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EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
CHIQUITA BRANDS INTERNATIONAL, INC.
AND
PERFORMANCE FOOD GROUP COMPANY
FEBRUARY 22, 2005
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TABLE OF CONTENTS
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Page
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ARTICLE 1. PURCHASE AND SALE OF
SHARES.......................................... 1
1.1 Transfer of Shares........................................
1
ARTICLE 2.
CONSIDERATION........................................................
1
2.1 Purchase Price............................................
1
2.2 Other Payments............................................
1
2.3 EBITDA Adjustment.........................................
4
ARTICLE 3. CLOSING; OBLIGATIONS OF THE
PARTIES.................................. 5
3.1 Closing Date..............................................
5
3.2 Obligations of the Parties at the Closing.................
5
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF
SELLER............................. 6
4.1 Corporate Status..........................................
6
4.2 Authority.................................................
7
4.3 No Conflict...............................................
7
4.4 Capitalization............................................
7
4.5 Financial Statements......................................
9
4.6 Real Property.............................................
10
4.7 Assets....................................................
11
4.8 Material Contracts........................................
11
4.9 Intellectual Property.....................................
13
4.10 Litigation, Claims and Proceedings........................
14
4.11 Environmental and Safety and Health Matters...............
14
4.12 Compliance with Law.......................................
16
4.13 Employee Matters and Benefit Plans........................
17
4.14 Taxes.....................................................
18
4.15 Absence of Undisclosed Liabilities........................
20
4.16 Absence of Certain Changes................................
20
4.17 Labor Matters.............................................
20
4.18 Customers and Suppliers...................................
21
4.19 Accounts Receivable.......................................
22
4.20 Affiliated Transactions...................................
22
4.21 Insurance.................................................
22
4.22 Payments..................................................
22
4.23 Finder's Fee..............................................
23
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF
PURCHASER.......................... 23
5.1 Corporate Status..........................................
23
5.2 Authority.................................................
23
5.3 No Conflict...............................................
23
5.4 Compliance with Law.......................................
24
5.5 Sufficient Funds..........................................
24
5.6 Finder's Fee..............................................
24
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5.7 No Reliance...............................................
24
5.8 Investment Intent.........................................
25
ARTICLE 6.
COVENANTS............................................................
25
6.1 Interim Operations of the Companies.......................
25
6.2 Consents..................................................
26
6.3 Publicity.................................................
27
6.4 Access to Records and Properties..........................
28
6.5 Further Action............................................
30
6.6 Expenses..................................................
31
6.7 Notification of Certain Matters...........................
31
6.8 Employee Benefit Plans....................................
31
6.9 Non-Competition, Non-Solicitation and Non-Disclosure......
34
6.10 Intercompany Indebtedness.................................
35
6.11 Debt and Guarantees.......................................
36
6.12 Supplements to Disclosure Schedule........................
36
6.13 Non-Solicitation..........................................
36
6.14 Obligations with Respect to Certain Insurance Claims......
37
6.15 Obligation with Respect to Fresh Advantage................
38
ARTICLE 7. CLOSING
CONDITIONS...................................................
38
7.1 Conditions to Obligations of Seller and Purchaser to
Consummate the Transaction................................
38
7.2 Additional Conditions to Obligations of Purchaser.........
38
7.3 Additional Conditions to Obligations of Seller............
40
ARTICLE 8. CERTAIN TAX
MATTERS.................................................. 41
8.1 Responsibility for Filing Tax Returns.....................
41
8.2 Cooperation on Tax Matters................................
41
8.3 Tax Sharing Agreements....................................
42
8.4 Tax Indemnifications......................................
42
8.5 Certain Non-income Taxes..................................
43
8.6 Section 338(h)(10) Election...............................
44
ARTICLE 9. ADDITIONAL
INDEMNIFICATION........................................... 44
9.1 Survival..................................................
44
9.2 Additional Indemnification................................
44
9.3 Indemnification Procedures................................
46
9.4 Indemnification Limitations...............................
47
ARTICLE 10.
TERMINATION.........................................................
48
10.1 Termination...............................................
48
10.2 Effect of Termination and Abandonment.....................
49
ARTICLE 11.
MISCELLANEOUS.......................................................
49
11.1 Intentionally Deleted.....................................
49
11.2 Notices...................................................
49
11.3 Certain Definitions; Interpretation.......................
50
11.4 Severability..............................................
55
11.5 Entire Agreement; No Third-Party Beneficiaries............
55
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11.6 Amendment; Waiver.........................................
55
11.7 Binding Effect; Assignment................................
55
11.8 Disclosure Schedule.......................................
55
11.9 Governing Law; Jurisdiction...............................
56
11.10 Enforcement...............................................
56
11.11 Construction..............................................
56
11.12 Counterparts..............................................
56
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INDEX OF DEFINED TERMS
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Term Section
----------------------------------------------------
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338(h)(10) Entity................................... 8.6
Accountants.........................................
2.2(d)(iii)
Accounts Receivable................................. 4.19
Acquisition Proposal................................ 6.13
Action..............................................
11.3(a)(i)
Actual Payment Amount............................... 2.2(a)
Adjustment Amount................................... 2.2(c)
affiliate...........................................
11.3(a)(ii)
Affiliated Group....................................
11.3(a)(iii)
Agreement...........................................
Recitals
Assets.............................................. 4.7
Audited Statements.................................. 6.4(b)
Average Working Capital............................. 2.2(b)
Business............................................ 4.4(d)
Cause............................................... 6.8(d)
CBAs................................................ 4.17(a)
Clayton County Arrangements.........................
11.3(a)(v)
Cleanup.............................................
11.3(a)(v)
Closing............................................. 3.1
Closing Date........................................ 3.1
Closing Date Financial Statements...................
2.2(d)(i)
Closing Date Working Capital........................
2.2(d)(i)
Code................................................
11.3(a)(vi)
Commitment Letter................................... 5.5
Companies...........................................
Recitals
Companies Covered Employees......................... 6.8(b)
Companies Owned Intellectual Property............... 4.9(b)
Companies Used Intellectual Property................ 4.9(b)
Company Plans....................................... 4.13(a)
Company Release.....................................
11.3(a)(vii)
Confidential Material............................... 6.9(c)
Confidentiality Agreement........................... 6.4(a)
Contract............................................
4.8(a)(i)
control.............................................
11.3(a)(viii)
DOJ................................................. 6.2(a)
EBITDA..............................................
11.3(a)(ix)
Effective Time...................................... 3.1
Encumbrances........................................ 4.3
Environmental Claim.................................
11.3(a)(x)
Environmental Law................................... 4.11(a)
ERISA...............................................
11.3(a)(xi)
ERISA Affiliate..................................... 4.13(f)
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Estimated Payment................................... 2.2(a)
Estimated Payment Adjustment Amount................. 2.2(a)
Financial Statements................................ 4.5(a)
FTC................................................. 6.2(a)
GAAP................................................ 4.5(b)
Goldman Fee......................................... 4.23
Governmental Authority..............................
11.3(a)(xii)
Governmental Order..................................
11.3(a)(xiii)
Guarantees.......................................... 6.11
Hazardous Substance................................. 4.11(a)
HSR Act............................................. 4.3
Indemnified Party................................... 9.3(a)
Indemnifying Party.................................. 9.3(a)
Intercompany Notes..................................
11.3(a)(xiv)
Key Customers and Suppliers......................... 4.18
Key Employees....................................... 4.13(h)
knowledge...........................................
11.3(a)(xv)
Law.................................................
11.3(a)(xvi)
Leased Real Property................................ 4.6(c)
Losses.............................................. 9.2(a)
Material Contracts.................................. 4.8(a)
Merrill Lynch Fee................................... 4.23
Monthly Statements..................................
2.2(d)(i)
Owned Real Property................................. 4.6(b)
Permit..............................................
11.3(a)(xvii)
Permitted Encumbrances.............................. 4.6(b)
Person..............................................
