(k) of the Code.
(ii) As soon as practicable after the Closing
Date, Seller shall cause the assets of the Savings Plan attributable to the
vested account of each Employee or the beneficiaries or alternate payee(s) of
each Employee to be transferred by the trustee of the Savings Plan to the
trustee of Buyer's Plan. Buyer shall cause appropriate provisions to be
included in Buyer's Plan, to carry out the provisions of this Section. The
obligations of Seller and Buyer to effectuate the transfer described in this
Section shall be conditioned on the reasonable satisfaction of Seller or Buyer,
as appropriate, that such transfer will not adversely affect the qualified
status of the Savings Plan or Buyer's Plan under Sections 401(a) or 401(k) of
the Code.
(d) Welfare Benefit Plans, Benefit Arrangements and
Buyer's Plans.
(i) Generally. The Closing Date shall be the
date of "termination of employment" of each Employee under each Welfare Benefit
Plan and each Benefit Arrangement and shall be the date of cessation of
participation of each Covered Person under all Welfare Benefit Plans and also
under all Benefit Arrangements with respect to which no contrary provisions are
made in this Section 9.3. Except as set forth below, to the extent that any
such Welfare Benefit Plans and Benefit Arrangements have incurred claims on the
Closing Date which have not been paid by the Closing Date, such incurred but
unpaid claims shall be (A) if the provisions of this Agreement require Buyer to
establish a comparable or replacement plan, paid under such plan, or (B)
otherwise, paid under the Welfare Benefit Plan or Benefit Arrangement in
accordance with its terms and Buyer shall reimburse Seller for the amount of
such claims which are paid after the Closing Date by Seller or its ERISA
Affiliates.
(ii) Retiree Medical. Any non-union Employee who
as of the Closing Date satisfies the age, service and other eligibility
requirements for retiree health coverage and retiree life insurance under any
Welfare Benefit Plan shall be provided with an opportunity to elect to commence
such retiree health coverage and retiree life insurance under such plan as of
the Closing Date, provided that such Employee makes a timely election for such
coverage or insurance not later 30 days after the Closing Date. Such coverage
and insurance shall be subject to all the terms and conditions of the relevant
Welfare Benefit Plans, including the rights of the Seller and/or its ERISA
Affiliates to amend or terminate such plans. The cost of providing such
coverage, and any retiree health coverage and retiree life insurance for
non-union Former Employees (and their eligible dependents or qualified
beneficiaries) who commenced coverage prior to the Closing Date under any
Welfare Benefit Plan shall be borne by Seller and/or its ERISA Affiliates.
After the Closing Date, all retiree medical coverage and retiree life insurance
for any Covered Union Person shall be provided under plans of Buyer pursuant to
Section 9.3(d)(iii) and the cost thereof shall be borne by Buyer. Except as
otherwise set forth above, any retiree medical coverage and retiree life
insurance for any other Employees, Former Employees, or their dependents or
qualified beneficiaries shall be the sole responsibility of Buyer.
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(iii) Buyer's Plans. Immediately after the Closing
Date, Buyer shall implement (either by establishing new plans or expanding
coverage of Buyer's existing plans) (A) replacement Welfare Benefit Plans and
Benefit Arrangements for the Covered Union Persons so that there is no
interruption in their coverage and in connection therewith shall fully comply
with the terms of any applicable collective bargaining agreement, and (B)
replacement Welfare Benefit Plans providing medical benefits for the Covered
Salaried Persons so that there is no interruption in their medical coverage.
With respect to Covered Union Persons, the replacement Welfare Benefit Plan and
Benefit Arrangements shall be equivalent in all material respects to Seller's
Welfare Benefit Plans and Benefit Arrangements which they are replacing. With
respect to Covered Salaried Persons, the replacement Welfare Benefit Plans
providing medical coverage shall provide coverage which is either similar to
that provided under Seller's plans or similar to that provided for Buyer's
salaried employees. In addition, each Employee who is not a member of the
union covered by the Collective Bargaining Agreement shall be eligible for
coverage under Buyer's other Welfare Benefit Plans, Pension Plans and Benefit
Arrangements in accordance with their terms.
Buyer shall recognize all prior service of the Employees that
Seller recognized under its Welfare Benefit Plans, Pension Plans and Benefit
Arrangements for all purposes under Buyer's Welfare Benefit Plans, Pension
Plans and Benefit Arrangements other than benefit accrual. Buyer agrees to (A)
waive any waiting periods and preexisting condition limitations in Buyer's
Welfare Benefit Plans, except to the extent coverage would have been denied or
restricted on a similar basis under Seller's Welfare Benefit Plans and (B)
coordinate deductibles, maximum benefit restrictions and "out-of-pocket"
maximums so that (I) Transferred Employees receive credit toward any
deductibles under Buyer's Welfare Plans for deductibles paid under Seller's
Welfare Plans during the coverage year in which the employment transfer occurs
and (II) Transferred Employees receive credit for eligible claims incurred
under the Seller's Welfare Benefit Plans during the coverage year toward any
"out-of-pocket" maximums under Buyer's Welfare Benefit Plans. As soon as
reasonably practicable after the Closing Date, Seller shall prepare and deliver
to Buyer the information needed for Buyer to comply with the preceding
sentence.
Buyer shall not provide any incentive or inducement to any
Covered Person to choose to be covered by the health care continuation
provisions of Seller's Welfare Benefit Plan, including but not limited to
payment of any Covered Person's premium for such health care continuation
coverage for any Covered Person who elects to receive such coverage from
Seller's Welfare Benefit Plan.
Buyer shall, until at least the first anniversary of the
Closing Date, continue to permit earned but unused vacation time and sick leave
(including paid time off) to be utilized in the same manner as permitted
immediately prior to the Closing Date.
