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UNITED STATES
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) - March 31, 1994
THE J. M. SMUCKER COMPANY
(Exact name of registrant as specified in its charter)
Ohio 1-5111 34-0538550
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State of Incorporation Commission File Number IRS Identification No.
STRAWBERRY LANE
ORRVILLE, OHIO 44667
(216) 682-3000
This document consists of 4 pages. The Exhibit Index is
located at page 3.
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ITEM 2. ACQUISITION OF ASSETS
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On March 31, 1994, The J. M. Smucker Company ("Smucker") acquired certain
assets and assumed certain liabilities of the frozen pie business of
Mrs. Smith's Frozen Foods Co., a wholly owned subsidiary of Kellogg
Company. Smucker acquired the Pottstown, Pennsylvania facility, which
includes a production plant, equipment, warehouse storage, and office
buildings. In addition, Smucker also received title to all raw material
and finished goods inventories, outstanding contracts, prepaid assets and
other intangible assets used in the frozen pie business. Smucker will
account for this acquisition under the purchase method.
At the closing date, Smucker paid an initial price of $80.1 million
for the assets of the Mrs. Smith's pie business, in accordance with the
purchase agreement dated March 1, 1994. This initial price is subject to
subsequent adjustment based upon, among other things, the value of the net
assets of the frozen pie business at March 31, 1994.
In order to provide long term financing for this transaction and to provide
funds for seasonal purchases of fruit during the coming months, Smucker
will enter into a $125.0 million revolving credit agreement with Society
National Bank, National City Bank, and First National Bank of Chicago. The
Company provided the funds for the initial price at closing by borrowing
$56 million under an existing line of credit with Society National Bank and
by using $24.1 million in cash from internally generated funds.
Smucker intends to continue the manufacturing, marketing, and distribution
of frozen pies.
Timothy P. Smucker, Chairman and a director of Smucker, also is a director
of Kellogg Company. Russell G. Mawby also is a director of both Smucker
and Kellogg Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
---------------------------------
(a & b)
Historically, the frozen pie business was consolidated into the overall
financial results of Mrs. Smith's Frozen Foods Co. As a result, no
separate financial statements were prepared for the pie business.
Therefore, it is impractical at this time to provide the required financial
information. The Company will file an amendment to this Report containing
audited financial statements and proforma information as soon as practical,
but no later than sixty days following the date of this Report.
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EXHIBITS
(c) Exhibits furnished in accordance with the provisions of item 601 of
regulation S-K:
2-1. Asset Purchase Agreement between The J. M. Smucker Company
and Mrs. Smith's Frozen Foods Co., dated March 1, 1994.
(As permitted by Item 601(b)(2) of Regulation S-K, the schedules
and exhibits to this agreement are not filed herewith. The
agreement identifies all omitted documents, and the Company agrees
to furnish supplementally a copy of any such document upon
Commission request.)
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No. 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
April 14, 1994 THE J. M. SMUCKER COMPANY
BY STEVEN J. ELLCESSOR
Secretary
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Execution Copy
ASSET PURCHASE AGREEMENT
By and Between
THE J.M. SMUCKER COMPANY,
an Ohio corporation
and
MRS. SMITH'S FROZEN FOODS CO.,
a Delaware corporation
Dated as of March 1, 1994
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TABLE OF CONTENTS
Page
----
ARTICLE 1
TRANSFER OF BUSINESS, PROPERTIES AND ASSETS
1.1 Sale and Transfer of Business, Properties and Assets ...............1
1.2 Purchase Price .....................................................3
1.3 Assumption of Liabilities ..........................................3
1.4 Allocation of Purchase Price .......................................4
1.5 Payment of Purchase Price ..........................................5
1.6 Instruments of Conveyance, Transfer, Assumption, Etc. ..............5
1.7 Closing Audit ......................................................5
ARTICLE 2
CLOSING AND TERMINATION
2.1 Closing ............................................................6
2.2 Termination ........................................................7
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
3.1 Organization; Authority ............................................7
3.2 Ability to Carry Out the Agreement .................................8
3.3 Financial Statements ...............................................8
3.4 Absence of Certain Changes or Events ...............................9
3.5 Litigation .........................................................9
3.6 Title to Properties; Absence of Liens; Real Estate ................10
3.7 Compliance with Law ...............................................10
3.8 Condition and Sufficiency of Purchased Assets .....................11
3.9 Contracts .........................................................12
3.10 Brokers and Intermediaries ........................................12
3.11 Tax Matters .......................................................12
3.12 Employee Benefits .................................................12
3.13 Environmental Matters .............................................14
3.14 Labor Matters .....................................................14
3.15 Product Returns and Claims ........................................15
3.16 Disclaimer of Other Representations and Warranties ................15
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ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
4.1 Organization and Authority of Buyer ...............................15
4.2 Ability to Carry Out the Agreement ................................16
4.3 Financial Ability to Perform ......................................16
4.4 Brokers and Intermediaries ........................................16
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS OF SELLER AND BUYER
5.1 Access and Information ............................................17
5.2 Regulatory Filings ................................................17
5.3 Conduct of Business Prior to the Closing Date .....................18
5.4 Employee Matters ..................................................18
5.5 No Solicitation ...................................................23
5.6 Books and Records .................................................23
5.7 Announcement ......................................................24
5.8 Best Efforts ......................................................24
5.9 Bulk Sales ........................................................24
5.10 Use of Names. .....................................................24
5.11 Employee Confidentiality Agreements. ..............................25
5.12 Collection of Receivables .........................................25
5.13 Insurance Policies ................................................25
5.14 Environmental Audit ...............................................25
5.15 Engineering Survey ................................................27
ARTICLE 6
CONDITIONS PRECEDENT OF SELLER
6.1 Representations and Warranties ....................................28
6.2 Agreements ........................................................28
6.3 Buyer Certificate .................................................28
6.4 No Injunction .....................................................28
6.5 HSR Compliance ....................................................29
6.6 Canadian Services Agreement .......................................29
6.7 Miscellaneous Closing Deliveries ..................................29
ARTICLE 7
CONDITIONS PRECEDENT OF BUYER
7.1 Representations and Warranties ....................................29
7.2 Agreements ........................................................30
7.3 Seller Certificate ................................................30
7.4 No Injunction .....................................................30
7.5 HSR Compliance. ...................................................30
7.6 Canadian Services Agreement .......................................30
7.7 No Material Adverse Change ........................................30
7.8 Trademark Assignment Agreement ....................................30
7.9 Waste Water Permit ................................................30
7.10 Miscellaneous Closing Deliveries ..................................30
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ARTICLE 8
NON-SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; CERTAIN ACKNOWLEDGMENTS; CONFIDENTIALITY
8.1 Non-Survival ......................................................30
8.2 Information .......................................................31
ARTICLE 9
INDEMNIFICATION
9.1 Indemnification of Buyer. .........................................31
9.2 Indemnification of Seller. ........................................33
9.3 Remedies. .........................................................35
9.4 Certain Limitations. ..............................................35
9.5 Survival. .........................................................35
ARTICLE 10
MISCELLANEOUS
10.1 Further Assurances; Consent to Assignments ........................35
10.2 Expenses ..........................................................36
10.3 Applicable Law ....................................................36
10.4 Notices ...........................................................36
10.5 Entire Agreement ..................................................37
10.6 Amendment and Modification ........................................38
10.7 Headings; References ..............................................38
10.8 Counterparts ......................................................38
10.9 Parties in Interest; Assignment ...................................38
10.10 Severability; Enforcement .........................................39
10.11 Covenant Not To Compete ...........................................39
10.12 Waiver ............................................................39
10.13 Mediation .........................................................39
10.14 Knowledge of Seller ...............................................40
10.15 Schedules .........................................................40
10.16 Definitions .......................................................40
Schedule 1.1 Excluded Contracts
Schedule 1.4 Allocation of Purchase Price
Schedule 3.5 Schedule of Litigation
Schedule 3.9 Contracts In Excess of $75,000
Schedule 3.12 Employee Benefit Plans
Schedule 3.13 Environmental Matters
Schedule 5.4 Employee Matters
Exhibit A Bill of Sale
Exhibit B Trademark Assignment Agreement
Exhibit C Canadian Services Agreement
Exhibit D Undertaking
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ASSET PURCHASE AGREEMENT dated as of March 1, 1994 (herein,
together with the Schedules and Exhibits attached hereto, referred to as the,
or this, "AGREEMENT") by and between MRS. SMITH'S FROZEN FOODS CO., a Delaware
corporation ("SELLER"), and THE J.M. SMUCKER COMPANY, an Ohio corporation
("BUYER").
WHEREAS, as a part of the business conducted by Seller, Seller
manufactures and markets branded frozen retail pies, frozen retail deserts,
frozen pie shells and in-store bake pies under the Mrs. Smith's brand name and
produces aluminum pans for its pie operations and steel magnetic shielding for
sale to third parties (the "FROZEN PIE BUSINESS");
WHEREAS, Seller wishes to dispose of the Frozen Pie Business
while retaining all other businesses, including the waffle business, presently
conducted by Seller; and
WHEREAS, Buyer wishes to acquire the Frozen Pie Business.