11.3(a)(xviii)
PICL................................................ 6.14
Pre-Closing Claims.................................. 6.14
Preliminary EBITDA Statement........................ 2.3(a)
Purchase Price...................................... 2.1
Purchaser...........................................
Recitals
Purchaser Indemnified Parties....................... 9.2(a)
Purchaser Material Adverse Effect...................
11.3(a)(xix)
Purchaser's 401(k) Plan............................. 6.8(e)
Real Property....................................... 4.6(c)
Real Property Leases................................
4.6(a)(ii)
Reference Balance Sheet............................. 4.5(a)
Related Parties..................................... 4.20
Representatives..................................... 6.9(c)
Seller..............................................
Recitals
Seller Indemnified Parties.......................... 9.2(b)
Seller Material Adverse Effect......................
11.3(a)(xxi)
Seller Plans........................................ 4.13(a)
Seller Release......................................
11.3(a)(xx)
Shares.............................................. 1.1
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Straddle Period.....................................
8.4(a)(iii)
Subsidiary..........................................
11.3(a)(xxii)
Survival Period..................................... 9.1
Tax Return..........................................
11.3(a)(xxv)
Taxes...............................................
11.3(a)(xxiii)
Taxing Authority....................................
11.3(a)(xxiv)
Termination Date.................................... 10.1(b)
Third-Party Claim................................... 9.3(a)
Threshold Amount.................................... 9.4
WC Adjustment Amount................................ 2.2(b)
Working Capital..................................... 2.2(b)
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<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT ("Agreement") is made this 22nd
day of
February, 2005, by and between Chiquita Brands International,
Inc., a New Jersey
corporation ("Purchaser"), and Performance Food Group Company, a
Tennessee
corporation ("Seller").
WHEREAS, Seller owns all of the issued and outstanding shares of
the
capital stock of Fresh International Corp., a Delaware
corporation, Fresh
Advantage, Inc., a Virginia corporation, Redi-Cut Foods, Inc.,
an Illinois
corporation, and K.C. Salad Holdings, Inc., a Missouri
corporation
(collectively, the "Companies"); and
WHEREAS, Purchaser desires to acquire from Seller, and Seller
desires to
sell to Purchaser, all of the issued and outstanding shares of
the capital stock
of the Companies upon and subject to the terms and conditions
contained in this
Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
covenants and
agreements herein contained, the parties agree as follows:
ARTICLE 1.
PURCHASE AND SALE OF SHARES
1.1 TRANSFER OF SHARES. Subject to all of the terms and
conditions of this
Agreement, at the Closing, Seller hereby agrees to sell,
transfer and convey to
Purchaser, and Purchaser agrees to purchase and acquire from
Seller, free and
clear of all Encumbrances (as defined in Section 4.3), 100
shares of common
stock, no par value, of Fresh International Corp., 1,000 shares
of common stock,
par value $0.01 per share, of Fresh Advantage, Inc., 1,000
shares of Class A
common stock, no par value, of Redi-Cut Foods, Inc., and 1,000
shares of common
stock, par value $0.01 per share, of K.C. Salad Holdings, Inc.,
which constitute
all of the issued and outstanding shares of capital stock of the
Companies
(collectively, the "Shares").
ARTICLE 2.
CONSIDERATION
2.1 PURCHASE PRICE. The purchase price (the "Purchase Price")
for the
Shares shall be $855,000,000, subject to adjustment pursuant to
Section 2.3, if
applicable. At the Closing (as defined below), Purchaser shall
deliver the
Purchase Price to Seller by wire transfer of immediately
available funds
pursuant to the wire transfer instructions provided by
Seller.
2.2 OTHER PAYMENTS.
(a) Payment of Cash and Outstanding Checks in Excess of
Deposits.
Purchaser agrees that it will pay to Seller at Closing an amount
equal to
the estimated amount of the following balance sheet line items
(i) cash;
and (ii) "outstanding checks (issued by Seller in payment of
obligations
of the Companies
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and Subsidiaries) in excess of deposits" as of the most recently
completed
four or five-week fiscal period prior to the Closing Date for
which
financial statements of the Companies and their Subsidiaries
prepared in
accordance with GAAP consistently applied with the Financial
Statements
are available (the "Estimated Payment"). The "Estimated Payment
Adjustment
Amount" (which may be a positive or negative number) will be
equal to the
amount determined by subtracting the actual amount of (i) cash;
and (ii)
"outstanding checks (issued by Seller in payment of obligations
of the
Companies and Subsidiaries) in excess of deposits" as of the
Closing Date
as set forth in the applicable line items in the Closing Date
Financial
Statements (the "Actual Payment Amount") from the Estimated
Payment.
(b) Working Capital Adjustment Amount. "Working Capital" as of
a
given date shall mean the amount calculated by subtracting the
current
liabilities of the Companies and their Subsidiaries
(including
"outstanding checks (issued by Seller in payment of obligations
of the
Companies and Subsidiaries) in excess of deposits," but
excluding (i)
liabilities for income taxes, (ii) capital lease obligations,
(iii)
interest payable, (iv) the current portion of long-term debt,
(v)
intercompany payables owing to Seller or its Subsidiaries and
(vi) any
Seller insurance allocation accrual), as of that date from the
current
assets of the Companies and their Subsidiaries (other than (i)
cash, (ii)
current deferred income tax assets, (iii) any other income Tax
assets and
(iv) intercompany receivables owed by Seller or its
Subsidiaries) as of
that date; provided, that, for the avoidance of doubt,
calculations of
inventory and accounts receivable shall be net of the applicable
reserve.
The "Average Working Capital" of the Companies and their
Subsidiaries
shall be equal to the average of the Working Capital as of the
last day of
each of the 12 most recently completed four or five-week fiscal
periods
prior to the Closing Date for which internally prepared
financial
statements of the Companies and their Subsidiaries prepared in
accordance
with GAAP consistently applied with the Financial Statements
are
available. The "WC Adjustment Amount" (which may be a positive
or negative
number) will be equal to the amount determined by subtracting
the Closing
Date Working Capital (as defined below) from the Average Working
Capital.
For the avoidance of doubt, Seller shall be fully responsible
for the
payment of, and shall make payment when due on, any "outstanding
checks in
excess of deposits" as of the Closing Date to the extent such
amount has
been included in the Estimated Payment and the Actual Payment
Amount. An
example of the internally prepared financial statements and
calculation of
Working Capital as of January 1, 2005 is attached as Section
2.2(b) of the
Disclosure Schedule.
(c) Post-Closing Payment. The Estimated Payment Adjustment
Amount
and the WC Adjustment Amount when added together (which may be a
positive
or negative number) shall collectively be referred to as the
"Adjustment
Amount." If the Adjustment Amount is positive, the Adjustment
Amount shall
be paid by wire transfer by Seller to an account specified by
Purchaser.
If the Adjustment Amount is negative, the Adjustment Amount
(treated as if
it were a positive number) shall be paid by wire transfer by
Purchaser to
an account
2
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specified by Seller. All payments shall be made together with
interest at
a rate of 3% per annum, which interest shall begin accruing on
the Closing
Date and end on the date that the payment is made. Within three
business
days after the calculation of the Actual Payment Amount and
Closing Date
Working Capital becomes binding and conclusive on the parties
pursuant to
Section 2.2(d), Seller or Purchaser, as the case may be, shall
make the
wire transfer payment provided for in this Section 2.2(c).
(d) Adjustment Procedure.
