<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 of earliest event reported): January 13, 1997
(December 29, 1996)
PERFORMANCE FOOD GROUP COMPANY
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 0-22192 54-0402940
- ---------------------------- ------------------------ -------------------
(State or other jurisdiction (Commission File Number) (I.R.S. Employer
of incorporation) Identification No.)
6800 Paragon Place, Suite 500, Richmond, Virginia 23230
- ------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 285-7340
Not Applicable
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE> 2
Item 2. Acquisition or Disposition of Assets.
On December 29, 1996, Performance Food Group of Texas, L.P., a Texas
limited partnership (the "Purchaser") and wholly-owned subsidiary of
Performance Food Group Company (the "Company"), in accordance with the terms of
an Asset Purchase Agreement (the "Agreement") dated October 22, 1996,
consummated the acquisition of certain assets of McLane Company, Inc., a Texas
corporation ("Parent") and substantially all of the assets of McLane
Foodservice--Temple, Inc., a Texas corporation and wholly-owned subsidiary of
McLane ("Temple"). Parent and Temple are collectively referred to herein as
the "Seller." The assets acquired were used by Seller at its Temple and
Victoria, Texas facilities in the foodservice distribution business, which the
Purchaser will continue.
The aggregate consideration paid by the Purchaser for the assets was
$30,463,183 (subject to certain post- closing adjustments), the assumption of
Seller's trade payables and certain other specified liabilities, and the
sublease of certain of Seller's tractors and trailers (the "Purchase Price").
The Purchaser paid Seller $26,463,183 of the Purchase Price in cash at closing.
The Purchaser deposited $4,000,000 of the Purchase Price (the "Escrow Amount")
into an escrow account under the terms and conditions of a separate Escrow
Agreement between the Company and Seller (the "Escrow Agreement"). Certain
sums of the Escrow Amount may be returned to the Company if Seller should have
a duty to indemnify the Company or the Purchaser under the terms of the
Agreement prior to December 29, 1997. The Purchase Price was determined
through arm's length negotiations between the Company and Seller. In addition,
the Purchaser purchased the Victoria, Texas facility from a third party for
$1.5 million.
Item 7. Financial Statements, Pro Forma Information and Exhibits.
(a) and (b) Financial Statements of Business Acquired and Pro Forma
Financial Information.
The Registrant believes that (i) is impracticable prior to the filing
of this Form 8-K to complete preparation of the financial statements
required to be filed pursuant to Rule 3-05 of Regulation S-X and the
pro forma financial information required to be filed pursuant to
Article 11 of Regulation S-X, and (ii) such information will be
available, and will be filed by the Registrant with the Securities and
Exchange Commission as promptly as practicable, within 60 days after
this Form 8-K is required to be filed.
(c) Exhibits:
(2) Asset Purchase Agreement, dated October 22, 1996 by and among
Performance Food Group Company, McLane Foodservice--Temple,
Inc., and McLane Company, Inc. and an amendment thereto
(Pursuant to Item 601(b)(2) of Regulation S-K, the schedules
of this agreement are omitted, but will be provided
supplementally to the Commission upon request.)
2
<PAGE> 3
(10) Escrow Agreement, dated December 29, 1996, by and among
Performance Food Group Company, McLane Company, Inc., McLane
Foodservice--Temple, Inc., and First Union National Bank of
Virginia.
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.
PERFORMANCE FOOD GROUP COMPANY
Date: January 13, 1997 By: /s/ Roger L. Boeve
----------------------------------
Roger L. Boeve
Executive Vice President and
Chief Financial Officer
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Exhibit
<S> <C>
2 Asset Purchase Agreement, dated October 22, 1996 by and among
Performance Food Group Company, McLane Foodservice--Temple,
Inc., and McLane Company, Inc. and an amendment thereto
(Pursuant to Item 601(b)(2) of Registration S-K, the schedules
of this agreement are omitted, but will be provided
supplementally to the Commission upon request.)
10 Escrow Agreement, dated December 29, 1996, by and among
Performance Food Group Company, McLane Company, Inc., McLane
Foodservice--Temple, Inc., and First Union National Bank of
Virginia.
</TABLE>
<PAGE> 1
EXHIBIT 2
ASSET PURCHASE AGREEMENT
BY AND AMONG
MCLANE FOODSERVICE--TEMPLE, INC.,
MCLANE COMPANY, INC.
AND
PERFORMANCE FOOD GROUP COMPANY
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE HEADING PAGE
<S> <C> <C>
1.
PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Purchase and Sale of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2.
CONSIDERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Payment of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.3. Purchase Price Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.4. Allocation of Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.
CLOSING; OBLIGATIONS OF THE PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.1. Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2. Obligations of the Parties at the Closing . . . . . . . . . . . . . . . . . . . . . . 4
3.3. Passage of Title at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
3.4. Assignment of Seller's Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.
REPRESENTATIONS AND WARRANTIES BY SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.1. Ownership of Assets; Validity and Enforceability . . . . . . . . . . . . . . . . . . . 7
4.2. Organization, Good Standing and Qualification . . . . . . . . . . . . . . . . . . . . 7
4.3. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.5. Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.6. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.7. Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8. Title to Properties; Encumbrances . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.9. No Undisclosed Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
4.10. Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.11. Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4.12. Compliance with Applicable Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.13. Absence of Questionable Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.14. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.15. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.16. Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.17. Employees and Fringe Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 14
4.18. Certain Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.19. Contracts and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.20. Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.21. Orders, Commitments and Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.22. Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.23. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.24. No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.25. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.26. Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.27. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.28. Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE HEADING PAGE
<S> <C> <C>
4.29. Relationships with Related Persons . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.30. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5. REPRESENTATIONS AND WARRANTIES BY BUYER
5.1. Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.2. Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.3. Valid and Binding Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.4. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.5. Professional Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.6. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.7. Full Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8. Employment Offers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
6.
COVENANTS AND AGREEMENTS OF TEMPLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
6.1. Conduct of Business Pending the Closing . . . . . . . . . . . . . . . . . . . . . . . 24
6.2. Non-Solicitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
6.3. Access; Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.4. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.5. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.6. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.7. Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.8. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.9. Environmental Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.10. Title Insurance and Survey . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.11. Post-Closing Ancillary Services . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.12. Certain Matters with Respect to Parent Customers . . . . . . . . . . . . . . . . . . . 28
7.
COVENANTS AND AGREEMENTS OF BUYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.1. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
7.2. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.3. Regulatory Filings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
7.4. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.
CONDITIONS TO BUYER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.2. Performance by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
8.3. Certificates of Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.4. Opinion of Counsel for Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.5. Consents and Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.6. Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.7. Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.8. Escrow Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.9. Master Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
ARTICLE HEADING PAGE
<S> <C> <C>
8.10. License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
8.11. No Material Adverse Change; Due Diligence Review . . . . . . . . . . . . . . . . . . . 30
8.12. Closing Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.
CONDITIONS TO SELLER'S OBLIGATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.2. Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.3. Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.4. Opinion of Counsel for Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.5. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.6. Master Sublease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
9.7. License Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
10.
INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.1. Indemnification by Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
10.2. Time Limitation; Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.3. Indemnification Threshold; Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.4. Limitations on Amount; Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.5. Special Rules with Respect to Environmental Matters . . . . . . . . . . . . . . . . . 33
10.6. Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
10.7. Time Limitation; Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.8. Indemnification Threshold; Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
10.9. Limitation on Amount; Buyer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
10.10. Special Rules with Respect to Environmental and Name Use Matters . . . . . . . . . . . 35
10.11. Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.
SURVIVAL OF REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.1. Survival of Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
11.2. Statements as Representations . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
11.3. Remedies Cumulative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.
TERMINATION OF AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
12.2. Liabilities of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.2. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
13.3. Bulk Transfer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.4. Assignability; Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.5. Entire Agreement; Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
ARTICLE HEADING PAGE
<S> <C> <C>
13.6. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.7. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
13.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.9. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
13.10. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
EXHIBITS
<S> <C>
Exhibit A Escrow Agreement
Exhibit B Form of Deed
Exhibit C Instrument of Conveyance
Exhibit D Non-Competition Agreement
Exhibit E Master Sublease Agreement
Exhibit F License Agreement
</TABLE>
SCHEDULES
<PAGE> 6
ASSET PURCHASE AGREEMENT
Agreement made this 22nd day of October, 1996, by and among
PERFORMANCE FOOD GROUP COMPANY, a Tennessee corporation ("Buyer"), McLANE
FOODSERVICE--TEMPLE, INC., a Texas corporation ("Temple"), McLANE COMPANY,
INC., a Texas corporation ("Parent") (Temple and Parent are collectively the
"Seller"); and
WHEREAS, Buyer desires to acquire from Seller, and Seller desires to
sell to Buyer, substantially all of Temple's assets and certain assets of
Parent or one or more of its subsidiaries, including certain contract rights,
used in Temple's foodservice business upon and subject to the terms and
conditions contained in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF ASSETS
1.1. PURCHASE AND SALE OF ASSETS. Upon the terms and
provisions of this Agreement, Buyer agrees to purchase and accept delivery from
Seller (or a subsidiary of Parent) of, and Seller agrees to sell, convey,
assign, transfer and deliver to Buyer (or cause to be sold, conveyed, assigned,
transferred and delivered to Buyer) at the Closing provided for in Section 3.1,
all of Seller's right, title and interest in (a) Seller's properties and assets
that are used in or that relate to the operation of Temple's foodservice
business and set forth on Schedule 1.1 hereto (except for certain trucks and
trailers that are leased by Seller as set forth on Schedule 2.1(b), which shall
be subleased by Buyer), (b) to the extent assignable, all licenses and permits
used in Temple's foodservice business, and (c) all of Temple's goodwill and the
non-exclusive right to the use of its logo for ninety (90) days following the
Closing and Temple's corporate name and the other rights set forth in the
License Agreement for a period of fifteen (15) months following the Closing.
The properties and assets to be sold by Seller to Buyer pursuant to this
Agreement are hereinafter collectively referred to as the "Assets." The Assets
shall in no event be deemed to include the assets and properties set forth on
Schedule 1.1 (a) hereto (the "Excluded Assets").
ARTICLE 2.
CONSIDERATION
2.1. PURCHASE PRICE. The purchase price (the "Purchase Price")
for the Assets shall be $30,000,000 cash, subject to the provisions of Section
2.3, plus the book value at Closing of certain trucks and trailers owned by
Parent (or one of Parent's subsidiaries) as listed in Schedule 1.1 (the
"Transco Equipment"), plus the assumption of Seller's trade payables and
certain other liabilities (the "Assumed Liabilities") listed on Schedule 2.1(a)
plus the sublease of Seller's truck and trailer leases listed on Schedule
2.1(b).
2.2. PAYMENT OF PURCHASE PRICE. Except as set forth in Section
2.3.(b), at the Closing, the Purchase Price shall be payable as follows (all of
which shall be deemed to occur simultaneously at the Closing):
<PAGE> 7
(a) Buyer shall deliver a certified or cashiers check
or wire transfer of Federal or other immediately
available funds to Seller in the amount of
$26,000,000, plus the book value at Closing of the
Transco Equipment.
(b) The remaining $4,000,000 of the Purchase Price
(the "Escrow Amount") shall be deposited at the
Closing in an escrow account to be maintained
with First Union National Bank in Richmond,
Virginia, $3,000,000 of which shall be held until
April 25, 1997 following the Closing and
$1,000,000 of which shall be held for one year
following the Closing, subject, in each case, to
certain extensions as provided in the Escrow
Agreement, in connection with any potential
indemnification of Buyer by Seller pursuant to
Sections 10.1 and 10.5 of this Agreement or to
satisfy any amounts owing to Buyer under Section
2.3. The Escrow Amount shall be held under the
terms of an escrow agreement (the "Escrow
Agreement") substantially in the form attached
hereto as Exhibit A and incorporated herein; and
(c) Buyer agrees to pay the Assumed Liabilities.
2.3. PURCHASE PRICE ADJUSTMENTS.
(a) If the Assets (excluding the Transco Equipment),
net of the Assumed Liabilities, have a book value
of more or less than $23,000,000 as determined by
audit as of the last business day preceding the
Closing, then the cash portion of the purchase
price shall be increased or reduced on a
dollar-for-dollar basis. For purposes of this
computation, (i) items of inventory that have not
had any sales in the preceding seven weeks shall
be ascribed no book value and shall be retained
by Temple and (ii) no reduction to the amount
initially payable for Receivables shall be made
on account of any reserve for uncollectibility.
Not later than sixty (60) days following the
Closing, Buyer will furnish to Seller a
reconciliation of the Assets based upon such
audit and a proration of any other liabilities
("Buyer's Statement") which are to be apportioned
under this Agreement. Seller shall notify Buyer
within fifteen (15) days following Seller's
receipt of the reconciliation if Seller disagrees
with Buyer's Statement. If Seller accepts, or
fails to notify Buyer of any objection to,
Buyer's Statement, then Buyer or Seller, as the
case may be, will pay the amount shown as due
within five (5) days after the expiration of the
fifteen (15) day period. Buyer shall promptly
make available to Seller at Seller's request
copies of Buyer's or Buyer's accountants work
papers prepared in connection with Buyer's
Statement. If Seller objects and Seller's
objections cannot be resolved by good faith
negotiation within ten (10) business days after
the expiration of the fifteen (15) day period,
then either party may submit the disputed items
to an independent public accounting firm
reasonably acceptable to Seller and Buyer, whose
decision shall be final and binding on both
parties. In the event of such a submission, each
party shall prepare and deliver to the accounting
firm a statement, individually as to each item in
dispute, of the amount it believes to be due to
or from the other party, as the case may be. The
award of the
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accounting firm as to a particular item shall be
not less than the lowest amount so stated or
higher than the highest amount so stated, and the
accounting firm, subject to the foregoing
limitation, shall be empowered only to direct the
payment of money or to find that no payment is
due. The fees and expenses of the accounting
firm shall be apportioned among the items in
dispute in proportion to the difference, as to
each item, between the amount stated by Seller
and the amount stated by Buyer; the portion of
such fees and expenses allocated to each item
shall be paid by Buyer and/or Seller, as the case
may be, in the same proportion as the difference
between the amount stated by such party and the
amount stated by the other party bears to the
amount stated by such party and the amount
awarded by the accounting firm. The parties
agree to make payments to each other on a timely
basis with respect to adjustments not susceptible
to definitive apportionment on the Closing Date
or the date of Buyer's Statement, when the
correct amount of any amounts to be adjusted or
apportioned pursuant to this Section 2.3 are
finally determined. Any disputes with respect to
any adjustments or apportionments to be made at a
later time as contemplated by the preceding
sentence shall be settled by following the same
procedures described above with respect to the
Buyer's Statement.
(b) In addition, if Seller or an affiliate of Seller
acquires its Victoria facility prior to Closing,
then Buyer will acquire such facility for an
additional $1,500,000 in cash payable at Closing.