NOW THEREFORE, in reliance upon the representations and
warranties made herein and in consideration of the mutual agreements herein
contained, the parties agree as follows:
ARTICLE 1
TRANSFER OF BUSINESS, PROPERTIES AND ASSETS
-------------------------------------------
1.1 SALE AND TRANSFER OF BUSINESS, PROPERTIES AND ASSETS.
Subject to the terms and conditions of this Agreement, and in reliance on the
representations, warranties, undertakings (including the Undertaking, as
hereinafter defined) and agreements of Buyer made hereunder, and in
consideration of the purchase by Buyer described below and the Undertaking by
Buyer, Seller hereby agrees to sell, transfer, convey, assign and deliver to
Buyer at the Closing provided for in Section 2.1 hereof all of the properties,
assets and rights of Seller used in the Frozen Pie Business (the "PURCHASED
ASSETS"), including:
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(a) The real property of Seller located at South and
Charlotte Streets, Pottstown, Pennsylvania 19464 and
as more fully described in the Deed (as defined in
Section 1.6(a)) (the "POTTSTOWN FACILITY");
(b) All property, plant and equipment at the Pottstown
Facility, including all machinery, equipment,
construction in progress, furniture, tools, vehicles,
instruments and fixtures and other fixed assets, and
the process and packaging equipment not currently
used in the Frozen Pie Business which is located at
Ram Industries, Inc., Fricks Lock Road, Pottstown,
Pennsylvania and the Eastern Warehouse, Pottstown,
Pennsylvania, and the vehicles used by employees of
the Frozen Pie Business, wherever such vehicles may
be located;
(c) All inventory of the Frozen Pie Business at the
Pottstown Facility, including all pie raw
ingredients, foil raw material, manufacturing
supplies, packaging materials, work-in-progress and
finished goods, and all inventory of the Frozen Pie
Business consisting of finished goods located at
public distribution centers and all inventory of the
Frozen Pie Business consisting of finished goods at
or en route to the Rossville or San Jose facilities
of Seller;
(d) The formulae, trade secrets, customer lists,
goodwill, the trade name "Mrs. Smith's Frozen Foods
Co.," and other intangibles used in the Frozen Pie
Business;
(e) The contracts (including all purchase, sale and
exchange orders and agreements, leases and service
agreements) used in the Frozen Pie Business and the
lease of a building located at the Pottstown Facility
to Sherwin-Williams Company, an Ohio corporation (the
"PIE CONTRACTS");
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(f) Prepaid expenses (prorated consistent with the
Reference Balance Sheet (as defined in Section
3.3)); and
(g) Operating data and records relating exclusively to
the Frozen Pie Business, including customer credit
information, correspondence and supplier and vendor
information.
Notwithstanding the foregoing, it is understood and agreed
that Seller shall retain all accounts receivable relating to the Frozen Pie
Business on the books of Seller as of the Closing Date. It is further
understood and agreed that the business properties, assets and rights of Seller
(including formulae, trade secrets, customer lists and goodwill) used in
Seller's waffle business, the name "Kellogg," and the contracts listed on
SCHEDULE 1.1 shall not be included in the Purchased Assets and shall be
specifically excluded therefrom.
1.2 PURCHASE PRICE. Subject to the terms and conditions
of this Agreement, and in reliance on the representations, warranties,
undertakings and agreements of Seller made hereunder, and in consideration of
such sale, conveyance, transfer, assignment and delivery, Buyer agrees to pay
Fifty Two Million One Hundred Thousand Dollars ($52,100,000) (the "PURCHASE
PRICE"), subject to adjustment pursuant to Section 1.7, Twenty Seven Million
Four Hundred Thousand Dollars ($27,400,000) as the Trademark Consideration (as
defined in the Trademark Assignment Agreement), and Six Hundred Thousand
Dollars ($600,000) in consideration for the covenant contained in Section
10.11.
1.3 ASSUMPTION OF LIABILITIES. As further consideration,
subject to the terms and conditions of this Agreement, and in reliance on the
representations, warranties, undertakings and agreements of Seller made
hereunder, Buyer agrees to undertake, assume and perform and otherwise pay,
satisfy and discharge in accordance with their respective terms, and to
indemnify and hold Seller harmless with respect to, all of the debts,
liabilities and obligations of Seller (of any nature, whether absolute or
contingent, known or unknown, and whether or not accrued or reflected on the
books and records of the Frozen Pie Business)
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relating to the Frozen Pie Business or the Purchased Assets (the "ASSUMED
LIABILITIES"), including but not limited to the following:
(a) All liabilities and expenses under the Pie Contracts
included under Section 1.1(e);
(b) All liabilities and expenses related to agreements,
policies and programs involving coupons, trade
allowances and promotions;
(c) All Non-Income Taxes relating to the Frozen Pie
Business or the Purchased Assets; and
(d) All accrued salaries and benefits;
PROVIDED, HOWEVER, that Seller shall retain all accrued benefit obligations
under the Kellogg Company Salaried Pension Plan relating to all Employees (as
defined in Section 5.4), all post-retirement benefit obligations relating to
Retired Frozen Pie Employees (as defined in Section 5.4), all accounts payable
relating to the Frozen Pie Business on the books of Seller as of the Closing
Date, all liabilities and obligations relating to all pending litigation, all
liabilities and obligations relating to the Douglasville Superfund Disposal
Site referred to in Schedule 3.13, and all Income Taxes (as defined in Section
10.16) relating to the Frozen Pie Business.
1.4 ALLOCATION OF PURCHASE PRICE. The Purchase Price
(together with liabilities assumed hereunder and other relevant items) shall
be allocated among the Purchased Assets in a manner consistent with the fair
market values of such Purchased Assets as determined by mutual agreement of
Seller and Buyer and set forth in SCHEDULE 1.4. Such allocation will comply
with the requirements of Section 1060 of the Code. Seller and Buyer
represent, warrant and agree that such allocation was determined through arm's
length negotiations. Seller and Buyer each agrees that, to the extent
permitted by applicable law, it will adopt and utilize the amounts allocated
to each asset or class of assets for purposes of all federal, state and other
income tax Returns filed by it and that it will not voluntarily take any
position inconsistent therewith upon examination of any such tax Returns, in
any claim for refund, in any litigation or otherwise with respect to such tax
Returns. Each of Seller and Buyer shall timely file Internal Revenue Service
Form 8594 consistent with such allocation. Notwithstanding any
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other provisions of this Agreement, the foregoing agreement shall survive the
Closing Date without limitation.
1.5 PAYMENT OF PURCHASE PRICE. At the Closing, Buyer
shall deliver to Seller the Purchase Price in immediately available
funds by wire transfer to an account designated by Seller prior to the Closing
Date. In addition, at the Closing, Buyer shall deliver to Kellogg Company, a
Delaware corporation, the Trademark Consideration (as defined in the Trademark
Assignment Agreement) and the consideration for the covenant contained in
Section 10.11 in immediately available funds by wire transfer to an account
designated by Kellogg Company prior to the Closing Date.
1.6 INSTRUMENTS OF CONVEYANCE, TRANSFER, ASSUMPTION, ETC.
(a) Seller shall deliver to Buyer at the Closing: (i) the Bill of Sale, in
the form of EXHIBIT A attached hereto (the "BILL OF SALE"); (ii) the Trademark
Assignment Agreement, in the form of EXHIBIT B attached hereto (the "TRADEMARK
ASSIGNMENT AGREEMENT"); (iii) the Canadian Services Agreement, in the form of
EXHIBIT C attached hereto (the "CANADIAN SERVICES AGREEMENT"); and (iv) the
special warranty deed (the "DEED") pursuant to which Seller shall convey the
Pottstown Facility to Buyer. Buyer shall pay all fees, costs and expenses
relating to the recording of the Deed, and all transfer and conveyance taxes.
(b) Buyer shall properly execute and deliver the
Undertaking, in the form of EXHIBIT D attached hereto (the "UNDERTAKING"), and
the Trademark Assignment Agreement.
(c) This Agreement, the Bill of Sale, the Deed and the
Undertaking are hereinafter sometimes referred to as the "AGREEMENTS."
1.7 CLOSING AUDIT. As promptly as practicable after the
Closing Date, Seller will cause a statement of net assets (the "STATEMENT OF
NET ASSETS") of the Purchased Assets and Assumed Liabilities as at the Closing
Date to be prepared by Price Waterhouse. The Statement of Net Assets shall (i)
be prepared in accordance, and consistent, with the accounting principles and
assumptions used in the preparation of the Reference Balance Sheet; (ii) be
prepared
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utilizing the Accounting Policy Manual of Kellogg Company previously disclosed
to Buyer; and (iii) not give effect to any tax liabilities arising out of the
transactions contemplated by this Agreement.
Buyer and its representatives shall have the right, at Buyer's
expense, to participate, observe, review and comment upon preparation of the
Statement of Net Assets.
Buyer agrees to cooperate with Seller and Price Waterhouse and
to furnish them with all such information as they may reasonably require in
connection with the preparation of the Statement of Net Assets.
Should Buyer and Seller disagree as to the proper accounting
treatment of any item or disagree as to any matter relating to the Statement of
Net Assets, then the matter shall be submitted to Arthur Andersen & Co. whose
decision shall be final.
If the amount of assets less liabilities as shown on the
Statement of Net Assets (the "CLOSING NET ASSETS") is less than the amount of
assets less liabilities as shown on the Reference Balance Sheet minus $100,000
(the "MINIMUM NET ASSETS"), Seller shall pay the difference between the Minimum
Net Assets and the Closing Net Assets to Buyer within ten (10) business days of
completion of the Statement of Net Assets. If the Closing Net Assets is
greater than the amount of assets less liabilities as shown on the Reference
Balance Sheet plus $100,000 (the "MAXIMUM NET ASSETS"), Buyer shall pay the
difference between the Closing Net Assets and the Maximum Net Assets to Seller
within ten (10) business days of completion of the Statement of Net Assets.
ARTICLE 2
CLOSING AND TERMINATION
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2.1 CLOSING. The closing of the transactions provided for
herein (the "CLOSING") will take place at the offices of Winthrop, Stimson,
Putnam & Roberts at One Battery Park Plaza, New York, New York at 10:00 a.m.
(local time) on March 31, 1994, or at such other time and place as Buyer and
Seller shall agree (the date of the Closing being the "CLOSING DATE").
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2.2 TERMINATION. Anything contained in this Agreement other
than in this Section 2.2 to the contrary notwithstanding, this Agreement may be
terminated in writing at any time:
(a) by mutual consent of Buyer and Seller;
(b) by either Buyer or Seller, if the Closing
shall not have occurred on or before June 30, 1994 (or such later date
as may be agreed upon in writing by the parties hereto) (the "FINAL
TERMINATION DATE");
(c) by Buyer or Seller if, during the twenty-day
waiting period following substantial compliance by Buyer and Seller
with a second request for information by the Department of Justice
(the "DOJ") or the Federal Trade Commission (the "FTC"), the FTC and
the DOJ shall not have completed their investigation or have indicated
that they would oppose consummation of the transactions contemplated
hereunder; or
(d) by Seller, pursuant to Section 5.14(d)(iv) or
Section 5.15(b).