(e) Multiemployer Pension Plans and Multiemployer Welfare
Plans. Buyer shall continue to participate in and continue to contribute to
all Multiemployer Pension Plans and Multiemployer Welfare Plans to the extent
such participation and contribution are required by any Collective Bargaining
Agreement in effect as of the Closing Date. Such participation and
contribution shall continue so long as cessation of participation or
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contribution would be a violation of any such Collective Bargaining Agreement.
In addition, Buyer and Seller intend that the sale of the Business pursuant to
this Agreement shall constitute a Sale of Purchased Assets under Section 4204
of ERISA and shall not result in the imposition of complete or partial
withdrawal liability to Seller under either the Western Conference of Teamsters
Pension Trust Fund (the "WCT Fund") or the Western States Foods Processing
Industry Employees Pension Plan (the "Foods Processing Fund" and, with the WCT
Fund, the "Funds," and, individually, a "Fund"). Therefore, Buyer and Seller
agree to take all steps necessary to comply with the provisions of said Section
4204 of ERISA in respect of both such Funds, including but not limited to the
following:
(i) Buyer shall contribute to each Fund with
respect to the Business for substantially the same number of contribution base
units (as defined by Section 4001(a)(11) of ERISA) for which Seller had an
obligation to contribute to such Fund, but in no event for fewer contribution
base units than would be required of Buyer under the applicable collective
bargaining agreement.
(ii) Buyer shall comply with the provisions of
Section 4204(a)(1)(B) of ERISA and provide to each such Fund for a period of
five plan years commencing with the first Fund year beginning after the Closing
Date either a bond issued by a corporate surety company that is an acceptable
surety within the meaning of Section 4204(a)(1)(B) of ERISA, or an amount held
in escrow by a bank or similar financial institution satisfactory to the Fund,
in an amount (calculated separately for each such Fund) equal, in either case
(bond or escrow) to the greater of (A) the average annual contribution required
to be made by Seller with respect to the Business under the Fund for the three
plan years preceding the plan year in which the Closing Date occurs, or (B) the
annual contribution that Seller was required to make with respect to the
Business under the Fund for the last plan year before the plan year in which
the Closing Date occurs, which bond (or escrowed funds) shall be paid to the
Fund if Buyer withdraws from the Fund or fails to make a contribution to the
Fund when due, at any time during the first five plan years beginning after the
Closing Date, except as otherwise provided herein. If either Fund is in
reorganization in the plan year in which the Closing Date occurs, and if Buyer
is required to post a bond or provide escrowed amounts to such Fund pursuant to
this Section 9.3(e), Buyer shall furnish such bond or escrow in an amount equal
to 200% of the amount that would otherwise be applicable under Section
4204(a)(1)(B) of ERISA.
(iii) If Buyer withdraws from either such Fund in a
complete withdrawal, or a partial withdrawal with respect to the Business,
during the first five plan years beginning after the Closing Date, Buyer shall
pay any withdrawal liability resulting from such action. Seller shall be
secondarily liable for any withdrawal liability it would have had to the Fund
with respect to the Business (but for Section 4204 of ERISA) if the liability
of Buyer with respect to the Fund is not paid.
(iv) Buyer shall notify Seller immediately in the
event that Buyer withdraws from either such Fund in a complete or partial
withdrawal during the first five plan years beginning after the Closing Date,
and upon request of Seller, shall provide Seller with any and all information
relevant to the obligations of Buyer and Seller under this
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Section 9.3(e) or ERISA. Buyer shall provide Seller with timely copies of all
notices, demands, and other correspondence between Buyer (or any party acting
on behalf of Buyer or in connection with a partial or complete withdrawal by
Buyer) and the Fund relating to such withdrawal.
(v) Buyer hereby agrees that, in the event Seller
is required to provide a bond or amount in escrow pursuant to Section
4204(a)(1)(C) or 4204(a)(3) of ERISA, Buyer shall pay to Seller the cost of
such bond (including any required collateral) or the amount of such escrow
within ten days prior to Seller's establishment of such bond or escrow.
(vi) Notwithstanding the foregoing provisions,
Buyer may apply to the Pension Benefit Guaranty Corporation or to any sponsor
of either or both of the Funds and shall use its reasonable best efforts to
obtain for the benefit of Buyer and Seller an individual exemption or variance
from the requirements of subparagraphs (B) and (C) of Section 4204(a)(1) of
ERISA and a waiver of the bond and escrow requirements of Section 4204(a)(3) of
ERISA. Seller shall cooperate in the prosecution of any such applications and
implementation of any such exemption, variance or waiver.
(vii) Buyer hereby indemnifies and holds harmless
Seller from, and agrees to reimburse Seller immediately and in full upon demand
with respect to any payment that Seller is required to make to the either Fund
by reason of Section 4204(a)(2) of ERISA, subsection (iii) of this Section
9.3(e), or the failure of Buyer to fully and completely perform any part of the
obligation undertaken by Buyer in this Section 9.3(e) and any and all expenses
incurred, including reasonable accounting, actuarial, and legal fees, arising
directly or indirectly by reason of the failure of Buyer to fully and
completely perform any part of the obligation undertaken by Buyer in this
Section 9.3(e).
(f) Severance Benefits. Buyer and Seller hereby agree
that the transaction contemplated by this Agreement shall not constitute a
termination of employment for purposes of determining an Employee's eligibility
for severance benefits under any Employee Plan. Any severance payments due to
an Employee after the Closing Date as a result of any termination of employment
contemporaneous with or subsequent to the Closing Date shall be the sole
responsibility of Buyer.
(g) Deferred Compensation. Any deferred compensation
payable to an Employee after the Closing Date (regardless of whether the
service to which such deferred compensation relates was performed prior to,
contemporaneous with, or subsequent to the Closing Date) shall be the sole
responsibility of Buyer, except (i) to the extent such deferred compensation
constitutes an Excluded Liability of Seller, or (ii) as otherwise provided in
this Section 9.3.
