Exhibit 10.1 AMERICAN ITALIAN PASTA COMPANY AND GOOCH FOODS, INC. AND ARCHER-DANIELS-MIDLAND COMPANY ASSET PURCHASE AGREEMENT SEPTEMBER 30, 2002
EXECUTION COPY TABLE OF CONTENTS Page No. ARTICLE I. DEFINITIONS AND INTERPRETATIONS....................................1 SECTION 1.1. DEFINED TERMS.................................................1 SECTION 1.2. TERMS DEFINED IN THE AGREEMENT................................2 SECTION 1.3. INTERPRETATIONS...............................................3 ARTICLE II. PURCHASE AND SALE OF ASSETS.......................................4 SECTION 2.1. ASSETS........................................................4 SECTION 2.2. EXCLUDED ASSETS...............................................5 SECTION 2.3. ASSUMED LIABILITIES...........................................5 SECTION 2.4. RETAINED LIABILITIES..........................................5 ARTICLE III. PURCHASE PRICE OF ASSETS.........................................6 SECTION 3.1. PURCHASE PRICE................................................6 SECTION 3.2. ADJUSTMENTS TO PURCHASE PRICE.................................6 SECTION 3.3. CLAIMS........................................................7 SECTION 3.4. ALLOCATION OF PURCHASE PRICE..................................7 ARTICLE IV. CLOSING...........................................................7 SECTION 4.1. DATE, TIME AND PLACE OF CLOSING...............................7 SECTION 4.2. DELIVERIES BY SELLER AT CLOSING...............................8 SECTION 4.3. DELIVERIES BY BUYER AT CLOSING................................9 SECTION 4.4. EFFECTIVE TIME................................................9 ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER...........................9 SECTION 5.1. EXISTENCE.....................................................9 SECTION 5.2. POWER AND AUTHORITY..........................................10 SECTION 5.3. EXECUTION AND DELIVERY PERMITTED.............................10 SECTION 5.4. CONSENTS.....................................................10 SECTION 5.5. AFFILIATE CONTRACTS..........................................10 SECTION 5.6. OWNERSHIP OF ASSETS..........................................10 SECTION 5.7. CONTRACTS....................................................10 SECTION 5.8. INTANGIBLE PERSONAL PROPERTY.................................11 i
SECTION 5.9. BINDING EFFECT...............................................11 SECTION 5.10. DOCUMENTS SUFFICIENT........................................11 SECTION 5.11. LITIGATION AND COMPLIANCE WITH LAW..........................11 SECTION 5.12. TAXES.......................................................11 SECTION 5.13. PERMITS.....................................................12 SECTION 5.14. CUSTOMERS...................................................12 SECTION 5.15. BOOKS AND RECORDS; DISCLOSURE...............................12 SECTION 5.16. BROKERS FEES................................................12 SECTION 5.17. INVENTORY...................................................12 SECTION 5.18. DISCLAIMER..................................................12 ARTICLE VI. COVENANTS OF SELLER..............................................13 SECTION 6.1. PERFORMANCE OF CONTRACTS AND RETAINED LIABILITIES............13 SECTION 6.2. CONDUCT OF BUSINESS..........................................13 SECTION 6.3. ACCESS TO INFORMATION........................................14 SECTION 6.4. NO SALE NEGOTIATIONS.........................................14 SECTION 6.5. CONFIDENTIALITY..............................................15 SECTION 6.6. REPORTING REQUIREMENTS.......................................15 SECTION 6.7. COOPERATION OTHER ACTIONS....................................15 SECTION 6.8. SUBSEQUENT CONTRACTS.........................................15 SECTION 6.9. TRANSFER AND SALES TAX.......................................15 SECTION 6.10. PASTA PRODUCTS..............................................16 SECTION 6.11. INSURANCE...................................................16 SECTION 6.12. SUPPLY OF SOY PROTEIN.......................................16 SECTION 6.13. SOY 7 LICENSE...............................................16 ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER.........................16 SECTION 7.1. CORPORATE EXISTENCE..........................................16 SECTION 7.2. CORPORATE POWER AND AUTHORITY................................16 SECTION 7.3. EXECUTION AND DELIVERY PERMITTED.............................16 SECTION 7.4. BINDING EFFECT...............................................17 SECTION 7.5. CONSENTS.....................................................17 SECTION 7.6. BROKERS FEES.................................................17 ARTICLE VIII. COVENANTS OF BUYER.............................................17 ii
SECTION 8.1. BUYER PERFORMANCE............................................17 SECTION 8.2. CONFIDENTIALITY..............................................17 SECTION 8.3. OTHER ACTIONS................................................17 SECTION 8.4. NOTIFICATION OF CERTAIN MATTERS..............................17 SECTION 8.5. POST CLOSING IDENTIFICATION..................................17 ARTICLE IX. CONDITIONS TO CLOSING............................................18 SECTION 9.1. BUYER'S CONDITIONS TO CLOSING................................18 SECTION 9.2. SELLER'S CONDITIONS TO CLOSING...............................18 ARTICLE X. SURVIVAL AND INDEMNIFICATION......................................19 SECTION 10.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.......19 SECTION 10.2. INDEMNIFICATION BY SELLER...................................19 SECTION 10.3. INDEMNIFICATION BY BUYER....................................19 SECTION 10.4. TIME TO ASSERT CLAIMS.......................................20 SECTION 10.5. THIRD PARTY CLAIM INDEMNIFICATION PROCEDURE.................20 SECTION 10.6. LIMITATIONS ON INDEMNIFICATION..............................20 ARTICLE XI. DISPUTE RESOLUTION...............................................21 SECTION 11.1. GENERAL.....................................................21 SECTION 11.2. NEGOTIATION.................................................21 SECTION 11.3. ARBITRATION; CLAIMS COVERED; CONCLUSIVE DETERMINATION.......21 SECTION 11.4. ARBITRATION PROCEDURES; SURVIVAL............................21 SECTION 11.5. CONFIDENTIALITY.............................................21 ARTICLE XII. SETTLEMENT AND RELEASE..........................................22 SECTION 12.1. CONTRACT MANUFACTURING AGREEMENT AMENDMENT..................22 SECTION 12.2. SETTLEMENT AND RELEASE......................................22 ARTICLE XIII. MISCELLANEOUS..................................................22 SECTION 13.1. NOTICES.....................................................22 SECTION 13.2. APPLICABLE LAW..............................................23 SECTION 13.3. BENEFIT AND ASSIGNMENT......................................23 SECTION 13.4. NO THIRD PARTY BENEFICIARY..................................23 SECTION 13.5. EXPENSES....................................................23 SECTION 13.6. WAIVER......................................................23 iii
SECTION 13.7. EQUITABLE RELIEF; REMEDIES CUMULATIVE; INTEREST.............24 SECTION 13.8. FURTHER ACTIONS; TRANSITION.................................24 SECTION 13.9. ENTIRE AGREEMENT; AMENDMENT.................................24 SECTION 13.10. COUNTERPARTS...............................................25 SECTION 13.11. TERMINATION................................................25 SECTION 13.12. PUBLIC ANNOUNCEMENTS.......................................25 iv
TABLE OF SCHEDULES Schedule 2.1 (a) Intellectual Property Schedule 2.1 (c) Material Contracts Schedule 2.1 (d) UPC's Schedule 3.4 Purchase Price Allocation Schedule 5.4 ADM Required Consents Schedule 5.5 Affiliate Contracts Schedule 5.7 Material Contracts Requiring Consent to Assign Schedule 5.11 Litigation Matters Schedule 11.4 Arbitration Procedures Schedule 13.12 Press Release
TABLE OF EXHIBITS Exhibit 4.2(a) Bill of Sale Exhibit 4.2(b) Assignment and Assumption Agreement Exhibit 4.2(d) Cross Receipt Exhibit 4.2(i) Transition Agreement Exhibit 6.12 Protein Purchase Agreement Exhibit 6.13 Soy 7 License Exhibit 12.1 Contract Manufacturing Agreement Amendment
EXECUTION COPY ASSET PURCHASE AGREEMENT THIS AGREEMENT (the "Agreement") is entered into as of September 30, 2002, by and among GOOCH FOODS, INC., a Delaware corporation ("Gooch"), and ARCHER-DANIELS-MIDLAND COMPANY, a Delaware corporation ("ADM"; and together with Gooch, "Seller"), and AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation ("Buyer"). WHEREAS, Seller owns various items of personal and intellectual property, as more fully defined in Section 2.1, used in the marketing and sale of the Branded Products (the "Business"); and WHEREAS, Seller desires to sell the Assets (as defined below) to Buyer and Buyer desires to purchase the Assets from Seller in exchange for cash and other valuable consideration. NOW, THEREFORE, in consideration of the foregoing and the mutual agreements, covenants, representations, warranties and promises set forth herein, the parties hereto agree as follows: ARTICLE I. DEFINITIONS AND INTERPRETATIONS Section 1.1. Defined Terms. Capitalized terms not otherwise defined in this Agreement shall each have the meaning given in this Section 1.1. "Affiliate" means any Person that controls, is controlled by, or is under common control with, a Person. "Branded Products" means potato, dinner and pasta products, but not including soy enriched pasta products, marketed and sold using the Brands. "Brands" means the LaRosa and Martha Gooch brands. "Code" means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto and any regulations promulgated thereunder. "Confidentiality Agreement" means that certain Secrecy Agreement by and between Gooch and the Buyer dated as of August 16, 2002. "Contract Manufacturing Agreement" means that certain Contract Manufacturing Agreement by and between Gooch and Buyer dated as of December 1, 2000. "Governmental Authority" means any federal, state, local or foreign governmental or regulatory or administrative department, court, commission, board, bureau, agency, authority or instrumentality. "Lien" means any mortgage, pledge, lien, charge, claim, option, conditional sale, deed of trust, security interest or other encumbrance, restriction or limitation of any nature whatsoever.