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Buyer that:
3.1 ORGANIZATION; AUTHORITY. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, with all corporate power and
authority to enter into this Agreement and to perform its obligations
hereunder. The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by all
requisite corporate action (including shareholder approval) on the part of
Seller. Each of the Agreements to which Seller is a party has been (in the
case of this Agreement) or will be as of the Closing Date duly executed and
delivered by Seller and (assuming due execution and delivery by the other
parties
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thereto) constitutes, or will constitute, a valid, binding and enforceable
obligation of Seller, subject to applicable bankruptcy, reorganization,
insolvency, moratorium and other laws affecting creditors' rights generally
from time to time in effect and to general equitable principles.
3.2 ABILITY TO CARRY OUT THE AGREEMENT. Seller is not subject
to or bound by any provision of
(i) any law, statute, rule, regulation or judicial or
administrative decision,
(ii) any articles or certificate of incorporation or by-laws,
(iii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, license, permit, or
(iv) any judgment, order, writ, injunction or decree of any
court, governmental body, administrative agency or arbitrator,
that would prevent or be violated by or under which there would be a default as
a result of, nor is the consent of any Person under any Pie Contract or
agreement which is material to the Frozen Pie Business which has not been, or
will not be prior to Closing, obtained required for, the execution, delivery
and performance by Seller of this Agreement and the transactions contemplated
hereby, other than notification pursuant to the HSR Act and violations,
defaults or failures to obtain consents which, singly or in the aggregate, do
not have a material adverse effect on the Frozen Pie Business or on the
enforceability or validity of this Agreement.
3.3 FINANCIAL STATEMENTS. (a) Seller has furnished to Buyer
copies of the following financial statements of the Frozen Pie Business: (i)
the unaudited pro forma Balance Sheet as at December 31, 1993 reflecting the
assets and liabilities of the Frozen Pie Business being transferred to Buyer
(the "REFERENCE BALANCE SHEET"); and (ii) the unaudited pro forma Statements of
Operations of the Frozen Pie Business for the three year period ended December
31, 1993. The financial statements have been prepared in accordance with
Seller's
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internal accounting policies, practices and procedures applied on a consistent
basis and have been derived from the financial statements of Seller, which have
been subject to certain audit procedures by the independent public accountants
of Seller in the scope of such firm's audit process of the parent of Seller.
(b) the Assumed Liabilities, other than the Assumed
Liabilities reflected or reserved for on the Statement of Net Assets, are
individually or in the aggregate not material to the Frozen Pie Business.
3.4 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31,
1993, the Frozen Pie Business has been conducted in the ordinary and usual
course and (i) there has not been (in each case to the extent relating to such
business), any increase in (A) the rate of compensation payable or to become
payable by Seller to any of its Frozen Pie Employees (as hereinafter defined),
or (B) any bonus, pension or other employee benefit plan, payment or
arrangement made by Seller for or with any such employees except, in each case,
for increases in the ordinary course of business (which shall include but not
be limited to normal periodic performance reviews and related compensation and
benefit increases), (ii) to the best of Seller's knowledge, there has not been
any cancellation of any contract to which Seller is a party which would have a
material adverse effect on the Frozen Pie Business, and (iii) as of the date
hereof, since December 31, 1993, there has been no material adverse change in
the financial condition or results of operations of the Frozen Pie Business,
except as otherwise disclosed to Buyer.
3.5 LITIGATION. Except as disclosed on SCHEDULE 3.5, there is
no action, suit, proceeding or investigation pending or, to the best of
Seller's knowledge, threatened against Seller relating to the Frozen Pie
Business at law, in equity or otherwise, in, before, or by any court or
governmental agency or authority which individually or in the aggregate will
likely have a material adverse effect on the Frozen Pie Business.
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3.6 TITLE TO PROPERTIES; ABSENCE OF LIENS; REAL ESTATE. (a)
Seller has title to all of the Purchased Assets, free and clear of any liens,
security interests and other encumbrances ("ENCUMBRANCES"), except for (i)
Encumbrances reflected in the Reference Balance Sheet or created in the
ordinary course of business subsequent to December 31, 1993, (ii) Encumbrances
that do not materially interfere with the present use by Seller of the property
subject thereto or affected thereby, (iii) Encumbrances for taxes, assessments
or governmental charges, or landlords', mechanics', workmen's, materialmen's or
similar liens, in each case that are not delinquent or which are being
contested in good faith, and (iv) Encumbrances of record as shown on Steward
Title Guaranty Company Title Report #64638-M dated January 5, 1994 (the "Title
Report") which has been delivered by Seller to Buyer together with all
Encumbrances shown on any plot plans which have been delivered by Seller to
Buyer and all Encumbrances that may be of record as shown on the tax maps of
Montgomery County, Pennsylvania.
(b) Buyer acknowledges that it has inspected all real
estate constituting Purchased Assets and agrees to purchase said real estate in
its present condition "as is."
(c) Seller has not received any written notice of any
appropriation, condemnation or like proceeding, or of any violation of any
applicable zoning or building law, regulation, code, order or requirement
relating to or affecting the real estate; and to the best of Seller's
knowledge, no such proceeding has commenced and no such proceeding with respect
to condemnation has been threatened in writing.
(d) The Encumbrances of record as shown on the Title
Report do not materially interfere with the current use of the Pottstown
Facility.
3.7 COMPLIANCE WITH LAW. (a) To the best of Seller's
knowledge, and, except as disclosed on SCHEDULE 3.13, the Frozen Pie Business
is being conducted in compliance in all respects with all laws, ordinances and
regulations of any governmental entity applicable to
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Seller, except for violations, if any, which singly or in the aggregate, do not
have a material adverse effect on the Frozen Pie Business.
(b) Except as disclosed on SCHEDULE 3.13, all governmental
approvals, permits and licenses required by the Frozen Pie Business in
connection with the conduct of its business have been obtained and
are in full force and effect and are being complied with in all respects,
except for any such approvals, permits or licenses where the failure either to
obtain or maintain them, or a failure to comply with them, would not, either
singly or in the aggregate, have a material adverse effect on the Frozen Pie
Business.
(c) The finished goods inventories comply in all material
respects with all applicable federal and state laws relating to the production,
sale, packaging and labeling of food products.
3.8 CONDITION AND SUFFICIENCY OF PURCHASED ASSETS. (a) All
of the machinery and equipment used in the Frozen Pie Business for manufacturing
and production is located at the Pottstown Facility, (b) such machinery and
equipment is sufficient to continue the manufacture and production of the
products of the Frozen Pie Business as currently being conducted, (c) such
machinery and equipment is substantially in good working condition in
accordance with Seller's past practice, normal wear and tear excepted, (d) the
trademarks set forth on the exhibits to the Trademark Assignment Agreement are
all of the trademarks used in the Frozen Pie Business other than the name
"Kellogg," (e) the only trade name used in the Frozen Pie Business is "Mrs.
Smith's Frozen Foods Co." and (f) all of the buildings, structures,
improvements and fixtures used by the Frozen Pie Business are in a state of
repair, maintenance and operating condition sufficient to conduct the Frozen
Pie Business as now being conducted and, except for normal wear and tear, there
are no defects with respect thereto which would impair the use by Buyer of any
such buildings, structures, improvements or fixtures.
#20060353.14 11
<PAGE> 16
3.9 CONTRACTS. (a) There is no default by Seller under any
Pie Contract, except for defaults which do not individually or in the aggregate
have a material adverse effect on the Frozen Pie Business.
(b) SCHEDULE 3.9 sets forth all contracts or agreements
outstanding as of the date hereof to which Seller is a party, which relate to
the Frozen Pie Business and involve the future payment of more than $75,000
(other than purchase orders in the ordinary course of business or cancelable
without penalty).
3.10 BROKERS AND INTERMEDIARIES. Except for Goldman, Sachs &
Co., neither Seller nor any of its Affiliates has employed any broker, finder,
advisor or intermediary in connection with the transactions contemplated by
this Agreement which would be entitled to a broker's, finder's or similar fee
or commission in connection therewith or upon the consummation thereof. Seller
shall be responsible for making any payments to which Goldman, Sachs & Co.
shall be entitled.
3.11 TAX MATTERS. (i) All Non-Income Tax Returns relating to
the Frozen Pie Business or the Purchased Assets for all Pre-Closing Periods
have been or will be filed when due in timely fashion; (ii) all Non-Income
Taxes shown on such Returns have been or will be paid when due in timely
fashion; (iii) to the best knowledge of Seller, there is no suit, proceeding,
investigation, audit or claim now pending regarding Non-Income Taxes relating
to the Frozen Pie Business or the Purchased Assets for any Pre-Closing Period;
and (iv) there are no agreements for the extension of the time for assessment
of Non-Income Taxes relating to the Frozen Pie Business or the Purchased Assets
for any Pre-Closing Period.
3.12 EMPLOYEE BENEFITS. (a) SCHEDULE 3.12 sets forth all
employee benefit plans (as defined in Section 3(3) of ERISA) and all bonus,
deferred compensation, incentive compensation, severance or termination pay,
change in control compensation and death benefit plans, agreements or
arrangements, maintained or contributed to by Seller or any Affiliate of Seller
and applicable to all persons who were employed in the Frozen Pie Business by
the Seller
#20060353.14 12
<PAGE> 17
immediately preceding the Closing, including those on vacation, leave of
absence or disability and those laid off (but only, in the case of laid off
employees, to the extent a collective bargaining agreement providing for recall
rights is applicable to such employees) ("FROZEN PIE EMPLOYEES") (the "PLANS")
and all fringe benefit plans or programs maintained by Seller or any Affiliate
of Seller and applicable to Frozen Pie Employees.