2.4. ALLOCATION OF CONSIDERATION.
(a) The consideration for the Assets shall be
allocated as set forth in Schedule 2.4, to be
agreed to prior to the Closing.
(b) The parties hereto covenant and agree with each
other that this allocation was arrived at by
arm's length negotiation and that neither of them
will take a position on any income tax return,
before any governmental agency charged with the
collection of any income tax or in any judicial
proceeding that is in any manner inconsistent
with the terms of this Section 2.4 without the
written consent of the other party to this
Agreement.
(c) The parties hereto agree to cooperate in
preparing and filing IRS Form 8594 reflecting
that allocation.
ARTICLE 3.
CLOSING; OBLIGATIONS OF THE PARTIES
3.1. CLOSING DATE. The closing (the "Closing") shall take
place at 10:00 a.m., local time, on December 30, 1996 at the offices of Bass,
Berry & Sims PLC, Nashville, Tennessee, or at such other time and place as the
parties hereto mutually agree and shall be effective for all purposes as of the
close of business on the immediately preceding business day (the "Closing
Date").
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3.2. OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, Buyer shall deliver to Seller
(or Seller's agent):
(i) the consideration as specified in
Section 2.1;
(ii) copy of resolutions of the Board of
Directors of Buyer, certified by Buyer's Secretary,
authorizing the execution, delivery and performance of this
Agreement and the other documents referred to herein to be
executed by Buyer, and the consummation of the
transactions contemplated hereby;
(ii) a certificate of Buyer certifying as
to the accuracy of Buyer's representations and warranties
at and as of the Closing and that Buyer has performed or
complied with all of the covenants, agreements, terms,
provisions and conditions to be performed or complied with
by Buyer at or before the Closing;
(iii) the opinion of Bass, Berry and Sims
PLC, legal counsel for Buyer, the terms of which are
substantially as set forth in Section 9.4;
(iv) a copy of the Escrow Agreement,
executed by Buyer;
(v) such other certificates and
documents as Seller or their counsel may reasonably
request;
(vi) the Master Sublease (as hereinafter
defined);
(vii) one or more instruments, in form
reasonably satisfactory to Seller, evidencing Buyer's
assumption of the Assumed Liabilities; and
(viii) a copy of the License Agreement, in
substantially the form of Exhibit F hereto, executed by
Seller.
(b) At the Closing, Seller will deliver to Buyer:
(i) the Assets, free and clear of all
liens, claims, charges, restrictions, security interests,
restrictions, transfers, pledges, equities or encumbrances
of any kind, which transfer shall be evidenced by
appropriate documents of transfer in form reasonably
satisfactory to Buyer;
(ii) a deed or deeds with covenants of
warranty as to good and marketable fee simple title to all
of the real property, which is included in the Assets,
executed and acknowledged by the owner thereof, and in
proper form for recording, with all necessary revenue
stamps attached, in the form attached hereto as Exhibit B,
conveying to Buyer good and marketable fee simple title to
all of such real property and the title insurance policies
issued pursuant to the commitments required in Section
6.10 hereof;
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(iii) a general instrument of sale,
conveyance, assignment, transfer and delivery with full
covenants of warranty as to Seller's good and marketable
title to all of the Assets (other than the real property
owned by Seller) in the form of Exhibit C.
(iv) a certificate of Seller certifying
as to the accuracy of Seller's representations and
warranties at and as of the Closing and that Seller has
performed or complied with all of the covenants,
agreements, terms, provisions and conditions to be
performed or complied with by Seller at or before the
Closing;
(v) the opinion of Kuperman, Orr, Mouer
& Albers, P.C., legal counsel for Seller, the opinion
matters of which are substantially as set forth in
Schedule 8.4, with such qualifications as Buyer may
reasonably agree;
(vi) a copy of the Non-Competition
Agreement (the "Non-Competition Agreement"), substantially
in the form of Exhibit D attached hereto and incorporated
herein.
(vii) a copy of the Escrow Agreement
executed by Seller;
(viii) a copy of a Master Sublease
Agreement, in substantially the form of Exhibit E attached
hereto, for the sublease of certain trucks and trailers
(the "Master Sublease");
(ix) a copy of the License Agreement,
executed by Buyer; and
(x) such other certificates and
documents as Buyer or its counsel may reasonably request.
3.3. PASSAGE OF TITLE AT CLOSING. Upon delivery of the
instruments of sale, conveyance, assignment, transfer and delivery, title to
the Assets shall pass to Buyer at the Closing. At the Closing, Temple will put
Buyer in full, complete and quiet possession and enjoyment of all of the Assets
and from and after the Closing the ownership and operation of the Assets to be
sold to Buyer pursuant to this Agreement shall be for the account and risk of
Buyer. Buyer shall be under no liability for any debt, liability or obligation
of Seller incurred after the Closing or arising out of any transaction by
Seller or any event occurring with respect to Seller after the Closing.
Likewise, Seller shall be under no liability for any debt, liability or
obligation of Buyer incurred after the Closing or arising out of any
transaction by Buyer or any event occurring with respect to Buyer after the
Closing.
3.4. ASSIGNMENT OF SELLER'S CONTRACTS. Nothing in this
Agreement shall be deemed to constitute an assignment or attempt to assign any
contract or other agreement to which Seller is a party if the attempted
assignment thereof without the consent of the other party to such contract or
agreement would constitute a breach thereof or effect in any way the rights of
Seller thereunder. If after Seller has used its best efforts to obtain a
consent of any such other party to such contract or agreement, such consent
shall not be obtained at or prior to the Closing, or an attempted assignment
thereof at the Closing would be ineffective and would affect the rights of
Seller thereunder, Seller will cooperate with Buyer in any reasonable
arrangement designed to provide for Buyer the benefits under any such contract
or agreement, including the enforcement,
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at the cost and for the benefit of the Buyer, of any and all rights of Seller
against such other party thereto arising out of the breach or cancellation
thereof by such other party or otherwise.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES BY SELLER
Seller hereby represents and warrants as follows:
4.1 OWNERSHIP OF ASSETS; VALIDITY AND ENFORCEABILITY. Seller
represents and warrants that (i) Temple or an affiliate of Temple is the lawful
owner of the Assets, which, at Closing, will be free and clear of all liens,
claims, charges, restrictions, security interests, equities, proxies, pledges or
encumbrances of any kind, except for the lien for taxes which are not yet due
and payable; (ii) Temple or an affiliate of Temple has or, at Closing, will have
the full right, power, authority and capacity to sell and transfer the Assets;
(iii) by virtue of the transfer of the Assets to Buyer at the Closing, Buyer
will obtain full title to the Assets, free and clear of all liens, claims,
charges, restrictions, security interests, equities, pledges or encumbrances of
any kind, except for the lien for taxes which are not yet due and payable. This
Agreement, the Escrow Agreement, the Master Sublease, and the Non-Competition
Agreement (collectively, the "Transaction Documents") each constitute, or when
executed will constitute, a legal, valid and binding agreement of Seller,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the enforcement of creditors'
rights generally and by general equity principles.
4.2 ORGANIZATION, GOOD STANDING AND QUALIFICATION. Seller is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Texas. Seller has full corporate power and authority to
carry on its business as now conducted and possesses all governmental and other
permits, licenses and other authorizations to own, lease or operate its assets
and properties as now owned, leased and operated and to carry on its business
as presently conducted. Temple is duly licensed or qualified to do business as
a foreign corporation and is in good standing in each state wherein the
properties owned or leased or the business transacted by Temple makes such
licensing or qualification to do business as a foreign corporation necessary,
and no other jurisdiction has demanded, requested or otherwise indicated that
(or inquired whether) Temple is required so to qualify.
4.3 SUBSIDIARIES. Temple has no subsidiaries.
4.4 NO VIOLATION. The execution and delivery of the
Transaction Documents by Seller does not, and the consummation of the
transactions contemplated hereby will not, (a) violate any provision of,
constitute a default under or otherwise give any person the right to terminate,
or result in the creation of any lien or security interest under, any
agreement, indenture, instrument, lease, security agreement, mortgage or lien
to which Seller is a party or by which any of the Assets are bound; (b) violate
any provision of the Articles of Incorporation or Bylaws of Seller; (c) violate
any order, arbitration award, judgment, writ, injunction, decree, statute, rule
or regulation applicable to Seller; or (d) violate any other contractual or
legal obligation or restriction to which Seller is subject.
4.5 CAPITALIZATION. The authorized capital stock of Temple
consists solely of 500,000 shares of common stock, $1.00 par value per share
("Temple Common Stock"), of which
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264,804 shares (the "Shares") are issued and outstanding, all of which are
owned by Parent. All of the Shares are duly authorized, validly issued and
outstanding and fully paid and nonassessable and free of preemptive rights.
There are no outstanding options, warrants or rights to purchase or acquire
from Parent or Temple any securities of Temple, and there are no contracts,
commitments, agreements, understandings, arrangements or restrictions as to
which Parent or Temple is a party or by which either of them is bound relating
to any shares of capital stock or other securities of Temple, whether or not
outstanding.
4.6 FINANCIAL STATEMENTS. Prior to Closing, Seller (a) will
deliver to Buyer an audited balance sheet of Temple as of the end of the
interim fiscal period ended November 1, 1996 (the "Audited Balance Sheet"), and
the related statements of income, changes in stockholders' equity and cash flow
for the interim period then ended, including the notes thereto, together with
the report thereon of KPMG Peat Marwick, independent auditor, (the "Audited
Financial Statements"), and (b) has delivered unaudited balance sheets of
Temple as at the end of fiscal years 1993, 1994 and 1995 and the most recent
interim fiscal period (the "Unaudited Balance Sheets") and the related
unaudited statements of income for the periods then ended (the "Unaudited
Financial Statements") (the Audited Financial Statements and the Unaudited
Financial Statements are collectively referred to herein as the "Financial
Statements"). The Audited Financial Statements will fairly present the assets,
liabilities, financial condition and results of operations of Temple as of the
date thereof and for the periods therein referred to, all in accordance with
generally accepted accounting principles ("GAAP"). The Unaudited Financial
Statements have been prepared by Parent for internal use only, may not be in
accordance with GAAP, and do not include notes.
4.7 ASSETS.
(a) Tangible Assets.
Schedules 1.1 and 1.1(a) hereto contains an accurate and
complete description of all material fixed and other tangible assets
owned, leased or used by Temple in Temple's foodservice business;
including, without limitation, improvements to leased property and
real property (including the approximate acreage of each parcel of
such property, the location thereof, the nature of any improvements
thereon, the identity of the record owner and lessee, if any, and a
summary of encumbrances thereon, if any), plants and structures
located thereon, equipment located therein, vehicles and all personal
property relating to Temple and its food service business and
properties. Except as set forth on Schedule 4.7, all such plants,
structures, machinery and equipment are in good working condition and
repair, normal wear and tear excepted, and are adequate for the uses
for which they are intended. Except as set forth on Schedule 4.7,
the title commitment or survey, all such plants, structures, machinery
and equipment conform in all material respects to applicable
health, sanitation, fire, environmental (including air and water
pollution laws and regulations), safety, labor, zoning and building
laws and ordinances; and except as set forth on Schedule 4.7, Seller
has not received any notification within the last five years of any
violation of any applicable ordinance or regulation of building, zoning
or other law, in respect of Temple's plants, structures, properties or
operations. None of such real property is currently the subject of any
eminent domain, condemnation or similar proceeding and to the best of
Seller's knowledge, no such proceeding is threatened. Temple is now in
possession of each parcel of such real property, there is no adverse
claim against such real property and there are
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no pending or, to Seller's knowledge, threatened proceedings which
might interfere with Buyer's quiet enjoyment of such real property.
(b) Intangible Assets.
Schedules 1.1 and 1.1(a) hereto contains an accurate and
complete description of all material intangible assets owned or used
by Temple in the operation of its foodservice business, including
without limitation, patents, tradenames, trademarks, service names,
servicemarks, copyrights, formulas and applications therefor
(collectively, the "Intangible Assets"). To the best of its
knowledge, Temple or an affiliate has sole, full, and clear title to
the Intangible Assets in the United States for the goods and services
for which such Intangible Assets are used and believes that any
registrations thereof are valid and subsisting and are in full force
and effect. Temple has used and will continue to use for the duration
of this Agreement standards of quality in the provision of services
and sale of products sold under any tradenames, trademarks or
servicemarks contained in the Intangible Assets that are at least
equal to those standards in effect as of the date of this Agreement.
Temple will continue to use any trademarks on each and every trademark
class of goods applicable to its current line of goods as reflected in
its current catalogs, brochures and price lists in order to maintain
the trademarks in full force and effect free from any claim of
abandonment for nonuse and Temple will not (and will not permit any
licensee thereof to) do any act or knowingly omit to do any act
whereby any trademark may become invalidated. Temple or an affiliate
(either itself or through licensees) has placed and will continue to
place appropriate notice of copyright on all copies embodying such
copyrighted works which are publicly distributed and neither Temple
nor any affiliate of Temple will (nor will either permit any licensee
thereof) to do any act or knowingly omit to do any act whereby any
copyright may become invalidated or dedicated to the public domain.
There is no infringement action, lawsuit, claim or complaint which
asserts that Temple's food service operations violate or infringe the
rights or the trade names, trademarks, trademark registration, service
name, service mark or copyright of others with respect to any
apparatus or method of Temple or any adversely held trademark, trade
name, trademark registration, service name, service mark or copyright,
and Temple is not in any way making use of any confidential
information or trade secrets of any person except with the consent of
such person. In the event that any trademarks, servicemark or
copyright is, to Seller's knowledge, infringed, misappropriated or
diluted by a third party, prior to the Closing, Seller shall notify
Buyer.
4.8 TITLE TO PROPERTIES; ENCUMBRANCES. Temple or an affiliate
has good, valid and marketable title to the Assets and all the properties and
assets reflected in the Financial Statements (except for inventory sold since
the date thereof in the ordinary course of business and consistent with past
practice). At Closing, none of the Assets will be subject to any mortgage,
pledge, lien, security interest, conditional sale agreement, encumbrance or
charge of any kind, except (a) liens shown on the Financial Statements as
securing specified liabilities (with respect to which no default exists) and
(b) liens for current taxes not yet due.
4.9 NO UNDISCLOSED LIABILITY. Except as and to the extent of
the amounts that will be specifically reflected or reserved against in the
Financial Statements or disclosed in the notes thereto, Temple does not have
any liabilities or obligations of any nature, whether absolute, accrued,
contingent or otherwise and whether due or to become due (including, without
limitation, liabilities for taxes and interest, penalties and other charges
payable with respect thereto). The reserves to be reflected in the Audited
Financial Statements will be adequate, appropriate and
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reasonable in accordance with GAAP applied on a consistent basis. Furthermore,
Seller does not know or have reason to know of any basis for the assertion
against Temple of any liability or obligation of any nature not fully reflected
or reserved against in the Financial Statements.