"Material Adverse Event" means an event that causes or is reasonably likely to lead to or result in a material adverse effect on, or a material adverse change in, the operations or condition (financial or otherwise) of the Business or the Assets and that will result or is reasonably likely to result in an obligation or liability in excess of $250,000, or a material adverse effect on the ability of Seller to execute, deliver or perform this Agreement or any of the other agreements and documents contemplated by this Agreement. "Ordinary Course of Business" means the ordinary course of business of the Business consistent with past custom and practice (including with respect to quantity, frequency, expense level, personnel resources, promotional and sales activity, etc.). "Person" means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust, a joint venture, an unincorporated organization, a Governmental Authority or any other type of entity. "Tax" or "Taxes" means any and all taxes, fees, duties, tariffs, imposts and other charges of any kind imposed by any Governmental Authority or taxing authority, including: federal, state, local or foreign income, gross receipts, windfall profits, property, motor vehicle, ad valorem, value added, production, sales, use, license, excise, franchise, capital, transfer, recordation, payroll, employment, severance, stamp, occupation, premium, environmental (including taxes under Code s.59A), customs duties, social security (or similar), unemployment, disability, withholding, alternative or add-on minimum tax, or other tax or governmental assessment, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties, whether disputed or not. Section 1.2. Terms Defined in the Agreement. In addition to the defined terms in Section 1.1, the following is a list of defined terms used in this Agreement and a reference to the Section in which such term is defined: Defined Term Section in which Defined ADM Recitals Agreed Amount s. 2.3 Arbitrator Schedule 11.4 Assets s. 2.1 Assumed Liabilities s. 2.3 Business Recitals Buyer Indemnification Claim s. 10.2 Cash Amount s. 3.1 Claim Notice s. 11.2 Claiming Party s. 11.2 Claims s. 11.1 Closing s. 4.1 Closing Date s. 4.1 Closing Date Balance Sheet s. 3.2 Contract Manufacturing Agreement Amendment s. 12.1 2
Contracts s. 2.1(c) Customer Claims s. 3.3(a) Customer Lists s. 2.1(b) Effective Time s. 4.4 Excluded Assets s. 2.2 Financial Statements s. 5.15 Gooch Recitals Indemnification Claim s. 10.4 Indemnification Claim Notice s. 10.4 Intangible Personal Property s. 5.8 Intellectual Property s. 2.1(a) Intentional Claims s. 10.6(d) Inventory s. 2.1(e) Inventory Purchase Amount s. 3.2 Other Intangible Rights s. 2.1(d) Paying Party s. 3.3(a) Post-Closing Claims s. 3.3(a) Procedures s. 11.3 Promotional Payable Claims s. 3.3 Promotional Payables s. 2.3 Protein Supply Agreement s. 6.12 Purchase Price s. 3.1 Receiving Party s. 3.3(a) Released Parties s. 12.2 Retained Liabilities s. 2.4 Selected Inventory s. 2.1(e) Seller Indemnification Claim s. 10.3 Soy 7 License Agreement s. 6.13 Submitted Claims s. 3.3(a) Subsequent Contracts s. 6.8 Trade Loading s. 6.2(a)(iv) Unintentional Claims s. 10.6(c) UPC Codes s. 2.1(d) Section 1.3. Interpretations. Words used in this Agreement, regardless of the gender and number specifically used, shall be construed to include any other gender and any other number as the context requires. Use of the word "including" throughout this Agreement shall mean "including but not limited to." Except as otherwise provided in this Agreement in a particular instance, a reference to a Section, Article, Schedule or Exhibit is a reference to a Section or Article of this Agreement or a Schedule or Exhibit attached hereto, each of which is incorporated into this Agreement by reference. The terms "hereof," "herein," "this Agreement" and other like terms refer to this Agreement as a whole, including the Schedules and Exhibits hereto, all certificates and closing documents delivered herewith, and not solely to any particular part of this Agreement. The titles of the sections of this Agreement are for convenience of reference only, and are not to be considered in construing this Agreement. 3
ARTICLE II. PURCHASE AND SALE OF ASSETS Section 2.1. Assets. Subject to the terms and conditions set forth in this Agreement, Seller shall at the Closing sell, transfer, convey, assign and deliver to Buyer free and clear of all Liens, and Buyer shall at the Closing purchase and accept from Seller, all of Seller's right, title and interest in and to those assets, whether tangible or intangible, specifically set forth below (the "Assets"): (a) all trademarks, trade names, copyrights, recipes, logos, marketing materials, designs used exclusively with the Branded Products (including all trade dress and packaging artwork and logos presently, or within five (5) years from the date of Closing, used in promoting the Brands and the physical plates or screens used to make, manufacture or press the same), confidential and proprietary information and other intellectual property (regardless of whether registered with any Governmental Authority) exclusively used in connection with the Branded Products, including those set forth on Schedule 2.1(a), and all goodwill associated with each of the foregoing (the "Intellectual Property"); (b) all lists of current and past customers of the Branded Products for two years prior to the Closing, which list shall include the business address and shipping address for such customers (the "Customer Lists"); (c) all agreements, contracts, contract rights, understandings, commitments and arrangements of Seller (regardless of whether prepaid) related exclusively to the Branded Products, whether oral or written (the "Contracts"), including (i) the material Contracts identified or summarized on Schedule 2.1(c); (ii) any and all material purchase orders delivered to suppliers, identified or summarized on Schedule 2.1(c), for which the goods or services being purchased by Seller relate exclusively to the Branded Products and are delivered to Buyer after Closing; (iii) any and all material open customer purchase orders taken in the Ordinary Course of Business that have not been fulfilled and paid for as of the Closing Date identified or summarized on Schedule 2.1(c); (iv) material customer and shelf space contracts (regardless of whether pre-paid) identified or summarized on Schedule 2.1(c); and (v) material supplier contracts identified or summarized on Schedule 2.1(c). A Contract will be deemed material if the Contract is for the purchase or sale of goods or services, or otherwise creates an obligation or liability, in an aggregate amount of more than $25,000.00; (d) all of Seller's rights to all of Seller's Uniform Product Codes exclusively used for the Branded Products (the "UPC Codes"), including those listed on Schedule 2.1 (d) (collectively, the "Other Intangible Rights"); and (e) all Branded Product inventories (the "Inventory") located at Buyer's Excelsior Springs, Missouri plant or any other location owned or controlled by Buyer, and determined by Buyer in its reasonable judgment to be within date, merchantable and suitable for human consumption (the "Selected Inventory"). 4
Section 2.2. Excluded Assets. All other assets of Seller, whether or not related to the Business, not specifically included in the Assets set forth in Section 2.1 (collectively, the "Excluded Assets") will not be included in the Assets. Section 2.3. Assumed Liabilities. As of the Closing, Buyer will assume and agree to discharge and perform (i) all of Seller's obligations under the Contracts, but only to the extent that such obligations arise from and after the Closing, and with respect to material Contracts, are set forth on Schedule 2.1(c), (ii) Seller's obligations for marketing and promotional expenses, including coupons, discounts and the like offered by Seller prior to the Closing but not yet paid ("Promotional Payables"), but only to the extent that such Promotional Payables do not exceed $1,000,000.00 ("Agreed Amount") and were incurred in the Ordinary Course of Business, and (iii) Seller's wheat price increase reserve payable to Buyer, if any, in the amount of up to $500,000.00, (collectively, the "Assumed Liabilities"). "Assumed Liabilities" does not include and Buyer shall not assume any liability for any tortious or other wrongful action, breach of contract, or nonperformance of any duty by Seller at any time before or after the Closing. Section 2.4. Retained Liabilities. Notwithstanding anything contained in this Agreement to the contrary, Buyer does not assume or agree to pay, satisfy, discharge or perform, and will not be deemed by virtue of the execution and delivery of this Agreement or any document delivered at the Closing pursuant to this Agreement, or as a result of the consummation of the transactions contemplated by this Agreement, to have assumed, or to have agreed to pay, satisfy, discharge or perform, any liability, obligation or indebtedness of Seller, whether primary or secondary, direct or indirect, other than the Assumed Liabilities. Seller shall retain and pay, satisfy, discharge and perform in accordance with the terms thereof, all liabilities and obligations other than the Assumed Liabilities (the "Retained Liabilities"). Without limitation, the Retained Liabilities shall include: (a) all obligations or liabilities of Seller or any Affiliate of Seller in respect of the Contracts arising from or attributable to the period before Closing, except with respect to Promotional Payables up to the Agreed Amount; (b) all obligations or liabilities of Seller or any Affiliate of Seller in respect of trade payables, other accounts payable and accrued expenses, except with respect to Promotional Payables up to the Agreed Amount; (c) all obligations or liabilities of Seller or any Affiliate of Seller that relate to any of the Excluded Assets; (d) all obligations or liabilities of Seller or any Affiliate of Seller that relate to Taxes arising from or attributable to the period before Closing; (e) all obligations or liabilities for any legal, accounting, investment banking, brokerage or similar fees or expenses incurred by Seller or any Affiliate of Seller in connection with, resulting from or attributable to the transactions contemplated by this Agreement; 5