(b) All Plans have been administered in compliance with their
terms in all material respects. All Plans are, and on the Closing Date will
be, in compliance in all material respects with the requirements of any
applicable law, including but not limited to ERISA and the Code and any
regulations thereunder and each Plan which is intended to be a qualified plan
under Section 401 and 501 of the Code has been so qualified since its
inception. Without limiting the generality of the foregoing:
(i) neither Seller nor any Affiliate of Seller
nor, to the knowledge of Seller, any trustee or administrator
of any "employee pension benefit plan" as such term is defined
in Section 3(2) of ERISA (collectively, the "RETIREMENT
PLANS"), has engaged in any act or omission constituting a
"prohibited transaction," as defined in Section 4975 of the
Code or a transaction prohibited by Section 406 of ERISA, or a
breach of fiduciary duties and responsibilities under ERISA;
(ii) at the end of its most recent plan year, each
Retirement Plan to which Section 412 of the Code is applicable
satisfied the minimum funding standards provided for in such
Section;
(iii) no reportable event within the meaning of
Section 4043 of ERISA (for which the 30-day notice requirement
has not been waived by regulations issued by the Pension
Benefit Guaranty Corporation) has occurred and is continuing;
(iv) there are no claims or actions pending or
threatened involving the Plans or the assets thereof; and
#20060353.14 13
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(v) Seller has no outstanding liabilities to the
Pension Benefit Guaranty Corporation.
3.13 ENVIRONMENTAL MATTERS. (a) Except as disclosed on
SCHEDULE 3.13, Seller has obtained or applied for all material permits,
licenses and other such authorizations required to be obtained by it
for the operation of the Frozen Pie Business under Environmental Laws.
(b) Except as disclosed on SCHEDULE 3.13, to the best
knowledge of Seller, Seller is (i) in compliance with all terms and conditions
of the permits, licenses and authorizations required by Environmental Laws for
the Frozen Pie Business, and (ii) in compliance with all other limitations,
restrictions, conditions, standards, prohibitions, requirements and obligations
contained in the Environmental Laws relating to the Frozen Pie Business,
except, in each case, for violations, if any, which in the aggregate do not
have a material adverse effect on the Frozen Pie Business.
(c) Except as disclosed on SCHEDULE 3.13, there are no
civil, criminal or administrative actions, suits, hearings, proceedings,
written notices of violation, claims or demands pending or, to the best
knowledge of Seller, threatened against Seller under the Environmental Laws
relating to the Frozen Pie Business, which will likely have a material adverse
effect on the Frozen Pie Business.
(d) Seller has heretofore delivered to Buyer copies of
all environmental reports and studies made by Seller and its consultants or
received from any governmental agency in the last three (3) years relating to
the Pottstown Facility.
3.14 LABOR MATTERS. In the past twelve (12) months,
there has been no labor strike, refusal to work, slowdown, work stoppage,
boycott or other labor trouble affecting the Frozen Pie Business, nor, to the
best of Seller's knowledge, has any such labor trouble been threatened against
Seller.
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<PAGE> 19
3.15 PRODUCT RETURNS AND CLAIMS. To the best of Seller's
knowledge, there is no basis for product returns or product liability claims
other than in the ordinary course of business of the Frozen Pie Business.
3.16 DISCLAIMER OF OTHER REPRESENTATIONS AND WARRANTIES.
Seller does not make, and Buyer agrees that Seller has not made, any
representations or warranties relating to Seller or the Frozen Pie Business or
otherwise in connection with the transactions contemplated hereby other than
those expressly set out herein which are made by Seller. Without limiting the
generality of the foregoing, Seller has not made, and shall not be deemed to
have made, any representations or warranties in the Confidential Memorandum
relating to the businesses of Seller dated October 1993 and supplied to Buyer
prior to the date hereof (the "CONFIDENTIAL MEMORANDUM") or in any presentation
of the businesses of Seller in connection with the transactions contemplated
hereby, or in any materials containing cost estimates, projections or other
predictions, or any data, financial information or any memoranda or offering
materials and no statement contained in the Confidential Memorandum, or such
information or materials or made in any such presentation shall be deemed a
representation or warranty hereunder or otherwise. No Person has been
authorized by Seller to make any representation or warranty relating to Seller,
the Frozen Pie Business or otherwise in connection with the transactions
contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer represents and warrants that:
4.1 ORGANIZATION AND AUTHORITY OF BUYER. Buyer is a
corporation duly incorporated, validly existing and in good standing under
the laws of the State of Ohio, with the corporate power and authority to enter
into this Agreement and to perform its obligations hereunder. The execution
and delivery of this Agreement and the consummation of the
#20060353.14 15
<PAGE> 20
transactions contemplated hereby have been duly authorized by all requisite
corporate action on the part of Buyer. This Agreement has been, and the
Undertaking as of the Closing Date will be, duly executed and delivered by
Buyer and constitutes, or (in the case of the Undertaking) will constitute, the
valid, binding and enforceable obligation of Buyer, subject to applicable
bankruptcy, reorganization, insolvency, moratorium and other laws affecting
creditors' rights generally from time to time in effect and to general
equitable principles.
4.2 ABILITY TO CARRY OUT THE AGREEMENT. Buyer is not subject
to or bound by any provision of
(i) any law, statute, rule, regulation or judicial or
administrative decision,
(ii) any articles or certificate of incorporation or
regulations,
(iii) any mortgage, deed of trust, lease, note,
shareholders' agreement, bond, indenture, license, permit, or
(iv) any judgment, order, writ, injunction or decree
of any court, governmental body, administrative agency or arbitrator,
that would prevent or be violated by or under which there would be a default as
a result of, nor is the consent of any Person under any material agreement
which has not been obtained required for, the execution, delivery and
performance by Buyer of this Agreement and the transactions contemplated
hereby.
4.3 FINANCIAL ABILITY TO PERFORM. Sufficient funds and credit
arrangements are available to Buyer as of the date hereof, and will be so
available at the Closing, to pay the Purchase Price and all other amounts
payable by it hereunder at the Closing.
4.4 BROKERS AND INTERMEDIARIES. Buyer has not employed any
broker, finder, advisor or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to a broker's, finder's,
or similar fee or commission in connection therewith or upon the consummation
thereof.
#20060353.14 16
<PAGE> 21
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS OF SELLER AND BUYER
----------------------------------------------------
5.1 ACCESS AND INFORMATION. Seller shall permit Buyer and
its representatives after the date of this Agreement to have reasonable access
during normal business hours, upon reasonable advance notice, to the Frozen
Pie Business, PROVIDED that such access shall be conducted by Buyer and its
representatives in such a manner as not to interfere unreasonably with the
business or operations of Seller, and Seller shall furnish to Buyer all
information relating to the Frozen Pie Business reasonably requested by Buyer,
PROVIDED that Seller shall not be required to furnish to Buyer or provide
Buyer with access to any formulae, recipes, process sheets, mixing
instructions, cost information or any other proprietary information relating to
the Frozen Pie Business prior to the Closing Date. All information provided to
Buyer pursuant hereto shall be subject to that certain confidentiality
agreement dated October 20, 1993 executed by Buyer (the "CONFIDENTIALITY
AGREEMENT"). Buyer shall notify Seller promptly upon its discovery of any
information which reasonably constitutes or which Buyer reasonably should
understand to indicate a breach by Seller of any representation, warranty or
agreement of Seller hereunder.
5.2 REGULATORY FILINGS. Each of the parties hereto will
furnish to the other party hereto such necessary information and reasonable
assistance as such other party may reasonably request in connection with its
preparation of necessary filings or submissions to any governmental agency.
Buyer and Seller each agrees to file any information required by the HSR Act,
if any, as soon as practicable following the execution of this Agreement, and
each agrees promptly to supplement such information and promptly use best
efforts to effect compliance with the conditions specified in Sections 6.5 and
7.5 hereof. Each of the parties shall use its best efforts to obtain any
regulatory approvals or clearances necessary to effect the transactions
contemplated herein.
#20060353.14 17
<PAGE> 22
5.3 CONDUCT OF BUSINESS PRIOR TO THE CLOSING DATE. Prior to
the Closing, and except as otherwise contemplated by this Agreement or
consented to or approved by Buyer, Seller shall cause the Frozen Pie Business
to be operated in all material respects in the ordinary and usual course.
5.4 EMPLOYEE MATTERS. (a) Buyer and Seller shall within
thirty (30) days from the date hereof determine the salaried employees of the
Frozen Pie Business to be hired by Buyer (which number shall not be less than
113, unless otherwise agreed) (the "Scheduled Employees"). The Scheduled
Employees will be employed by Buyer or any Affiliate of Buyer on and after the
Closing Date for a period of not less than one (1) year on substantially the
same terms (including salary, fringe benefits, job responsibility and location)
as those provided by Buyer to its similarly situated employees immediately
prior to the Closing Date, except as otherwise provided in this Section 5.4.
Buyer agrees (i) to recognize, or to cause each of its applicable Affiliates to
recognize, the unions which are parties to the collective bargaining agreements
noted in SCHEDULE 5.4 as the sole and exclusive collective bargaining agents,
as of the Closing Date and immediately thereafter, for the Frozen Pie Employees
represented by such unions as of the Closing Date who will continue employment
with Buyer and its Affiliates after the Closing Date ("ASSUMED UNION
EMPLOYEES"), (ii) that on and after the Closing Date Buyer will continue to be
bound by the terms of each collective bargaining agreement set forth in
SCHEDULE 5.4, or that Buyer or any other Affiliate of Buyer will be the
successor employer under such collective bargaining agreements, and (iii) that
it will cause the Frozen Pie Business and each applicable Affiliate of Buyer to
comply with its respective obligations under such collective bargaining
agreements. Buyer shall not, at any time prior to sixty (60) days after the
Closing Date, effectuate a "plant closing" or "mass layoff" as those terms are
defined in the Worker Adjustment and Retraining Notification Act of 1988
("WARN") affecting in whole or in part any facility, site of employment,
operating unit or employee of the Frozen Pie Business without complying fully
with the requirements of WARN.