4.10 ABSENCE OF CERTAIN CHANGES. Except as and to the extent
set forth on Schedule 4.10 hereto, since January 26, 1996, Temple has not:
(a) suffered any material adverse change in its
working capital, financial condition, assets, liabilities, business or
prospects, experienced any labor difficulty, or suffered any material
casualty loss (whether or not insured);
(b) made any change in its business or operations or
in the manner of conducting its business other than changes in the
ordinary course of business;
(c) incurred any obligations or liabilities (whether
absolute, accrued, contingent or otherwise and whether due or to
become due), except items incurred in the ordinary course of business
and consistent with past practice, or experienced any change in any
assumptions underlying or methods of calculating any bad debt,
contingency or other reserves;
(d) paid, discharged or satisfied any claim, lien,
encumbrance or liability (whether absolute, accrued, contingent or
otherwise and whether due or to become due), other than claims,
encumbrances or liabilities which are reflected or reserved against in
the Unaudited Financial Statements or which were paid, discharged or
satisfied since the date thereof in the ordinary course of business
and consistent with past practice;
(e) written down the value of any inventory, or
written off as uncollectible any notes or accounts receivable or any
portion thereof, except for immaterial write-downs and write-offs made
in the ordinary course of business, consistent with past practice and
at a rate no greater than during the twelve (12) months ended January
26, 1996;
(f) canceled any other debts or claims, or waived any
rights, of substantial value;
(g) sold, transferred or conveyed any of its
properties or assets (whether real, personal or mixed, tangible or
intangible), except in the ordinary course of business and consistent
with past practice;
(h) disposed of or permitted to lapse, or otherwise
failed to preserve the rights of Temple to use any patent, trademark,
trade name, logo or copyright or any such application, or disposed of
or permitted to lapse any license, permit or other form of
authorization, or disposed of or disclosed to any person any trade
secret, formula, process or know-how;
(i) except in the ordinary course of business,
granted any increase in the compensation of any officer, director,
employee or agent (including, without limitation, any increase
pursuant to any bonus, pension, profit sharing or other plan or
commitment), or adopted any such plan or other arrangements; and no
such increase, or the adoption of any such plan or arrangement, is
planned or required;
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(j) made any capital expenditures or commitments in
excess of $100,000 in the aggregate for replacements or additions to
property, plant, equipment or intangible capital assets;
(k) declared, paid or made or set aside for payment
or making, any dividend or other distribution in respect of its
capital stock or other securities, or directly or indirectly redeemed,
purchased or otherwise acquired any of its capital stock or other
securities;
(l) made any change in any method of accounting or
accounting practice;
(m) paid, loaned or advanced any amount to or in
respect of, or sold, transferred or leased any properties or assets
(real, personal or mixed, tangible or intangible) to, or entered into
any agreement, arrangement or transaction with, any of the officers or
directors of Temple, any affiliates or associates of Temple or any of
their respective officers or directors, or any business or entity in
which any of such persons has any material direct or material indirect
interest, except for compensation to the officers and employees of
Temple at rates not exceeding the rates of compensation during fiscal
1996 and advances to employees in the ordinary course of business for
travel and expense disbursements in accordance with past practice, but
not in excess of $5,000 at any one time outstanding;
(n) agreed, whether in writing or otherwise, to take
any action described in this Section 4.10.
4.11 TAX MATTERS. Temple has duly filed all tax reports and
returns required to be filed by it and has duly paid all taxes and other
charges due or claimed to be due from it by federal, state or local taxing
authorities (including without limitation, those due in respect of its
properties, income, franchises, licenses, sales and payrolls). Since January
26, 1996, Temple has not incurred any tax liabilities other than in the
ordinary course of business; there are no tax liens (other than liens for
current taxes not yet due) upon any properties or assets of Temple (whether
real, personal or mixed, tangible or intangible).
4.12 COMPLIANCE WITH APPLICABLE LAW. Except as set forth in
Schedule 4.7, Temple has in the past duly complied and is presently duly
complying, in the conduct of its business and the ownership of its assets with
all applicable laws, whether statutory or otherwise, rules, regulations,
orders, ordinances, judgments and decrees of all governmental authorities
(federal, state, local or otherwise) (collectively, "Laws"), noncompliance with
which would have a material adverse effect on Temple. Seller has not received
any notice of, or notice of any investigation of, a possible violation of any
applicable Laws, or any other Law or requirement relating to or affecting the
operations or properties of Temple.
4.13 ABSENCE OF QUESTIONABLE PAYMENTS. Neither Temple nor any
of its directors, officers, employees or affiliates has at any time used funds
for any illegal purpose, including without limitation, the making of any
improper political contribution, bribe or kickback.
4.14 LITIGATION. Except as set forth in Schedule 4.14, there
are no claims, actions, suits, proceedings or investigations pending or, to the
knowledge of Seller, threatened by or against, or otherwise affecting Temple at
law or in equity or before or by any federal, state, municipal or other
governmental department, commission, board, agency, instrumentality or
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authority. Seller does not know of any basis for any such claim, action, suit,
proceeding or investigation. No claim, action, suit, proceeding or
investigation set forth in Schedule 4.14, could, if adversely decided, have a
material adverse effect on the condition (financial or otherwise), assets,
liabilities, earnings, prospects or business of Temple.
4.15 INSURANCE. Temple is an insured under adequate fire,
liability, workmen's compensation, health, title and other forms of insurance.
All such policies are valid, outstanding and enforceable policies and will
remain in full force and effect at least through the Closing. Seller has not
been refused any insurance, nor has its coverage been limited, by any insurance
carrier to which it has applied for insurance or with which it has carried
insurance during the last five years.
4.16 PRODUCT WARRANTIES. Except as described on Schedule 4.16,
Temple has not given or made any warranties to third parties with respect to
any products supplied which may still be in effect at any time after the date
hereof, except for warranties imposed by law. Except as described on Schedule
4.16, there have been no claims or investigations made with respect to any
product warranties which have not been fully settled and resolved or any
unresolved warranty claims which have not been adequately reserved against on
the Financial Statements. Temple does not know of any basis for any other
claim or investigation relating to product warranties.
4.17 EMPLOYEES AND FRINGE BENEFIT PLANS.
(a) Schedule 4.17(a) identifies all consulting or
employment agreements and other agreements with individual consultants
or employees to which Temple is a party and which are either currently
effective or will become effective at the Closing Date, as well as any
employee handbooks, policy manuals and job application forms used by
Temple. Copies of all such written agreements have been delivered to
Buyer. Also shown on Schedule 4.17(a) are the names and dates of
hire of each regular employee of Temple and each such person's rate of
compensation and accrued vacation pay. No officer, manager or other
key employee of Temple has notified Temple of an intention to
terminate employment or to seek a material change in his terms of
employment.
(b) Schedule 4.17(b) contains a complete list of
"Plans" consisting of each:
(i) "employee welfare benefit plan," as
defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), that is
maintained or administered by Temple, or to which Temple
contributes, and that covers any employee or former
employee of Temple or under which Temple has any liability
(a "Welfare Plan");
(ii) "employee benefit plan," as defined
in Section 3(3) of ERISA, that is maintained, or
administered by Temple, or to which Temple contributes, in
connection with any trust described in Section 501(c)(9)
of the Internal Revenue Code of 1986, as amended (the
"Code") and that covers any employee or former employee of
Temple or under which Temple has any liability;
(iii) "employee pension benefit plan," as
defined in Section 3(2) of ERISA, that is maintained or
administered by Temple, or to which Temple
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contributes, and that covers any employee or former
employee of Temple or under which Temple has any liability
(a "Pension Plan"); and
(iv) employment, severance or other
similar contract, arrangement or policy (written or oral)
and each plan or arrangement (written or oral) providing
for insurance coverage (including self-insured
arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits,
retirement benefits or 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 that (a) is not a Welfare Plan or Pension Plan,
(b) is entered into, maintained, contributed to or
required to be contributed to, as the case may be, by
Temple or under which Temple has any liability, and (c)
covers any employee or former employee of Temple
(collectively, "Benefit Arrangements").
(c) Except as disclosed in Schedule 4.17(b), Temple
does not contribute to or have any liability to the Pension Benefit
Guaranty Corporation or any other person, plan or entity under or with
respect to (i) a Pension Plan subject to Title IV of ERISA or Section
412 of the Code, (ii) a multiemployer pension plan, as defined in
Section 3(37) of ERISA or (iii) a Welfare Plan providing health or
medical benefits for retired employees.
(d) With respect to the Plans; a copy of each Plan
and any amendment(s) thereto, together with (i) any written
descriptions or summaries thereof, (ii) all trust agreements,
insurance contracts, annuity contracts or other funding instruments,
and (iii) the last two annual reports (IRS Form 5500 Series, together
with all required schedules) prepared in connection with any such Plan
will be made available to Buyer, and if the Plan is intended to be
qualified under Section 401(a) of the Code, the most recent
determination letter reviewed from the Internal Revenue Service (the
"IRS") that the Plan is so qualified. The Plans comply, to the extent
applicable, with the requirements of ERISA and the Code, and any Plan
intended to be qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service (the "IRS") to be so
qualified. All reports and information required by law to be filed
with the United States Department of Labor ("DOL"), or the IRS, or to
plan participants or their beneficiaries with respect to the Plans
have been timely filed or distributed. All statements, notices and
disclosures made on documents or forms required to be filed with the
DOL or the IRS or distributed to participants or to their
beneficiaries have been true and accurate and complete in all
materials respects. With respect to any Welfare Plan, Temple has
complied with any applicable notice and other requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended,
and the regulations thereunder related to health care confirmation
coverage. Neither a Plan nor Temple has incurred any liability,
penalty or tax under Chapter 43 of Subtitle D of the Code or Section
502(i) or 502(d) of ERISA, and there has been no prohibited
transaction (as defined in Section 4975 of the Code or Section 406 of
ERISA) with respect to any of the Plans. Each of the Plans has been
maintained and administered in accordance with its terms and with the
requirements prescribed by any and all statutes, orders, rules and
regulations including, but not limited to, ERISA and the Code which
are applicable to such Plans. No event has occurred for which, and no
condition or set of circumstances exists under which Temple or an
officer or director thereof, or any of the Plans, reasonably could be
subject to any liability, penalty, tax or lost income tax deduction
whether or not assessed, pending or threatened,
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directly or indirectly, under any applicable statute, order or
governmental rules and regulations including, but not limited to,
ERISA and the Code. There are no pending or anticipated claims
against or otherwise involving any of the Plans, and no suit, action
or other litigation (excluding claims for benefits incurred in the
ordinary course of plan activities) has been brought against or with
respect to any of the Plans. All contributions, reserves or premium
payments required to be made as of the date hereof have been made or
are reflected in the Financial Statements. None of the Plans listed
on Schedule 4.17(b) which are Welfare Plans provide for continuing
benefits or coverage after termination or retirement from employment,
except with respect to any "group health plan" as defined in Code
Section 4980B(g) and ERISA Section 607. With respect to any Plan
which is a "group health plan," as so defined, Temple warrants that in
all "qualified events" (including those resulting from the transaction
contemplated by this Agreement) occurring prior to or on the Closing
Date, Temple has or will offer to its eligible employees and their
"qualified beneficiaries" the opportunity to elect continuation
coverage under ERISA Section 602 to the extent required by ERISA
Sections 601-607 and will provide that coverage, if elected, at no
expense to Buyer.
(e) There is no Benefit Arrangement covering any
employee or former employee of Temple that, individually or
collectively, could give rise to the payment of an amount that would
not be deductible pursuant to the terms of Sections 280G or 162 of the
Code.
(f) Neither Temple nor any "affiliate" of Temple (as
defined in ERISA) has ever participated in or withdrawn from a
multiemployer plan as defined in Section 4001(a)(3) of Title IV of
ERISA, and Temple has not incurred and does not owe any liability as a
result of any partial or complete withdrawal by any employer from such
a multi-employer plan as described under Sections 4201, 4203, or 4205
of ERISA.
(g) Except as disclosed on Schedule 4.17(g), no
employee of Temple is obligated under any agreement or judgment that
would conflict with such employee's obligation to use his best efforts
to promote the interests of Temple or would conflict with Temple's
business as conducted or proposed to be conducted. No employee of
Temple is in violation of the terms of any employment agreement or any
other agreement relating to such employee's relationship with any
previous employer and no litigation is pending or threatened with
regard thereto.
4.18 CERTAIN ENVIRONMENTAL MATTERS.
Definitions
"Hazardous Material" is any material or substance that is
prohibited or regulated by any Environmental Law or that has been
designated by any Governmental Authority to be radioactive, toxic,
hazardous or otherwise a danger to health, reproduction or the
environment.
"Governmental Authority" is any local, state, provincial,
federal, or international governmental authority or agency which has
had or now has jurisdiction over any portion of the subject of this
Agreement or any Business Facility of Temple.
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"Business Facility" is any real property including the
land, the improvements thereon, and the ground water and surface water
thereof, that Temple has at any time owned, operated, occupied,
controlled or leased and is transferring to Buyer pursuant to this
Agreement, including the Temple and Victoria facilities currently used
by Temple.
"Disposal Site" is a landfill, disposal agent, waste
hauler or recycler of Hazardous Materials.
"Environmental Laws" are all laws, rules, regulations,
orders, treaties, statutes, and codes promulgated by any Governmental
Authority which prohibit, regulate or control any Hazardous Material
or any Hazardous Materials Activity, including, without limitation,
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, the Resource Recovery and Conservation Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous
Materials Transportation Act, the Clean Water Act, comparable laws,
rules, regulations, orders, treaties, statutes, and codes of other
Governmental Authorities, the regulations and publications promulgated
pursuant to any of the foregoing, and all amendments and modifications
of any of the foregoing now or hereafter enacted.
"Hazardous Material Activity" is the transportation,
transfer, recycling, storage, use, treatment, manufacture,
investigation, removal, remediation, release, exposure of others to,
sale, or distribution of any Hazardous Material or any product
containing a Hazardous Material.
"Environmental Permit" is any approval, permit, license,
clearance or consent required to be obtained from any private person
or any Governmental Authority with respect to a Hazardous Materials
Activity which is or was conducted by Temple.
Environmental Representations: Except as set forth in
Schedule 4.18, Seller hereby represents and warrants that:
(a) Condition of Property: As of the Closing, no
Hazardous Material is present on any Business Facility and to the
knowledge of Seller, no condition currently exists that is reasonably
likely to result in any Hazardous Material present on other property
coming to be present on a Business Facility. Except as set forth in
Schedule 4.18, there are no underground storage tanks, asbestos or
PCBs present on any Business Facility.
(b) Hazardous Materials Activities: To the best of
its knowledge, Temple has conducted all Hazardous Material Activities
relating to Temple in compliance with all applicable Environmental
Laws. To the best of its knowledge, the Hazardous Materials
Activities of Temple prior to the Closing have not resulted in the
exposure of any person to a Hazardous Material in a manner which has
or will cause an adverse health effect to said person.