(f) all obligations or liabilities of Seller or any Affiliate of Seller for any borrowed money, and all obligations or liabilities arising under any letter of credit or guaranty issued in connection therewith; (g) except for the Assumed Liabilities, all obligations or liabilities of Seller or any Affiliate of Seller resulting from, caused by or arising out of, directly or indirectly, the conduct of the Business by Seller, or the ownership or lease of any of the Assets or any properties or assets previously used in the Business at any time prior to the Closing, including such of the foregoing as constitute, may constitute or are alleged to constitute a tort, or violation of any legal requirement, contract or agreement by which Seller is bound; and (h) all obligations in respect of present or former employees or independent contractors of Seller or any Affiliate of Seller, including (i) claims for severance, unemployment compensation or insurance, any employee benefits or other compensation or damages by or on behalf of any present or former employees or independent contractors of Seller or by or on behalf of any Governmental Authority in respect of present or former employees or independent contractors of Seller; (ii) all liabilities and obligations of Seller or any Affiliate of Seller with respect to present or former employees or independent contractors of Seller under any Plan; and (iii) all liabilities and obligations with respect to physical, mental or other health conditions of present or former employees or independent contractors of Seller. ARTICLE III. PURCHASE PRICE OF ASSETS Section 3.1. Purchase Price. Subject to the terms and conditions provided in this Agreement, Buyer shall pay to Seller the amount of $5,000,000.00, adjusted as set forth in Section 3.2 (the "Cash Amount" and together with the Assumed Liabilities, the "Purchase Price"). Buyer shall pay to Seller by wire transfer $1,000,000.00 upon the execution of this Agreement as earnest money to be credited against the Purchase Price at the Closing. Buyer shall pay the remaining Purchase Price to Seller by wire transfer at the Closing. All wire transfers made by Buyer to Seller shall be sent to Hickory Point Bank & Trust, ABA 0711-24805, Account # 01 4982. If Buyer terminates this Agreement prior to Closing pursuant to Section 13.11(a)(i), (ii) or (iii), or if the conditions set forth Section 9.1(f), (g) or (h) are not met and Buyer fails to complete the Closing as a result thereof, then in either case Seller shall return to Buyer the earnest money paid without interest. In all other cases where the Agreement is terminated or the parties fail to complete the Closing, Seller shall be entitled to retain the earnest money paid, and pursue any remedies that may be available pursuant to this Agreement, in law or at equity. Section 3.2. Adjustments to Purchase Price. On the Closing Date, Seller shall deliver to Buyer a balance sheet setting forth, among other things, the Seller's liability for Promotional Payables as of the Closing Date (the "Closing Date Balance Sheet"). To the extent that the Promotional Payables on such Closing Date Balance Sheet exceed the Agreed Amount, the Purchase Price shall be reduced by reducing the Cash Amount on a dollar-for-dollar basis. In addition, the Purchase Price shall be increased, by increasing the Cash Amount by the Inventory 6
Purchase Amount. The Inventory Purchase Amount shall be determined by multiplying the number of cases of Selected Inventory by Seller's documented average cost per case. Section 3.3. Claims. (a) Claim Payment. The parties acknowledge that after the Closing Buyer may receive claims for or be subject to offsets related to claims for Promotional Payables in excess of the Agreed Amount ("Promotional Payable Claims") and that Seller may receive claims from, or be subjected to offsets by customers that relate to matters for which Buyer is responsible under this Agreement ("Customer Claims") (Promotional Payable Claims and Customer Claims being referred to herein as "Post-Closing Claims"). In the event a party (the "Receiving Party") receives Post-Closing Claims, it may submit such claims to the other party (the "Paying Party") on a weekly basis, with any documentation related to the Post-Closing Claims received by the Receiving Party ("Submitted Claims"), and the Paying Party shall pay the Receiving Party, by wire transfer, the amount of such Submitted Claims on the third business day following the date on which it received the Submitted Claims. If such payment is not made timely, the Receiving Party will be entitled to interest thereon at the rate of 18% per annum. (b) Monthly True-up. A Paying Party may, after the end of each calendar month, conduct an audit of the books and records of a Receiving Party to confirm the existence of all Submitted Claims and the accuracy of the calculation of the Submitted Claims and Receiving Party will provide Paying Party and its agents reasonable access to its books and records for this purpose. In the event a Paying Party reasonably determines that it overpaid a Submitted Claim, the Receiving Party will reimburse the overpayment by wire transfer on the third business day following the receipt by it of written notice of overpayment. (c) Time Limit. The provisions of Section 3.3 shall terminate on June 30, 2003. Section 3.4. Allocation of Purchase Price. Seller and Buyer shall allocate the Purchase Price among the Assets in accordance with Section 1060 of the Code. Such allocation shall be established by mutual agreement of Seller and Buyer and shall be attached to this Agreement as Schedule 3.4 within 30 days after Closing. The allocations will be used by Buyer and Seller as the basis for reporting asset values and other items for purposes of all required returns, statements and reports with respect to taxes, including any reports required to be filed under Section 1060(b) of the Code. Seller and Buyer agree not to assert, in connection with any audit or other proceeding with respect to Taxes, any asset values or other items inconsistent with the allocations set forth in Schedule 3.4. ARTICLE IV. CLOSING Section 4.1. Date, Time and Place of Closing. The consummation of the transactions contemplated hereby (the "Closing") shall be held on the first Monday (or if such Monday is not a business day, the first Tuesday) following the date on which all conditions to Closing in Article 7
IX have been satisfied or waived at a time mutually acceptable to the parties, but in any event not later than October 31, 2002 (the "Closing Date"). The Closing shall take place at the offices of Blackwell Sanders Peper Martin, LLP, 2300 Main Street, Suite 1000, Kansas City, Missouri 64108 or at such other place as the parties agree. Section 4.2. Deliveries by Seller at Closing. At the Closing, Seller shall convey, transfer, assign, and deliver all of its right, title and interest in and possession of the Assets to Buyer, and shall also deliver to Buyer the following: (a) A Bill of Sale, duly executed by Seller, in the form attached hereto as Exhibit 4.2(a); (b) An Assignment and Assumption Agreement, duly executed by Buyer and Seller, in the form attached hereto as Exhibit 4.2(b); (c) Such other instruments of conveyance, assignment and transfer, in form and substance satisfactory to Buyer, as appropriate to convey, transfer and assign to, and to vest in, Buyer, good, clear, record and marketable title to the Assets, including a consent or assignment related to the UPC Codes; (d) A Cross Receipt, duly executed by Buyer and Seller, in the form attached hereto as Exhibit 4.2(d); (e) A certified copy of duly adopted resolutions of ADM's Board of Directors authorizing ADM's representative to execute and deliver agreements of the nature of this Agreement, and a certificate of incumbency certifying that the individual signing documents on behalf of ADM holds one of the offices set forth in the above-referenced resolution; (f) A certified copy of duly adopted resolutions of Seller's Board of Directors authorizing, approving and consenting to the execution and delivery of this Agreement, to the consummation of the transactions contemplated herein, and to the performance of the agreements set forth herein; (g) A certificate of a duly authorized officer of Seller stating that the representations and warranties of Seller in this Agreement are true as of the Closing; (h) The waiver, release, consent, certificate or other document of any Person that is necessary to consummate the transactions contemplated hereby, and to make the warranties and representations made in this Agreement true; (i) A duly executed copy of a Transition Agreement, in the form attached hereto as Exhibit 4.2(i); (j) Originals of all Contracts in Seller's possession; (k) A duly executed copy of the Contract Manufacturing Agreement Amendment; 8