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<PAGE> 23
For purposes of this Section 5.4, the term "EMPLOYEES" shall
mean all current and former Frozen Pie Employees, including those on layoff,
and all retired and terminated vested Frozen Pie Employees. For purposes of
this Section 5.4, "RETIRED FROZEN PIE EMPLOYEES" shall mean all former
Employees who retired or otherwise terminated employment prior to the Closing
Date and who are entitled to retiree life insurance and may participate in
retiree medical and dental benefit programs ("RETIREE WELFARE BENEFITS"). For
purposes of this Schedule 5.4, "ASSUMED EMPLOYEES" shall mean all Scheduled
Employees and Assumed Union Employees.
(b) Effective as of the Closing Date, Scheduled Employees
shall cease accruing benefits under the Kellogg Company Salaried Pension Plan
(the "SALARIED PENSION PLAN"). Seller shall continue to be responsible on and
after the Closing Date for all benefits accrued for Employees under the
Salaried Pension Plan as of the Closing Date. All Scheduled Employees shall be
fully vested in their accrued benefits under the Salaried Pension Plan as of
the Closing Date. As soon as practicable after the Closing Date and effective
as of the Closing Date, Buyer shall cause its The J.M. Smucker Company
Employees' Retirement Plan (the "BUYER PENSION PLAN") to cover the Scheduled
Employees who were covered by the Salaried Pension Plan immediately prior to
the Closing Date on the same terms and conditions as are applicable to Buyer's
salaried employees under the Buyer Pension Plan immediately prior to the
Closing Date. Buyer shall cause the Buyer Pension Plan to count for purposes
of eligibility and vesting all service of the Scheduled Employees that was
counted for such purposes under the Salaried Pension Plan.
(c) (i) With respect to each multi-employer plan
identified on SCHEDULE 3.12 as one to which Seller is obliged to contribute,
Buyer shall be obligated to contribute to each such multi-employer plan for
substantially the same number of contribution base units for which Seller had
an obligation to contribute thereto.
(ii) Subject to subsection (iii) hereof, Buyer will provide
to each multi-employer plan referred to in the collective bargaining agreements
listed on SCHEDULE 5.4 for a
#20060353.14 19
<PAGE> 24
period of five (5) plan years commencing with the first plan year beginning
after the Closing Date, a bond issued by a corporate surety company that is an
acceptable surety for purposes of Section 412 of ERISA, or an amount held in
escrow by a bank or similar financial institution, satisfactory to such plan,
in an amount equal to 120% of the greater of
(A) the average annual contribution required to be
made by Seller with respect to the operations under such plan for the
three (3) plan years preceding the plan year in which the Closing
occurs, being $1,094,103 in the aggregate for such plan, or
(B) the annual contribution that Seller was required
to make with respect to the operations under such multi-employer plan
for the last plan year prior to the plan year in which the Closing
occurs, being $1,309,291 in the aggregate for such plan, which bond or
escrow shall be paid to such multi-employer plan if Buyer withdraws
from such plan, or fails to make a contribution when due, at any time
during the first five (5) plan years beginning after the Closing
occurs.
(iii) In lieu of providing the bond contemplated by
subsection (b) hereof, Buyer may obtain a waiver or variance of the requirement
under ERISA that it provide such bond.
(iv) If Buyer withdraws from any of such multi-employer plans
in a complete withdrawal, or a partial withdrawal with respect to operations,
during the first five (5) plan years beginning after the Closing, Seller will
be secondarily liable to such plan and the PBGC for any withdrawal liability
Seller would have had to any such plan with respect to the operations (but for
Section 4204 of ERISA) if the liability of Buyer with respect to such plan is
not paid.
(d) Effective as of the Closing Date, all Scheduled
Employees shall be fully vested in their accrued benefits under the Kellogg
Company Salaried Savings and Investment Plan (the "SAVINGS PLAN") and Seller
shall cease to make contributions under the Savings Plan on behalf of such
Scheduled Employees. The Scheduled Employees shall be entitled to receive a
#20060353.14 20
<PAGE> 25
distribution of their benefits under the Savings Plan on and after the Closing
Date in accordance with applicable law and the terms of the Savings Plan.
As soon as practicable after the Closing Date and effective as
of the Closing Date, Buyer shall cause its The J.M. Smucker Company Employee
Savings Plan (the "BUYER SAVINGS PLAN") to cover the Scheduled Employees who
were covered by the Savings Plan immediately prior to the Closing Date on the
same terms and conditions as such Plan is made available to Buyer's salaried
employees immediately prior to the Closing Date. Buyer shall cause the Buyer
Savings Plan to count for purposes of eligibility and vesting all service of
the Scheduled Employees that was counted for such purposes under the Savings
Plan. Buyer shall also cause the Buyer Savings Plan to accept, to the extent
permitted by applicable law, rollover contributions by the Scheduled Employees
of amounts distributed to such employees from the Savings Plan.
(e) Buyer shall provide the Assumed Employees and their
covered dependents with life insurance, medical benefits, disability benefits
and other employee welfare benefit plans, programs, policies or arrangements
that are the same as or comparable to the benefits, plans, programs, policies
and arrangements that Buyer provides or makes available to its similarly
situated employees (the "BUYER WELFARE PLANS"); PROVIDED, HOWEVER, that the
benefits, plans, programs, policies and arrangements to be provided by Buyer,
in the case of Scheduled Employees to whom a collective bargaining agreement is
applicable, shall conform with the benefits, plans, programs, policies and
arrangements required to be provided under such agreement. Buyer shall cause
the Buyer Welfare Plans to count for purposes of eligibility and benefits under
such plans all service of the Assumed Employees that was counted for such
purposes under Seller's welfare plans and arrangements. In addition, Buyer
shall cause the Buyer Welfare Plans to grant credit to the Assumed Employees
and their covered dependents for payments made by such individuals toward
out-of-pocket maximums and deductibles for the
#20060353.14 21
<PAGE> 26
year in which the Closing Date occurs, and to waive any pre-existing condition
restrictions under the Buyer Welfare Plans with respect to such individuals.
Seller shall retain responsibility for Retiree Welfare
Benefits for all Retired Frozen Pie Employees. Seller shall also retain
responsibility for all salaried Frozen Pie Employees who are not Scheduled
Employees with regard to long-term disability, life, medical and pension
benefits.
With respect to Employees covered by welfare plans sponsored
or maintained by Seller, Seller shall retain responsibility for and continue to
pay all medical, dental, life insurance, disability, supplemental unemployment,
workers' compensation and other welfare plan expenses and benefits with respect
to claims incurred prior to the Closing Date. Expenses and benefits with
respect to claims incurred by any Assumed Employee or his or her covered
dependents on or after the Closing Date shall be the responsibility of Buyer.
For purposes of this paragraph, a medical, dental, workers' compensation or
similar claim is deemed incurred when the services that are the subject of the
claim are performed and any other claim is deemed incurred when the event
occurs which entitles the Employee or his or her dependents to benefits.
(f) Seller shall retain and be responsible for all
severance pay and benefit continuation relating to the termination of
employment of Employees prior to the Closing Date. If any Assumed Employee is
terminated by Buyer on or after the Closing Date and prior to the date that is
twelve (12) months after the Closing Date, Buyer shall provide to such employee
severance pay and benefit continuation in accordance with the terms of Mrs.
Smith's Frozen Foods Co. Severance Plan, as in effect on the date hereof, and
any applicable collective bargaining agreement.
(g) Buyer shall be responsible for vacation pay on and
after the Closing Date with respect to all periods of service (whether prior to
or after the Closing Date) of all Assumed Employees.
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(h) No provision of this Section 5.4 shall create any
third-party beneficiary rights in any person or organization, including without
limitation employees or former employees (including any beneficiary or
dependent thereof) of Seller or any of its Affiliates, unions or other
representatives of such employees or former employees, or trustees,
administrators, participants or beneficiaries of any employee benefit plan, and
no provision of this Section 5.4 shall create such third-party beneficiary
rights in any such person or organization in respect of any benefits that may
be provided, directly or indirectly, under any employee benefit plan or
arrangement, including the currently existing Plans of Seller.
(i) Seller, Seller's Affiliates, Buyer and Buyer's
Affiliates shall cooperate as may reasonably be requested with respect to
actions necessary to effect the transactions contemplated by this Section 5.4
and in obtaining any governmental approvals required hereunder.
5.5 NO SOLICITATION. If this Agreement is terminated, Buyer
will not, for a period of three (3) years thereafter, directly or indirectly,
solicit, encourage, entice or induce any Person who is an employee of Seller to
terminate his or her employment with Seller. Buyer agrees that money damages
will not be an adequate remedy and that Seller shall be entitled to equitable
relief, including but not limited to injunction, in the event of any breach by
Buyer of this Section 5.5, in addition to any other remedies available to
Seller at law.
5.6 BOOKS AND RECORDS. Buyer shall retain all books, records
and other documents pertaining to the Frozen Pie Business in existence on the
Closing Date and shall make the same available after the Closing Date for
inspection and copying by Seller or any Affiliate of Seller at Seller's expense
during the normal business hours of Buyer, upon reasonable request and upon
reasonable notice. No such books, records or documents shall be destroyed by
Buyer without first advising Seller in writing and giving Seller a reasonable
opportunity to obtain possession thereof. Without limiting the generality of
the foregoing, Buyer will make available to Seller, the Affiliates of Seller
and their respective representatives all information deemed
#20060353.14 23
<PAGE> 28
necessary or desirable by Seller or such Affiliates in preparing their
respective financial statements, conducting any audits in connection therewith,
preparing Seller's or its Affiliates' tax returns and defending or prosecuting
any claim under Article 9. In addition, Buyer shall make available after the
Closing, at no cost to Seller, Mr. John J. Feeney and such other former
employees of Seller that are employed by Buyer as Seller may reasonably
request, in order for Seller to prepare for and defend against the lawsuit of
Twin County Construction Company v. Mrs. Smith's Frozen Foods Co. and Kellogg
Company in the United States District Court for the Eastern District of
Pennsylvania and any other pending litigation retained by Seller.