(i) Seller shall prepare financial statements (including a
combined balance sheet as of the Closing Date and a combined
statement of operations from January 2, 2005 through the
Closing
Date) (the "Closing Date Financial Statements") of the Companies
and
their Subsidiaries as of the Closing Date in accordance with
GAAP
consistently applied with the Financial Statements. Seller
shall
then determine (A) the Actual Payment Amount and the Working
Capital
as of the Closing Date (the "Closing Date Working Capital")
based
upon the Closing Date Financial Statements and (B) the
Average
Working Capital based on the financial statements of the
Companies
and their Subsidiaries prepared in accordance with GAAP
consistently
applied with the Financial Statements for each of the 12
most
recently completed four or five-week fiscal periods prior to
the
Closing Date for which internally prepared financial statements
of
the Companies and their Subsidiaries prepared in accordance
with
GAAP consistently applied with the Financial Statements are
available (the "Monthly Statements"). Seller shall deliver
the
Closing Date Financial Statements, the Monthly Statements and
its
determination of the Actual Payment Amount, the Average
Working
Capital and the Closing Date Working Capital (which shall
include a
description in reasonable detail of the components and
amounts
thereof) to Purchaser within thirty (30) days following the
Closing
Date.
(ii) If within thirty (30) days following delivery of the
Closing Date Financial Statements, the Monthly Statements and
the
calculation of the Actual Payment Amount, the Average
Working
Capital and the Closing Date Working Capital, Purchaser has
not
given Seller written notice of its objection as to the
Actual
Payment Amount, the Average Working Capital and/or the Closing
Date
Working Capital calculation (which notice shall state in
reasonable
detail the basis of Purchaser's objection), then the Actual
Payment
Amount, the Average Working Capital and Closing Date Working
Capital
calculated by Seller shall be binding and conclusive on the
parties
and be used in computing the Estimated Payment Adjustment Amount
and
the WC Adjustment Amount, respectively.
(iii) If Purchaser duly gives Seller such notice of
objection,
and if Seller and Purchaser fail to resolve the issues
outstanding
with respect to
3
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the Closing Date Financial Statements and the calculation of
the
Actual Payment Amount, the Average Working Capital and/or
the
Closing Date Working Capital within thirty (30) days of
Seller's
receipt of Purchaser's objection notice, Seller and Purchaser
shall
submit the issues remaining in dispute to Deloitte & Touche
LLP,
independent public accountants (the "Accountants"), for
resolution
in accordance with the terms of the Agreement and in compliance
with
GAAP consistently applied with the Financial Statements. If
issues
are submitted to the Accountants for resolution, (i) Seller
and
Purchaser shall furnish or cause to be furnished to the
Accountants
such work papers and other documents and information relating to
the
disputed issues as the Accountants may request and are available
to
that party or its agents and shall be afforded the opportunity
to
present to the Accountants any material relating to the
disputed
issues and to discuss the issues with the Accountants; (ii)
the
determination by the Accountants, as set forth in a notice to
be
delivered to both Seller and Purchaser within sixty (60) days of
the
submission to the Accountants of the issues remaining in
dispute,
shall be final, binding and conclusive on the parties and shall
be
used in the calculation of the Actual Payment Amount, the
Average
Working Capital and/or the Closing Date Working Capital, as
applicable; and (iii) Seller and Purchaser will each bear
fifty
percent (50%) of the fees and costs of the Accountants for
such
determination.
2.3 EBITDA ADJUSTMENT.
(a) Concurrently with the delivery to Purchaser of the
Audited
Statements, Seller shall deliver to Purchaser a preliminary
statement
("Preliminary EBITDA Statement") of the EBITDA based on the
Audited
Statements (which shall include a description in reasonable
detail of the
components and amounts thereof).
(b) If within ten (10) days following delivery of the
Preliminary
EBITDA Statement, Purchaser has not given Seller written notice
of its
objection as to the calculation of EBITDA (which notice shall
state in
reasonable detail the basis of Purchaser's objection), then the
EBITDA
calculated by Seller shall be binding and conclusive on the
parties and be
used in computing any adjustment of the Purchase Price pursuant
to this
Section 2.3.
(c) If Purchaser duly gives Seller such notice of objection, and
if
Seller and Purchaser fail to resolve the issues outstanding with
respect
to the Preliminary EBITDA Statement and the calculation of the
EBITDA
within ten (10) days of Seller's receipt of Purchaser's
objection notice,
Seller and Purchaser shall submit the issues remaining in
dispute to the
Accountants for resolution in accordance with the terms of the
Agreement
and consistent with the definition of EBITDA set forth herein.
If issues
are submitted to the Accountants for resolution: (i) Seller and
Purchaser
shall furnish or cause to be furnished to the Accountants such
work papers
and other documents and information relating to
4
<PAGE>
the disputed issues as the Accountants may request and are
available to
that party or its agents and shall be afforded the opportunity
to present
to the Accountants any material relating to the disputed issues
and to
discuss the issues with the Accountants; (ii) the determination
by the
Accountants, as set forth in a notice to be delivered to both
Seller and
Purchaser within ten (10) days of the submission to the
Accountants of the
issues remaining in dispute, shall be final, binding and
conclusive on the
parties and shall be used in the calculation of any adjustment
of the
Purchase Price pursuant to this Section 2.3; and (iii) Seller
and
Purchaser will each bear fifty percent (50%) of the fees and
costs of the
Accountants for such determination.
(d) In the event the amount of EBITDA set forth in Section
2.3(d) of
the Disclosure Schedule (which shall include a description in
reasonable
detail of the components and amounts thereof, including the
amount of any
corporate allocation charge and any insurance allocation charge)
exceeds
by more than $4,000,000 the amount of EBITDA based on the
Audited
Statements as finally determined pursuant to this Section 2.3,
the
Purchase Price shall be reduced by an amount equal to the
product of (i)
the difference between the amount of EBITDA set forth in Section
2.3(d) of
the Disclosure Schedule and the amount of EBITDA based on the
Audited
Statements as finally determined pursuant to this Section 2.3
and (ii)
8.65. For the avoidance of doubt, an example of the calculation
of EBITDA
for the year ended January 1, 2005 is set forth in Section
2.3(d) of the
Disclosure Schedule.
ARTICLE 3.
CLOSING; OBLIGATIONS OF THE PARTIES
3.1 CLOSING DATE. The closing (the "Closing") shall take place
at 10:00
a.m., local time, at the offices of Bass, Berry & Sims PLC,
Nashville,
Tennessee, on the later of (i) five (5) business days following
satisfaction or
waiver of all conditions to Closing set forth in Article 7
hereof (other than
those conditions that by their nature have to be satisfied at
Closing (but
subject to the satisfaction or waiver of those conditions)) or
(ii) 45 days
after the date of Purchaser's receipt of the Audited Statements
(as defined in
Section 6.4(b)) (the "Closing Date"). The transfer shall be
deemed to have
become effective at 12:01 a.m., California time on the Closing
Date (the
"Effective Time").
3.2 OBLIGATIONS OF THE PARTIES AT THE CLOSING.
(a) At the Closing, Purchaser shall deliver to Seller:
(i) the Purchase Price as specified in Section 2.1, plus the
Estimated Payment;
(ii) a copy of resolutions of the Board of Directors of
Purchaser, certified by Purchaser's Secretary, authorizing
the
execution, delivery and performance of this Agreement and the
other
documents
5
<PAGE>
referred to herein to be executed by Purchaser, and the
consummation
of the transactions contemplated hereby; and
(iii) a duly executed copy of the Company Release.