(l) A duly executed copy of the Soy 7 License Agreement; (m) A duly executed copy of the Protein Purchase Agreement; and (n) The Customer List. Section 4.3. Deliveries by Buyer at Closing. Buyer shall deliver to Seller at Closing: (a) The Purchase Price; (b) An Assignment and Assumption Agreement, duly executed by Buyer and Seller, in the form attached hereto as Exhibit 4.2(b); (c) A Cross Receipt, duly executed by Buyer and Seller, in the form attached hereto as Exhibit 4.2(d); (d) A certified copy of duly adopted resolutions of Buyer's Board of Directors authorizing, approving, and consenting to the execution and delivery of this Agreement, to the consummation of the transactions contemplated herein, and to performance of the agreements set forth herein; (e) A certificate of a duly authorized officer of Buyer stating that the representations and warranties of Buyer in this Agreement are true as of the Closing; (f) A duly executed copy of a Transition Agreement, in the form attached hereto as Exhibit 4.2(i); (g) A duly executed copy of the Contract Manufacturing Agreement Amendment; (h) A duly executed copy of the Soy 7 License Agreement; and (i) A duly executed copy of the Protein Purchase Agreement. Section 4.4. Effective Time. The effective time of the transactions contemplated by the Agreement shall be deemed to be as of 12:01 a.m. on the Closing Date (the "Effective Time"). Provided the Closing occurs, Buyer shall be entitled to possession of, and to exercise all rights arising under, the Assets as of the Effective Time. The risk of loss or damage to the Assets by fire, storm, flood, theft, or other casualty or cause shall be in all respects upon Seller prior to the Effective Time and upon Buyer thereafter. ARTICLE V. REPRESENTATIONS AND WARRANTIES OF SELLER As an inducement to Buyer to enter this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants to Buyer as follows: Section 5.1. Existence. Seller is duly organized, validly existing, and in good standing under the laws of the State of Delaware and is qualified to do business and is in good standing in 9
all jurisdictions in which it is required to be so qualified and in good standing as a result of its operation of the Business, except where the failure to be so qualified or in good standing would not be a Material Adverse Event. Section 5.2. Power and Authority. Seller has all requisite power and authority to own its properties and assets, including the Assets, and to carry on the Business as now conducted. Seller has all requisite corporate power and authority to execute and deliver this Agreement, to perform the agreements and covenants of Seller set forth in this Agreement and to consummate the transactions contemplated by this Agreement, including the conveyance, assignment and transfer of the Assets. Section 5.3. Execution and Delivery Permitted. The execution, delivery and performance of this Agreement will not (i) violate or result in a breach of any term of Seller's Certificate of Incorporation or Bylaws, (ii) result in a breach of or constitute a default under any term in any agreement or other instrument, including any Contract, to which Seller is a party, (iii) violate any law or any order, rule or regulation applicable to Seller, of any Governmental Authority having jurisdiction over Seller, its properties or the Assets or (iv) result in the creation or imposition of any Lien upon any of the Assets. The Seller has taken all action required by law and by Seller's Certificate of Incorporation and Bylaws to authorize the execution, delivery and performance of this Agreement and the other agreements executed in connection herewith by Seller and the transfer all of the Assets to Buyer in accordance with this Agreement. Section 5.4. Consents. Except as set forth on Schedule 5.4, the execution, delivery and performance of this Agreement and the other agreements executed in connection herewith, and the consummation by Seller of the transactions contemplated hereby and thereby do not require any filing with, notice to or consent, waiver or approval of any third party, including but not limited to, any Governmental Authority or entity other than any disclosure of this Agreement required by applicable securities laws, regulations and rules. Section 5.5. Affiliate Contracts. Except as set forth in Schedule 5.5 (including as to any oral matters an accurate and reasonably detailed summary thereof), there are no contracts, agreements, commitments, understandings or arrangements affecting or relating to the Business or the Assets to which any Affiliate of Seller is a party or by which any such Affiliate is bound. Section 5.6. Ownership of Assets. Seller has sole and good, clear and marketable title to the Assets, which title will be transferred to Buyer at Closing, free and clear of all Liens. Seller has the full, absolute and unrestricted right to assign, transfer and convey to Buyer the Assets, subject only to such consents and approvals as listed on Schedule 5.4, which consents and approvals Seller shall deliver to Buyer at Closing. To the Seller's knowledge, the Assets constitute all of the intellectual property (except software), customer lists, contracts, inventory and Uniform Product Codes necessary to conduct the marketing and sale of the Branded Products in the Ordinary Course of Business. Section 5.7. Contracts. The Contracts have been entered into in the Ordinary Course of Business. Except as specifically provided on Schedule 5.7, Seller has full, absolute and unrestricted right to assign, transfer and convey to Buyer the Contracts. Each Contract is in full force and effect and constitutes the legal, valid, binding and enforceable obligation of the parties 10
thereto. Seller and the other parties thereto are current in all obligations under each Contract. There have been no events of default, and no state of facts exist that with notice or passage of time, or both, would constitute an event of default by Seller under any Contract. To the Seller's knowledge, there have been no events of default, and no state of facts exists that with notice or the passage of time, or both, would constitute an event of default under any contract by any party other than Seller. Except as set forth on Schedule 5.7, the consummation of the transactions contemplated by this Agreement will not (and will not give any Person a right to) terminate or modify any rights of, or accelerate or increase any obligation of Seller under any Contract. A true and complete copy of every written Contract listed on Schedule 2.1(c) has been made available to Buyer and such Schedule contains an accurate and reasonably detailed summary of all oral contracts. Section 5.8. Intangible Personal Property. Seller has full right, title and interest in and to the Intellectual Property, the Customer Lists, and the Other Intangible Rights (collectively, the "Intangible Personal Property"). Seller is not (i) a licensor or licensee in respect of any Intangible Personal Property or (ii) obligated to make any royalty or other payments with respect to any Intangible Personal Property. To Seller's knowledge, Seller is not infringing upon or otherwise acting adversely to the intangible personal property owned by any other Person, and there is no notice, claim or action by any such Person pending with respect thereto. Section 5.9. Binding Effect. This Agreement and each other agreement required to be executed and delivered by Seller in connection herewith, when executed and delivered, will be the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with its terms, except as enforceability may be limited by (i) applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting the enforcement of creditors' rights generally, and (ii) general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law). Section 5.10. Documents Sufficient. The documents delivered by Seller to Buyer pursuant to Article IV of this Agreement will be valid, sufficient and effective to completely transfer to Buyer all of Seller's right, title and interest in and to all of the Assets, free and clear of all Liens. Section 5.11. Litigation and Compliance with Law. Except as set forth on Schedule 5.11, there are no suits, actions, claims, demands, investigations, complaints, or other proceedings of any nature whatsoever in law or in equity, that are pending or, to the knowledge of Seller, threatened against Seller, that affect any of the Assets or the Branded Products, by or before any Governmental Authority. Seller is not in default or violation with respect to any order, writ, injunction, garnishment, levy, or decree of any Governmental Authority applicable to the Assets or the Branded Products, and the use, operation, ownership, or transfer of the Assets does not constitute a default or violation thereunder. Neither the condition of the Assets nor the Branded Products violates in any material respect any federal, state, or municipal law, regulation or rule. Section 5.12. Taxes. Seller has timely filed (or will timely file) all federal, state, local and other Tax returns and reports of whatever kind pertaining to the Assets or the Business and 11