(c) Permits: Schedule 4.18 accurately describes all
of the Environmental Permits currently held by Temple and relating to
Temple's foodservice business, and to the best of Seller's knowledge,
the Environmental Permits listed on Schedule 4.18 are all of the
Environmental Permits necessary for the continued conduct of any
Hazardous Material Activity of Temple as such activities are currently
being conducted. All such
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Environmental Permits are valid and in full force and effect. Temple
has complied in all material respects with all covenants and
conditions of any Environmental Permit which is or has been in force
with respect to Temple's Hazardous Materials Activities. To the best
knowledge of Seller, no circumstances exist which could cause any
Environmental Permit to be revoked, modified, or rendered
non-renewable upon payment of the permit fee or which could impose
upon Temple the obligation to obtain any additional Environmental
Permit. All Environmental Permits and all other consents and
clearances required by any Environmental Law or any agreement to which
Temple is bound as a condition to the performance and enforcement of
this Agreement, including without limitation, all so-called "RCRA"
environmental clearances required by any Governmental Authority have
been obtained or will be obtained prior to the Closing at no cost to
Buyer.
(d) Environmental Litigation: Except as disclosed on
Schedule 4.18, no action, proceeding, revocation proceeding, amendment
procedure, writ, injunction or claim is pending, or to the best of
Seller's knowledge threatened, concerning or relating to any Business
Facility, any Environmental Permit or any Hazardous Materials Activity
of Temple.
(e) Offsite Hazardous Material Disposal: Temple has
transferred or released Hazardous Materials during the last eight (8)
years only to those Disposal Sites described on Schedule 4.18(e) to be
provided to Buyer; and no action, proceeding, liability or claim
exists or, to the best knowledge of Seller is threatened, against any
Disposal Site or against Temple with respect to any transfer or
release of Hazardous Materials relating to Temple to a Disposal Site.
(f) Environmental Liabilities: Seller is not aware
of any fact or circumstance which could involve Temple in any
environmental litigation or impose upon the Buyer any environmental
liability which could have a material adverse effect on the business
or financial status of Temple.
(g) Reports and Records: Seller has delivered to
Buyer or made available for inspections by Buyer and its agents and
employees all records concerning the Environmental Activities of
Temple and all environmental audits and environmental assessments of
any Business Facility conducted at the request of, or otherwise
available to, Temple. Temple has complied with all environmental
disclosure obligations imposed upon Temple with respect to this
transaction by applicable law.
4.19 CONTRACTS AND COMMITMENTS. Except as set forth in
Schedule 4.19 hereto:
(a) The legal enforceability after the Closing of the
rights of Temple under any of its contracts and any of Parent's
contracts being assigned to Buyer will not be affected in any manner
by the execution and delivery of this Agreement or the consummation of
the transactions contemplated hereby.
(b) All of the contracts to which Temple is a party
or by which it is bound, and any of Parent's contracts being assigned
to Buyer, are in full force and effect, are valid and enforceable in
accordance with their terms, and no condition exists or event has
occurred which, with notice or lapse of time or both, would constitute
a default or a basis for force majeure or other claim of excusable
delay or non- performance thereunder. The terms and conditions of all
such contracts, agreements, or commitments are reasonable and
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customary in the industries and trades in which Temple operates, and
there are no extraordinary terms contained therein.
(c) To the knowledge of Seller, there are no
renegotiations of, or attempts to renegotiate, or outstanding rights
to renegotiate, any material amounts paid or payable to Temple or to
Parent under any of Parent's contracts being assigned to Buyer under
current or completed contracts, agreements, or commitments with any
person or entity having the contractual or statutory right to demand
or require such renegotiation. To the knowledge of Seller, no such
person or entity has made written demand for such renegotiation.
(d) Temple has no sales or purchase commitments which
are in excess of the normal, ordinary and usual capacity or
requirements of its business or which are not terminable on 30 days'
notice.
(e) Except as described in Schedule 4.19, Temple is
not a party to or bound by (i) any outstanding contracts with
officers, employees, agents, consultants, advisors, salesmen, sales
representatives, distributors or dealers that are not cancelable by
Temple on notice of not longer than 30 days and without liability,
penalty or premium, (ii) any agreement or arrangement providing for
the payment of any bonus or commission based on sales or earnings, or
(iii) any agreements that contain any severance or termination pay,
liabilities or obligations.
(f) Except as set forth on Schedule 4.19, Temple is
not a party to any licensing agreement, either as licensor or
licensee.
(g) Temple is not restricted or purported to be
restricted by agreement from carrying on its business anywhere in the
continental United States or Mexico.
4.20 ACCOUNTS RECEIVABLE. All accounts and notes receivable of
Temple at the Closing, whether reflected in the Financial Statements or
otherwise (herein called the "Receivables"), represent sales actually made in
the ordinary course of business consistent with past practice; none of the
Receivables is subject to any counterclaim or set-off other than normal sales
adjustments or allowances consistent with past practice; and all the
Receivables are collectible in the ordinary course of business at the aggregate
amounts thereof, net of any reserve reflected in the Financial Statements.
Following the Closing, Seller and/or Buyer shall apply amounts received from
parties who have Receivables in accordance with their instructions and, in the
event no instructions are given, against the oldest accounts first. Within
five business days after the end of each month following the Closing, Buyer
shall send to Seller an accounting for that month of payments received against
the Receivables. If on the 180th day following the Closing Date an amount of
the Receivables equal to the aggregate amount of the Receivables on the Closing
Balance Sheet (as hereinafter defined) (with no reduction for any reserve for
uncollectibility) have not been collected, Buyer shall have the right to cause
Seller to purchase such unpaid Receivables (or any unpaid portion thereof)
from Buyer in the following manner: Buyer shall certify to Seller the amounts,
names and addresses for each such unpaid Receivable, and Seller shall disburse
to Buyer an amount equal to the aggregate unpaid amount so certified, less the
reserve on the Closing Balance Sheet. Upon receipt of payment from the Seller,
Buyer shall transfer the unpaid Receivables to Seller if so requested by it.
In addition, Seller shall repay to Buyer vendor receivables and disputed vendor
debits at the same time. If Seller does not satisfy this payment obligation,
then Buyer may deduct such payment from the Escrow Amount.
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4.21 ORDERS, COMMITMENTS AND RETURNS. The aggregate of all
accepted and unfilled orders for the sale of merchandise entered into by Temple
does not exceed an amount which can reasonably be expected to be filled in the
ordinary course of business on a schedule which will maintain satisfactory
customer relationships, and the aggregate of all contracts or commitments for
the purchase of products by Temple does not exceed an amount which is
reasonable for its anticipated volumes of business (all of which orders,
contracts and commitments were made in the ordinary course of business). As of
the date of this Agreement, there are no asserted, or if unasserted, to the
knowledge of Temple, sustainable, claims to return merchandise of Temple by
reason of alleged overshipments, defective merchandise, breach of warranty or
otherwise. There is no merchandise in the hands of customers under any
understanding that such merchandise is returnable other than pursuant to the
standard returns policy set forth in Temple's contracts. Seller does not know
or have reason to believe that either the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby will
result in any cancellations or withdrawals of accepted and unfilled orders for
the sale of Temple's merchandise.
4.22 CUSTOMERS AND SUPPLIERS. Schedule 4.22 hereto contains an
accurate and complete list of the names and addresses of the 20 largest
customers, determined by dollar value of sales, to whom Temple has sold or
leased products or services during the past two fiscal years and the 20 largest
suppliers, determined by dollar value of purchases, from whom Temple has
purchased supplies during the past two fiscal years. Except as set forth on
Schedule 4.22, Temple has not received any indication from any customer or
supplier whose name appears on such list (or otherwise has any reason to
believe) that such customer or supplier will not continue as a customer or
supplier of Buyer after the Closing. Except as set forth in Schedule 4.22, no
customer, or group of related customers, accounted for more than 5% of Temple's
revenues for the year ended January 26, 1996 or the fiscal year to date.
4.23 LABOR MATTERS. There are no collective bargaining
agreements in effect between Temple and labor unions or organizations
representing any of Temple's employees. During the past seven years, there has
been no request of Temple for collective bargaining or for an employee election
from any employee, union or the National Labor Relations Board. Except as and
to the extent set forth in Schedule 4.23, (i) Temple is in compliance with all
federal, state and local laws respecting employment and employment practices,
terms and conditions of employment and wages and hours, and is not engaged in
any unfair labor practice; (ii) there is no unfair labor practice complaint
against Temple pending or threatened before the National Labor Relations Board
or the United States Department of Labor; (iii) there is no labor strike,
dispute, slowdown or stoppage in progress or, to Temple's knowledge, threatened
against or involving Temple, (iv) no question concerning representation has
been raised or is threatened respecting the employees of Temple, (v) no
grievance or arbitration proceeding is pending and, to Temple's knowledge, no
claim therefor exists; (vi) no private agreement restricts Temple from
relocating, closing or terminating any of its operations or facilities; and
(vii) Temple has not in the past five years experienced any labor strike,
dispute, slowdown, stoppage or other labor difficulty.
4.24 NO BREACH. Each arrangement (whether evidenced by a
written document or otherwise and of whatever type) referred to in this
Agreement or in any Schedule hereto under which Seller has any material right,
interest or obligation is in full force and effect; there have been no
threatened cancellations thereof nor outstanding disputes thereunder, and
Seller has not breached any provision of, nor does there exist any default in
any material respect under, or event (including the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby)
which is, or with the giving of notice or the passage of time or both would
become, a breach or default in any material respect under the terms of any such
arrangement.
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4.25 INVENTORY. All inventory of Temple, whether reflected in
the Financial Statements or otherwise, is of good and merchantable quality and
is usable and saleable in the ordinary course of business (except for items of
obsolete materials and materials of below standard quality, all of which have
been written down in the Financial Statements to realizable market value or for
which adequate reserves have been provided therein). The present quantities of
all inventory of Temple are reasonable in the present circumstances of its
business. Temple is not under any liability or obligation with respect to the
return of inventory or merchandise in the possession of wholesalers, retailers
or other customers.
4.26 PROFESSIONAL FEES. Except for Chapman Partners LLC, whose
fee will be paid by Seller, Seller has not done anything to cause or incur any
liability or obligation for investment banking, brokerage, finders, agents or
other fees, commissions, expenses or charges in connection with the
negotiation, preparation, execution or performance of this Agreement or the
consummation of the transactions contemplated hereby, and Seller does not know
of any claim by anyone for such a fee, commission, expense or charge.
4.27 CONSENTS AND APPROVALS. Temple has obtained, or will
obtain prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by Seller, which
consents, approvals, authorizations and orders are listed on Schedule 4.27
hereto.
4.28 CORPORATE RECORDS. Temple has delivered or provided to
Buyer for its review true, complete and correct copies of the following items,
as amended and presently in effect, for Temple: (a) Articles of Incorporation,
(b) Bylaws and (c) minute books. The minute books contain a record of all
shareholder and director meetings and actions taken without a meeting from
January 1, 1986 to the date hereof.
4.29 RELATIONSHIPS WITH RELATED PERSONS. During the period
beginning December 31, 1994 through and including the date hereof, Temple does
not own nor has it owned of record or as a beneficial owner, an equity interest
or any other financial or profit interest in any firm, corporation or any other
entity or person which (i) has had business dealings or a material financial
interest in any transaction with Temple, or (ii) which is in competition with
Temple with respect to any line of the products or services of Temple in any
market presently served by Temple.
4.30 FULL DISCLOSURE. Neither this Agreement, nor any
Schedule, exhibit, list, certificate or other instrument and document furnished
or to be furnished by Seller to Buyer pursuant to this Agreement, contains any
untrue statement of a material fact or omits to state any material fact
required to be stated herein or therein or necessary to make the statements and
information contained herein or therein not misleading. Seller has not
withheld from Buyer disclosure of any event, condition or fact which Seller
knows, or has reasonable grounds to know, may materially adversely affect
Seller's assets, prospects or condition (financial or otherwise).
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ARTICLE 5.
REPRESENTATIONS AND WARRANTIES BY BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1. ORGANIZATION AND GOOD STANDING. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Tennessee and has full corporate power and authority to enter into
this Agreement and to carry out the transactions contemplated hereby.
5.2. AUTHORIZATION. The Board of Directors of Buyer has taken
all action required by law, its Charter, its Bylaws and otherwise to authorize
the execution and delivery by Buyer of this Agreement and the consummation by
Buyer of the transactions contemplated hereby.
5.3. VALID AND BINDING AGREEMENT. The Transaction Documents
each constitute, or when executed will constitute, a valid and binding
agreement of Buyer, enforceable against Buyer in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and by general equity principles.
5.4. NO VIOLATION. The execution and delivery of this
Agreement by Buyer does not, and the consummation of the transactions
contemplated hereby will not, (a) violate any provision, or result in the
creation of any lien or security interest under, any agreement, indenture,
instrument, lease, security agreement, mortgage or lien to which Buyer is a
party or by which it is bound; (b) violate any provision of Buyer's Charter or
Bylaws; (c) violate any order, arbitration award, judgment, writ, injunction,
decree, statute, rule or regulation applicable to Buyer; or (d) violate any
other contractual or legal obligation or restriction to which Buyer is subject.
5.5. PROFESSIONAL FEES. Buyer has not done anything to cause
or incur any liability for investment banking, brokerage, finders or agents
fees, commissions, expenses or charges in connection with the negotiation,
preparation, execution and performance this Agreement or the consummation of
the transactions contemplated hereby, and Buyer does not know of any claim by
anyone for such a commission or fee.
5.6. CONSENTS AND APPROVALS. Buyer has obtained, or will
obtain prior to Closing, all consents, approvals, authorizations or orders of
third parties, including governmental authorities, necessary for the
authorization, execution and performance of this Agreement by Buyer.
5.7. FULL DISCLOSURE. Neither this Agreement, nor any
certificate or other instrument or document furnished or to be furnished by
Buyer to Seller pursuant to this Agreement, contains any untrue statement of a
material fact or omits to state a material fact required to be stated herein or
therein or necessary to make the statements and information contained herein or
therein not misleading.
5.8. EMPLOYMENT OFFERS. Buyer will make employment offers to
Temple's employees who are employed by Temple immediately prior to Closing and
will employ effective as of the Closing Date all of such employees who accept
such offers. Buyer will employ all such
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employees for a period of at least sixty (60) days following the Closing,
subject to its right during such sixty (60) day period to terminate any
employee at any time for cause. Except as specifically set forth herein, this
covenant is not to create any right of continued employment and Buyer and
Seller acknowledge that levels of employment following such sixty (60) day
period shall be determined by Buyer based on individual employee's
qualifications and performance and on the business needs of Buyer after
Closing. For each such employee, such employment will be at a rate earned by
such employees as of the Closing Date. Additionally, Buyer shall offer to all
of such employees benefits that are generally comparable to those presently
offered by Temple, considered as a whole. For purposes of determining vesting
and eligibility with respect to employee benefits and company seniority, Buyer
shall give each employee full credit for all the time that such employee was
continuously employed by Seller (or an affiliate of Seller). Buyer shall
extend coverage to such employees who become employed by Buyer and their
dependents under Buyer's existing or new health plans without a waiting period
for eligibility or any exclusion or limitation applicable to any pre-existing
condition of any such employee and their dependents.