(b) At the Closing, Seller will deliver to Purchaser:
(i) stock certificates for the Shares, which certificates
shall be duly endorsed to Purchaser or accompanied by duly
executed
stock powers;
(ii) a copy of resolutions of the Board of Directors of
Seller, certified by Seller's Secretary, authorizing the
execution,
delivery and performance of this Agreement and the other
documents
referred to herein to be executed by Seller, and the
consummation of
the transactions contemplated hereby;
(iii) a duly executed copy of the Seller Release;
(iv) written resignations, effective as of the Closing Date,
from any directors, officers or managing members of the
Companies
and the Subsidiaries requested by Purchaser to resign as of
the
Closing;
(v) an opinion of Bass, Berry & Sims PLC in form and
substance
reasonably satisfactory to Purchaser, or, with respect to
certain
matters, opinions of local counsel reasonably satisfactory
to
Purchaser or of the general counsel of the Seller or the
Companies;
and
(vi) such other certificates, documents and instruments as
Purchaser may reasonably request in connection with the
consummation
of the transactions contemplated hereby.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
4.1 CORPORATE STATUS. Each of the Companies and each Subsidiary
of the
Companies is duly organized, validly existing and in good
standing under the
laws of the jurisdiction of its incorporation or organization
and each (a) has
all requisite corporate or limited liability company power and
authority to own,
operate or lease its properties and assets and to carry on its
business as it is
now being conducted, and (b) is duly qualified to do business
and is in good
standing in each of the jurisdictions listed on Section 4.1 of
the Disclosure
Schedule, which includes each jurisdiction in which the
ownership, operation or
leasing of its properties and assets and the conduct of its
business requires it
to be so qualified, licensed or authorized, except where the
failures to have
such power and authority or to be so qualified, licensed or
authorized would not
have a Seller Material Adverse Effect. Seller has made available
to Purchaser a
copy of the certificate
6
<PAGE>
of incorporation and bylaws (or similar organization documents),
as amended, of
the Companies and each of their Subsidiaries, each as in effect
on the date
hereof.
4.2 AUTHORITY. Seller has all requisite corporate power and
authority to
enter into this Agreement and to consummate the transactions
contemplated
hereby. The execution and delivery of this Agreement by Seller
and the
consummation of the transactions contemplated hereby have been
duly and validly
authorized by the Board of Directors of Seller and no other
corporate
proceedings are necessary to authorize this Agreement or to
consummate the
transactions contemplated hereby. This Agreement has been duly
executed and
delivered by Seller, and (assuming due authorization and
delivery by Purchaser)
this Agreement constitutes a legal, valid and binding obligation
of Seller
enforceable against it in accordance with its terms, subject to
general
principles of equity and except as the enforceability thereof
may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar laws of
general application relating to creditors' rights.
4.3 NO CONFLICT. Except as set forth in Section 4.3 of the
Disclosure
Schedule and except for the notification requirements of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules
and regulations
promulgated thereunder (the "HSR Act"), the execution, delivery
and performance
of this Agreement by Seller and the consummation by Seller of
the transactions
contemplated hereby will not (a) violate, conflict with or
result in the breach
of any term or provision of the charter or bylaws (or similar
organizational
documents) of Seller, any of the Companies or any of the
Subsidiaries, (b)
conflict with or violate any Law applicable to Seller, the
Companies or any
Subsidiary or any of their respective assets, properties or
businesses, (c)
result in the creation of any Encumbrance (as defined below) on
the Shares, (d)
require any action, consent, approval or authorization by, or
any other order
of, filing with or notification to, any Governmental Authority
or (e) conflict
with or violate, result in the breach of any term or provision
of, or constitute
a default (or event which with the giving of notice or lapse of
time, or both,
would become a default) under, or give to others any rights of
termination,
amendment, acceleration, suspension, revocation or cancellation
of, or result in
the creation of any mortgage, pledge, hypothecation, claim,
security interest,
encumbrance, interest, option, lien or other restriction
(collectively,
"Encumbrances") on any of the assets or properties of Seller,
the Companies or
any Subsidiary pursuant to, in the case of clause (e), any
material agreement or
arrangement to which Seller is a party or by which it is bound
or any Material
Contract, except for immaterial violations, conflicts, breaches
or defaults or
violations, conflicts, breaches or defaults which would occur as
a result of the
business or activities in which Purchaser is or proposes to be
engaged or as a
result of any acts or omissions by, or the status of any facts
pertaining to,
Purchaser.
4.4 CAPITALIZATION.
(a) The authorized and outstanding capital stock of the
Companies is
set forth in Section 4.4(a) of the Disclosure Schedule. All of
the
Companies' issued and outstanding stock is duly authorized,
validly
issued, fully paid, nonassessable, free of any preemptive
rights, have
been issued in compliance with
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applicable Law and is held of record and beneficially by Seller,
free and
clear of any Encumbrance. The Shares constitute all of the
issued and
outstanding capital stock of the Companies.
(b) Except as set forth in Section 4.4(b) of the Disclosure
Schedule, there are (i) no outstanding obligations, options,
warrants,
convertible securities or other rights, agreements, arrangements
or
commitments of any kind relating to the capital stock of the
Companies or
obligating the Companies to issue or sell or otherwise transfer
any shares
of capital stock of, or any other interest in, the Companies,
(ii) no
outstanding obligations of the Companies to repurchase, redeem
or
otherwise acquire any shares of their respective capital stock
or to
provide funds to, or make any investment (in the form of a loan,
capital
contribution or otherwise) in, any other Person or (iii) no
voting trusts,
stockholder agreements, proxies or other agreements or
understandings in
effect with respect to the voting or transfer of any of their
respective
capital stock.
(c) Section 4.4(c) of the Disclosure Schedule sets forth a true
and
complete list of all Subsidiaries of the Companies, listing for
each
Subsidiary its name, its jurisdiction of organization, the
percentage of
stock or other equity interest of each subsidiary owned by the
Companies
or a Subsidiary and the authorized and outstanding capital stock
of each
such Subsidiary. Other than the Subsidiaries or as otherwise set
forth in
Section 4.4(c) of the Disclosure Schedule, there are no
other
corporations, partnerships, joint ventures, associations or
other similar
entities in which the Companies own, of record or beneficially,
any direct
or indirect equity or other similar interest or any right
(contingent or
otherwise) to acquire the same. All of the issued and
outstanding shares
(or voting securities) of each of the Subsidiaries are validly
issued,
fully paid, nonassessable, and free of any preemptive rights.
Except as
set forth in Section 4.4(c) of the Disclosure Schedule, (i) the
Companies
own beneficially and of record all of the outstanding shares of
capital
stock (or voting securities) of each Subsidiary free and clear
of any
Encumbrances, (ii) there are no outstanding obligations,
options,
warrants, convertible securities or other rights, agreements
or
commitments of any kind relating to the capital stock of any
Subsidiary or
obligating the Companies or any Subsidiary to issue or sell or
otherwise
transfer any shares of capital stock of, or any other interest
in, any
Subsidiary, (iii) there are no outstanding obligations of the
Subsidiaries
to repurchase, redeem or otherwise acquire any shares of their
respective
capital stock or to provide funds to, or make any investment (in
the form
of a loan, capital contribution or otherwise) in, any other
Person, and
(iv) there are no voting trusts, stockholder agreements, proxies
or other
agreements or understandings in effect with respect to the
voting or
transfer of any of their respective capital stock.
(d) Except as set forth on Section 4.4(d) of the Disclosure
Schedule, the "Fresh Cut" business of Seller as such business is
described
in Seller's public filings with the United States Securities and
Exchange
Commission (the "Business") is conducted exclusively by the
Companies and
the Subsidiaries. At Closing, the assets and properties of the
Companies
and the Subsidiaries will
8
<PAGE>
constitute substantially all of the tangible and intangible
property
historically used by them.
4.5 FINANCIAL STATEMENTS.
(a) Seller has made available to Purchaser true and complete
copies
of (i) the audited combined balance sheets as of January 3, 2004
and
December 28, 2002 and related audited combined statements of
earnings,
cash flows and Seller's net investment for the Companies and
their
Subsidiaries for the fiscal years then ended, and (ii) the
unaudited
combined balance sheet as of January 1, 2005 and related
unaudited
combined statements of earnings and statement of cash flows for
the
Companies and their Subsidiaries for the year ended January 1,
2005
(collectively, the "Financial Statements"). The January 1, 2005
balance
sheet is referred to herein as the "Reference Balance
Sheet."
(b) The Financial Statements (i) have been prepared based on
the
books and records of the Companies and their Subsidiaries in
accordance
with United States generally accepted accounting principles
("GAAP") and
the Companies' normal accounting practices, consistent with past
practice
(except as may be indicated therein or in the notes or schedules
thereto),
(ii) except with respect to the unaudited Financial Statements
described
under Section 4.5(a)(ii), are in accordance with Regulation S-X
of the
Securities Exchange Act of 1934, as amended, and (iii) present
fairly, in
all material respects, the combined financial condition,
combined results
of operations and combined statements of cash flow of the
Companies and
their Subsidiaries as of the dates indicated or for the periods
indicated.