required to be filed by Seller for all periods up to and including the Closing Date. Seller has paid (or will timely pay) all Taxes that are due and payable (or that relate to any period up to and including the Closing Date) or for which assessments relating to any period up to and including the Closing Date have been levied, the nonpayment of which could result in a Lien on any of the Assets. There are no audits, suits, actions, claims, investigations, inquiries, or proceedings pending or, to the knowledge of Seller, threatened against Seller with respect to any Taxes, nor are any such matters under discussion with any Governmental Authority as they relate to the Business or the Assets. Section 5.13. Permits. To the Seller's knowledge, there are no governmental permits or licenses necessary to operate the Business. Section 5.14. Customers. Since August 1, 2002, to Seller's knowledge, Seller has not received any notice from any of its top twenty (20) customers purchasing Branded Products from Seller that any such customer intends to terminate, or to reduce by more than 50% on an annual basis, its purchases of Branded Products from Seller. Section 5.15. Books and Records; Disclosure. The books and records of Seller relating to the Business are in all material respects complete and correct and have been maintained in accordance with good business practices. The financial statements of the Business provided to Buyer accurately present in all material respects the results of operations and financial position of the Business for the periods and at the times indicated (the "Financial Statements"). The Financial Statements have been maintained and prepared in accordance with generally accepted accounting principles. As of the Closing Date, the Closing Date Balance Sheet will be accurate and complete in all material respects. None of (i) the Financial Statements, (ii) the information concerning the Assets, Business or Seller delivered to Buyer, (iii) the representations and warranties made by Seller in this Agreement or (iv) the statements made by or on behalf of Seller in any certificate, document or Schedule delivered or to be delivered in connection with the transaction contemplated by this Agreement, contains or will contain any untrue statement of material fact, and there is no omission of any material fact necessary to make such representation or warranty or any such statement not misleading, in light of the circumstances in which they are made. The items listed in the Schedules attached to this Agreement constitute all of the matters required to be shown on such Schedules. Section 5.16. Brokers Fees. Seller has no liability or obligation to pay any brokerage or finders fees or commissions with respect to the transactions contemplated herein. Section 5.17. Inventory. As of the Closing, the Selected Inventory shall be merchantable, suitable for human consumption, comply with all applicable law, and bear no name, mark or other designation that knowingly infringes the intellectual property rights of any other party. Section 5.18. Disclaimer. Except as to the warranties expressly set forth in this Article V, Seller makes no representations or warranties relative to the Assets whatsoever. Unless expressly granted in this Article V, SELLER HEREBY DISCLAIMS ANY AND ALL IMPLIED WARRANTIES, INCLUDING THE IMPLIED WARRANTY OF 12
MERCHANTABILITY AND THE WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE. ARTICLE VI. COVENANTS OF SELLER Seller covenants and agrees as follows: Section 6.1. Performance of Contracts and Retained Liabilities. Seller shall, from the date hereof through the Closing, continue to faithfully, diligently and promptly perform each and every obligation of Seller, if any, under each of the Contracts and pay and satisfy each Retained Liability. Section 6.2. Conduct of Business. From the date hereof through the Closing, Seller shall operate the Business in accordance with the Ordinary Course of Business and with at least as much attention and support as is currently being provided, using its best efforts to preserve and maintain its relationships with suppliers and customers and to preserve its current level of sales volume, shelf space and historical operating margins. Seller shall pay all bills and debts incurred by it and related to the operation of the Business promptly as they become due. Seller shall consult in advance with Buyer on all decisions not in the Ordinary Course of Business relating to the, Assets or the Business. (a) In particular, and without limiting the foregoing, with respect to the Business, Seller shall: (i) continue to conduct marketing, product pricing, promotional and advertising activities consistent with historical practices; (ii) maintain the sales force in a manner consistent with past practices, including, but not limited to, maintaining the number of active salespersons assigned to the Business, and maintain the levels of and the payment of bonus, incentive and other compensation; (iii)continue to purchase and maintain inventories in such quantities and quality as necessary to operate the Business in the Ordinary Course of Business; (iv) refrain from shipping manufactured pasta ahead of normally maintained schedules or shipping dates or otherwise accelerating sales or the amount of Inventory less than 90 days old in a manner not in the Ordinary Course of Business ("Trade Loading"), or permitting or tolerating any brokers or other representatives of Seller to engage in Trade Loading; (v) continue all customer service and fulfillment levels at historical levels and maintain all shelf space and promotional displays at least at the levels in existence as of the date hereof, 13
(vi) continue to operate the Business in compliance with all applicable local, state and federal laws and regulations; and (vii)notify Buyer within 48 hours of any termination, cancellation, limitation of, or any adverse modification of or change in, any, Contract or any business relationship of Seller with any customer described in Section 5.14. (b) Further, Seller shall not, without the express prior written approval of Buyer: (i) change in any material manner the ownership of the Assets (other than inventories sold in the Ordinary Course of Business); (ii) terminate or decrease the rate of compensation or benefits of, any salesperson responsible for the sale and/or distribution of products within the Business; (iii) mortgage, pledge or subject to Lien any of the Assets; (iv) enter into or commit to enter into any Contract other than in the Ordinary Course of Business or any contract, agreement or commitment that would be required to be set forth on Schedule 5.5 hereto; or (v) other than in the Ordinary Course of Business, cancel or terminate or consent to or accept any cancellation or termination of any Contract, amend or otherwise modify any of the material terms or provisions or give any consent, waiver or approval with respect to any Contract, waive any breach of any material terms or provisions or take any other action in connection with any Contract that would materially impair the interests or rights of Seller to be transferred to Buyer hereunder. Section 6.3. Access to Information. Seller shall afford Buyer, its counsel, financial advisors, auditors and other authorized representatives reasonable access for any purpose consistent with this Agreement from the date hereof through the Closing or termination of this Agreement, whichever occurs first, during normal business hours, to the offices, properties, books, and records of Seller related to the Assets and the Branded Products and shall furnish to Buyer such additional financial and operating data and other information as Seller may possess and as Buyer may reasonably request related to the Assets and the Branded Products. Section 6.4. No Sale Negotiations. Seller and its representatives and agents shall not solicit, entertain or engage in any negotiations, discussions or contact with any party other than Buyer, with respect to the sale, transfer or other disposition of any of the Assets (other than the sale of Inventory in the Ordinary Course of Business), or any interest, legal, equitable or beneficial, in the above. 14
Section 6.5. Confidentiality. Seller will hold, and will cause its directors, officers, employees, accountants, counsel, financial advisors and other representatives and Affiliates to hold, any nonpublic information of Buyer in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. Section 6.6. Reporting Requirements. From the date hereof through the Closing, Seller shall promptly notify Buyer of: (a) Any (i) Material Adverse Event, (ii) any fact that, if known as of the date of this Agreement, would have been required to be disclosed to Buyer, (iii) event that causes any representation or warranty contained herein to be untrue or inaccurate in any respect or (iv) event that causes any covenant, condition or agreement of Seller hereunder not to be complied with or satisfied in any respect; (b) all claims, actions, charges, orders or other directives that, if adversely determined, would cause a Material Adverse Event; and (c) such other information respecting the Assets or the operations, business prospects or condition (financial or otherwise) of the Business as Buyer may from time to time reasonably request. Section 6.7. Cooperation Other Actions. (a) Seller will use its best efforts to facilitate and cause the consummation of the transactions contemplated hereby and to obtain from all Persons, and take all other actions with respect to, all consents or approvals required on the part of such party with respect to the consummation of the transactions contemplated hereby. (b) From the date hereof through the Closing, Seller shall not take any action that would, or that would reasonably be expected to, result in any of the conditions to the transactions contemplated hereby set forth in Sections 9.1 and 9.2 hereof not being satisfied, or in the satisfaction thereof being delayed. Section 6.8. Subsequent Contracts. From the date hereof through the Closing, Seller shall (i) include in any agreements entered into by Seller relating in any way to the Assets or the Branded Products ("Subsequent Contracts") a provision permitting the assignment of any such Subsequent Contract to Buyer and providing that upon such assignment, Buyer shall succeed to all of Seller's rights, title and interests thereunder and (ii) ensure that no Subsequent Contract contains any provision which would limit in any way the rights, title and interest of Seller in the Assets. Section 6.9. Transfer and Sales Tax. Notwithstanding any provisions of law imposing the burden of such taxes on Seller or Buyer, as the case may be, Seller shall be responsible for and shall pay (a) all sales, use and transfer taxes, and (b) all governmental charges, if any, upon the sale or transfer of any of the Assets hereunder. If Seller shall fail to pay such amounts on a timely basis, Buyer may pay such amounts to the appropriate Governmental Authority or authorities, and Seller shall promptly reimburse Buyer for any amounts so paid by Buyer. 15