ARTICLE 6.
COVENANTS AND AGREEMENTS OF TEMPLE
Temple agrees that from the date hereof until the Closing, and
thereafter if so specified, it will operate the Business in the ordinary course
consistent with past practices and, without limiting the foregoing, to fulfill
the following covenants and agreements unless otherwise consented to by Buyer
in writing:
6.1. CONDUCT OF BUSINESS PENDING THE CLOSING.
(a) Temple will take such commercially reasonable
action as may be necessary to maintain, preserve, renew and keep in
full force and effect the existence, rights and franchises of Temple,
to preserve the business organizations of Temple intact, to keep
available to Buyer Temple's officers and employees, and to preserve
for Buyer the present relationships of Temple with its suppliers and
customers and others having business relationships with it.
(b) Temple will not do or omit to do any act, or
permit any act or omission to act, which may cause a breach of any
contract, commitment or obligation of Parent or Temple, or any breach
of any representation, warranty, covenant or agreement made by Seller
herein.
(c) Temple will duly comply with all laws applicable
to it and its respective business and operations and all laws,
compliance with which is required for the valid consummation of the
transactions contemplated by this Agreement.
(d) Temple will not (i) grant any increase in the
wages or salary of any officer, employee or agent of Temple, except
normal wage or salary increases for employees (other than officers and
other management employees) in the ordinary course of business and
consistent with past practice; (ii) by means of any bonus or pursuant
to any plan or arrangement or otherwise, increase by any amount or to
any extent the benefits or compensation of any such officer, employee
or agent; (iii) enter into any employment agreement, sales agency or
other contract or arrangement with respect to the performance
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of personal services which is not terminable by it without liability
on not more than 30 days notice; (iv) enter into or extend any labor
contract with any hourly-paid employees or any union; or (v) agree to
take any such action.
(e) Temple will not terminate or modify any lease,
license, permit, contract or other agreement to which it is a party.
(f) Temple will not mortgage, pledge or subject to
lien or any other encumbrance, any of the Assets.
(g) Temple will not enter into any transaction
involving more than $25,000 or a commitment extending more than three
months.
(h) Except as set forth in Schedule 4.10, Temple will
not declare, pay or make or set aside for payment or making, any
dividend or other distribution in respect of its capital stock or
other securities, or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock or other securities.
(i) Temple will not enter into any transaction
outside the ordinary course of business.
(j) Temple will continue to enforce its current
employment practices and procedures (including disciplinary
practices).
(k) Temple will not enter into any agreement to do
any of the foregoing.
6.2. NON-SOLICITATION. Prior to the Closing Date, Temple
agrees (a) that it shall, and shall direct and use its best efforts to cause
its directors, officers, employees, advisors, accountants and attorneys (the
"Representatives"), not to initiate, solicit or encourage, directly or
indirectly, any inquiries or the making or implementation of any proposal or
offer with respect to a merger, acquisition, consolidation or similar
transaction involving Seller, or any purchase of all or any significant portion
of the assets or any equity securities of Seller (any such proposal or offer
being hereinafter referred to as an "Acquisition Proposal") or engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort to attempt to make or implement an Acquisition
Proposal; (b) that it will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties other than
Buyer conducted heretofore with respect to any of the foregoing and will take
the necessary steps to inform the individuals or entities referred to above of
the obligations undertaken in this Section 6.2; and (c) that it will notify
Buyer immediately if any such inquiries or proposals are received by, any such
information is requested from, or any such negotiations or discussions are
sought to be initiated or continued with, it. In the event that Seller or its
Representatives directly or indirectly breach this covenant, Seller shall
promptly pay to Buyer the sum of one million dollars ($1,000,000) payable in
immediately available funds (the "Reimbursement Fee") as liquidated damages.
Accordingly, if the Reimbursement Fee shall become due and payable by Seller,
and Seller shall fail to pay such amount when due pursuant to this Section, and
in order to obtain such payment, suit is commenced, Seller shall pay Buyer's
reasonable costs and expenses (including attorney's fees) in connection with
such suit.
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6.3. ACCESS; FURTHER ASSURANCES.
(a) After the execution of this Agreement and
continuing until the Closing, Seller shall permit Buyer and its
counsel, accountants, engineers and other representatives full access
during normal business hours to all of the directors, officers,
facilities, properties, books, contracts, commitments and records of
or relating to Temple or of Seller as they may relate to the Assets
(including without limitation, the right to conduct any physical count
of inventory of Temple or otherwise be present at or participate in
any such occurrence at any time prior to the Closing), provided that
there is no significant disruption of Seller's business activities,
and will furnish Buyer and its representatives during such period with
all such information concerning Temple's affairs and such copies of
such documents relating thereto, as Buyer or its representatives may
request.
(b) At any time and from time to time after the
Closing, at Buyer's request and without further consideration, Seller
will execute and deliver such other instruments of sale, transfer,
conveyance, assignment, and delivery and confirmation and take such
action as the Buyer may reasonably deem necessary or desirable in
order more effectively to transfer, convey and assign to Buyer and to
place Buyer in possession and control of, and to confirm Buyer's title
to, the Assets, and to assist Buyer in exercising all rights and
enjoying all benefits with respect thereto.
6.4. SCHEDULES. Seller shall have the continuing obligation to
supplement or amend promptly the Schedules being delivered pursuant to this
Agreement with respect to any matter hereafter arising or discovered which, if
existing or known at the date of this Agreement, would have been required to be
set forth or described in these Schedules.
6.5. CONFIDENTIALITY. Seller will not disclose to any other
person not an employee of either Seller or Buyer (or a person otherwise
involved in the carrying out of the transactions contemplated by this
Agreement), nor make any public announcement of, the transactions contemplated
by this Agreement prior to the Closing.
6.6. TAXES. Seller and Buyer will each be responsible for, and
hereby agrees to assume and pay, 50% of all sales and similar taxes which may
be due to any jurisdiction or governmental body as a result of the sale and
transfer of the Assets.
6.7. REGULATORY FILINGS. Within ten business days after the
date hereof, Seller will make such filings as may be required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") with
respect to the consummation of the transactions contemplated by this Agreement.
Thereafter, Seller will file or cause to be filed as promptly as practicable
with the United States Federal Trade Commission and the United States
Department of Justice any supplemental information which may be required
pursuant to the HSR Act. Without limiting the generality or effect of the
foregoing, Seller will (i) use reasonable efforts to comply as expeditiously as
possible with all lawful requests of governmental authorities for additional
information and documents pursuant to the HSR Act; (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any agreement with any
governmental authority not to consummate the transactions contemplated by this
Agreement, except with the prior consent of Buyer; and (iii) cooperate with
Buyer and use reasonable efforts to cause the lifting or removal of any
temporary restraining order, preliminary injunction or other judicial or
administrative order which may be entered into in connection with the
transactions contemplated by this Agreement.
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6.8. CONSENTS AND APPROVALS. Seller shall, in a timely,
accurate and complete manner, take all necessary corporate and other action and
use all reasonable efforts to obtain all consents, approvals, permits, licenses
and amendments of agreements required of Seller to carry out the transactions
contemplated in this Agreement and shall provide to Buyer such information as
Buyer may reasonably require to make such filings and prepare such applications
as may be required for the consummation by Buyer of the transactions
contemplated by this Agreement.
6.9. ENVIRONMENTAL REVIEW. Seller will permit Buyer, at
Buyer's expense, to promptly cause an environmental consulting firm to conduct
a Phase I Environmental Audit on a scope reasonably acceptable to Buyer of
Seller's real property included in the Assets. In the event the Phase I
Environmental Audit indicates, in Buyer's reasonable judgment, the necessity
for a Phase II Environmental Audit, Seller will permit Buyer, at Buyer's
expense, to promptly cause such environmental consulting firm to conduct such
an audit. In the event any such audit discloses an environmental condition
that requires remediation, Seller shall remediate such condition prior to
Closing (or as soon thereafter as is reasonably practical) if the cost of such
remediation is reasonably expected to be less than $1,000,000. In the event
the cost of such remediation is reasonably expected to exceed $1,000,000,
Seller shall be entitled, in Seller's sole discretion, to either (i) terminate
this Agreement, or (ii) remediate such condition prior to Closing (or as soon
thereafter as is reasonably practical). Any remediation costs incurred by
Seller pursuant to this Section 6.9 shall reduce, on a dollar-for-dollar basis,
the maximum amount of Seller's indemnification obligations under Section 10.5.
6.10. TITLE INSURANCE AND SURVEY. Within fifteen (15) days
after execution of this Agreement, Seller, at its expense, shall furnish to
Buyer an owner's title insurance commitment issued by a title insurance company
reasonably acceptable to Buyer, which shall show the state of title to the real
property of Seller, and shall require the issuance of a Texas standard owner
policy of Title Insurance in favor of the Buyer with only the standard
preprinted exceptions (not to include a survey exception for encroachments,
protrusions or overlapping of improvements, or an exception for tenants in
possession) and such other exceptions that are applicable to such real
property. Buyer may object to any such exceptions (other than the standard
preprinted exceptions, not to include a survey exception for encroachments,
protrusions or overlapping of improvements, or an exception for tenants in
possession) in writing within thirty (30) days after receipt of such title
commitment; and any exceptions not timely objected to shall be deemed to be
permitted exceptions. If Seller is unable or unwilling to cure any such
objections prior to Closing, Buyer may terminate this Agreement as Buyer's sole
and exclusive remedy. In addition within 15 days prior to the Closing, Seller,
at its expense, shall obtain an as-built survey of the real property of Seller
which shall indicate the exact metes, bounds, and acreage of such real property
and shall show the exact location of all buildings, encroachments, easements,
utility lines, rights-of-way, setback lines and encumbrances affecting such
real property.
6.11. POST-CLOSING ANCILLARY SERVICES. Following the Closing,
Seller agrees to provide certain services to Buyer in exchange for the
consideration provided herein. Seller will provide management information and
reporting services to Buyer for a period of up to 15 months and purchasing
services for up to two months. In exchange therefor, Buyer shall pay Seller an
amount equal to $22,000 per month for the first nine months and $30,000 per
month for six months thereafter for the management information and reporting
services and the current percentage charge for purchasing services. Seller
will cause its affiliates to permit Buyer to use the "Southwest" storage
facility currently used by Seller for up to two years at current volumes.
Buyer shall pay Seller current storage and handling rates for the first 12
months which shall be
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increased by 10% for the succeeding 12 months, in each case payable on a
monthly basis. Seller will also provide Buyer reasonable information and
assistance in connection with Buyer's securing benefits for its employees in
the acquired operations.
6.12. CERTAIN MATTERS WITH RESPECT TO PARENT CUSTOMERS.
Following the consummation of the transactions contemplated hereby, Buyer and
Seller agree that Buyer will provide food services to the Parent customers
listed on Schedule 6.12 hereto, subject to the applicable customer's consent.
ARTICLE 7.
COVENANTS AND AGREEMENTS OF BUYER
Buyer agrees that from the date hereof until the Closing, unless
otherwise consented to by Seller in writing, it will fulfill the following
covenants and agreements:
7.1. CONFIDENTIALITY. In the event the transactions
contemplated by this Agreement are not consummated, for any reason, Buyer
promptly will return to Seller all records and information provided to Buyer
from Seller, and Buyer will treat all such records and information as
confidential, and Buyer and Seller agree that previous confidentiality
agreements shall remain in effect. Buyer agrees to consult with Seller before
issuing any press release with respect to the transactions contemplated by this
Agreement.
7.2. TAXES. Buyer and Seller will each be responsible for, and
hereby agrees to assume and pay, 50% of all sales and similar taxes which may
be due to any jurisdiction or governmental body as a result of the sale and
transfer of the Assets.
7.3. REGULATORY FILINGS. Within ten business days after the
date hereof, Buyer will make such filings as may be required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") with
respect to the consummation of the transactions contemplated by this Agreement.
Thereafter, Buyer will file or cause to be filed as promptly as practicable
with the United States Federal Trade Commission and the United States
Department of Justice any supplemental information which may be required
pursuant to the HSR Act. Without limiting the generality or effect of the
foregoing, Buyer will (i) use reasonable efforts to comply as expeditiously as
possible with all lawful requests of governmental authorities for additional
information and documents pursuant to the HSR Act; (ii) not (A) extend any
waiting period under the HSR Act or (B) enter into any agreement with any
governmental authority not to consummate the transactions contemplated by this
Agreement, except with the prior consent of Seller; and (iii) cooperate with
Seller and use reasonable efforts to cause the lifting or removal of any
temporary restraining order, preliminary injunction or other judicial or
administrative order which may be entered into in connection with the
transactions contemplated by this Agreement.
7.4. CONSENTS AND APPROVALS. Buyer shall, in a timely,
accurate and complete manner, take all necessary corporate and other action and
use all reasonable efforts to obtain all consents, approvals, permits, licenses
and amendments of agreements required of Buyer to carry out the transactions
contemplated in this Agreement and shall provide to Seller such information as
Seller may reasonably require to make such filings and prepare such
applications as may be required for the consummation by Seller of the
transactions contemplated by this Agreement.
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ARTICLE 8.
CONDITIONS TO BUYER'S OBLIGATIONS
All obligations of Buyer hereunder are subject to the fulfillment,
prior to or at the Closing, of each of the following conditions:
8.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by Seller in this Agreement and the statements contained in the
Schedules attached hereto or in any instrument, list, certificate or writing
delivered by Seller pursuant to this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of the Closing.
8.2. PERFORMANCE BY SELLER. Seller shall have performed and
complied with all covenants, agreements, obligations and conditions required by
this Agreement to be so complied with or performed.
8.3. CERTIFICATES OF SELLER. Seller shall have delivered to
Buyer a certificate, dated the Closing Date, certifying as to the fulfillment
of the conditions specified in Sections 8.1 and 8.2 hereof.
8.4. OPINION OF COUNSEL FOR SELLER. Buyer shall have received
an opinion of Seller's counsel, Kuperman, Orr, Mouer & Albers, P.C., dated the
Closing Date, in substantially the form of Schedule 8.4 hereto.
8.5. CONSENTS AND APPROVALS. Buyer shall have received from
Seller executed counterparts of the consents referred to in Section 4.27 hereof
and all other consents required, for the consummation of the transactions
contemplated hereby, all of which consents shall be in form and substance
reasonably satisfactory to Buyer. Without limiting the generality of the
foregoing, all applicable waiting periods under the HSR Act shall have expired.