5.7 ANNOUNCEMENT. Hereafter, neither Seller nor Buyer will
issue any press release or otherwise make any public statement with respect to
this Agreement and the transactions contemplated hereby without the prior
consent of the other (which consent shall not be unreasonably withheld), except
as may be required by applicable law or stock exchange regulation.
5.8 BEST EFFORTS. Each of the parties hereto shall use its
best efforts to fulfill or obtain the fulfillment of the conditions of the
Closing, including the execution and delivery of all agreements contemplated
hereunder to be so executed and delivered.
5.9 BULK SALES. Buyer hereby waives compliance by Seller with
any bulk-sales notice requirements of applicable law.
5.10 USE OF NAMES. (a) Buyer acknowledges that no interest
in or right to use the name "Kellogg" is being transferred hereunder. Buyer
agrees that it will, as promptly as practicable but in any event within thirty
(30) days following the Closing Date, remove or obliterate the name "Kellogg"
from all signs, purchase orders, invoices, sales orders, letterheads, shipping
documents and other materials used by it; PROVIDED, HOWEVER, that Buyer may
utilize any packaging stock and labels held in inventory by the Frozen Pie
Business on the Closing Date and containing the name "Kellogg" until the
depletion of said inventory.
#20060353.14 24
<PAGE> 29
(b) Seller agrees that it shall, within ninety (90) days
after the Closing Date, remove "Mrs. Smith's" from its corporate name and
terminate its use thereof.
5.11 EMPLOYEE CONFIDENTIALITY AGREEMENTS. Buyer acknowledges
that certain employees in the Frozen Pie Business have previously signed
confidentiality agreements with Seller. Buyer agrees that it will not induce
such employees to violate or breach the provisions of, nor will Buyer knowingly
obtain information in violation of, such confidentiality agreements.
5.12 COLLECTION OF RECEIVABLES. In the event that, after the
Closing Date, Buyer receives any payment in respect of an account receivable
outstanding as of the Closing Date, Buyer shall promptly remit such funds to
Seller and Buyer agrees that, until the forty-fifth day after the Closing Date,
all payments received by Buyer that are not identified, by reference to an
invoice number, as payments for a receivable arising after the Closing Date,
shall be remitted to Seller; PROVIDED, HOWEVER, that Seller shall return such
payment to Buyer if Seller is not owed any amount by the payor with respect to
accounts receivable arising on or prior to the Closing Date.
5.13 INSURANCE POLICIES. Seller agrees that, between the date
hereof and the Closing Date, Seller shall maintain in force all insurance
policies pertaining to the Frozen Pie Business in force on the date hereof or
insurance policies providing the same or substantially similar coverage.
5.14 ENVIRONMENTAL AUDIT. (a) Buyer may at its own expense
conduct a phase 1 environmental audit of the Pottstown Facility. Seller shall
cooperate fully with Buyer during the audit and will provide Buyer access to
the facility during normal business hours upon reasonable advance notice from
Buyer. Buyer will complete the audit and provide Seller with the phase 1 audit
report within fifteen (15) days of the date hereof.
(b) If during the audit Buyer finds specific evidence that
the facility or a portion of the facility may be contaminated with Hazardous
Substances, Buyer at its own
#20060353.14 25
<PAGE> 30
expense may conduct a phase 2 audit of the facility to delineate the extent of
the contamination. The phase 2 audit shall be limited to the area or areas in
which the phase 1 audit identified specific evidence of contamination. Buyer
shall complete its initial set of tests for contamination and shall provide
Seller with a report on those tests within forty-five (45) days from the date
hereof.
(c) If during the phase 1 or phase 2 environmental audits
Buyer determines that the Pottstown Facility or the Frozen Pie Business is not
in compliance with Environmental Laws, it shall so state in the appropriate
environmental audit report. If Buyer concludes that the cost of bringing the
facility or the business into compliance with law will not exceed $100,000, it
shall so state in the report and Buyer shall be responsible for such costs.
(d) If Buyer concludes that the cost of bringing the
Pottstown Facility or the Frozen Pie Business into compliance with any
Environmental Laws will exceed $100,000, it shall so state in the environmental
audit report and shall specify in the report the matters it believes are not in
compliance with such laws. Seller shall then take all steps necessary to
correct each of these violations. Buyer and Seller shall allocate the cost of
correcting each of the violations as follows:
(i) Buyer shall be responsible for the first $100,000 of
cost;
(ii) Seller and Buyer shall each be responsible for 50% of
the costs between $100,000 and $1,000,000;
(iii) Seller shall be responsible for 85% of and Buyer
shall be responsible for 15% of the costs between
$1,000,000 and $3,000,000; and
(iv) Seller shall be responsible for all costs above
$3,000,0000. In the alternative, if Buyer notifies
Seller in an audit report that it has reasonable
grounds to believe that the costs of bringing the
facility into compliance with law will exceed
$3,000,000, or if Seller reasonably concludes that
the cost of bringing the facility into compliance
with law will exceed $3,000,000, Seller may terminate
this transaction (if the Closing shall not have
occurred).
(e) Seller in taking action to correct a violation of an
Environmental Law shall provide Buyer with notice of the action it plans to
take. Buyer may within three (3) days of
#20060353.14 26
<PAGE> 31
receipt of notice propose changes to the actions Seller plans to take. If
Seller and Buyer are then unable to agree on the action that Buyer should take,
each party shall direct its environmental engineers to meet and agree within
seven (7) days on the selection of a third environmental engineer of national
repute to resolve the dispute. If the parties' environmental engineers cannot
agree on a third environmental engineer, they shall each appoint an
environmental engineer with whom neither they nor Buyer or Seller has any
business relationship and these environmental engineers shall chose an
environmental engineer of national repute to resolve the dispute. Buyer and
Seller shall be bound by the decision of the environmental engineer.
(f) If Buyer notifies Seller of a matter it believes is in
violation of law, and Seller disagrees that there is a violation of law, then
Buyer and Seller shall meet within three (3) days to attempt to resolve the
dispute. If the parties are unable to resolve the dispute, they shall jointly
appoint an environmental expert to resolve the dispute. If the parties are
unable to agree on an environmental expert, they shall arbitrate the dispute
before three (3) arbitrators pursuant to the rules of the American Arbitration
Association and shall be bound by the decision of the arbitral panel.
5.15 ENGINEERING SURVEY. (a) Buyer may at its own
expense conduct an engineering survey of the Pottstown Facility. Seller shall
cooperate fully with Buyer during the survey and will provide Buyer access to
the facility during normal business hours upon reasonable advance notice from
Buyer. Buyer will complete the survey and provide Seller with the survey
report within fifteen (15) days of the date hereof.
(b) If the engineering survey report concludes that there
exists at the Pottstown Facility any unsound, unsafe condition or conditions
which materially interfere with the use of the Pottstown Facility and the
operation of the Frozen Pie Business and specifies how such condition or
conditions are unsound, unsafe and materially interfere with the use of the
Pottstown Facility and the operation of the Frozen Pie Business, Seller shall
then take all steps
#20060353.14 27
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necessary, at its expense, to rectify such conditions; PROVIDED, HOWEVER, that
if Seller reasonably concludes that the cost of bringing the condition or
conditions into a state that does not materially interfere with the use of the
Pottstown Facility and the operation of the Frozen Pie Business will exceed
$3,000,000, Seller may terminate this transaction (if the Closing shall not
have occurred).
ARTICLE 6
CONDITIONS PRECEDENT OF SELLER
------------------------------
The obligation of Seller to consummate the transactions
described in Article 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
6.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer made hereunder shall be true in all material respects at
and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except to the extent that any representation or warranty is
made as of a specified date, in which case such representation or warranty
shall be true in all material respects as of such date.
6.2 AGREEMENTS. Buyer shall have performed and complied in
all material respects with all its undertakings and agreements required by this
Agreement to be performed or complied with by Buyer prior to or at the Closing.
6.3 BUYER CERTIFICATE. Seller shall have been furnished
with a certificate of an authorized officer of Buyer, dated the Closing Date,
certifying to the effect that the conditions contained in Sections 6.1 and 6.2
have been fulfilled and confirming the acknowledgement set forth in Section
8.2.
6.4 NO INJUNCTION. No injunction, restraining order or decree
of any nature of any court or governmental or regulatory authority shall exist
against Buyer, Seller or any of
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<PAGE> 33
their respective Affiliates, or any of the principals, officers or directors of
any of them, that restrains, prevents or materially adversely changes the
transactions contemplated hereby.
6.5 HSR COMPLIANCE. All applicable waiting periods under the
HSR Act shall have expired or have been terminated.
6.6 CANADIAN SERVICES AGREEMENT. Buyer shall have executed
and delivered the Canadian Services Agreement.
6.7 MISCELLANEOUS CLOSING DELIVERIES. Seller shall have
received each of the following:
(a) all documents, instruments and other closing
deliveries specified in Section 1.6; and
(b) such evidence as Seller may reasonably
request in order to establish (i) the corporate power and authority of Buyer to
consummate the transactions contemplated by this Agreement and (ii) compliance
with the conditions of Closing set forth herein.
ARTICLE 7
CONDITIONS PRECEDENT OF BUYER
-----------------------------
The obligation of Buyer to consummate the transactions
described in Article 1 hereof is subject to the fulfillment of each of the
following conditions prior to or at the Closing:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller made hereunder shall be true in all material respects at
and as of the Closing Date, with the same force and effect as though made at
and as of the Closing Date, except for changes permitted or contemplated by
this Agreement and except to the extent that any representation or warranty is
made as of a specified date, in which case such representation or warranty
shall be true in all material respects as of such date.
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<PAGE> 34
7.2 AGREEMENTS. Seller shall have performed and complied in
all material respects with all of its undertakings and agreements required by
this Agreement to be performed or complied with by it prior to or at the
Closing.