Section 6.10. Pasta Products. Commencing on the Closing and for so long as the Contract Manufacturing Agreement, as amended pursuant to Section 12.1, remains in effect between the parties, Seller or Seller's Affiliates will not manufacture, market, sell or distribute any branded retail dry pasta product, alone or in combination with any other product, unless such branded retail dry pasta product is manufactured by Buyer. Section 6.11. Insurance. Seller shall continue to maintain product liability insurance for all periods through the Effective Time. Section 6.12. Supply of Soy Protein. Buyer shall purchase all of its requirements for soy protein exclusively from Seller for a period of three years pursuant to the terms and conditions of the Protein Purchase Agreement, in the form of Exhibit 6.12 hereto. Section 6.13. Soy 7 License. Seller shall grant to Buyer a non-exclusive license to use the Soy 7 marks in conjunction with the manufacture, sale, marketing and use of dry pasta, on the terms and conditions of the Soy 7 License, in the form of Exhibit 6.13 hereto, which shall include a 2(cent) per pound royalty and the obligation to purchase soy isolate from Seller on products bearing the Soy 7 marks. ARTICLE VII. REPRESENTATIONS AND WARRANTIES OF BUYER As an inducement to Seller to enter into this Agreement and to consummate the transactions contemplated hereby, Buyer represents and warrants to Seller as follows: Section 7.1. Corporate Existence. Buyer is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is qualified to do business and is in good standing in all jurisdictions in which it is required to be so qualified as a result of the operation of its business, except where the failure to be so qualified or in good standing would have a material adverse effect on the Buyer. Section 7.2. Corporate Power and Authority. Buyer has all requisite corporate power and authority to own its properties and assets, and to carry on the business in which it is now engaged. Buyer has all requisite corporate power and authority to execute and deliver this Agreement, to perform the agreements and covenants of Buyer set forth in this Agreement and to consummate the transactions contemplated by this Agreement. Section 7.3. Execution and Delivery Permitted. The execution, delivery and performance of this Agreement will not (i) violate or result in a breach of any term of Buyer's Certificate of Incorporation or Bylaws; (ii) result in a breach of or constitute a default under any term in any agreement or other instrument to which Buyer is a party; or (iii) violate any law or any order, rule or regulation applicable to Buyer, of any Governmental Authority having jurisdiction over Buyer or its properties. The Buyer has taken all action required by law, and by Buyer's Certificate of Incorporation and Bylaws to authorize the execution, delivery and performance of this Agreement and the other agreements executed in connection herewith by Buyer and the purchase of the Assets from Seller in accordance with this Agreement. 16
Section 7.4. Binding Effect. This Agreement and each other agreement required to be executed and delivered by Buyer in connection herewith, when executed and delivered, will be the legal, valid and binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as enforceability may be limited by (i) applicable bankruptcy, reorganization, insolvency, moratorium and similar laws affecting the enforcement of creditors' rights generally, and (ii) general equitable principles (regardless of whether enforceability is considered in a proceeding in equity or at law). Section 7.5. Consents. The execution, delivery and performance of this Agreement and the other agreements executed in connection herewith, and the consummation by Buyer of the transactions contemplated hereby and thereby do not require any filing with, notice to or consent, waiver or approval of any third party, including but not limited to, any Governmental Authority other than any disclosure of this Agreement required by applicable securities laws, regulations and rules. Section 7.6. Brokers Fees. Buyer has no liability or obligation to pay any brokerage or finders fees or commissions with respect to the transactions contemplated herein. ARTICLE VIII. COVENANTS OF BUYER Section 8.1. Buyer Performance. Buyer hereby covenants and agrees to accept conveyance of the Assets, and to assume and perform the Assumed Liabilities. Section 8.2. Confidentiality. Buyer will hold, and will cause its respective directors, officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold any nonpublic information of the Seller in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. Section 8.3. Other Actions. From the date hereof to the Closing, Buyer shall not take any action that would, or that would reasonably be expected to, result in any of the conditions to Closing set forth in Sections 9.1 or 9.2 not being satisfied, or in the satisfaction thereof being delayed. Section 8.4. Notification of Certain Matters. From the date of this Agreement through the Closing, Buyer shall promptly notify Seller of the occurrence of any fact or event that would reasonably be expected (i) to cause any representation or warranty of Buyer contained in this Agreement to be untrue in any material respect or (ii) to cause any covenant, condition or agreement of Buyer hereunder not to be complied with or satisfied in any material respect. Section 8.5. Post Closing Identification. Buyer shall ensure that products produced after the Effective Time and any coupons or other promotional items issued after the Effective Time are distinguishable from products produced prior to the Effective Time and coupons and other promotional items issued prior to the Effective Time. 17
ARTICLE IX. CONDITIONS TO CLOSING Section 9.1. Buyer's Conditions to Closing. The obligations of Buyer hereunder are subject to satisfaction of each of the following conditions at or before Closing, the occurrence of which may, at the option of Buyer, be waived: (a) All representations and warranties of Seller in this Agreement and each Schedule hereto shall be true on and as of the Closing as if made as of the Closing, and Seller shall have delivered to Buyer a certificate to such effect dated as of the Closing Date; (b) There shall be no Material Adverse Event from the date hereof to the Closing Date; (c) Seller shall have performed and complied with all of its obligations under this Agreement which are to be performed or complied with by Seller prior to or on the Closing Date; (d) Seller shall be willing and able to deliver all of the items and documents required to be delivered by it pursuant to Article IV of this Agreement; (e) The form and substance of the documents delivered by Seller pursuant to this Agreement shall be reasonably acceptable to Buyer and Buyer's counsel; (f) There shall be no claims, actions or suits pending or threatened regarding the Assets other than those disclosed in Schedule 5.11 or that otherwise would restrict or prohibit Buyer or Seller from consummating the transactions contemplated herein; (g) Seller shall have obtained and delivered to Buyer all necessary consents to transfer the Assets and assign the Contracts to Buyer; and (h) During Buyer's review and investigation of the Assets, Buyer shall not have discovered (i) any material misrepresentations or omissions with respect to the disclosures previously made to Buyer, in the context of negotiations of the transactions contemplated herein, concerning the Assets or the Branded Products; or (ii) any obligations or liabilities, contingent or otherwise, which do or reasonably could materially affect the value of any of the Assets in an amount in excess of $250,000. Section 9.2. Seller's Conditions to Closing. The obligations of Seller hereunder are subject to satisfaction of each of the following conditions at or before Closing, the occurrence of which may, at the option of Seller, be waived: (a) All representations and warranties of Buyer in this Agreement shall be true on and as of the Closing as if made as of the Closing, and Buyer shall have delivered to Seller a certificate to such effect dated as of the Closing Date; 18