8.6. LITIGATION. On the date of the Closing, neither Parent
nor Temple shall be a party to, nor will there otherwise be pending or
threatened, any judicial, administrative, or other action, proceeding or
investigation which, if adversely determined might, in the reasonable opinion
of Buyer, have a material adverse effect upon Temple, Buyer or the transactions
contemplated hereby; and there shall be no lawsuits pending against Seller or
Buyer seeking to enjoin, prohibit, restrain or otherwise prevent the
transactions contemplated hereby.
8.7. NON-COMPETITION AGREEMENT. Buyer shall have received from
Seller a Non-Competition Agreement substantially in the form of Exhibit D
hereto.
8.8. ESCROW AGREEMENT. Buyer and Seller shall have entered
into the Escrow Agreement substantially in the form of Exhibit A hereto.
8.9. MASTER SUBLEASE. Buyer and Seller shall have entered into
the Master Sublease substantially in the form of Exhibit E hereto.
8.10. LICENSE AGREEMENT. Buyer and Seller shall have entered
into the License Agreement substantially in the form of Exhibit F hereto.
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8.11. NO MATERIAL ADVERSE CHANGE; DUE DILIGENCE REVIEW. Since
the date of this Agreement, there shall not have been any circumstance,
development, state of fact or matter which has, or would reasonably be expected
to have, a material adverse effect in respect of the business, operations,
assets, financial condition or results, or prospects in respect of Temple. In
the event that during the period from the date of this Agreement until Closing,
Buyer in good faith reasonably determines not to proceed with the transactions
contemplated by this Agreement for one of the following reasons, then Buyer may
terminate this Agreement by written notice thereof to Seller, in which case, no
party will have any obligations or liabilities in respect to this Agreement
except as set forth in Section 7.1 and 13.1 hereof: (i) the Audited Financial
Statements shall differ in any material adverse respect from the Unaudited
Financial Statements with respect to the results of operations or financial
condition of Temple; (ii) the environmental review described in Section 6.9
shall reveal a problem which Seller is unwilling or unable to remediate prior
to or after Closing; or (iii) Buyer shall not be reasonably satisfied that the
condition of the improvements to the real property is suitable for conducting a
foodservice business.
8.12. CLOSING BALANCE SHEET. Within 45 days after Closing,
Seller shall deliver to Buyer an audited closing balance sheet for the Assets
as of the Closing (the "Closing Balance Sheet"). The Closing Balance Sheet
shall be prepared in accordance with GAAP consistently applied with the
accounting principles used to prepare the Audited Financial Statements.
ARTICLE 9.
CONDITIONS TO SELLER'S OBLIGATIONS
All obligations of Seller under this Agreement are subject to the
fulfillment, prior to or at the Closing, of each of the following conditions:
9.1. REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Buyer in this Agreement shall be true when made and at
and as of the time of the Closing as though such representations and warranties
were made at and as of such date.
9.2. PERFORMANCE. Buyer shall have performed and complied with
all agreements, obligations and conditions required by this Agreement to be so
complied with or performed.
9.3. OFFICER'S CERTIFICATE. Buyer shall have delivered to
Seller a Certificate of the President of Buyer, dated the Closing Date,
certifying as to the fulfillment of the conditions specified in Sections 9.1
and 9.2 hereof.
9.4. OPINION OF COUNSEL FOR BUYER. Seller shall have received
an opinion of Buyer's counsel, Bass, Berry and Sims PLC, dated the Closing
Date, in substantially the form of Schedule 9.4 hereto.
9.5. APPROVALS. All applicable waiting periods under the HSR
Act shall have expired.
9.6. MASTER SUBLEASE. Buyer and Seller shall have entered into
the Master Sublease substantially in the form of Exhibit E hereto.
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9.7. LICENSE AGREEMENT. Buyer and Seller shall have entered
into the License Agreement substantially in the form of Exhibit F hereto.
ARTICLE 10.
INDEMNIFICATION
10.1. INDEMNIFICATION BY SELLER. Seller hereby agrees to
defend, indemnify and hold harmless Buyer, each fiduciary of Buyer's employee
benefit plans and each of Buyer's shareholders, affiliates, officers,
directors, employees, agents, successors and assigns ("Buyer's Indemnified
Persons") for, from and against each claim, loss, liability, cost and expense
(including without limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors) (collectively,
"Losses"), directly or indirectly relating to, resulting from or arising out
of:
(a) Any untrue representation, misrepresentation,
breach of warranty or nonfulfillment of any covenant, agreement or
other obligation by or of Seller contained herein, any Schedule hereto
or in any certificate, document or instrument delivered to Buyer
pursuant hereto.
(b) Any tax liability of Seller not previously paid,
or for which adequate reserves have not been established in the
Financial Statements which may at any time be asserted or assessed
against it for any event or period prior to the Closing Date
(regardless of whether the possibility of the assertion or assessment
of any such tax liability shall have been disclosed to Buyer at or
prior to the Closing).
(c) Any cost, expense or liability incurred by Buyer
related to the release of any Hazardous Material into the soil or
groundwater of, or originating from, any Business Facility prior to
the Closing Date, or any Hazardous Materials Activity occurring prior
to the Closing Date.
(d) Any cost, expense or liability resulting from any
and all products liability actions, suits, proceedings, assessments,
judgments, claims, costs and expenses including, without limitation,
legal fees and expenses incidental to any of the foregoing which arise
out of or are based on acts or omissions occurring prior to the
Closing. The phrase "products liability" shall mean any and all
claims, whether based on strict liability, negligence or warranty, by
any party alleging the sale, transfer or delivery by Seller of any
product in a defective or dangerous condition which results in harm or
injury to any user, person with whom Seller has dealt or others,
whether such harm or injury is personal injury, property damage or
economic loss.
(e) Any liability or cost incurred by Buyer for
refunds to customers because of returned goods (net of recoverable
costs) or warranty claims in connection with goods sold by Seller in
excess of the reserve established for warranty claims in the Financial
Statements.
(f) Any cost, expense, or liability resulting from
Seller's operation of Temple's foodservice business before Closing.
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(g) Any other Loss incidental to any of the foregoing.
10.2. TIME LIMITATION; SELLER. If the Closing occurs, Seller
will have no liability with respect to any representation or warranty, or
covenant or obligation to be performed and complied with prior to the Closing
Date, unless on or before that date which is one year from the Closing Date,
Buyer notifies Seller of a Loss specifying the factual basis of that Loss in
reasonable detail to the extent then known by Buyer.
10.3. INDEMNIFICATION THRESHOLD; SELLER. Seller will have no
liability with respect to the matters described in Section 10.1 until the total
of all Losses with respect to such matters exceeds $100,000 (the "Seller's
Indemnification Threshold"). Once Buyer's Losses equal or exceed Seller's
Indemnification Threshold, Buyer shall be entitled to recover such $100,000 as
comprises Seller's Indemnification Threshold. This Section 10.3 shall not
apply to any breach of Seller's representations and warranties of which Seller
had actual knowledge at any time prior to the date on which such representation
and warranty is made or any intentional breach by Seller of any covenant or
obligation.
10.4. LIMITATIONS ON AMOUNT; SELLER. Seller shall be liable to
Buyer, with respect to the matters described in clauses (a), (b), (d), (e), (f)
and (g) (to the extent that amounts payable pursuant to paragraph (g) relate to
the aforementioned clauses) of Section 10.1 in an amount not exceeding
$3,000,000, for any Losses sustained by Buyer of which Buyer gives notice to
Seller on or before that date which is six months from the Closing Date, and in
an amount not exceeding $1,000,000, for any Losses sustained by Buyer of which
Buyer gives notice to Seller from that date which is six months after the
Closing Date to one year after the Closing Date. Seller shall not be liable
for such Loss if Buyer does not give notice within the applicable time period.
10.5. SPECIAL RULES WITH RESPECT TO ENVIRONMENTAL MATTERS.
Notwithstanding the foregoing, with respect to any Losses of Buyer under
Section 10.1.(c) or any breach of or any misrepresentation in Section 4.18,
Seller shall indemnify Buyer for amounts which in the aggregate do not exceed
$6,000,000, less all amounts paid to Buyer pursuant to Section 10.4, and by
Seller pursuant to Section 6.9, provided that Buyer gives Seller notice of such
Loss on or before that date which is three years from the Closing Date, and
Seller shall not be liable for any such Loss described in this Section 10.5 for
which Buyer does not give Seller notice within such three year period.
10.6 INDEMNIFICATION BY BUYER. Buyer hereby agrees to defend,
indemnify and hold harmless Seller, and shall reimburse Seller for, from and
against Losses directly or indirectly relating to, resulting from or arising
out of:
(a) Any untrue representation, misrepresentation,
breach of warranty or nonfulfillment of any covenant, agreement or
other obligation by Buyer contained herein or in any certificate,
document or instrument delivered to Seller pursuant hereto.
(b) Any cost, expense or liability incurred by Seller
related to the release of any Hazardous Material into the soil or
groundwater of, or originating from, any Business Facility after the
Closing Date, or any Hazardous Materials Activity, in either case
which comes into existence after the Closing Date and which did not
exist on or prior to the Closing Date.
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(c) Any cost, expense or liability resulting from any
and all products liability actions, suits, proceedings, assessments,
judgments, claims, costs and expenses including, without limitation,
legal fees and expenses incidental to any of the foregoing which arise
out of or are based on acts or omissions of Buyer on or after the
Closing Date. The phrase "products liability" shall mean any and all
claims, whether based on strict liability, negligence or warranty, by
any party alleging the sale, transfer or delivery by Buyer of any
product in a defective or dangerous condition which results in harm or
injury to any user, person with whom Buyer has dealt or others,
whether such harm or injury is personal injury, property damage or
economic loss.
(d) Any cost, expense or liability resulting from
Buyer's operation of Temple's foodservice business after Closing.
(e) Any cost, expense or liability resulting from or
arising in connection with Buyer's use of Temple's name or trademarks
following the Closing.
(f) Any other Loss incidental to the foregoing.
10.7 TIME LIMITATION; BUYER. If the Closing occurs, Buyer will
have no liability with respect to any representation or warranty or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before that date which is one year from the Closing Date, Seller notifies
Buyer of a Loss specifying the factual basis of that Loss in reasonable detail
to the extent then known by Seller.
10.8 INDEMNIFICATION THRESHOLD; BUYER. Buyer will have no
liability with respect to the matters described in Section 10.6, until the
total of all Losses with respect to such matters exceeds $100,000 (the "Buyer's
Indemnification Threshold"). Once Seller's Losses exceed Buyer's
Indemnification Threshold, Seller shall be entitled to recover such $100,000 as
comprises Buyer's Indemnification Threshold. This Section 10.8 shall not apply
to any breach of Buyer's representations and warranties of which Buyer had
actual knowledge at any time prior to the date on which such representation and
warranty is made and any intentional breach by Buyer of any covenant or
obligation.
10.9 LIMITATION ON AMOUNT; BUYER. Buyer shall be liable to
Seller with respect to the matters described in Section 10.6 in an amount not
exceeding $3,000,000 for any Losses sustained by Seller of which Seller gives
notice to Buyer on or before that date which is six months from the Closing
Date, and in an amount not exceeding $1,000,000 for any Losses sustained by
Seller of which Seller gives notice to Buyer from that date which is six months
after the Closing Date to one year after the Closing Date. Buyer shall not be
liable for such Loss if Seller does not give notice within the applicable time
period.
10.10 SPECIAL RULES WITH RESPECT TO ENVIRONMENTAL AND NAME USE
MATTERS. Notwithstanding the foregoing, with respect to any Losses of Seller
under Section 10.6.(b), Buyer shall indemnify Seller for amounts which in the
aggregate do not exceed $10,000,000, less all amounts paid to Seller pursuant
to Section 10.9. Notwithstanding the foregoing, with respect to any Losses of
Seller under Section 10.6.(e), Buyer shall indemnify Seller for all such
amounts, provided that Seller gives Buyer notice of such Loss on or before that
date which is six (6) years after the Closing Date, and Buyer shall not be
liable for any such Loss described in this sentence for which Seller does not
give Buyer notice within such six year period.
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10.11 PROCEDURE. The indemnified party shall promptly notify
the indemnifying party of any claim, demand, action or proceeding for which
indemnification will be sought under Sections 10.1 or 10.6 of this Agreement,
and, if such claim, demand, action or proceeding is a third party claim,
demand, action or proceeding, the indemnifying party will have the right at its
expense to assume the defense thereof using counsel reasonably acceptable to
the indemnified party. The indemnified party shall have the right to
participate, at its own expense, with respect to any such third party claim,
demand, action or proceeding. In connection with any such third party claim,
demand, action or proceeding, Buyer and Seller shall cooperate with each other
and provide each other with access to relevant books and records in their
possession. No such third party claim, demand, action or proceeding shall be
settled without the prior written consent of the indemnified party. If a firm
written offer is made to settle any such third party claim, demand, action or
proceeding and the indemnifying party proposes to accept such settlement and
the indemnified party refuses to consent to such settlement, then: (i) the
indemnifying party shall be excused from, and the indemnified party shall be
solely responsible for, all further defense of such third party claim, demand,
action or proceeding; and (ii) the maximum liability of the indemnifying party
relating to such third party claim, demand, action or proceeding shall be the
amount of the proposed settlement if the amount thereafter recovered from the
indemnified party on such third party claim, demand, action or proceeding is
greater than the amount of the proposed settlement.
ARTICLE 11.
SURVIVAL OF REPRESENTATIONS
11.1. SURVIVAL OF REPRESENTATIONS. All representations,
warranties, covenants and agreements by the parties contained in this Agreement
shall survive the Closing for a period of one year, except that Seller's
representations and warranties made pursuant to Section 4.18 shall survive the
Closing for a period of three years.
11.2. STATEMENTS AS REPRESENTATIONS. All statements contained
in any certificate, Schedule, list, document or other writing delivered
pursuant hereto or in connection with the transactions contemplated hereby
shall be deemed representations and warranties for all purposes of this
Agreement.
11.3. REMEDIES CUMULATIVE. Unless specifically provided
otherwise, the remedies provided herein shall be cumulative and shall not
preclude the assertion by any party hereto of any other rights or the seeking
of any other remedies against the other party hereto.
ARTICLE 12.
TERMINATION OF AGREEMENT
12.1. TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) By mutual agreement of Seller and Buyer.
(b) By Buyer, if there has been a material violation
or breach by Seller of any of the agreements, representations or
warranties contained in this Agreement
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which has not been waived in writing, or if any of the conditions set
forth in Article VIII hereof have not been satisfied by the Closing or
have not been waived in writing by Buyer.