(h) ESP. The provisions of this Section, and not those
of Sections 9.3(d) and 9.3(g) above, shall govern the obligations of the
parties with respect to the ESP. Seller and/or its ERISA Affiliates shall
retain the sponsorship of the ESP, and Seller or its ERISA Affiliates, as
applicable, shall retain all the assets of and liabilities attributable to the
Savings
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Plan. Effective as of the Closing Date, further allocation of contributions to
the ESP on behalf of Employees shall cease. The Closing Date shall be the date
of "termination of employment" of each Employee under the ESP for all purposes,
including eligibility for the commencement of benefits. Any amounts payable to
or with respect to an Employee or a Former Employee after the Closing Date
under the ESP shall be the sole responsibility of the Seller or its ERISA
Affiliates.
(i) MLIP. The provisions of this Section, and not those
of Sections 9.3(d) and 9.3(g) above, shall govern the obligations of the
parties with respect to the MLIP. Seller and/or its ERISA Affiliates shall
retain the sponsorship of the MLIP. Seller or its ERISA Affiliates, as
applicable, shall retain all the assets of and liabilities attributable to the
MLIP and all rights of the "Company" and "Employer" under the MLIP, including
but not limited to all such rights in any insurance policies issued in
connection with the MLIP which cover any Employees and Former Employees. The
Closing Date shall be the date of "termination of employment" of each Employee
under the MLIP for all purposes, including eligibility for the commencement of
benefits. Any premium contributions payable with respect to an Employee or a
Former Employee after the Closing Date under the MLIP shall be the sole
responsibility of the Seller or its ERISA Affiliates after the Closing Date.
(j) Incentive Plans. The provisions of this Section, and
not those of Sections 9.3(d) or 9.3(g) above, shall govern the obligations of
the parties with respect to the Incentive Plans. Seller and/or its ERISA
Affiliates shall retain the sponsorship of the Incentive Plans and Seller or
its ERISA Affiliates, as applicable, shall retain all the assets of and
liabilities attributable to the Incentive Plans. The Closing Date shall be the
date of "termination of employment" of each Employee under the Incentive Plans
for all purposes, including eligibility for the commencement of benefits. Any
amounts payable with respect to an Employee or a Former Employee after the
Closing Date under the Incentive Plans shall be the sole responsibility of the
Seller or its ERISA Affiliates after the Closing Date.
(k) Workers' Compensation. The provisions of this
Section, and not those of Section 9.3(d) above shall govern the obligation of
the parties with respect to workers' compensation. On and after the Closing
Date, Buyer shall be responsible for paying, or arranging for insurance to pay,
all workers' compensation claims of the Personnel which are filed on or after
the Closing Date, and any other workers' compensation premiums or costs related
to the Business, regardless of whether such claims or costs relate to injuries,
medical treatments or other events occurring prior to, on or after the Closing
Date.
(l) Bonus. With respect to bonuses for calendar year
1997, Seller shall treat Employees hired by Buyer hereunder in a manner
consistent with Seller's past practice for its similarly situated culinary
employees. In the event the Closing Date occurs during 1997, the termination
of any such Employee's employment with Seller on or prior to December 31, 1997,
shall not bar the Employee from being eligible to receive any such bonus
payments, to the extent any such bonuses are payable.
ARTICLE X
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SURVIVAL AND INDEMNIFICATION
10.1 Survival of Representations, Etc. The representations and
warranties of Seller contained in Sections 4.1, 4.16 and 4.19 (in each case, as
updated pursuant to Section 6.6 and as in effect on the Closing Date) shall
survive the Closing Date and shall terminate only when the applicable statutes
of limitations with respect to the liabilities in question expire. The
representations and warranties of Seller set forth in Section 4.17 (as updated
pursuant to Section 6.6 and as in effect on the Closing Date) shall survive the
Closing Date and shall terminate three (3) years after the Closing Date. All
other representations and warranties of Seller and Buyer contained herein (in
each case, as updated pursuant to Section 6.6 and as in effect on the Closing
Date) shall survive the Closing Date and shall terminate eighteen (18) months
after the Closing Date. The representations and warranties of Del Monte Foods
contained herein shall terminate on the Closing Date. Upon the termination of
a representation or warranty in accordance with the foregoing, such
representation or warranty shall have no further force or effect for any
purpose under this Agreement, including Section 10.2 hereof, provided that, any
representation or warranty in respect of which indemnity may be sought under
Section 10.2, and the indemnity with respect thereto, shall survive the time at
which it would otherwise terminate pursuant to this Section 10.1 if notice of
the inaccuracy or breach thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be sought prior to
such time. The election by any party to consummate the transactions
contemplated by this Agreement, notwithstanding such party's actual knowledge
of the inaccuracy of any representation or warranty contained herein, shall
constitute a waiver by such party of any claim for indemnification arising out
of the breach of such representation or warranty.
10.2 Indemnifications.
(a) By Seller and Parent. Seller and Parent shall
indemnify Buyer and its Representatives and Affiliates, and hold each of them
harmless from and against any and all Damages incurred by any of them in
connection with, arising out of, or resulting from (i) any breach of any
representation or warranty made by Parent or Seller in this Agreement or any
Ancillary Agreement (in each case, as updated pursuant to Section 6.6 as in
effect on the Closing Date); or (ii) any failure by Parent or Seller to perform
in a timely manner any agreement, covenant or obligation of Parent or Seller
pursuant to this Agreement; provided, however, that Damages shall not include,
and that Parent and Seller shall not be liable for, any Damages arising out of
any condition which resulted in an adjustment reflected in the Final Purchase
Price pursuant to Section 2.4 of this Agreement.