7.3 SELLER CERTIFICATE. Buyer shall have been furnished with
a certificate of an authorized officer of Seller, dated the Closing Date,
certifying to the effect that the conditions contained in Sections 7.1 and 7.2
have been fulfilled.
7.4 NO INJUNCTION. No injunction, restraining order or decree
of any court or governmental or regulatory authority shall exist against Buyer,
Seller or any of their respective Affiliates, or any of the principals,
officers or directors of any of them, that restrains, prevents or materially
adversely changes the transactions contemplated hereby.
7.5 HSR COMPLIANCE. All applicable waiting periods under the
HSR Act shall have expired or have been terminated.
7.6 CANADIAN SERVICES AGREEMENT. Seller shall have delivered
the Canadian Services Agreement.
7.7 NO MATERIAL ADVERSE CHANGE. Since December 31, 1993,
there shall have been no material adverse change in the financial condition or
results of operations of the Frozen Pie Business.
7.8 TRADEMARK ASSIGNMENT AGREEMENT. Seller shall have
delivered the Trademark Assignment Agreement duly executed by Kellogg Company.
7.9 WASTE WATER PERMIT. Buyer shall have received
reasonable assurance from the Borough of Pottstown that it will be able to
secure a waste water permit on substantially the same terms and conditions as
the new permit to be issued to Seller as described in Schedule 3.13.
7.10 MISCELLANEOUS CLOSING DELIVERIES. Buyer shall have
received each of the following:
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<PAGE> 35
(a) all documents, instruments and other closing
deliveries specified in Section 1.6; and
(b) such evidence as Buyer may reasonably request in
order to establish (i) the corporate power and authority of Seller to
consummate the transactions contemplated by this Agreement and (ii) compliance
with the conditions of Closing set forth herein.
ARTICLE 8
NON-SURVIVAL OF REPRESENTATIONS AND
WARRANTIES; CERTAIN ACKNOWLEDGMENTS; CONFIDENTIALITY
----------------------------------------------------
8.1 NON-SURVIVAL. The respective representations and
warranties of Seller and of Buyer hereunder shall survive the Closing until the
eighteenth month anniversary of the Closing Date; PROVIDED, HOWEVER that the
representations and warranties of Seller contained in Section 3.11 shall
survive until the applicable statute of limitation for Non-Income Taxes shall
have expired and the representations and warranties of Seller contained in
Section 3.13 shall survive the closing for twenty (20) years.
8.2 INFORMATION. Buyer hereby acknowledges it has not relied,
in whole or in part, on any information contained in the Confidential
Memorandum and Seller is making no representations or warranties with respect
to the Confidential Memorandum.
ARTICLE 9
INDEMNIFICATION
---------------
9.1 INDEMNIFICATION OF BUYER. Seller agrees to defend,
indemnify and hold harmless Buyer and its successors and assigns (individually,
a "BUYER INDEMNITEE," and collectively, the "BUYER INDEMNITEES"), against and
in respect of:
(a) any and all losses, damages, deficiencies or liabilities
caused by, resulting or arising from or otherwise relating to (i) any
failure by Seller to perform or otherwise fulfill or comply with (x)
if this Agreement shall have been terminated,
#20060353.14 31
<PAGE> 36
Section 5.8 or any other undertaking, agreement or obligation to be
performed, fulfilled or complied with by Seller prior to the Closing,
or (y) if the Closing shall occur, any undertaking or other agreement
or obligation hereunder to be performed, fulfilled or otherwise
complied with by Seller after the Closing, and (ii) the breach of any
representation or warranty set forth in Article 3, provided that the
obligation of Seller to indemnify Buyer Indemnitees shall be subject
to the limitation period set forth in Section 8.1 hereof with respect
to survival of such representations and warranties;
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, costs and expenses,
including reasonable attorneys' fees (whether or not incurred by Buyer
in connection with any action, suit, proceeding or claim against
Seller hereunder), incident to any of the foregoing or such
indemnification;
PROVIDED, HOWEVER, that Seller shall only be obligated to indemnify under this
Section 9.1 for losses, damages, deficiencies, debts, liabilities, costs and
expenses arising under this Agreement with respect to the matters set forth in
Section 9.1(a) if such losses, damages, deficiencies, debts, liabilities, costs
and expenses are in the aggregate in excess of $3,000,000, at which time Seller
shall be liable to Buyer for the entire amount of any such losses, damages,
deficiencies, debts, liabilities, costs and expenses; PROVIDED, HOWEVER, that
the aggregate indemnification by Seller under Section 9.1(a) and (b) shall not
exceed $35,000,000; PROVIDED, HOWEVER, that if any action, suit, proceeding,
claim, liability, demand or assessment shall be asserted against any Buyer
Indemnitee in respect of which such Buyer Indemnitee proposes to demand
indemnification, such Buyer Indemnitee shall notify Seller thereof within a
reasonable period of time after assertion thereof. Subject to rights of or
duties to any insurer or other third Person having liability therefor, Seller
shall have the right within thirty (30) days after receipt of such notice to
assume the control of the defense, compromise or settlement of any such action,
suit, proceeding, claim, liability, demand or assessment, including, at its
#20060353.14 32
<PAGE> 37
own expense, employment of counsel and at any time thereafter to exercise on
behalf of the Buyer Indemnitee any rights which may mitigate any of the
foregoing; PROVIDED, HOWEVER, that if Seller shall have exercised its right to
assume such control, the Buyer Indemnitee (i) may, in its sole discretion,
employ counsel to represent it (in addition to counsel employed by Seller, and
at the Buyer Indemnitee's sole expense) in any such matter, and in such event
counsel selected by Seller shall be required to cooperate with such counsel of
the Buyer Indemnitee in such defense, compromise or settlement for the purpose
of informing and sharing information with such Buyer Indemnitee and (ii) will,
at its own expense, make available to Seller those employees of Buyer or any
Affiliate of Buyer (including but not limited to those in the Frozen Pie
Business) whose assistance, testimony or presence is necessary to assist Seller
in evaluating and in defending any such action, suit, proceeding, claim,
liability, demand or assessment; PROVIDED, HOWEVER, that any such access shall
be conducted in such a manner as not to interfere unreasonably with the
operations of the businesses of Buyer and its Affiliates.
9.2 INDEMNIFICATION OF SELLER. Buyer agrees to defend,
indemnify and hold harmless Seller, and its successors and assigns
(individually, a "SELLER INDEMNITEE," and collectively, the "SELLER
INDEMNITEES"), against and in respect of:
(a) any and all losses, damages, deficiencies or liabilities
caused by, resulting or arising from or otherwise relating to (i) any
failure by Buyer to perform or otherwise fulfill or comply with (x) if
this Agreement shall have been terminated, Sections 5.5 or 5.8 or any
other undertaking, agreement or obligation to be performed, fulfilled
or complied with by Buyer prior to the Closing or (y) if the Closing
shall occur, any undertaking or other agreement or obligation
hereunder or under the Undertaking to be performed, fulfilled or
otherwise complied with by Buyer after the Closing or (ii) the breach
of any representation or warranty set forth in Article 4, provided
that the obligation of Buyer to indemnify Seller Indemnitees shall be
subject to
#20060353.14 33
<PAGE> 38
the limitation period set forth in Section 8.1 hereof with respect to
survival of such representations and warranties;
(b) any and all actions, suits, proceedings, claims,
liabilities, demands, assessments, judgments, costs and expenses,
including reasonable attorneys' fees (whether or not incurred by
Seller in connection with any action, suit, proceeding or claim
against Buyer hereunder), incident to any of the foregoing or such
indemnification;
PROVIDED, HOWEVER, that Buyer shall only be obligated to indemnify under this
Section 9.2 for losses, damages, deficiencies, debts, liabilities, costs and
expenses arising under this Agreement with respect to the matters set forth in
Section 9.2(a)(ii) if such losses, damages, deficiencies, debts, liabilities,
costs and expenses are in the aggregate in excess of $3,000,000, at which time
Buyer shall be liable to Seller for the entire amount of any such losses,
damages, deficiencies, debts, liabilities, costs and expenses; PROVIDED,
HOWEVER, that the aggregate indemnification by Seller under Section 9.2(a)(ii)
shall not exceed $35,000,000; PROVIDED, HOWEVER, that if any action, suit,
proceeding, claim, liability, demand or assessment shall be asserted against
any Seller Indemnitee in respect of which such Seller Indemnitee proposes to
demand indemnification, such Seller Indemnitee shall notify Buyer thereof
within a reasonable period of time after assertion thereof. Subject to rights
of or duties to any insurer or other third Person having liability therefor,
Buyer shall have the right after acknowledging to the applicable Seller
Indemnitee its liability therefor within thirty (30) days after receipt of such
notice to assume the control of the defense, compromise or settlement of any
such action, suit, proceeding, claim, liability, demand or assessment,
including, at its own expense, employment of counsel and at any time thereafter
to exercise on behalf of the Seller Indemnitee any rights which may mitigate
any of the foregoing; PROVIDED, HOWEVER, that if Buyer shall have exercised its
right to assume such control, the Seller Indemnitee (i) may, in its sole
discretion, employ counsel to represent it (in addition to counsel employed by
Buyer, and at the Seller Indemnitee's
#20060353.14 34
<PAGE> 39
sole expense) in any such matter, and in such event counsel selected by Buyer
shall be required to cooperate with such counsel of the Seller Indemnitee in
such defense, compromise or settlement for the purpose of informing and sharing
information with such Seller Indemnitee and (ii) will, at its own expense, make
available to Buyer those employees of Seller whose assistance, testimony or
presence is necessary to assist Buyer in evaluating and in defending any such
action, suit, proceeding, claim, liability, demand or assessment; PROVIDED,
HOWEVER, that any such access shall be conducted in such a manner as not to
interfere unreasonably with the operations of the businesses of Seller.
9.3 REMEDIES. Except as otherwise specifically provided in
this Agreement, the sole and exclusive remedy of both Buyer and Seller
hereunder shall be restricted to the indemnification rights set forth in this
Article 9.