(c) Seller's internal control over financial reporting is
sufficient
in all material respects to provide reasonable assurance (i)
that
transactions of the Companies and the Subsidiaries are recorded
as
necessary to permit preparation of financial statements in
conformity with
GAAP, (ii) that receipts and expenditures of the Companies and
the
Subsidiaries are being made only in accordance with the
authorization of
management, and (iii) regarding prevention or timely detection
of the
unauthorized acquisition, use or disposition of the Assets that
could
materially affect the combined financial statements of the
Companies and
the Subsidiaries. Based on information available and Seller's
internal
control review conducted through the date hereof, Seller has no
knowledge
of any significant deficiencies or material weaknesses in the
design or
operation of Seller's internal control over financial reporting
with
respect to the Companies, the Subsidiaries or the Business. The
books and
records of the Companies and the Subsidiaries, all of which have
been made
available to Purchaser, are complete and accurate in all
material respects
and at the Closing will be in their possession.
(d) The matters relating to Seller and certain of its
Subsidiaries
subject to an informal inquiry by the Securities and Exchange
Commission
and under investigation by Seller's Audit Committee do not
involve or
affect the financial
9
<PAGE>
reporting, financial statements or internal controls relating to
the
Business or any of the Companies or Subsidiaries.
(e) Section 4.5(e) of the Disclosure Schedule sets forth
Seller's
good faith calculation of excess raw product costs, fruit
start-up costs,
excess insurance allocation costs, executive severance costs and
bonus
costs, in each case, of the Companies and the Subsidiaries for
the fiscal
year ended January 1, 2005.
4.6 REAL PROPERTY.
(a) Section 4.6(a) of the Disclosure Schedule sets forth a true
and
complete list of all of the real property owned or leased by the
Companies
or any Subsidiary, including any on which one of the Companies'
or their
Subsidiaries' operating facilities is located, as delineated
therein,
including:
(i) with respect to the owned real property, (a) if
available,
the street address of each parcel of owned real property, and
(b)
the current owner of each such parcel of owned real property,
and
(ii) with respect to the leased real property, (a) if
available, the street address of each parcel of leased real
property, (b) the identity of the lessor and lessee of each
such
parcel of leased real property, (c) the term of the lease
pertaining
to each such parcel of leased real property and (d) a list of
all
leases, as amended (the "Real Property Leases").
(b) Except as otherwise set forth in Section 4.6(b) of the
Disclosure Schedule, (i) the Companies or one of their
Subsidiaries have
good and marketable fee simple title to all of the real property
owned by
them (the "Owned Real Property"), free and clear of all
Encumbrances,
except (x) to the extent of liens reserved against in the
Financial
Statements for the applicable property, (y) liens for taxes not
yet due
and payable or which are being contested in good faith, or (z)
liens that
individually or in the aggregate would not have a Seller
Material Adverse
Effect (collectively, "Permitted Encumbrances"), (ii) there are
no leases,
subleases, licenses, concessions or other agreements granting to
any
Person the right to use or occupy the Owned Real Property, and
(iii) there
are no outstanding options, rights of first offer or rights of
first
refusal to purchase the Owned Real Property or any portion
thereof or
interest therein.
(c) The Companies and/or the Subsidiaries have a valid and
subsisting leasehold estate in and the right to quiet enjoyment
of the
material real properties leased by it as lessee (the "Leased
Real
Property" and, together with the Owned Real Property, the "Real
Property")
under the Real Property Leases related to such Leased Real
Property. The
improvements on the Real Property listed in Section 4.6(c) of
the
Disclosure Schedule are in all material respects in good
operating
condition and in a state of good maintenance and repair,
ordinary wear and
tear excepted, are adequate and suitable for the purposes for
which they
are presently being used and there are no condemnation or
appropriation
proceedings
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pending or threatened against any of such real property or
the
improvements thereon.
4.7 ASSETS. Except as disclosed in Section 4.7 of the Disclosure
Schedule,
either one of the Companies or a Subsidiary, as the case may be,
owns or leases
all the properties and assets, including, without limitation,
the Companies
Intellectual Property (defined in Section 4.9) and the assets
reflected in the
Reference Balance Sheet (except for inventory or other assets
disposed of in the
ordinary course of business consistent with past practice), but
excluding the
Real Property, used or held for use by the Companies or a
Subsidiary in the
conduct of the Business (all such properties and assets being
the "Assets"),
except where the failures to own or lease such Assets would not
have a Seller
Material Adverse Effect. Either one of the Companies or a
Subsidiary, as the
case may be, has good and valid title to, or in the case of
leased or subleased
Assets, valid and subsisting leasehold interests in, all the
Assets, free and
clear of all Encumbrances, except (a) as disclosed in Section
4.7 of the
Disclosure Schedule, (b) for Permitted Encumbrances and (c)
where the failure to
have good and valid title to or valid or subsisting leasehold
interests in the
Assets would not have a Seller Material Adverse Effect. Except
as set forth in
Section 4.7 of the Disclosure Schedule, the Assets, together
with the Real
Property, are sufficient for the conduct of the Business as
currently conducted
by the Companies and Subsidiaries. The equipment used or held
for use by the
Companies and Subsidiaries is in all material respects in good
operating
condition and in all material respects in a state of good
maintenance and
repair, ordinary wear and tear excepted.
4.8 MATERIAL CONTRACTS.
(a) Section 4.8(a) of the Disclosure Schedule sets forth a true
and
complete list of all the Material Contracts to which any of the
Companies
or their Subsidiaries is a party or by which it is expressly
bound. As
used herein, "Material Contracts" means all of the
following:
(i) each agreement or arrangement to which any of the
Companies or any Subsidiary is party or by which it is bound
(a
"Contract") that was not entered into in the ordinary course
of
business consistent with past practice;
(ii) each agreement with any Key Customer or Key Supplier;
(iii) each agreement, indenture or other instrument relating
to the borrowing of money, or guaranteeing, or providing
security
for, indebtedness, in an amount in excess of One Million
Dollars
($1,000,000) or otherwise restricting, in any material respect,
the
ability of the Companies or Subsidiaries to incur indebtedness
or
provide security for indebtedness;
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<PAGE>
(iv) each partnership, material joint venture or material
other similar agreement to which any of the Companies or any
Subsidiary is a party or by which any of them is otherwise
expressly
bound;
(v) each agreement, arrangement, contract or commitment
restricting or otherwise affecting the ability of the Companies
or
Subsidiaries to engage in any business or compete in any
jurisdiction or otherwise solicit customers;
(vi) each material Real Property Lease, each agreement
covering Companies Used Intellectual Property and each lease
of
material equipment or other material Assets;
(vii) each agreement, arrangement, contract or commitment
with
a third party for the benefit of any of the Companies or
Subsidiaries or the Business restricting or otherwise affecting
the
ability of the third party to engage in the Business or compete
or
solicit customers of the Business in any jurisdiction;
(viii) each Contract with exclusive supply or requirements
obligations;
(ix) each employment agreement of any of the Companies or
any
of their Subsidiaries pursuant to which any employee is entitled
to
receive base salary in excess of $100,000 in any one year and
each
material consulting Contract;
(x) each agreement for the sale or other transfer of a
material Asset or Owned Real Property that has not yet been
consummated and was not entered into in the ordinary course
of
business consistent with past practice;
(xi) each Contract with Seller or any other affiliate of
Seller;
(xii) each Contract providing for any "earn out" type
arrangements to any Person;
(xiii) each other existing agreement, not otherwise covered
by
clauses (i) through (xii), that requires payments by or to any
of
the Companies or any Subsidiary in excess of One Million
Dollars
($1,000,000) during any one year and has not been entered into
in
the ordinary course of business consistent with past
practice;
(b) Except as disclosed in Section 4.8(b) of the Disclosure
Schedule:
(i) neither any of the Companies nor any Subsidiary party to
any Material Contract, nor, to the knowledge of Seller, any
other
party thereto, is in breach thereof or default thereunder
except
where such
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<PAGE>
breach or default would not have a Seller Material Adverse
Effect,
or has given notice of breach or default to any other party
thereunder; and
(ii) each Material Contract is valid and binding on each of
the relevant Companies and their relevant Subsidiaries and, to
the
knowledge of Seller, each respective counterparty thereto, and
each
Material Contract is in full force and effect and is enforceable
in
accordance with its terms, subject to general principles of
equity
and except as the enforceability thereof may be limited by
applicable bankruptcy, insolvency, reorganization or other
similar
laws of general application relating to creditors' rights. No
third
party to any Material Contract has notified Seller or any of
the
Companies or Subsidiaries that it intends to terminate or
otherwise
alter any Material Contract.