(b) By Buyer and Del Monte Foods. Prior to the Closing,
Buyer and Del Monte Foods and, after the Closing, Buyer, shall indemnify Parent
and Seller and their respective Representatives and Affiliates, and hold each
of them harmless from and against any and all Damages incurred by any of them
in connection with, arising out of or resulting from (i) any breach or
inaccuracy of any representation or warranty made by Buyer or Del Monte Foods
in this Agreement or any Ancillary Agreement (in each case, as updated pursuant
to Section 6.6 and as in effect on the Closing Date) or (ii) any failure by
Buyer or
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Del Monte Foods to perform in a timely manner any agreement, covenant or
obligation pursuant to this Agreement.
(c) Defense of Claims. If a claim for Damages (a
"Claim") is to be made by a party entitled to indemnification hereunder (the
"Indemnified Party") against the party from whom indemnification is claimed
(the "Indemnifying Party"), the Indemnified Party shall give written notice (a
"Claim Notice") to the Indemnifying Party as soon as practicable after the
Indemnified Party becomes aware of any fact, condition or event which may give
rise to Damages for which indemnification may be sought under this Section
10.2. If any lawsuit or enforcement action is filed against any party entitled
to the benefit of indemnity hereunder, written notice thereof shall be given to
the Indemnifying Party as promptly as practicable (and in any event within ten
(10) business days after the service of the citation or summons). The failure
of any Indemnified Party to give timely notice hereunder shall not affect
rights to indemnification hereunder, except to the extent that the Indemnifying
Party demonstrates actual damage caused by such failure. Notwithstanding the
foregoing, a Claim Notice that relates to a representation or warranty that is
subject to a survival period set forth in Section 10.1 must be made within such
survival period, whether or not the Indemnifying Party is prejudiced by any
failure to give the Claim Notice. The Claim Notice shall describe in
reasonable detail the nature of the Claim, including an estimate of the amount
of Damages that have been or may be suffered or incurred by the Indemnified
Party attributable to such Claim, the basis of the Indemnified Party's request
for indemnification under the Agreement and all information in the Indemnified
Party's possession relating to such Claim. After receipt of such Claim Notice,
the Indemnifying Party shall be entitled, if it so elects, at its own cost,
risk and expense, (i) to take control of the defense and investigation of such
lawsuit or action and (ii) to employ and engage attorneys of its own choice to
handle and defend the same. If the Indemnifying Party fails to assume the
defense of such Claim within ten (10) business days after receipt of the Claim
Notice, the Indemnified Party against which such Claim has been asserted will
(upon delivering notice to such effect to the Indemnifying Party) have the
right to undertake, at the Indemnifying Party's cost and expense, the defense,
compromise or settlement of such Claim on behalf of and for the account and
risk of the Indemnifying Party; provided, however, that such Claim shall not be
compromised or settled without the written consent of the Indemnifying Party,
which consent shall not be unreasonably withheld. In the event the Indemnified
Party assumes the defense of the Claim, the Indemnified Party will keep the
Indemnifying Party reasonably informed of the progress of any such defense,
compromise or settlement. Notwithstanding the foregoing, the Indemnified Party
shall be entitled to conduct its own defense at the cost and expense of the
Indemnifying Party if the Indemnified Party establishes that the conduct of its
defense by the Indemnifying Party would reasonably be likely to prejudice
materially the Indemnified Party due to a conflict of interest between the
Indemnified Party and the Indemnifying Party; and provided further that in any
event the Indemnified Party may participate in such defense at its own expense.
(d) Settlement. In the event that the Indemnified Party
settles any Claim without the prior written consent of the Indemnifying Party,
the Indemnifying Party shall have no further indemnification obligations under
this Section 10.2 with respect to such Claim; provided, however, that if the
Indemnifying Party refuses to defend or otherwise
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handle such Claim and it is subsequently determined that the Indemnifying Party
is or was obligated to defend or indemnify the Indemnified Party with respect
to such Claim, then the Indemnifying Party shall remain obligated with respect
to such settlement amount. If the Indemnifying Party shall control the defense
of any such Claim, the Indemnifying Party shall obtain the prior written
consent of the Indemnified Party (which shall not be unreasonably withheld)
before entering into any settlement of a Claim or ceasing to defend such Claim
if, pursuant to or as a result of such settlement or cessation, injunctive or
other equitable relief shall be imposed against the Indemnified Party or if
such settlement or cessation does not expressly and unconditionally release the
Indemnified Party from all liabilities and obligations with respect to such
Claim, without prejudice. In the event that the Indemnifying Party proposes a
settlement to any Claim with respect to which the Indemnifying Party is or was
entitled to defend, which settlement is satisfactory to the party instituting
such Claim, and the Indemnified Party withholds its consent to such settlement,
and thereafter a final judgment is entered against the Indemnifying Party or
Indemnified Party pursuant to which Damages exceed the amount of the proposed
settlement, then in such case the Indemnifying Party shall have no obligation
to indemnify the Indemnified Party under this Section 10.2 against and in
respect of the amount by which the Damages resulting from such final judgment
exceed the amount of the proposed settlement.
(e) Mitigation. Each Indemnified Party shall have an
obligation to mitigate Damages under this Agreement, and to that end each party
shall use its reasonable efforts and shall consult and cooperate with each
other with a view towards mitigating claims, losses, liabilities, Damages,
deficiencies, costs and expenses that may give rise to claims for
indemnification under this Section 10.2.
(f) Cooperation. In the event that any action, suit,
proceeding or investigation relating hereto or to the transactions contemplated
by this Agreement is commenced, whether before or after the Closing, the
parties hereto agree to cooperate and use reasonable efforts to vigorously
defend against and respond thereto and make available to each other such
personnel, witnesses, books, records, documents or other information within its
control that are necessary or appropriate for such defense (except for trade
secrets and such items which may not be made available pursuant to a Court
Order); provided that, subject to Section 10.2(c), the Indemnifying Party shall
reimburse the Indemnified Party for its out-of-pocket expenses incurred in
connection therewith.