(c) By Buyer on forty-eight (48) hours written notice
in the event of a material adverse change in Seller's foodservice
business or the value of the Assets for any reason, including without
limitation, Seller's filing of a petition under Chapter 7 or 11 of the
Bankruptcy Code or similar Law.
(d) By Seller, if there has been a material violation
or breach by the Buyer of any of the agreements, representations or
warranties contained in this Agreement which has not been waived in
writing, or if any of the conditions set forth in Article IX hereof
have not been satisfied by the Closing or have not been waived in
writing by Seller.
(e) By either Buyer or Seller if the transactions
contemplated by this Agreement shall not have been consummated on or
before February 28, 1997.
(f) By either Buyer or Seller if the other makes an
assignment for the benefit of creditors, files a voluntary petition in
bankruptcy or seeks or consents to any reorganization or similar
relief under any present or future bankruptcy act or similar law, or
is adjudicated a bankrupt or insolvent, or if a third party commences
any bankruptcy, insolvency, reorganization or similar proceeding
involving the other.
(g) By Seller pursuant to Section 6.9.
12.2. LIABILITIES OF THE PARTIES. In the event of the
termination of this Agreement by any party hereto pursuant to this Section 12,
the parties hereto shall have no liability under this Agreement of any nature
whatsoever (other than pursuant to this Section 12) to the other parties hereto
(including without limitation, any liability for damages or for the costs and
expenses incurred in connection with the negotiation of this Agreement), unless
any party is in default under its obligations under this Agreement, in which
event the party in default shall be liable to the other parties for such
default, and such non-defaulting parties shall be entitled to any and all
remedies available at Law or in equity or under this Agreement. In the event
that a condition precedent to the obligations of a party hereto is not
satisfied, nothing herein shall be deemed to require any such party to
terminate this Agreement rather than to waive such condition precedent and
proceed with the Closing.
ARTICLE 13.
MISCELLANEOUS
13.1. EXPENSES.
(a) Except as set forth in (b), all fees and expenses
incurred by Seller, including without limitation legal fees and
expenses, in connection with this Agreement will be borne by Seller
and all fees and expenses incurred by Buyer, including without
limitation, legal fees and expenses, in connection with this Agreement
will be borne by Buyer. Filing fees incurred in connection with any
filing under the HSR Act shall be paid one-half by Seller and one-half
by Buyer.
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(b) In the event Seller incurs expenses as a result
of the preparation of audited Financial Statements for the Assets,
Buyer agrees to split such costs with Seller on a 50/50 basis. Any
amount payable hereunder by Buyer shall be paid in cash at Closing.
13.2. FURTHER ASSURANCES. Seller and Buyer agree that they
will, from time to time on or after the Closing Date when so requested by the
other, perform, execute, acknowledge, or deliver or cause to be performed,
executed, acknowledged or delivered, all such further acts, deeds, assignments,
transfers, conveyances, documents, instruments and assurances as may be
reasonably necessary or advisable to carry out the provisions of this Agreement
or any related document or to effectuate the consummation of any transactions,
including without, limitation, putting Buyer in possession and operating
control of the Assets and the business of Temple. The parties hereto further
agree that so long as any books, records and files are retained by Temple with
respect to the Assets or Temple's business or any books, records and files
delivered under this Agreement to Buyer (to the extent such books, records and
files relate to the Assets or Temple's business prior to the Closing Date)
remain in existence and available, each party, at its expense and upon prior
notice to the other party, shall have the right to inspect and make copies of
the same at any time during normal business hours for any proper purpose.
13.3. BULK TRANSFER. The parties hereby waive applicable
provisions of the Uniform Commercial Code (as enacted in Texas) relating to
bulk transfers. Seller represents that it has paid or will pay on or before
the Closing all debts due and payable to its creditors in respect of the
Assets, which debts are not assumed and payable by Buyer as set forth herein,
and the non-payment of which would result in a lien on the Assets. Seller
hereby agrees to indemnify and hold harmless Buyer from and against any and all
liability to creditors of Seller arising from transactions which have occurred
prior to the Closing unless specifically assumed by the Buyer herein.
13.4. ASSIGNABILITY; PARTIES IN INTEREST.
(a) Buyer may assign any or all of its rights
hereunder to any affiliate or any direct or indirect subsidiary of
Buyer, and Buyer shall advise Seller of any such assignment and shall
designate such party as the assignee and transferee of the securities
purchased. Any such assignee shall assume all of Buyer's duties,
obligations and undertakings hereunder, but Buyer and any other
assignor shall remain jointly and severally liable thereunder.
(b) Seller may not assign, transfer or otherwise
dispose of any of its rights hereunder without the prior written
consent of Buyer.
(c) All the terms and provisions of this Agreement
shall be binding upon, shall inure to the benefit of and shall be
enforceable by the respective heirs, successors, assigns and legal or
personal representatives of the parties hereto.
13.5. ENTIRE AGREEMENT; AMENDMENTS. This Agreement, including
the exhibits, Schedules, lists and other documents and writings referred to
herein or delivered pursuant hereto, which form a part hereof, contains the
entire understanding of the parties with respect to its subject matter. There
are no restrictions, agreements, promises, warranties, covenants or
undertakings other than those expressly set forth herein or therein. This
Agreement supersedes
32
<PAGE> 38
all prior agreements and understandings between the parties with respect to its
subject matter. This Agreement may be amended only by a written instrument
duly executed by all parties or their respective heirs, successors, assigns or
legal personal representatives. Any condition to a party's obligations
hereunder may be waived but only by a written instrument signed by the party
entitled to the benefits thereof. The failure or delay of any party at any
time or times to require performance of any provision or to exercise its rights
with respect to any provision hereof, shall in no manner operate as a waiver of
or affect such party's right at a later time to enforce the same.
13.6. HEADINGS. The section and paragraph headings contained in
this Agreement are for reference purposes only and shall not affect in any way
the meaning or interpretations of this Agreement.
13.7. SEVERABILITY. The invalidity of any term or terms of this
Agreement shall not affect any other term of this Agreement, which shall remain
in full force and effect.
13.8. NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
If to Seller:
Jim Kent, Senior Vice President
Special Divisions
McLane Company, Inc.
4747 McLane Parkway
P.O. Box 6115
Temple, Texas 76503-6115
with a copy to:
Len E. Mewhinney
McLane Company, Inc.
Post Office Box 6115
4747 McLane Parkway
Temple, Texas 76503
If to Buyer:
Performance Food Group Company
6800 Paragon Place, Suite 500
Richmond, Virginia 23230
Attn: Roger Boeve
33
<PAGE> 39
with a copy to:
Bass, Berry & Sims PLC
2700 First American Center
Nashville, Tennessee 37238
Attn: F. Mitchell Walker, Jr.
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
13.9. GOVERNING LAW. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas,
without regard to its conflict of laws rules.
13.10. COUNTERPARTS. This Agreement may be executed
simultaneously in one or more counterparts, with the same effect as if the
signatories executing the several counterparts had executed one counterpart,
provided, however, that the several executed counterparts shall together have
been signed by Buyer and Seller. All such executed counterparts shall together
constitute one and the same instrument.
34
<PAGE> 40
IN WITNESS WHEREOF, this Agreement has been duly executed and
delivered by the duly authorized officers of Buyer and by Seller on the date
first above written.
BUYER:
PERFORMANCE FOOD GROUP COMPANY,
a Tennessee corporation
By: /s/ Roger L. Boeve
-----------------------------------
Title: Executive Vice President
--------------------------------
SELLER:
McLANE FOODSERVICE--TEMPLE, INC.,
a Texas corporation
By: /s/ James L. Kent
-----------------------------------
Title: Sr. V.P. Special Divisions
--------------------------------
McLANE COMPANY, INC.
a Texas corporation
By: /s/ James L. Kent
-----------------------------------
Title: Sr. V.P. Special Divisions
--------------------------------
35
<PAGE> 41
AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS AMENDMENT (the "Amendment") is entered into as of the 29th day of
December 1996, by and among Performance Food Group Company, a Tennessee
corporation ("PFG"), McLane Company, Inc., a Texas corporation ("Parent"), and
McLane Foodservice -- Temple, Inc., a Texas corporation ("McLane").
WHEREAS, PFG, Parent and Temple are all parties to that certain Asset
Purchase Agreement (the "Agreement") dated October 22, 1996, and the parties
thereto desire to amend the Agreement.
NOW, THEREFORE, the parties hereto hereby agree to amend Section 11.1
of the Agreement to read in its entirety as follows:
"11.1 SURVIVAL OF REPRESENTATIONS. All representations,
warranties, covenants and agreements by the parties contained in this Agreement
shall survive the Closing for a period of one year, except that Seller's
representations and warranties made pursuant to Section 4.18 shall survive the
Closing for a period of three years and the indemnity obligations made pursuant
to Sections 10.5 and 10.10 shall survive the Closing for a period of six
years."
IN WITNESS WHEREOF, the undersigned have executed this Amendment as of
the date first set forth above.
PERFORMANCE FOOD GROUP COMPANY
By: /s/ Roger L. Boeve
-----------------------------------
Title: Executive Vice President
--------------------------------
MCLANE COMPANY, INC.
By: /s/ Len E. Mewhinney
-----------------------------------
Title: Vice President
--------------------------------
MCLANE FOODSERVICE -- TEMPLE, INC.
By: /s/ Len E. Mewhinney
-----------------------------------
Title: Vice President
--------------------------------
<PAGE> 42
PERFORMANCE FOOD GROUP OF TEXAS, L.P.
By: Performance Food Group Company of
Texas, Inc., its general partner
By: /s/ Johnny Baird
-----------------------------------
Title: President
--------------------------------
<PAGE> 1
EXHIBIT 10
ESCROW AGREEMENT
THIS ESCROW AGREEMENT (the "Agreement") is made and entered into this
29th day of December, 1996, by and among Performance Food Group Company, a
Tennessee corporation ("PFG"), McLane Foodservice-Temple, Inc., a Texas
corporation ("Temple"), McLane Company, Inc., a Texas corporation ("Parent")
(Temple and Parent are collectively the "Seller"), and First Union National
Bank of Virginia in Richmond, Virginia, a national banking association (the
"Escrow Agent").
WHEREAS, pursuant to an Asset Purchase Agreement dated October 22,
1996, by and between PFG and Seller (the "Asset Purchase Agreement"),
Performance Food Group of Texas, L.P., a Texas limited partnership ("PFG of
Texas"), as PFG's assignee under the Asset Purchase Agreement, shall purchase
from Seller substantially all of the assets of Temple and certain assets of
Parent (PFG and PFG of Texas are referred to collectively herein as the
"Buyer");
WHEREAS, Section 2.2(b) of the Asset Purchase Agreement requires that
Four Million Dollars ($4,000,000) of the Purchase Price (as that term is
defined in the Asset Purchase Agreement), together with any and all interest
and/or income accruing thereon, be held in escrow (the "Escrow Amount") until
satisfaction of the terms and conditions set forth in Article 10, Section 2.3
and Section 4.20 of the Asset Purchase Agreement; and
WHEREAS, Buyer and Seller desire to appoint Escrow Agent to hold,
invest, and disburse the Escrow Amount in accordance with the terms and
conditions hereinafter set forth, and Escrow Agent has agreed to act as such.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto hereby agree as follows:
11. Delivery of Proceeds. Contemporaneous with the execution of
this Agreement, Buyer will deliver at Closing (as that term is defined in the
Asset Purchase Agreement) to Escrow Agent for deposit into a special account
the Escrow Amount. Escrow Agent hereby acknowledges receipt of the Escrow
Amount.
12. Deposit of Escrow Amount. Upon receipt of the Escrow Amount
in immediately-available funds from Buyer, Escrow Agent shall invest the Escrow
Amount in accordance with the written instructions jointly delivered by Buyer
and Seller. If no joint written instructions are received by Escrow Agent,
Escrow Agent may deposit $3,000,000 of the Escrow Amount into interest bearing
government securities or a money market fund consisting of government
securities having a maturity not exceeding the Interim Release Date (as defined
herein) and may deposit the remainder of the Escrow Amount into interest
bearing government securities having a maturity not exceeding the Final Release
Date (as defined herein).
13. Holding and Distribution of Escrow Amount. Escrow Agent will
hold the Escrow Amount until it has been directed in accordance with the
following:
<PAGE> 2
(a) The Escrow Agent shall release all or part of the
Escrow Amount to Buyer from time to time (i) on receipt of and in
accordance with (A) joint written instructions purportedly signed by
authorized officers of Buyer and Seller or (B) an order or decree or
final and non-appealable judgment of a court of competent jurisdiction
or (ii) as provided below.
(b) On April 25, 1997, the Escrow Agent shall release
from the Escrow Account the balance of the Escrow Account less
$1,000,000 (including any and all interest and/or income accrued on
such released amount) to Seller, subject to the provisions of Section
3(c) below (the "Interim Release Date"). On that date which is one
year from the Closing Date, the Escrow Agent shall release the
remaining balance of the Escrow Amount (which includes any and all
interest and/or income accrued on such amount) to Seller, subject to
the provisions of Section 3(c) below (the "Final Release Date").
(c) Notwithstanding anything to the contrary contained
herein, if on or before the Interim Release Date or the Final Release
Date, the Escrow Agent has received from Buyer a signed and completed
notice in the form of Exhibit A hereto ("Claim Notice") specifying (i)
the amount claimed by Buyer as owing to Buyer under the Asset Purchase
Agreement and designated in the Claim Notice as the "Claimed
Indemnification Amount" and (ii) in the case of the Interim Release
Date, that the Claimed Indemnification Amount exceeds the Escrow
Amount after deducting the amount proposed to be repaid under Section
3(b), the Escrow Agent shall continue to hold and retain such Claimed
Indemnification Amount until release is otherwise required pursuant to
Paragraphs 3(a) or 3(b) above.
(d) Promptly on receipt from Buyer of the Claim Notice,
the Escrow Agent will forward a copy of the Claim Notice to Seller by
registered or certified mail, postage prepaid, return receipt
requested, to Seller's address set forth in Section 6(b) hereof.
Unless Seller delivers to the Escrow Agent a signed notice in the form
of Exhibit B hereto ("Contest Notice"), which must be received by
Escrow Agent within thirty (30) days after the date of Seller's
receipt of the Claim Notice, Seller shall be deemed to have waived any
and all right to contest such claim, and promptly thereafter the
Escrow Agent shall, without further instructions, deliver to Buyer the
Claimed Indemnification Amount. If, prior to making such payment to
Buyer, Escrow Agent shall have received written notice from Buyer that
such indemnification has been satisfied by Seller outside of this
Escrow Agreement, Escrow Agent shall withhold such payment. If the
Escrow Agent duly receives a Contest Notice, it shall endeavor to send
a copy of such Contest Notice to Buyer within fifteen days of its
receipt, to Buyer's address set forth in Section 6(a) hereof.