(c) Except as required by Law or as set forth on Section 4.8(c)
of
the Disclosure Schedule, there are no outstanding material
warranties,
other than those made in the ordinary course of business
consistent with
past practices, made by the Companies or Subsidiaries and there
have been
no material warranty claims within the past two (2) years and
there are no
material unresolved claims thereunder.
(d) Seller has made available to Purchaser each Material
Contract,
other than as indicated on Section 4.8(a) of the Disclosure
Schedule.
4.9 INTELLECTUAL PROPERTY.
(a) Section 4.9 of the Disclosure Schedule sets forth a true
and
complete list of all (i) intellectual property registrations
and
applications, Internet domain names and material unregistered
intellectual
property owned by the Companies or any Subsidiary and (ii)
material
intellectual property licensed by the Companies or any
Subsidiary (whether
as licensee or licensor) (excluding "clickwrap" or
"shrinkwrap"
agreements, agreements contained in or pertaining to
"off-the-shelf"
software, and the terms of use or service for any website, to
the extent
each is commercially available to consumers on nondiscriminatory
pricing
terms). There are no pending actions against any of the
Companies or any
Subsidiary of which the Companies or any Subsidiary have been
given
written notice that assert that the Companies or any Subsidiary
violate or
infringe or unlawfully use the intellectual property rights of
others or
challenging the Companies' or any Subsidiary's ownership or use
of, or
the validity, enforceability or registrability of any
intellectual
property. To the knowledge of Seller, neither any of the
Companies nor any
Subsidiary violates, infringes upon or unlawfully uses any
intellectual
property owned by another Person. Neither any of the Companies
nor any
Subsidiary has received any written notice alleging any
violation,
infringement upon or unlawful use of any intellectual property
rights of
others or challenging the Companies' or any Subsidiary's
ownership or use
of, or
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<PAGE>
the validity, enforceability or registrability of any
intellectual
property that remains unresolved on the date hereof. Except as
set forth
in Section 4.9(a) of the Disclosure Schedule, neither the
Companies nor
any Subsidiary has brought or threatened any Action against
another Person
involving intellectual property, and to the knowledge of Seller,
there is
no basis for any Action regarding the foregoing.
(b) Except as set forth in Section 4.9(b) of the Disclosure
Schedule, the Companies or a Subsidiary solely and exclusively
owns all
intellectual property owned by the Companies or a Subsidiary
("Companies
Owned Intellectual Property") and has the valid and enforceable
right to
use all other material intellectual property used or held for
use by the
Companies or any Subsidiary ("Companies Used Intellectual
Property"), free
and clear of all material Encumbrances.
(c) The Companies Owned Intellectual Property and, to the
knowledge
of Seller, any Companies Used Intellectual Property, (i) has
been duly
maintained, (ii) is subsisting, in full force and effect and
(iii) has not
been cancelled, expired or abandoned.
4.10 LITIGATION, CLAIMS AND PROCEEDINGS. Except as set forth in
Section
4.10 of the Disclosure Schedule, there are no Actions that have
been brought by
or against any Governmental Authority or any other Person
pending or, to the
knowledge of Seller, threatened against or by the Companies, any
Subsidiary of
the Companies, the Business, any Assets, or any of their Owned
Real Property or
Leased Real Property, which, if adversely determined, would
result in
liabilities in excess of Three Million Dollars ($3,000,000) or
material
injunctive or equitable relief, or would have a Seller Material
Adverse Effect.
There are no existing Governmental Orders naming the Companies
or any Subsidiary
as an affected party. Seller makes no representation in this
Section 4.10 as to
any matter the subject matter of which is specifically covered
by Sections 4.9,
4.11, 4.13 or 4.14 of this Agreement.
4.11 ENVIRONMENTAL AND SAFETY AND HEALTH MATTERS. Except as
disclosed in
Section 4.11 of the Disclosure Schedule:
(a) The Companies and their Subsidiaries have obtained all
material
Permits that are required under any Environmental Law for the
operation of
their businesses as currently being conducted. To Seller's
knowledge, all
such Permits are valid and in full force and effect, and will
survive the
Closing without material modification. "Environmental Law" means
any
applicable Law relating to (i) the protection, investigation
or
restoration of the environment or natural resources, (ii) the
protection
of human health and safety as it pertains to exposure to
Hazardous
Substances, or (iii) the handling, use, presence, disposal,
treatment,
storage, release or threatened release of any Hazardous
Substance, and
includes, without limitation, the Comprehensive Environmental
Response,
Compensation and Liability Act, the Federal Water Pollution
Control Act,
the Clean Air Act, the Resource Conservation and Recovery Act,
the
Occupational Safety and Health
14
<PAGE>
Act, the Hazardous Materials Transportation Act, the Safe
Drinking Water
Act, the Federal Insecticide, Fungicide & Rodenticide Act,
the National
Environmental Policy Act, the Emergency Planning & Community
Right-to Know
Act, and any similar or analogous state statutes. "Hazardous
Substance"
means any substance that is (i) listed, classified or regulated
pursuant
to any Environmental Law, (ii) any petroleum product or
by-product, (iii)
any asbestos-containing material and (iv) any other substance
which is the
subject of regulatory action by any Governmental Authority
pursuant to any
Environmental Law or which may result in liability pursuant to
any
Environmental Law.
(b) The Companies and their Subsidiaries are in material
compliance
with all material Permits required under all Environmental Laws
that are
used in the operation of their businesses as currently being
conducted.
The Companies and their Subsidiaries have historically been in
compliance
with all Permits required under all Environmental Laws, except
where the
failures to comply would not have a Seller Material Adverse
Effect. To the
knowledge of Seller, no circumstances exist which could cause
any material
Permit to be revoked, modified or rendered non-renewable upon
payment of
the permit fee.
(c) The Companies, their Subsidiaries and their Real Property
are in
material compliance with all Environmental Laws. The Companies,
their
Subsidiaries and the Real Property have historically been in
material
compliance with all Environmental Laws, except where the failure
to comply
would not, individually or in the aggregate, have a Seller
Material
Adverse Effect. To Seller's knowledge, no Hazardous Substance is
located
on any of the Real Property, except in material compliance with
all
Environmental Laws. To Seller's knowledge, no facts or
circumstances exist
which would reasonably be expected to involve any of the
Companies or any
Subsidiary in any environmental litigation, or impose upon the
Purchaser
or the Companies or their Subsidiaries any environmental
liability which
would have a Seller Material Adverse Effect.
(d) To Seller's knowledge, neither any of the Companies nor
any
Subsidiary, nor, any other Person, has had a material disposal
or release
of any Hazardous Substances on, under, in, from, adjacent to or
about the
Real Property.
(e) None of the Companies nor any Subsidiary has disposed or
arranged for the disposal of Hazardous Substances on any third
party
property that has subjected or, to the knowledge of Seller, may
subject
the Companies or their Subsidiaries to material liability under
any
Environmental Law.