9.4 CERTAIN LIMITATIONS. Recovery pursuant to Section 9.1
shall be limited to actual out-of-pocket expenses and shall in no event include
any special, indirect, incidental or consequential damages whatsoever.
9.5 SURVIVAL. Notwithstanding anything herein to the
contrary, this Article 9 shall survive termination of this Agreement without
limitation.
ARTICLE 10
MISCELLANEOUS
-------------
10.1 FURTHER ASSURANCES; CONSENT TO ASSIGNMENTS.
(a) From time to time after the Closing, Seller will execute
and deliver, or cause to be executed and delivered, such documents to Buyer as
Buyer shall reasonably request in order to vest more effectively in Buyer good
title to the Purchased Assets, and from time to time after the Closing, Buyer
will execute and deliver, or cause to be executed and delivered, such documents
to Seller as Seller shall reasonably request in order to confirm and carry out
#20060353.14 35
<PAGE> 40
the assumption by Buyer of the debts, liabilities and obligation of Seller
assumed pursuant to the Undertaking.
(b) At the request of Buyer following the Closing, Seller shall
use its best efforts to assist Buyer in obtaining consent to the assignment,
if any, of any contracts of the Frozen Pie Business not obtained prior to the
Closing.
10.2 EXPENSES. Each of the parties hereto shall
pay the fees and expenses of its respective counsel, accountants and
other experts and shall pay all other expenses incurred by it in connection
with the negotiation, preparation and execution of this Agreement and the
consummation of the transactions contemplated hereby.
All transfer, documentary, sales, registration, stamp, or
other similar taxes, charges and fees payable by reason of the transactions
contemplated by this Agreement or attributable to the sale, transfer or
delivery of the Purchased Assets hereunder (excluding any tax or charge on
Seller in the nature of a tax on income or gains from the transaction) shall be
borne by Buyer, and Buyer shall file with the necessary authorities or deliver
to Seller all necessary Returns and other documentation with respect to all
such taxes, charges and fees, including without limitation all required
exemption or resale certificates.
10.3 APPLICABLE LAW. This Agreement shall be governed by, and
construed in accordance with, the law of the State of Michigan without
reference to choice of law principles, including all matters of construction,
validity and performance.
10.4 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if signed by
the respective person giving such notice or other communication (in the case of
any corporation the signature shall be by an
#20060353.14 36
<PAGE> 41
authorized officer thereof) upon receipt of: hand delivery; certified or
registered mail, return receipt requested; or telecopy transmission with
confirmation of receipt:
If to Seller, to:
Mrs. Smith's Frozen Foods Co.
c/o Kellogg Company
One Kellogg Square
Battle Creek, Michigan 49016-3599
Attention: General Counsel
Telephone: (616) 961-2000
Telecopy: (616) 961-6172
with a copy to:
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
Attention: Howard S. Kelberg
Telephone: (212) 858-1334
Telecopy: (212) 858-1500
If to Buyer, to:
The J.M. Smucker Company
Strawberry Lane
Orrville, Ohio 45667-0280
Attention: R. Alan McFalls
Telephone: (216) 682-3000
Telecopy: (216) 684-3428
with a copy to:
The J.M. Smucker Company
Strawberry Lane
Orrville, Ohio 45667-0280
Attention: General Counsel
Telephone: (216) 682-3000
Telecopy: (216) 684-3428
Such names and addresses may be changed by such notice.
10.5 ENTIRE AGREEMENT. This Agreement (including the Exhibits
and Schedules attached hereto, all of which are a part hereof), the documents
referred to herein and the Confidentiality Agreement contain the entire
understanding of the parties hereto with respect to the subject matter
contained herein, and supersede and cancel all prior agreements,
#20060353.14 37
<PAGE> 42
negotiations, correspondence, undertakings and communications of the parties,
oral or written, respecting such subject matter, including but not limited to
the Confidential Memorandum. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto
with respect to the transactions under this Agreement other than those set
forth herein or made hereunder.
10.6 AMENDMENT AND MODIFICATION. This Agreement may be
amended or modified only by a written instrument executed by the parties or
their respective successors or assigns.
10.7 HEADINGS; REFERENCES. The article, section and paragraph
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
references herein to "Articles," "Sections," or "Schedules" shall be deemed to
be references to Articles or Sections hereof or Schedules hereto unless
otherwise indicated.
10.8 COUNTERPARTS. This Agreement may be executed in one or
more counterparts and each counterpart shall be deemed to be an original.
10.9 PARTIES IN INTEREST; ASSIGNMENT. This Agreement shall
inure to the benefit of and be binding upon Seller and Buyer and their
respective successors. Except as provided in or contemplated by Article 9
(which shall confer upon the Persons referred to therein for whose benefit it
is intended the right to enforce such Section or Article, as applicable),
nothing in this Agreement, express or implied, is intended to confer upon any
Person not a party to this Agreement any rights or remedies under or by reason
of this Agreement. No party to this Agreement may assign or delegate all or
any portion of its rights, obligations or liabilities under this Agreement
without the prior written consent of the other party to this Agreement;
PROVIDED, HOWEVER, that Buyer may assign this Agreement to an Affiliate
provided Buyer remains liable for all its obligations and liabilities hereunder
and guarantees the performance of all obligations and liabilities of said
Affiliate.
#20060353.14 38
<PAGE> 43
10.10 SEVERABILITY; ENFORCEMENT. The invalidity of any
portion hereof shall not affect the validity, force or effect of the remaining
portions hereof. If it is ever held that any restriction hereunder is too
broad to permit enforcement of such restriction to its fullest extent, each
party agrees that a court of competent jurisdiction may enforce such
restriction to the maximum extent permitted by law, and each party hereby
consents and agrees that such scope may be judicially modified accordingly in
any proceeding brought to enforce such restriction.
10.11 COVENANT NOT TO COMPETE. Kellogg Company hereby
covenants and agrees that, for a period of three (3) years following the
Closing Date, neither it nor any subsidiary will conduct or engage in North
America in a frozen pie or frozen cake business or a business based on a
frozen product substantially similar to SmartStyle(TM), or acquire any company
which derived more than 25% of its revenues in North America during the
immediately prior fiscal year from the frozen pie or frozen cake business or
from a business based on a frozen product substantially similar to
SmartStyle(TM); PROVIDED, HOWEVER, that nothing contained herein shall limit
the ability of Kellogg Company to develop the business of any of its current
product lines.
10.12 WAIVER. Any of the conditions to Closing set forth in
this Agreement may be waived at any time prior to or at the Closing hereunder
by the party entitled to the benefit thereof. The failure of any party hereto
to enforce at any time any of the provisions of this Agreement shall in no way
be construed to be a waiver of any such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach
of or non-compliance with this Agreement shall be held to be a waiver of any
other or subsequent breach or non-compliance.
10.13 MEDIATION. If a dispute arises out of or relates to
this Agreement, or the breach thereof, and if said dispute cannot be settled
through negotiation, the parties agree first to try in good faith to settle
the dispute by mediation under the Commercial Mediation Rules of
#20060353.14 39
<PAGE> 44
the American Arbitration Association, before resorting to arbitration,
litigation or some other dispute resolution procedure.
10.14 KNOWLEDGE OF SELLER. Whenever a representation or
warranty made by Seller herein refers to the knowledge of Seller, such
knowledge shall be deemed to consist only of the actual knowledge of Seller.
Seller has not undertaken, nor shall Seller have any duty to undertake, any
investigation concerning any matter as to which a representation or warranty is
made as to Seller's knowledge.
10.15 SCHEDULES. Notwithstanding anything to the contrary
contained in this Agreement or in any of the Schedules, any information
disclosed in one Schedule shall be deemed to be disclosed in all Schedules.
The disclosure of any information on any Schedule shall not be deemed to
constitute an acknowledgment that such information is required to be disclosed
in connection with the representations and warranties made by Seller in this
Agreement or that it is material, nor shall such information be deemed to
establish a standard of materiality.
10.16 DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings set forth below:
"AFFILIATE" means, with respect to any Person, any other
Person directly or indirectly Controlling, Controlled by, or under common
Control with such other Person.
"CODE" means the Internal Revenue Code of 1986, as amended or,
if appropriate, any predecessor statute.
"CONTROL" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through ownership of voting securities, by contract or otherwise.
"ENVIRONMENTAL LAWS" means any federal, state, or local
statute, law or regulation, in effect on the date hereof relating to pollution
or protection of the environment.
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<PAGE> 45
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"HAZARDOUS SUBSTANCES" means all substances defined as such
in the Comprehensive Environmental Response, Compensation, and Liability Act
of 1980.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
"INCOME TAX" or "INCOME TAXES" means any federal, state,
local or foreign taxes measured or measurable, in whole or in part, by overall
net or gross income or profits.
"PERSON" means an individual, corporation, partnership, trust
or unincorporated organization or a government or any agency or political
subdivision thereof.
"PRE-CLOSING PERIOD" means any tax period ending on or prior
to the Closing Date.
"RETURNS" means any return, declaration, report, information
return or statement, including any schedule or attachment thereto.
"NON-INCOME TAX" or "NON-INCOME TAXES" means any federal,
state, local or foreign transfer, sales, use, payroll, services, capital,
intangibles, ad valorem, payroll, customs, occupation, property (real or
personal), and similar taxes, assessments, fees or charges (including interest,
penalties or additions to such taxes), which taxes shall not include any Income
Taxes.
#20060353.14 41
<PAGE> 46
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
THE J.M. SMUCKER COMPANY
By:
_________________________________
Richard G. Jirsa
Controller
MRS. SMITH'S FROZEN FOODS CO.
By:
_________________________________
Edward J. Gildea
Secretary
Kellogg Company shall be deemed a party to this Agreement for purposes of
Section 5.9, Section 9 and Section 10.11, and hereby agrees to guarantee the
performance of the obligations of Seller under Sections 5.9 and 9 of this
Agreement and hereby agrees to the covenant contained in Section 10.11.
KELLOGG COMPANY
By: ______________________________
Charles E. French
Vice President, Finance and
Treasurer
#20060353.14 42