(g) Product and Warranty Liability. The provisions of
this Section 10.2 shall cover, without limitation, all liabilities of
whatsoever kind, nature or description relating, directly or indirectly, to
product liability, litigation or claims against Buyer or Seller in connection
with, arising out of, or relating to products set forth on Schedule 1.1A by
Buyer or Seller, respectively.
(h) Limitations.
(i) Neither Buyer and Del Monte Foods on the one
hand, nor Seller on the other hand, shall be liable to the other under this
Section 10.2 for any Damages due pursuant to Section 10.2(a)(i) or Section
10.2(b)(i) exclusively, unless and until (i) each
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individual amount otherwise due the Indemnified Party exceeds Seventy-Five
Thousand Dollars ($75,000) (excluding legal fees and expenses), and (ii) the
aggregate amount of all such Damages under this Agreement and the Intellectual
Property Purchase Agreement otherwise due the Indemnified Party (excluding
Damages incurred in any individual claim of less than Seventy-Five Thousand
Dollars ($75,000)) exceeds an accumulated total of One Million Dollars
($1,000,000) and thereafter the total amount of all such Damages in excess of
Seventy-Five Thousand Dollars ($75,000) per claim (excluding legal fees and
expenses) actually incurred (excluding the first One Million Dollars
($1,000,000)) shall be indemnifiable.
(ii) Neither (a) Seller's aggregate liability
under (I) Sections 10.2(a) and 10.3 of this Agreement and (II) Section 7.2(a)
of the Intellectual Property Purchase Agreement, for all claims for Damages
incurred by Buyer (and its Representatives and Affiliates) nor (b) Buyer's and
Del Monte Foods' aggregate liability under (I) Sections 10.2(b) and 10.3 of
this Agreement and (II) Section 7.2(b) of the Intellectual Property Purchase
Agreement, for all claims for Damages incurred by Seller (and its
Representatives and Affiliates), shall in any event exceed, in either case (a)
or (b), the Aggregate Amount.
(i) In no event shall any party be liable for any
incidental, consequential, indirect or special losses or damages (including,
without limitation, lost profits, lost revenues and loss of business), whether
foreseeable or not, whether occasioned by any failure to perform or the breach
of any representation, warranty, covenant or other obligation under this
Agreement for any cause whatsoever.
(j) Buyer agrees that all rights of indemnification and
contribution, if any, existing in favor of the present or former officers,
directors, employees, fiduciaries and agents of Seller as provided in Seller's
Certificate of Incorporation or Bylaws, as in effect as of the date hereof,
with respect to matters occurring prior to the Closing Date, shall survive the
Closing Date and shall continue in full force and effect for a period of not
less than the applicable statute of limitations.
(k) Nothing herein shall relieve either party of any
liability to make any payment expressly required to be made by such party
pursuant to this Agreement.
(l) With regard to this Section 10.2, Buyer acknowledges
that it has read and is familiar with, and hereby waives the benefit of, the
provisions of California Civil Code Section 1542, which is set forth below:
"A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the
release, which if known by him must have materially affected his
settlement with the debtor."
10.3 Tax Indemnifications. Parent and Seller shall pay, or cause
to be paid, when due all Taxes for which Seller is or may be liable or that are
or may become payable with respect to all taxable periods ending on or prior to
the Closing Date, other than Taxes for which Buyer is responsible pursuant to
Section 2.8. Seller shall indemnify and hold harmless
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Buyer, its Affiliates, successors and assigns, from and against any and all
Taxes of the Seller Affiliated Group for any Taxes in respect of the Purchased
Assets and income of the Business for the period or portions of periods ending
prior to the Closing Date. Buyer shall indemnify and hold harmless Seller, its
Affiliates, successors and assigns, from and against any and all Taxes of the
Buyer for any Taxes in respect of the Purchased Assets and income of the
Business for the period or portions of periods beginning on and after the
Closing Date. Notwithstanding anything to the contrary contained herein,
Damages arising pursuant to this Section 10.3 shall not be subject to
subsection (h) of Section 10.2.
10.4 Insurance Proceeds. With respect to any Claim required to be
indemnified pursuant to this Agreement, so long as the Indemnifying Party has
complied with its indemnification obligations on such Claim, (i) to the extent
available, the Indemnified Party shall assign to the Indemnifying Party any
applicable proceeds under any insurance policy which covers the matter which is
the subject of the indemnification and shall take reasonable steps to insure
that the Indemnifying Party obtains the benefits of such policy, including
providing any notices as required under such policy; and (ii) if the
Indemnified Party receives insurance proceeds with respect to any Damages paid
by the Indemnifying Party, then the Indemnified Party shall reimburse the
Indemnifying Party in an amount equivalent to such proceeds up to the amount
actually paid by the Indemnifying Party.
10.5 Exclusive Remedy. The rights of Buyer under Section 10.2
shall be the exclusive remedy of Buyer with respect to claims based upon a
breach or alleged breach of the representations, warranties and covenants
(except the covenant set forth in Section 6.8) of Seller contained herein. The
rights of Seller under Section 10.2 shall be the exclusive remedy of Seller
with respect to claims based upon a breach or alleged breach of the
representations, warranties and covenants of Buyer and Del Monte Foods
contained herein. Except as expressly set forth in this Agreement, neither
Seller nor any of its Representatives or Affiliates makes or has made any
representations or warranties, express or implied, in connection with the
transactions contemplated by this Agreement. Without limiting the generality
of the foregoing, except as expressly set forth in this Agreement, (i) the
Purchased Assets shall be transferred to Buyer pursuant to this Agreement in
their present condition, "AS IS" and without any warranty, express or implied;
and (ii) no patent or latent physical condition or defect in any of the
Purchased Assets, whether or not now known or discovered shall affect the
rights of either party.