(f) To Seller's knowledge, there has been no discharge or
release at
any property formerly owned, used, leased or occupied by the
Companies or
any Subsidiary which has subjected or is expected to subject the
Companies
or their Subsidiaries to material liability under any
Environmental Law.
(g) None of the Companies nor their Subsidiaries have received
any
written notice, demand, letter, claim or request for information
alleging
violation
15
<PAGE>
of or liability under any Environmental Law and neither the
Companies nor
their Subsidiaries are party to any written proceedings,
actions, orders,
decrees or injunctions alleging material liability under any
Environmental
Law.
(h) None of the Companies or their Subsidiaries have entered
into
any agreement that may require them to pay to, reimburse,
guarantee,
pledge, defend, indemnify or hold harmless any person from or
against any
liabilities or costs arising in connection with or relating
to
Environmental Laws.
(i) Seller has delivered or made available to Purchaser copies
of
all environmental assessments, audits, studies and other
environmental
reports in its possession relating to the Companies, their
Subsidiaries
and the Real Property.
(j) Except for such expenditures that have been included in
the
projected budgets for the Companies or its Subsidiaries, which
have been
provided to Purchaser, to Seller's knowledge, none of the
Companies nor
their Subsidiaries is required to make any capital or other
expenditures
to comply with applicable Environmental Law exceeding
$500,000.
4.12 COMPLIANCE WITH LAW. Except as disclosed in Section 4.12 of
the
Disclosure Schedule, to the knowledge of Seller, the Companies
and the
Subsidiaries have conducted and are currently conducting their
business in
accordance with all Laws and Governmental Orders applicable to
the Companies or
any Subsidiary or any of the Assets, the Real Property or their
business, except
where the violation of such Laws or Governmental Orders would
not have a Seller
Material Adverse Effect. Neither the Companies nor any
Subsidiary has received
any outstanding or uncured written notice alleging any default
or violation of
any Law or Governmental Order nor to Seller's knowledge is there
any reasonable
basis for any such allegation, which, if true, would have a
Seller Material
Adverse Effect. The Companies and the Subsidiaries have each
Permit required by
Law for the operation of the Business, except where the failure
to have any such
Permit would not have a Seller Material Adverse Effect. Each
Permit is valid,
binding and in full force and effect and none of the Companies
or Subsidiaries
is in default thereunder (or would be with the giving of notice
or lapse of time
or both) except for such defaults as would not have a Seller
Material Adverse
Effect. Seller makes no representation in this Section 4.12 as
to any matter the
subject matter of which is specifically covered by Section 4.9,
4.11, 4.13 or
4.14 of this Agreement.
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4.13 EMPLOYEE MATTERS AND BENEFIT PLANS.
(a) Section 4.13(a)(i) of the Disclosure Schedule identifies
each
employment, bonus, deferred compensation, pension, stock option,
stock
appreciation right, profit-sharing or retirement plan,
arrangement or
practice, each medical, vacation, retiree medical, severance pay
plan, and
each other agreement or fringe benefit plan, arrangement or
practice, of
the Seller which affects or covers any current employee of the
Companies
or a Subsidiary, including all "employee benefit plans" as
defined by
Section 3(3) of ERISA (collectively, the "Seller Plans").
Purchaser will
have no liabilities or obligations under any Seller Plan, except
as
specifically provided in this Agreement. Section 4.13(a)(ii) of
the
Disclosure Schedule identifies each employment, bonus,
deferred
compensation, pension, stock option, stock appreciation
right,
profit-sharing or retirement plan, arrangement or practice, each
medical,
vacation, retiree medical, severance pay plan, and each other
agreement or
fringe benefit plan, arrangement or practice, of the Seller, the
Companies
or any Subsidiary which affects or covers any current employee
of the
Companies or a Subsidiary, including all "employee benefit
plans" as
defined by Section 3(3) of ERISA (collectively, the "Company
Plans").
(b) Except as set forth on Section 4.13(b) of the Disclosure
Schedule, for each Company Plan, correct and complete copies of
the plan
documents and summary plan descriptions, the most recent Form
5500 annual
report, the most recent favorable determination letter (if
applicable),
and all related trust agreements, insurance contracts and
funding
agreements which implement each such Company Plan, have been
made
available to Purchaser.
(c) Neither the Companies nor any Subsidiary has any
commitment,
whether formal or informal, (i) to create any additional such
Company
Plan; (ii) to modify or change any such Company Plan; or (iii)
to maintain
for any period of time any such Company Plan, except as
described in
Section 4.13 of the Disclosure Schedule.
(d) Except as disclosed in Section 4.13 of the Disclosure
Schedule,
(i) neither the Companies, any Subsidiary, nor, to the knowledge
of
Seller, any Company Plan or any trustee, administrator,
fiduciary or
sponsor of any Company Plan has engaged in any prohibited
transactions as
defined in Section 406 of ERISA or Section 4975 of the Code for
which
there is no statutory exemption under Section 408 of ERISA or
Section 4975
of the Code; (ii) all material filings, reports and descriptions
as to all
Company Plans (including Form 5500 annual reports, summary
plan
descriptions, and summary annual reports) required to have been
made or
distributed to participants, the Internal Revenue Service, the
United
States Department of Labor and other governmental agencies have
been made
in a timely manner or will be made in a timely manner on or
prior to the
Closing Date; (iii) there is no material litigation, disputed
claim,
governmental proceeding or investigation pending or, to the
knowledge of
Seller, threatened with respect to any Company Plan, the related
trusts,
or any fiduciary, trustee, administrator or sponsor of any
Company Plan;
and (iv) all Company Plans have been established,
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maintained and administered in all material respects in
accordance with
their governing documents and applicable provisions of ERISA and
the Code.
(e) Except as disclosed in Section 4.13 of the Disclosure
Schedule,
none of the Company Plans provide for continuing benefits or
coverage
after termination or retirement from employment, except for
COBRA rights
under a "group health plan" as defined in Section 4980B(g) of
the Code and
Section 607 of ERISA.
(f) Except for the Midwest Pension Plan (contributed to pursuant
to
the collective bargaining agreement between Redi-Cut Foods, Inc.
and
Manufacturing, Production and Service Workers Union, Local 24),
neither
the Companies, any Subsidiary, nor any entity required to be
aggregated
with the Companies or any Subsidiary under Section 414(b), (c),
(m) or (o)
of the Code ("ERISA Affiliate") has ever sponsored, participated
in, or
contributed to (or been required to contribute to) either a plan
subject
to Title IV of ERISA, or a multiemployer plan as defined in
Section
4001(a)(3) of ERISA. Neither the Companies, any Subsidiary nor
any ERISA
Affiliate has ever withdrawn from such a multiemployer plan nor
incurred
any liability as a result of any partial or complete withdrawal
by any
employer from a multiemployer plan as described under Sections
4201, 4203,
or 4205 of ERISA. No event has occurred that presents a material
risk of a
partial withdrawal from the Midwest Pension Plan. The aggregate
withdrawal
liability of the Companies, Subsidiaries and ERISA Affiliates,
computed as
if a complete withdrawal by the Companies, Subsidiaries and
ERISA
Affiliates had occurred under the Midwest Pension Plan on the
date hereof,
would not exceed $50,000.
(g) Each Company Plan that is intended to be qualified within
the
meaning of Section 401(a) of the Code has received a
determination letter
from the Internal Revenue Service that it is so qualified, and
no fact or
event has occurred since the date of such determination letter
that could
adversely affect the qualified status of any such Company
Plan.
(h) As of the date hereof, Seller has not received any
notification
or other direct indication from any employee listed in Section
4.8(h) of
the Disclosure Schedule (collectively, "Key Employees") that
such employee
intends to terminate his or employment with any of the
Companies.