(b) Buyer shall have performed and complied with all of its obligations under this Agreement which are to be performed or complied with by Buyer prior to or on the Closing Date; (c) Buyer shall be willing and able to deliver all of the items and documents required to be delivered by it under Article IV of this Agreement; and (d) The form and substance of the documents delivered by Buyer pursuant to this Agreement shall be reasonably acceptable to Seller and Seller's counsel. ARTICLE X. SURVIVAL AND INDEMNIFICATION Section 10.1. Survival of Representations, Warranties and Covenants. The representations, warranties, covenants, agreements and indemnification obligations of the parties contained in this Agreement shall survive the Closing until June 30, 2003. The parties shall be entitled to rely on the representations and warranties contained herein, notwithstanding any due diligence investigation conducted by the parties. If, as the result of any due diligence investigation or otherwise, a party learns of a breach of any representation or warranty, such party shall promptly inform the other in writing of such breach. Either party's knowledge prior to Closing of a breach of a representation, warranty, covenant or agreement contained herein by the other party shall not modify the representations, warranties covenants or agreements of any party contained herein or waive or impair such party's right to seek indemnification for such breach after Closing. Section 10.2. Indemnification by Seller. Seller agrees to defend, indemnify, and hold harmless Buyer and its officers, directors, agents, employees, and Affiliates against and in respect of any and all loss, liability, lien, damage, cost and expense (each, a "Buyer Indemnification Claim") incurred or resulting from: (a) except for Assumed Liabilities, any matter or event of any nature whatsoever relating to Seller or the ownership or operation of the Assets or the Business that occurred prior to the Closing, and without limiting the generality of the foregoing, such matters or events shall include all Retained Liabilities and all Excluded Assets; (b) any misrepresentation or breach of warranty made by Seller in this Agreement or in any document, certificate or Schedule delivered hereunder; or (c) any non-fulfillment of any covenant or agreement by Seller under this Agreement or any liability related to noncompliance with any bulk sales laws. Section 10.3. Indemnification by Buyer. Buyer agrees to defend, indemnify, and hold harmless Seller and its officers, directors, agents, employees and Affiliates against and in respect of any and all loss, liability, lien, damage, costs and expense (each a "Seller Indemnification Claim") incurred or resulting from: (a) the ownership or operation of the Assets or the Business from and after the Closing or the nonperformance of Assumed Liabilities; 19
(b) any misrepresentation or breach of warranty made by Buyer in this Agreement or in any document, certificate or Schedule delivered hereunder; or (c) any non-fulfillment of any covenant or agreement by Buyer under this Agreement. Section 10.4. Time to Assert Claims. Any Buyer Indemnification Claims or Seller Indemnification Claims made pursuant to this Article must be asserted by providing written notice to the party against which the Indemnification Claim is made reasonably promptly after the asserting party becomes aware of such Claim (the "Indemnification Claim Notice"). The right of a party to be indemnified hereunder shall not be adversely affected by such party's failure to give such Indemnification Claim Notice unless, and then only to the extent that, the party against which the Indemnification Claim is made is prejudiced thereby. The parties shall resolve disputes between them regarding Indemnification Claims in accordance with Article XI. The term "Indemnification Claim" shall mean a Buyer Indemnification Claim or a Seller Indemnification Claim, as appropriate. Section 10.5. Third Party Claim Indemnification Procedure. An indemnified person shall promptly notify the indemnifying party of the existence of any Indemnification Claim resulting from a claim made by a third party and shall give the indemnifying party the opportunity to defend the same at its own expense and with counsel of its own selection, provided that such indemnified person shall at all times also have the right to participate fully in the defense of the Indemnification Claim at its own expense. If the indemnifying party shall, within twenty (20) days after such notice, fail to acknowledge its indemnification obligation hereunder in writing or thereafter fail to defend such Indemnification Claim adequately and reasonably, and such indemnified person is entitled to such defense, such indemnified person shall have the right, but not the obligation, to undertake the defense of, and to compromise or settle (exercising reasonable business judgment) such Indemnification Claim on behalf, for the account, and the sole risk and expense, of the indemnifying party. Section 10.6. Limitations on Indemnification. (a) Notwithstanding anything to the contrary, the indemnifying party shall not be liable for an Indemnification Claim under this Article for: (i) any Indemnification Claim, unless and until the aggregate amount of all such Indemnification Claims otherwise due exceeds an accumulated total of One Hundred Thousand Dollars ($100,000.00); or (ii) any Indemnification Claim to the extent arising directly out of the acts or omissions of the party seeking indemnification. (b) The maximum aggregate amount of all Indemnification Claims (except for those set forth in subsection (c) below) for which a party may be responsible or otherwise liable (whether for indemnification, breach, default or otherwise) under this Article and this Agreement (the "Unintentional Claims") shall be the sum of One Million Dollars ($1,000,000.00). 20
(c) The maximum aggregate amount of all Indemnification Claims based upon intentional misrepresentation, fraud or willful misconduct for which a party may be responsible or otherwise liable (whether for indemnification, breach, default or otherwise) under this Article and this Agreement (the "Intentional Claims") shall be the sum of Five Million Dollars ($5,000,000.00). (d) The maximum aggregate amount of all Unintentional Claims and Intentional Claims combined shall be the sum of Five Million Dollars ($5,000,000.00). ARTICLE XI. DISPUTE RESOLUTION Section 11.1. General. All disputes between the parties arising under or in connection with this Agreement, including Indemnification Claims (as more fully described below, "Claims"), shall be resolved in accordance with the following procedures. Section 11.2. Negotiation. A party with a Claim (the "Claiming Party") shall give reasonably prompt notice (the "Claim Notice") to the other, specifically identifying the issue and amount in dispute. Senior executives of the parties or their representatives shall negotiate in good faith to attempt to resolve the Claim in the absence of attorneys and other non-employer advisors. During this process, either party may request that an independent third party be used to mediate the dispute. If the parties do not resolve the Claim by negotiation within 60 days after receipt of the Claim Notice, either party may submit the Claim for binding arbitration. Section 11.3. Arbitration; Claims Covered; Conclusive Determination. Claims not settled by negotiation shall be resolved by arbitration in accordance with the American Arbitration Association procedures for Commercial Arbitration and any supplemental rules deemed appropriate by the arbitrator (the "Procedures"). The arbitration shall be conducted in the city of Kansas City, Missouri. Claims by either party for injunctive or other equitable relief, for unfair competition and the use or unauthorized disclosure of trade secrets, confidential information, or intellectual property, are not covered by this Section and either party may seek and obtain relief for such Claims from a court of competent jurisdiction. The decision of the arbitrator may be entered as a judgment in any court of competent jurisdiction thereof. Any arbitral award shall be a conclusive determination of the matter, final and binding upon all parties. Section 11.4. Arbitration Procedures; Survival. The parties agree that the procedures and provisions set forth in Schedule 11.4 shall apply to any arbitration under this Section. This Agreement to arbitrate shall survive the termination of this Agreement. Section 11.5. Confidentiality. All aspects of the proceedings provided for by this Agreement, including the exchange of information during discovery, any hearings, and the record of the proceedings, are confidential and shall not be open to the public, except (a) to the extent the parties agree otherwise in writing, (b) as may be appropriate in any subsequent proceedings between the parties, or (c) as may otherwise be required by a Governmental Authority or the rules of the New York Stock Exchange. 21
ARTICLE XII. SETTLEMENT AND RELEASE Section 12.1. Contract Manufacturing Agreement Amendment. From the date hereof through Closing, the parties shall continue to perform under the Contract Manufacturing Agreement. As of the Closing, the Contract Manufacturing Agreement shall be amended pursuant to the terms and conditions of the Contract Manufacturing Agreement Amendment, in the form of Exhibit 12.1 hereof. Section 12.2. Settlement and Release. Except as otherwise provided in this Section 12.2, as of the Closing each of Buyer and Seller, for itself and its Affiliates, successors and assigns, does hereby fully, finally and unconditionally release and forever discharge the other, the others' Affiliates, agents, attorneys, employees, directors and officers, and all successors and assigns, and representatives of each of the foregoing (collectively, the "Released Parties") and agrees to indemnify and hold harmless the Released Parties, from any and all debts, claims, obligations, damages, costs, attorneys' fees, suits, demands, liabilities, actions, proceedings and causes of action, in each case whether known or unknown, contingent or fixed, direct or indirect and of whatever nature or description and whether in law or in equity, under contract, tort, statute or otherwise, which each has heretofore had or now or hereafter can, shall or may have against the Released Parties arising from acts, claims or events related to or arising out of the Contract Manufacturing Agreement prior to the Closing and any performance or nonperformance prior to the Closing thereunder. Notwithstanding the foregoing, this Section in no way pertains to the following: (a) this Agreement, the other agreements executed in connection with this Agreement and the transactions contemplated by this Agreement; (b) the obligations of Seller to pay the production invoices of Buyer under the Contract Manufacturing Agreement for pasta produced through the Closing; (c) Seller's obligations under any of the Retained Liabilities; or (d) the ongoing obligations of the parties set forth in Section 12.1. ARTICLE XIII. MISCELLANEOUS Section 13.1. Notices. Except as otherwise expressly provided, all notices or other communications required or permitted under this Agreement shall be made in writing and shall be deemed given (i) upon delivery, if sent by (A) personal delivery or (B) courier (e.g., overnight delivery), (ii) 3 days after being sent by certified mail, return receipt requested, postage and registration fees prepaid and correctly addressed to a party as set forth below or (iii) upon sending, if sent by telecopy to a party at the number listed below for such party (with a telecopy machine generated confirmation sheet retained by the sender): 22