ARTICLE XI
MISCELLANEOUS
11.1 Termination.
(a) Termination. This Agreement may be terminated at any
time prior to Closing:
(i) By mutual written consent of Buyer and
Seller;
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(ii) By Buyer or Seller if the Closing shall not
have occurred on or before the six (6) month anniversary of the date of this
Agreement; provided however, that this provision shall not be available to
Buyer if Seller has the right to terminate this Agreement under clause (iv) of
this Section 11.1, and this provision shall not be available to Seller if Buyer
has the right to terminate this Agreement under clause (iii) of this Section
11.1;
(iii) By Buyer if there is a material breach of any
representation or warranty set forth in Article IV hereof or any covenant or
agreement to be complied with or performed by Seller pursuant to the terms of
this Agreement or the failure of a condition set forth in Article VIII to be
satisfied (and such condition is not waived in writing by Buyer) on or prior to
the Closing Date, or the occurrence of any event which results or would result
in the failure of a condition set forth in Article VIII to be satisfied on or
prior to the Closing Date, provided that Buyer may not terminate this Agreement
prior to the Closing if Seller has not had an adequate opportunity to cure such
failure; or
(iv) By Seller if there is a material breach of
any representation or warranty set forth in Article V hereof or of any covenant
or agreement to be complied with or performed by Buyer or Del Monte Foods
pursuant to the terms of this Agreement or the failure of a condition set forth
in Article VII to be satisfied (and such condition is not waived in writing by
Seller) on or prior to the Closing Date, or the occurrence of any event which
results or would result in the failure of a condition set forth in Article VII
to be satisfied on or prior to the Closing Date; provided that, Seller may not
terminate this Agreement prior to the Closing Date if Buyer and Del Monte Foods
have not had an adequate opportunity to cure such failure.
(b) In the Event of Termination. In the event of
termination of this Agreement:
(i) Each party will redeliver all documents, work
papers and other material of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution hereof,
to the party furnishing the same;
(ii) The provisions of the Confidentiality
Agreement and Section 11.12(a)-(f) shall continue in full force and effect; and
(iii) No party hereto shall have any Liability to
any other party to this Agreement, except as stated in subsections (i), (ii)
and (iii) of this Section 11.1(b), except for any willful breach of this
Agreement occurring prior to the proper termination of this Agreement.
11.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of the other parties, except that Seller may assign any of its rights
or obligations under this Agreement to any one or more of Seller's Affiliates;
provided, however, that Buyer may assign its rights and obligations hereunder
to a wholly owned subsidiary provided that Buyer shall not be
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released from any of its obligations under this Agreement. Subject to the
foregoing, this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns, and no
other person shall have any right, benefit or obligation under this Agreement
as a third party beneficiary or otherwise.
11.3 Notices. All notices, requests, demands and other
communications which are required or may be given under this Agreement shall be
in writing and shall be deemed to have been duly given when received if
personally delivered; when transmitted if transmitted by telecopy, electronic
or digital transmission method; the day after it is sent, if sent for next day
delivery to a domestic address by recognized overnight delivery service (e.g.,
Federal Express); and upon receipt, if sent by certified or registered mail,
return receipt requested. In each case notice shall be sent to:
If to Parent or Seller, addressed to:
Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
Attention: James H. Ball, Esq.
Senior Vice President and General Counsel
Tel: 818-549-7050
Fax: 818-549-7015
With copies to:
Nestle USA, Inc.
800 North Brand Boulevard
Glendale, California 91203
Attention: Kristin Adrian, Esq.
Vice President and Deputy General Counsel
Tel: 818-549-6703
Fax: 818-549-6713
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Mary Ellen Kanoff, Esq.
Tel: 213-485-1234
Fax: 213-891-8763
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If to Buyer or Del Monte Foods, addressed to:
Del Monte Corporation
One Market
P.O. Box 193575
San Francisco, CA 94119-3575
Attention: David L. Meyers
Tel: 415-247-3300
Fax: 415-247-3103
With copies to:
Del Monte Corporation
One Market
P.O. Box 193575
San Francisco, CA 94119-3575
Attention: William R. Sawyers, Esq.
Tel: 415-247-3262
Fax: 415-247-3263
Pillsbury Madison & Sutro LLP
235 Montgomery Street
San Francisco, CA 94104
Attention: Gregg Vignos, Esq.
Tel: 415-983-1649
Fax: 415-983-1200
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
11.4 Choice of Law. This Agreement shall be construed, interpreted
and the rights of the parties determined in accordance with the laws of the
State of California (without reference to its choice of law provisions).
11.5 Jurisdiction; Services of Process. Any action or proceeding
seeking to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of California, County of Los Angeles, or, if it has or can acquire
jurisdiction, in the United States District Court for the Central District of
California, and each of the parties consents to the jurisdiction of such courts
(and of the appropriate appellate courts) in any such action or proceeding and
waives any objection to venue laid therein. Process in any action or
proceeding referred to in the preceding sentence may be served on any party
anywhere in the world.
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11.6 Entire Agreement; Amendments and Waivers. This Agreement and
the Ancillary Agreements, together with all exhibits and schedules hereto and
thereto (including the Disclosure Schedule), and the Confidentiality Agreement,
constitutes the entire agreement among the parties pertaining to the subject
matter hereof and supersedes all prior agreements, understandings, negotiations
and discussions, whether oral or written, of the parties. This Agreement may
not be amended except by an instrument in writing signed on behalf of each of
the parties hereto. No amendment, supplement, modification or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or shall constitute a waiver of any other provision hereof (whether or not
similar), nor shall such waiver constitute a continuing waiver unless otherwise
expressly provided.