(e) In the event that Seller shall deliver a Contest
Notice in accordance with Section 3(d) above, Seller and Buyer shall
attempt in good faith to agree upon the rights of the respective
parties with respect to each of the claims which are the subject of
the related Claim Notice. If Seller and Buyer should so agree, a
memorandum setting forth such agreement shall be prepared and signed
by both parties and shall be furnished to the Escrow Agent. The
Escrow Agent shall be entitled to rely on any such memorandum and
distribute funds from the Escrow Amount in accordance with the terms
thereof. If, within ten (10) days after delivery to Buyer of said
Contest Notice and after good faith
2
<PAGE> 3
negotiations, no such agreement can be reached, Buyer and Seller shall
each select an arbitrator. Such arbitrators shall promptly select a
third arbitrator. Buyer and Seller shall each pay the fees and
expenses of their respective arbitrators and the fees of the third
arbitrator shall be paid one-half by each party. The decision of the
arbitrators so appointed as to the validity of any claim in such Claim
Notice shall be binding and conclusive upon the parties to this Escrow
Agreement and may be entered in any court of competent jurisdiction.
Anything to the contrary in this Escrow Agreement notwithstanding, the
Escrow Agent shall be entitled to act in accordance with such decision
and make or withhold payment out of the Escrow Amount in accordance
therewith. Any such arbitration shall be held in Atlanta, Georgia,
under the rules then and there in effect of the American Arbitration
Association (the "Association"). The parties hereto shall pay their
own respective expenses of the arbitration, and the cost of the
Association shall be borne one-half by each party.
14. Limitations of Liability and Other Rights of Escrow Agent.
Escrow Agent may employ such legal counsel and other experts as it may deem
necessary to retain for advice in connection with its obligations hereunder,
and may rely upon the advice of such counsel or experts, and shall be protected
from any liability of any kind for actions taken in reasonable reliance upon
such opinion(s) of counsel and other experts. All fees and expenses of counsel
or experts for the Escrow Agent will be paid by Buyer. For agreeing to act as
Escrow Agent hereunder, Escrow Agent shall be paid an annual fee of $1,200,
paid in advance, one-half by Buyer and one-half by Seller.
Escrow Agent may resign by transmitting written notice thereof
to Buyer and Seller. In the event of any such resignation, Buyer and Seller
may appoint a successor Escrow Agent which shall be a banking association or
trust company doing business in Virginia, and shall notify Escrow Agent of the
identity of and appointment of such successor. If Buyer and Seller are unable
to agree upon a successor within 30 days after notice is sent by Escrow Agent
of its resignation, Escrow Agent shall be entitled to appoint its successor,
which shall be a national banking association or trust company doing business
in Virginia. The Escrow Agent may continue to serve until its successor
accepts the escrow and receives the funds or the Escrow Agent may interplead
the Escrow Amount and interest into the registry of the Chancery Court sitting
in Henrico County, Virginia, deducting from the Escrow Amount the costs and
legal fees and expenses of such action. Any successor Escrow Agent shall have
all of the rights, obligations and immunities of Escrow Agent set forth herein.
Upon resignation of Escrow Agent, Escrow Agent shall be discharged of all of
its duties and obligations hereunder, but shall be required to refund such
unearned portion of its fee as has already been paid.
The Escrow Agent shall have no duties or obligations hereunder
except as expressly set forth herein, shall be responsible only for the
performance of such duties and obligations and shall not be required to take
any action otherwise than in accordance with the terms hereof. The Escrow
Agent shall not be in any manner liable or responsible for any loss or damage
arising by reason of any act or omission to act by it hereunder or in
connection with any of the transactions contemplated hereby, including, but not
limited to, any loss that may occur by reason of forgery, false
representations, the exercise of its discretion, or any other reason, except
for its gross negligence or willful misconduct. The Escrow Agent may rely on,
and shall be protected in acting or refraining from acting on, any instrument
believed by it, in good faith, to
3
<PAGE> 4
be genuine and to have been signed or presented by the proper party or parties.
The Escrow Agent shall not be liable for any action taken or omitted by it in
good faith and believed by it to be authorized hereby. Buyer and Seller each
hereby release Escrow Agent from any liability for any act done or omitted to
be done by Escrow Agent in the performance of Escrow Agent's duties hereunder,
except for acts or omissions that constitute gross negligence or willful
misconduct. In no event will Escrow Agent have any liability for
consequential, special, or incidental damages of any kind.
It is understood and agreed that Escrow Agent assumes no
liability under this Agreement except that of a stakeholder. If there is any
dispute as to whether Escrow Agent is obligated to deliver the Escrow Amount
(or any portion thereof) and/or the interest thereon, or as to whom the Escrow
Amount (or any portion thereof) and/or the interest thereon is to be delivered,
Escrow Agent will not be obligated to make any delivery of any of the Escrow
Amount and/or the interest thereon, but in such event may hold the Escrow
Amount and/or the interest thereon until receipt by Escrow Agent of an
authorization in writing signed by the Buyer and the Seller directing the
disposition thereof, or in the absence of such authorization, Escrow Agent may
hold the Escrow Amount and/or the interest thereon until the final
determination of the rights of the parties in an appropriate proceeding. If
such written authorization is not given, or proceedings for such determination
are not begun and diligently continued, Escrow Agent is not required to bring
an appropriate action or proceeding for leave to deposit the Escrow Amount (or
any portion thereof) and/or interest in court pending such determination but
may, at Escrow Agent's sole discretion, make a deposit of the Escrow Amount (or
any portion thereof) and/or interest into a court of competent jurisdiction and
in such event, all liability and responsibility as escrow agent shall terminate
upon such deposit having been made. Upon making delivery of the Escrow Amount
(or any remaining portion thereof) and/or interest in the manner provided for
in this Agreement, Escrow Agent shall have no further liability in the matter.
In the event that Escrow Agent renders any service hereunder
not provided for in this Agreement, or that there is any assignment of any
interest in the subject matter of this Agreement or modification hereof, or
that any controversy arises hereunder or that Escrow Agent is made a party to,
or intervenes in, any litigation pertaining to this Agreement, Escrow Agent
shall be reasonably compensated for such extraordinary services and reimbursed
for all costs and expenses occasioned by such default, delay, controversy or
litigation, and Escrow Agent shall have the right to retain all documents and
other things of value at any time held by it hereunder until such compensation,
fees, costs and expenses have been paid. Buyer hereby promises to pay the
aforesaid sums upon demand.
15. Indemnity. The Buyer and Seller hereby jointly and severally
agree to defend Escrow Agent (with counsel satisfactory to Escrow Agent), and
hereby indemnify and hold Escrow Agent free and harmless, from and against any
claim, liability, expenses, damages, suit, cost (including reasonable
attorneys' fees and disbursements) or other obligation incurred or arising out
of or in connection with this Agreement, the Escrow Amount and/or the Escrow,
excluding only Escrow Agent's liability for its own willful misconduct or gross
negligence.
16. Notices. All notices, requests, permissions, waivers, and
other communications hereunder shall be in writing and shall be deemed to have
been duly given or served if signed by
4
<PAGE> 5
the respective persons giving them (in the case of any corporation the
signature shall be by an officer thereof) and hand-delivered or mailed by
registered or certified mail, postage prepaid.
<TABLE>
<S> <C>
(a) if to Buyer, to:
Performance Food Group Company
6800 Paragon Place, Suite 500
Richmond, Virginia 37087
Attention: Roger L. Boeve
with a copy to:
Bass, Berry & Sims PLC
First American Center
Nashville, Tennessee 37238
Attention: F. Mitchell Walker, Jr.
(b) if to Seller, to:
McLane Company, Inc.
4747 McLane Parkway
P.O. Box 6115
Temple, Texas 76503-6115
Attention: President
with a copy to:
McLane Company, Inc.
4747 McLane Parkway
P.O. Box 6115
Temple, Texas 76503-6115
Attention: General Counsel
(c) if to Escrow Agent, to:
First Union National Bank of Virginia
Corporate Trust Department
P.O. Box 26944
Richmond, Virginia 23261
Attention: Gregory N. Jordan
</TABLE>
Such names and addresses may be changed by such notice. Notices served in
accordance with this Section 6 shall be deemed to have been received, if
hand-delivered, on the date delivered, and if mailed, on the third (3rd) day
after the day deposited in the mail; provided that notice to Escrow Agent shall
be effective only upon receipt thereof.
17. Representations and Warranties. The Buyer and the Seller
severally and not jointly represent and warrant to Escrow Agent as follows:
(a) This Escrow Agreement has been duly authorized by any
necessary corporate or trust action, has been duly executed by the Buyer and
the Seller, has been entered into
5
<PAGE> 6
in good faith, and constitutes the legal, valid and binding obligations of the
Buyer and the Seller.
(b) The payment of the Escrow Amount according to the
provisions herein is made for fair consideration, is not made with actual or
constructive intent to hinder, delay, or defraud any creditors of Buyer or the
Seller, and is not made on account of any pre-existing debt of the Buyer or the
Seller.
18. Headings. The section headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. All pronouns shall be deemed to refer to the
masculine, feminine, singular or plural, as the identity of the persons, firm
or corporation may require in the context thereof.
19. Assignment. This Agreement may not be assigned by any party
hereto without the prior written consent of all of the other parties hereto and
shall be binding upon and inure to the benefit of each of the parties and their
respective personal representatives, successors and permitted assigns, if any.
20. Entire Agreement; Amendment. This Agreement constitutes the
entire and sole agreement between the parties hereto with respect to the
subject matter hereof and supersedes and cancels all prior agreements with
respect thereto. This Agreement may not be amended except by an instrument in
writing duly executed by all of the parties to this Agreement to be charged
therewith and delivered on behalf of each of such parties.
21. Applicable Law, Jurisdiction and Venue. This Agreement shall
be interpreted, construed and enforced in accordance with the laws of the
Commonwealth of Virginia. The Buyer and Seller hereby irrevocably consent to
the jurisdiction of all state and federal courts sitting in Henrico County,
Virginia, agree that venue for any such action shall lie exclusively in such
courts, and agree that such courts shall be the exclusive forum for any legal
actions brought in connection with this Escrow Agreement, the Escrow, or the
relationship among the parties hereto.
22. Breach. If any party (other than Escrow Agent) to this
Agreement is finally adjudicated to have breached this Agreement, the breaching
party shall reimburse all expense, including reasonable attorneys' fees and
court costs, incurred, respectively, by the other parties as a result of such
breach.
6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have signed this Agreement as
of the date first written above.
ESCROW AGENT:
FIRST UNION NATIONAL BANK OF VIRGINIA
By: /s/ Gregory N. Jordan
------------------------------------------
Title: Corporate Trust Officer
-----------------------------------
BUYER:
PERFORMANCE FOOD GROUP COMPANY
By: /s/ Roger L. Boeve
------------------------------------------
Title: Executive Vice President
-----------------------------------
SELLER:
MCLANE FOODSERVICE-TEMPLE, INC.
By: /s/ W. Grady Rosier
------------------------------------------
Title: President
-----------------------------------
MCLANE COMPANY, INC.
By: /s/ W. Grady Rosier
------------------------------------------
Title: President
-----------------------------------
7
<PAGE> 8
<TABLE>
<CAPTION>
EXHIBIT A
"Claim Notice"
<S> <C> <C> <C>
To: First Union National Bank of Virginia From: Performance Food Group Company
Corporate Trust Department 6800 Paragon Place, Suite 500
Post Office Box 26944 Richmond, Virginia 37087
Richmond, Virginia 23261 Attention: Mr. Roger Boeve
Attention: Gregory N. Jordan
Re: Escrow Agreement ("Escrow Agreement") between Performance Food Group Company ("Buyer"),
McLane Foodservice -- Temple, Inc., McLane Company, Inc. (collectively "Seller"), and
First Union National Bank of Virginia (the "Escrow Agent"), dated October __, 1996
- ------------------------------------------------------------------------------------------------
</TABLE>
With regard to the above-referenced Escrow Agreement, the Buyer hereby
certifies to the Escrow Agent as follows:
1. The undersigned is the Buyer under the Escrow Agreement, and
the individual executing this Notice on behalf of the undersigned has full
power and authority to execute this Notice on behalf of the Buyer.
2. The Seller is obligated to discharge certain obligations under
Article 10, Section 2.3, and Section 4.20 of the Asset Purchase Agreement
described in the Escrow Agreement ("Asset Purchase Agreement"), which Seller
has not discharged.
3. The Buyer is entitled to receive from Escrow Agent under the
Escrow Agreement, from the Escrow Amount, the sum of $_____ as the amount of
indemnification due to Buyer under the Asset Purchase Agreement (such amount
being referred to as the "Claimed Indemnification Amount").
IN WITNESS WHEREOF, the Buyer has made and given this certification to
the Escrow Agent on this _____ day of __________, 19___.
Buyer:
PERFORMANCE FOOD GROUP COMPANY
Date of Claim Notice:
By:
-------------------------------------
__________, 19___ Title:
---------------------------------
<PAGE> 9
<TABLE>
<CAPTION>
EXHIBIT B
"Contest Notice"
<S> <C> <C> <C>
To: First Union National Bank of Virginia From: McLane Company, Inc.
Corporate Trust Department 4747 McLane Parkway
Post Office Box 26944 Post Office Box 6115
Richmond, Virginia 23261 Temple, Texas 76503-6115
Attention: Gregory N. Jordan
Re: Escrow Agreement ("Escrow Agreement") between Performance Food Group Company ("Buyer"),
McLane Foodservice -- Temple, Inc., McLane Company, Inc. (collectively "Seller"), and
First Union National Bank of Virginia (the "Escrow Agent"), dated October __, 1996
- ------------------------------------------------------------------------------------------------
</TABLE>
With regard to the above-referenced Escrow Agreement, the Seller
hereby certifies and represents to the Escrow Agent as follows:
1. The undersigned is the Seller under the Escrow Agreement.
2. The Seller has received a copy of the Claim Notice from the
Buyer dated _____________ (the "Claim Notice"), and hereby gives notice to the
Escrow Agent that Seller contests such Claim Notice.
3. Provided, however, that Seller agrees that a portion of the
claimed indemnification amount specified in the Claim Notice may be paid to
Buyer, as described below, but the remainder is contested by Seller:
<TABLE>
<CAPTION>
Indemnification Amount Claimed
by Buyer in Claim Notice: Amount Objected to by Seller:
------------------------------ -----------------------------
<S> <C>
$______________________ $_________________
</TABLE>
4. To the extent (if any) the amount specified in the Claim
Notice as the "Claimed Indemnification Amount" (as such term is defined in the
Claim Notice), exceeds the amount specified above under the heading "Amount
Objected to by Seller," Seller agrees that the Escrow Agent may deliver such
excess amount to the Buyer.
IN WITNESS WHEREOF, the Seller has made and given this certification
to the Escrow Agent on this _______ day of __________, 19__.
Seller:
MCLANE COMPANY, INC.
By:
-----------------------------------
Title:
--------------------------------