If to Buyer: American Italian Pasta Company 4100 N. Mulberry, Ste. 200 Kansas City, Missouri 64116 Attn: Timothy S. Webster Telecopy: (816) 584-5362 with a copy to: Blackwell Sanders Peper Martin LLP 2300 Main Street, Suite 1000 Kansas City, Missouri 64108 Attn: James M. Ash Telecopy: (816)983-8080 If to Seller: Archer-Daniels-Midland Company 4666 Faries Parkway Decatur, Illinois 62526 Attn: President, ADM Natural Health & Nutrition Division Telecopy: 217-451-6196 with a copy to: Archer-Daniels-Midland Company 4666 Faries Parkway Decatur, Illinois 62526 Attn: General Counsel Telecopy: 217-451-6196 or to such other address as Buyer or Seller shall have last designated by notice to the other party. Section 13.2. Applicable Law. This Agreement, and the rights and obligations of the parties hereto, shall be governed by and determined in accordance with the laws of the State of Missouri, without giving effect to the choice or conflicts of law provisions thereof. Section 13.3. Benefit and Assignment. This Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and permitted assigns. Neither this Agreement nor any rights hereunder may be assigned or transferred, and no duties may be delegated, by Seller without the prior written consent of Buyer. Buyer may assign or transfer its rights and delegate its duties hereunder to any Affiliate of Buyer. Section 13.4. No Third Party Beneficiary. This Agreement is for the benefit of, and may be enforced only by, the parties who are signatories hereto and their respective successors and permitted assigns. This Agreement is not for the benefit of, and may not be enforced by, any third party. Section 13.5. Expenses. Except as otherwise provided in this Agreement, each party hereto shall pay its own expenses incurred in connection with this Agreement and in the preparation for and consummation of the transactions provided for herein. Section 13.6. Waiver. Except as otherwise provided in this Agreement, no delay or failure on the part of any party hereto in exercising any right, power or privilege under this Agreement or under any other instrument or document given in connection with or pursuant to 23
this Agreement shall impair any such right, power or privilege or be construed as a waiver of any default or any acquiescence therein. No single or partial exercise of any such right, power or privilege shall preclude the further exercise of such right, power or privilege, or the exercise of any other right, power or privilege. No waiver shall be valid against any party hereto unless made in writing and signed by the party against whom enforcement of such waiver is sought and then only to the extent expressly specified therein. Section 13.7. Equitable Relief; Remedies Cumulative; Interest. Seller hereby acknowledges that irreparable injury may result to Buyer in the event of a breach of this Agreement to Seller. It is therefore agreed that, if Seller breaches this Agreement, Buyer may seek, in addition to any other remedies and damages available: (i) an injunction to restrain the violation thereof by such party, or its shareholders, directors, agents, servants, employers or employees of such party, and all Persons acting for or with such party and (ii) specific performance of the terms and conditions of this Agreement. All rights and remedies granted in this Agreement or available under law or at equity shall be deemed concurrent and cumulative, and not alternative or exclusive remedies, to the full extent permitted by law and this Agreement. Any party may proceed with any number of remedies at the same time or in any order. The exercise of any one right or remedy shall not be deemed a waiver or release of any other right or remedy. The parties waive any right they may have to require, or any obligation on the part of, another party to post a bond in connection with any equitable remedies. Except as otherwise provided herein, each party shall be entitled to interest on any amounts owed by and not timely paid by the other from the date such amount was first due to be paid until the date of actual payment thereof at the prime rate of Citibank, N.A., as published from time to time in The Wall Street Journal. Section 13.8. Further Actions; Transition. (a) If at any time after the Closing any further action is necessary or desirable to carry out the purposes of this Agreement, each party will take such further action (including the execution and delivery of such further instruments and documents) as the other party reasonably may request, all at the sole cost and expense of the requesting party (unless the requesting party is entitled to indemnification therefor under Article X). (b) Seller shall not take any action that is designed or intended to have the effect of discouraging any customer, supplier or other business associate of Seller from establishing or maintaining the same business relationships with Buyer after the Closing as it maintained with Seller prior to the Closing relating to the Assets. Seller will refer all customer inquiries relating to the Branded Products to Buyer from and after the Closing. (c) In the event that Buyer or Seller receives funds after the Closing which belong to or are property payable to the other, the receiving party shall promptly endorse over or otherwise pay to the other all such erroneously received funds. Section 13.9. Entire Agreement; Amendment. This Agreement, the Exhibits and Schedules attached hereto and the Confidentiality Agreement contain the entire Agreement of the parties hereto with respect to the transactions contemplated hereby and supersede any and all prior agreements, arrangements, and understandings between the parties. No inducements 24
contrary to the terms of this Agreement exist. No waiver of any term, provision, or condition of this Agreement, whether by conduct or otherwise, in any one or more instances shall be construed as a further or continuing waiver of any such term, provision or condition or any other term, provision or condition of this Agreement. This Agreement may not be modified orally and may only be amended in a writing executed by all parties hereto. Section 13.10. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original, but all of which together shall constitute a single agreement. Section 13.11. Termination. (a) This Agreement may be terminated prior to the Closing as follows (i) At any time by the mutual consent of Seller and Buyer; (ii) By either party, at its sole election, if the Closing shall not have occurred on or before October 31, 2003, unless such party has taken action (or failed to take action) in violation of this Agreement and which caused delay in the Closing; (iii)By Buyer upon a material breach of any representation, warranty, covenant or agreement on the part of Seller set forth in this Agreement; or (iv) By Seller upon a material breach of any representation, warranty, covenant or agreement on the part of Buyer set forth in this Agreement. (b) In the event of the termination of this Agreement pursuant to subparagraph (iii) or (iv) above because Seller or Buyer, as the case may be, shall have willingly or in bad faith failed to satisfy a condition to the Closing, the other party shall be entitled to pursue, exercise, and enforce any and all remedies, rights, powers, and privileges available to it at law or in equity. Section 13.12. Public Announcements. Buyer and Seller will coordinate with each other regarding the content and timing of the initial public announcement of, the transactions contemplated by this Agreement. Buyer and Seller acknowledge and consent that each may issue a press release concerning the transactions contemplated by this Agreement so long as such press release contains substantially the same information as set forth on Schedule 13.12. [The remainder of this page is intentionally blank.] 25
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. Archer-Daniels-Midland Company Gooch Foods, Inc. By: /s/ John D. Rice By: /s/ David J. Smith ----------------------------------- ----------------------------------- Name: John D. Rice Name: David J. Smith Title: Senior Vice President Title: Vice President American Italian Pasta Company By: ------------------------------------ David E. Watson Executive Vice President - Operations and Corporate Development 26
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set forth above. Archer-Daniels-Midland Company Gooch Foods, Inc. By: By: ----------------------------------- ----------------------------------- Name: Name: ----------------------------------- ----------------------------------- Title: Title: ----------------------------------- ----------------------------------- American Italian Pasta Company By: /s/ David E. Watson ----------------------------------- David E. Watson Executive Vice President - Operations and Corporate Development 26