11.7 Multiple Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
11.8 Expenses. Except as otherwise specified in this Agreement,
each party hereto shall pay its own legal, accounting, out-of-pocket and other
expenses incident to this Agreement and to any action taken by such party in
preparation for carrying this Agreement into effect.
11.9 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
11.10 Titles; Gender. The titles, captions or headings of the
Articles and Sections herein, and the use of a particular gender, are for
convenience of reference only and are not intended to be a part of or to affect
or restrict the meaning or interpretation of this Agreement.
11.11 Publicity. No party shall issue any press release or make any
public statement regarding the transactions contemplated hereby, without prior
written approval of the other party.
11.12 Confidential Information.
(a) No Disclosure. The parties acknowledge that the
transaction described herein is of a confidential nature and shall not be
disclosed except to consultants, advisors and Affiliates, or as required by
law, until such time as the parties make a public announcement regarding the
transaction as provided in Section 11.11.
(b) Preservation of Confidentiality. In connection with
the negotiation of this Agreement, the preparation for the consummation of the
transactions contemplated hereby, and the performance of obligations hereunder,
Buyer and Del Monte Foods
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acknowledge that they and their Representatives will have access to
confidential information relating to Parent and Seller, including technical,
manufacturing or marketing information, ideas, methods, developments,
inventions, improvements, business plans, trade secrets, scientific or
statistical data, diagrams, drawings, specifications or other proprietary
information relating thereto, together with all analyses, compilations, studies
or other documents, records or data prepared by Seller, Parent, Buyer or Del
Monte Foods, or their respective Representatives which contain or otherwise
reflect or are generated from such information ("Confidential Information").
The term "Confidential Information" does not include information received by
Buyer or Del Monte Foods in connection with the transactions contemplated
hereby which (i) is or becomes generally available to the public other than as
a result of a disclosure by Buyer, Del Monte Foods or their Representatives,
(ii) was within Buyer's or Del Monte Foods' possession prior to its being
furnished to Buyer or Del Monte Foods by or on behalf of the Parent or Seller
in connection with the transactions contemplated hereby, provided that the
source of such information was not known by Buyer or Del Monte Foods to be
bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to Parent or Seller or any other Person
with respect to such information or (iii) becomes available to Buyer or Del
Monte Foods on a non-confidential basis from a source other than Parent or
Seller or any of their respective Representatives, provided that such source is
not bound by a confidentiality agreement with or other contractual, legal or
fiduciary obligation of confidentiality to Parent or Seller or any other Person
with respect to such information.
(c) Buyer and Del Monte Foods shall, and shall cause
their Representatives and Financial Parties (as defined in Section 11.12(g)) to
treat all Confidential Information as confidential, preserve the
confidentiality thereof and not disclose any Confidential Information, except
to their Representatives and Affiliates who need to know such Confidential
Information in connection with the transactions contemplated hereby. Buyer and
Del Monte Foods shall use all reasonable efforts to cause their Representatives
and Financial Parties to treat all Confidential Information as confidential,
preserve the confidentiality thereof and not disclose any Confidential
Information. Buyer and Del Monte Foods shall be responsible for any breach of
this Agreement by any of their Representatives and Financial Parties. If,
however, Confidential Information is disclosed, Buyer and Del Monte Foods shall
immediately notify Seller in writing and take all reasonable steps required to
prevent further disclosure. Buyer acknowledges and agrees that neither Seller
nor Parent is making any representation or warranty as to the accuracy or
completeness of the material it provides to Buyer except as specifically set
forth in this Agreement and, subject to the representations and warranties
specifically set forth in this Agreement, Seller and Parent shall not have any
liability to the Company with respect to such material including the
Information set forth below.
Buyer agrees to indemnify and hold harmless Seller
and Parent from and against any and all expenses (included without limitation,
reasonable attorneys' fees and expenses) arising out of any breach or
nonperformance of any of Buyer's obligations set forth in this Section 11.12.
In addition to all other remedies available to Seller and Parent at law or in
equity, Buyer agrees that Seller and Parent shall be entitled to equitable
relief, including injunctive and specific performance, in the event of any
breach of the provisions.
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(d) Until the Closing or the termination of this
Agreement, all Confidential Information shall remain the property of the party
who originally possessed such information. In the event of the termination of
this Agreement for any reason whatsoever, Buyer and Del Monte Foods shall, and
shall cause their Representatives and Financial Parties to, return to Parent
and Seller all Confidential Information (including all copies, summaries and
extracts thereof) furnished to Buyer and Del Monte Foods by Parent or Seller in
connection with the transactions contemplated hereby.
(e) If Buyer or Del Monte Foods or any of their
Representatives or Financial Parties or Affiliates is requested or required (by
oral questions, interrogatories, requests for information or documents in legal
proceedings, subpoena, civil investigative demand or other similar process) or
is required by operation of law to disclose any Confidential Information, Buyer
and Del Monte Foods shall provide Parent and Seller with prompt written notice
of such request or requirement, which notice shall, if practicable, be at least
48 hours prior to making such disclosure, so that Parent and Seller may seek a
protective order or other appropriate remedy and/or waive compliance with the
provisions of this Agreement. If, in the absence of a protective order or
other remedy or the receipt of such a waiver, Buyer or Del Monte Foods or any
of their Representatives or Financial Parties are nonetheless, in the opinion
of counsel, legally compelled to disclose Confidential Information, then Buyer
and Del Monte Foods may disclose that portion of the Confidential Information
which such counsel advises is legally required to be disclosed, provided that
Buyer and Del Monte Foods use their reasonable efforts to preserve the
confidentiality of the Confidential Information, whereupon such disclosure
shall not constitute a breach of this Agreement.