4.14 TAXES. Except as set forth in Section 4.14 of the
Disclosure
Schedule:
(a) Each of the Companies and the Subsidiaries has filed, or
Seller
has filed on behalf of each of them, all Tax Returns required to
be filed
on or before the date of this Agreement, except where the
failure to file
such Tax Returns or to pay such Taxes shown thereon as owing
would not
have a Seller Material Adverse Effect, all such Tax Returns are
true,
correct and complete in all material respects and all Taxes
shown due with
respect to the periods covered by such Tax Returns have been
paid. True
and correct copies of all federal, state and local
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income Tax Returns filed by or on behalf of each of the
Companies and the
Subsidiaries for all periods since December 31, 2001, have been
heretofore
made available to Purchaser except for such returns where Seller
files a
consolidated return that includes any Company or any Subsidiary.
Except as
set forth in Section 4.14 of the Disclosure Schedule, all Taxes
not yet
due and payable by the Companies and the Subsidiaries have been
properly
accrued on the books of account of the Companies in accordance
with GAAP.
(b) There are no (i) examinations, audits, actions,
proceedings,
investigations or disputes pending of which Seller or any of the
Companies
or their Subsidiaries have been notified in writing, (ii) claims
asserted
in writing for Taxes, (iii) waivers or extensions of statutes
of
limitation with respect to Taxes currently in effect, or (iv)
closing
agreements, or similar agreements entered into or issued by any
Taxing
Authority, in each case with respect to any Company or
Subsidiary, that
may, in each case, increase any Taxes of such Company or
Subsidiary by a
material amount.
(c) No Taxing Authority has asserted that any of the Companies
or
any Subsidiary is subject to Tax or obligated to file a Tax
Return in a
jurisdiction in which such Company or Subsidiary does not pay
Tax or file
a Tax Return.
(d) None of the Companies nor any Subsidiary is a party to any
Tax
allocation or sharing agreement.
(e) There are no liens for Taxes upon the Assets or properties
of
the Companies or any Subsidiary (whether real, personal or
mixed, tangible
or intangible) except for statutory liens for Taxes not yet due
or
payable.
(f) None of the Seller, any of the Companies nor any of
their
Subsidiaries is a "foreign person" within the meaning of Section
1445 of
the Code.
(g) None of the Companies nor any Subsidiary has been a
United
States real property holding corporation within the meaning of
Code
Section 897(c)(2) during the applicable period specified in Code
Section
897(c)(1)(A)(ii).
(h) Except with respect to any Affiliated Group of which the
Seller,
the Companies or a Subsidiary is the common parent, none of the
Companies
nor any Subsidiary (i) has been a member of an Affiliated Group
or (ii)
has any liability to pay, reimburse, indemnify, or otherwise
bear the
Taxes of any Person under Treas. Reg. Section 1.1502-6 (or any
similar
provision of state, local or foreign law), as a transferee or
successor,
by contract or otherwise.
(i) Each Affiliated Group has filed all Tax Returns that it
was
required to file for each taxable period during which any of the
Companies
or any Subsidiary was a member of that Affiliated Group, and has
paid all
Taxes shown thereon as owing, except where the failure to file
such Tax
Returns or pay such Taxes would not have a Seller Material
Adverse Effect.
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<PAGE>
(j) Each of the Companies and their Subsidiaries has withheld
and/or
paid all Taxes required to have been withheld and/or paid in
connection
with amounts paid or owed to any employee, independent
contractor,
creditor, stockholder, member or other third party.
(k) No Company or Subsidiary has reported, and Seller has
not
reported with respect to any Company or Subsidiary, any
"reportable
transaction" as defined in Treasury Regulation Section 1.6011-4
or any
transaction that is required to be reported to any Taxing
Authority
pursuant to any corresponding or similar provision of state,
local or
foreign Law.
4.15 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities
or
obligations which are accrued or reserved against in the
Reference Balance Sheet
(or reflected in the notes thereto) or in connection with the
transactions
contemplated by this Agreement, the Companies and their
Subsidiaries do not have
any liabilities or obligations (contingent or absolute) which
would constitute a
Seller Material Adverse Effect. Seller makes no representation
in this Section
4.15 as to any matter the subject matter of which is
specifically covered by
Sections 4.9, 4.11, 4.13 or 4.14 of this Agreement.
4.16 ABSENCE OF CERTAIN CHANGES. Except as (a) disclosed on the
Reference
Balance Sheet; (b) disclosed in Section 4.16 of the Disclosure
Schedule; or (c)
expressly contemplated by this Agreement, since the date of the
Reference
Balance Sheet, neither the Companies nor their Subsidiaries
have: (i) suffered
any change constituting a Seller Material Adverse Effect; (ii)
split, combined
or reclassified their capital stock; (iii) materially changed
their accounting
principles, practices or methods, except as required by GAAP or
applicable Law;
(iv) declared or paid any dividend or other distribution of cash
or other assets
or made any payments to Seller or its affiliates (in each case,
on a net basis),
or released any claims against Seller or its affiliates, except
for (A)
participation in Seller's cash management program pursuant to
which cash
collected by the Companies and their Subsidiaries is swept by
Seller to reduce
amounts outstanding under the Intercompany Notes and
expenditures made by the
Companies and the Subsidiaries are paid with funds provided by
Seller increasing
the balances of the Intercompany Notes, consistent with past
practice, and (B)
the payment of any accounts payable to Seller or its affiliates
arising from the
sale in the ordinary course of business of food or other
products or services to
the Companies and the Subsidiaries by Seller or such affiliates
consistent with
past practice; (v) materially increased any compensation or
expanded any
perquisites of employees; (vi) paid any liabilities or collected
any receivables
other than in the ordinary course of business based on the
normal terms thereof
and consistent with past practice; (vii) sold or otherwise
transferred any
material asset of the Companies or the Subsidiaries; or (viii)
otherwise
operated the business other than in the ordinary course
consistent with past
practices.
4.17 LABOR MATTERS.
(a) Section 4.17(a) of the Disclosure Schedule lists each
collective
bargaining agreement, work rule or practice, or other
labor-related
Contract (collectively, "CBAs") to which any of the Companies or
one of
their Subsidiaries
20
<PAGE>
is a party or by which it is bound, or which pertain to any of
the
employees of the Companies or the Subsidiaries. There is no
material
arbitration, material grievance, labor dispute, strike, slowdown
or
stoppage in progress or pending or, to the knowledge of
Seller,
threatened, against or involving the Companies or any
Subsidiary. Since
December 28, 2002, neither the Companies nor any Subsidiary
has
experienced any material arbitration, material grievance, labor
dispute,
strike, lockout, slowdown or stoppage. Seller has no knowledge
of any
labor union organizing activities or proceedings with respect to
any
employees of the Companies or their Subsidiaries. Since December
28, 2002,
there has been no request for collective bargaining or for a
representation election from, or any demand for recognition
or
certification by, any employee, union, labor organization, works
council
or the National Labor Relations Board or any other labor
relations
tribunal or authority, and there are no representation or
certification
proceedings or petitions seeking a representation proceeding
presently
pending or threatened in writing to be brought or filed with the
National
Labor Relations Board or any other labor relations tribunal or
authority.
(b) Since December 28, 2002 and except as set forth in
Section
4.17(b) of the Disclosure Schedule, the Companies and the
Subsidiaries
have not received notice of (i) any unfair labor practice charge
or
complaint pending or threatened before the National Labor
Relations Board
or any other Governmental Authority, (ii) any complaints,
grievances or
arbitrations arising out of any CBAs or otherwise, (iii) any
charge or
complaint with respect to or relating to them pending before the
Equal
Employment Opportunity Commission or any other Governmental
Authority
responsible for the prevention of unlawful employment practices,
(iv) the
intent of any Governmental Authority responsible for the
enforcement of
labor, employment, child labor, immigration, or occupational
safety and
health Laws to conduct an investigation with respect to or
relating to
them or notice that such investigation is in progress, or (v)
any
complaint, lawsuit or other proceeding pending or threatened in
any forum
by or on behalf of any present or former employee of such
entities, any
applicant for employment or classes of the foregoing alleging
breach of
any express or implied contract of employment, any applicable
Law
governing employment or the termination thereof or other
discriminatory,
wrongful or tortuous
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