(f) Until October 1, 1999, Buyer and Del Monte Foods
agree not to solicit for hire any person who is currently employed in a senior
management position (i.e., vice president level or above) with the Business,
without the prior written consent of Seller, except as otherwise contemplated
by this Agreement on the Closing Date.
(g) Notwithstanding anything to the contrary in clauses
(a) through (e) above, Buyer and its Representatives may disclose certain
information that Buyer or its Representatives have prepared regarding the
Business (the "Information") which may be derived in part from information
supplied to Buyer pursuant to the Confidentiality Agreement solely to qualified
institutional investors in connection with Buyer's private 144A offering of
securities (collectively, "Buyer's Offering") and, in connection with the
provision of any financing to the Buyer through The Bear Stearns Companies,
Inc. (the "Financing"); to (A) The Bear Stearns Companies, Inc., Bank of
America National Trust and Savings Association, Bear, Stearns & Co., Inc. and
BancAmerica Robertson Stephens, and their respective Affiliates, their
respective bridge funds and the participants therein (the "Financial Parties"),
and (B) such additional parties, other than the parties set forth in clause (A)
above, as the Financial Parties identify as potential participants or assigns
in any such financing (the "Additional Parties"), so long as such Additional
Parties have previously entered into a confidentiality agreement consistent
with the Section 11.12 covering the Information with the Buyer and, in each
case subject to the limitations set forth below. The disclosure of such
Information by Buyer shall be limited as follows: (1) Buyer represents that
such Information
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is necessary to complete Buyer's Offering or Financing and such Information is
in accordance and consistent with Schedule 11.12 of this Agreement; (2) All
such Information was prepared by Buyer or its Representatives and Buyer assumes
full responsibility for the accuracy of such Information; (3) No representation
or warranty (express or implied) from Seller or its Affiliates is made with
respect to any such Information; (4) Seller shall be provided copies of any
offering memoranda or other documentation containing the Information at least
three business days in advance of the mailing of any such materials; provided
that this clause (4) shall not apply to any such offering memorandum or
documentation that does not vary in a material respect with respect to any
Information contained in documentation or offering memoranda which had been
previously delivered to Seller pursuant to this clause (4) and so long as all
of the requirements of this paragraph (g) are otherwise complied with; (5) such
Information will not contain any reference to Seller except for naming Seller
and its Parent as the sellers of the Business, and no reference shall be made
to any other Nestle affiliate, including, but not limited to, Societe des
Produits Nestle S.A.; and (6) the Indemnification Agreement shall be in full
force and effect.
11.13 No Third-Party Beneficiary. The provisions of this Agreement
are for the benefit only of the parties hereto, and no third party may seek to
enforce, or benefit from, these provisions. The parties specifically disavow
any desire or intention to create any third party beneficiary hereunder, and
specifically declare that no person or entity, except for the parties and their
successors, shall have any right hereunder nor any right of enforcement hereof.
11.14 Representation of Counsel; Mutual Negotiation. Each party has
had the opportunity to be represented by counsel of its choice in negotiating
this Agreement. This Agreement shall therefore be deemed to have been
negotiated and prepared at the joint request, direction, and construction of
the parties, at arm's-length, with the advice and participation of counsel, and
will be interpreted in accordance with its terms without favor to any party.
The parties' respective counsel may not be disqualified from representing their
clients in indemnification or other disputes arising out of this transaction by
virtue of such counsel's prior representation of the other party in an
unrelated matter.
11.15 No Reliance on Other Information. Except for the
representations and warranties contained in this Agreement, neither Seller,
Parent nor any Representative or Affiliate or other person acting for any of
them makes any other representation or warranty, express or implied, with
respect to the Purchased Assets, Business, financial condition or prospects or
the execution, delivery or performance by Seller and Parent of this Agreement
or with respect to the transactions contemplated hereby, and Seller and Parent
hereby disclaim any such representation or warranty, whether oral or written,
whether by Seller, Parent or any of their respective Representatives or
Affiliates or any other person. Buyer and Del Monte Foods acknowledge that
none of Seller, Parent or any other person has made any representation or
warranty, express or implied, as to the accuracy or completeness of any
information regarding Seller or Parent not included in this Agreement or the
Seller Disclosure Schedule attached hereto, and neither Seller, Parent nor any
other person will have or be subject to any liability to Buyer or Del Monte
Foods or any other person resulting from the distribution to Buyer or Del Monte
Foods, or Buyer's or Del Monte Foods' use of,
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any such information (including, without limitation, any brochures, offering
memoranda or other publications distributed in connection with the sale of
Purchased Assets or in any presentation by the management of Seller and any
estimates of anticipated performance of the Business.)
11.16 Release of Del Monte Foods. Notwithstanding anything to the
contrary contained in this Agreement, Del Monte Foods shall be released from
all of its obligations under this Agreement upon the Closing of the
transactions contemplated by this Agreement (including the receipt of the Base
Purchase Price and the deposit into the Escrow Account of the Estimated
Adjustment Amount), without further action on the part of any party hereto.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed on their respective behalf, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
CONTADINA SERVICES, INC. DEL MONTE CORPORATION
By /S/ PETER D. ARGENTINE By /S/ THOMAS E. GIBBONS
-------------------------------- --------------------------------
Name: Peter D. Argentine Name: Thomas E. Gibbons
------------------------------ -----------------------------
Its President Its: Senior V. P. & Treasurer
------------------------------ ------------------------------
NESTLE USA, INC. DEL MONTE FOODS COMPANY
By /S/ PETER D. ARGENTINE By /S/ THOMAS E. GIBBONS
--------------------------------- --------------------------------
Name: Peter D. Argentine Name: Thomas E. Gibbons
------------------------------- ------------------------------
Its Executive V.P., & CEO Its: Senior V.P. & Treasurer
------------------------------- ------------------------------
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