EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
AMONG
FLAGSTAR CORPORATION,
CANTEEN HOLDINGS, INC.,
COMPASS GROUP PLC,
AND
COMPASS HOLDINGS, INC.
Dated as of April 26, 1994
TABLE OF CONTENTS
Article I DEFINITIONS
Article II PURCHASE AND SALE OF SHARES
Article III PURCHASE PRICE
3.1 Payment of Purchase Price
3.2 Post-Closing Purchase Price Adjustment
3.3 Section 338 Election and Forms
Article IV REPRESENTATIONS AND WARRANTIES OF FLAGSTAR
4.1 Corporate Organization
4.2 Capitalization of IMV
4.3 Capitalization of Canteen
4.4 Canteen Subsidiaries
4.5 Authority
4.6 Consents and Approvals; No Violations; Release of
Indebtedness and Liens
4.7 Financial Statements
4.8 Undisclosed Liabilities
4.9 Taxes
4.10 Business and Contracts
4.11 Properties and Assets
4.12 Absence of Changes
4.13 Proprietary Rights
4.14 Leases
4.15 Bank Accounts
4.16 Material Contracts and Customers
4.17 Related Transactions
4.18 Insurance
4.19 Employees; Labor Matters
4.20 Employee Benefit Plans
4.21 Litigation
4.22 Compliance with Laws
4.23 Environmental Matters
4.24 Books and Records
4.25 Accounts Receivable; Inventories
4.26 Adequacy of Assets
4.27 Canteen Group Receivables
4.28 Licenses
4.29 Disclosures
4.30 Liquidation or Insolvency
4.31 Working Capital
4.32 Accuracy of Information Contained in Certain Filings
4.33 Not Subject to Certain Regulations
4.34 Knowledge
Article V REPRESENTATIONS AND WARRANTIES OF BUYER
5.1 Corporate Organization
5.2 Authority
5.3 Consent and Approvals; No Violations
5.4 Litigation
5.5 Investment Intent
5.6 Buyer's Investigation
Article VI FURTHER COVENANTS AND AGREEMENTS
6.1 Covenants of Flagstar and Seller Pending the
Closing
6.2 Covenants of Compass and Buyer Pending the Closing
6.3 Filings
6.4 Effective Time of Closing and Transfer
6.5 Announcements
6.6 Costs and Expenses
6.7 Further Assurances
6.8 Cooperation and Preservation of Records
6.9 Limitation of Liabilities
6.10 Employees and Employee Benefit Plans
6.11 Brokers
6.12 Distributions in the Ordinary Course
6.13 Certain Agreements
6.14 Financing Commitment
6.15 Updating and Amendment of Disclosure Schedule
6.16 Certain Additional Understandings
6.17 Franchise Rights
Article VII TERMINATION
7.1 Termination
7.2 Automatic Termination
7.3Procedure and Effect of Termination
Article VIII CONDITIONS TO COMPASS' AND BUYER'S OBLIGATIONS
8.1 Financing
8.2 Representations and Warranties True
8.3 Performances
8.4 Compass' Shareholder Approval
8.5 Governmental Consents and Approvals
8.6 No Injunction or Proceeding
8.7 Agreement to Admit
8.8 No Amendment to Disclosure Schedule
8.9 Rights Issue Underwriting
Article IX CONDITIONS TO FLAGSTAR'S AND SELLER'S OBLIGATIONS
9.1 No Injunction or Proceeding
9.2 Compass Shareholder Approval
9.3 Representations and Warranties True
9.4 Performances
9.5 Governmental Consents and Approvals
Article IX-A CLOSING DELIVERIES
9-A.1 Seller's Closing Deliveries
9-A.2 Buyer's Closing Deliveries
Article X INDEMNIFICATION
10.1 Indemnification by Flagstar
10.2 Threshold for Indemnification
10.3 Third Party Claims
10.4 Notice of Direct Claims
Article XI MISCELLANEOUS
11.1 No Survival of Representations and Warranties
11.2 Entire Understanding, Waiver, Etc.
11.3 Severability
11.4 Captions
11.5 Notices
11.6 Successors and Assigns
11.7 Parties in Interest
11.8 Counterparts
11.9 Construction of Terms
11.10 Governing Law
11.11 Specific Performance
Exhibits to Stock Purchase Agreement
Exhibit A Franchise Deal Points
Exhibit B Legal Opinion of Seller
Exhibit C Legal Opinion of Buyer
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
April 26, 1994, by and among FLAGSTAR CORPORATION, a Delaware
corporation ("Flagstar"), CANTEEN HOLDINGS, INC., a New York
corporation ("Seller"), COMPASS GROUP PLC, a public limited
company incorporated in England and Wales ("Compass"), and
COMPASS HOLDINGS, INC., a Delaware corporation ("Buyer").
RECITALS
WHEREAS, Flagstar owns all of the issued and outstanding
shares of common stock, $.01 par value per share, of Seller and
has joined in the execution of this Agreement for the limited
purposes expressly provided for herein; and
WHEREAS, Seller owns all of the issued and outstanding
shares (the "Shares") of common stock, $.01 par value per share,
of IM VENDING, INC., a Delaware corporation ("IMV"); and
WHEREAS, IMV owns all of the issued and outstanding shares
of common stock, $.01 par value per share, of Canteen
Corporation, a Delaware corporation ("Canteen"); and
WHEREAS, Compass indirectly owns all of the issued and
outstanding shares of common stock, $1.00 par value per share, of
Buyer; and
WHEREAS, Seller desires to sell the Shares to Buyer, and
Buyer desires to purchase the Shares from Seller, on the terms
and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the
mutual representations, warranties, covenants and agreements
hereinafter set forth and for other good and valuable
considerations, the receipt and sufficiency of which are hereby
expressly acknowledged by Seller and Buyer, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article shall have the following
respective meanings for all purposes of this Agreement:
Section 1.1. "Accountants" means Deloitte & Touche.
Section 1.2. "Business" means all the business
currently being conducted by the Canteen Group, including the
provision of contract food and vending and certain non-food
services to business and industry, governmental, educational,
lifecare, leisure, correctional, airports, railway stations and
similar institutional markets throughout the United States,
together with the granting of franchises and licensing of
trademarks to domestic and international distributors and
licensees in such business; but excluding from the term Business
the concession and recreation services operations and food and
beverage service business as currently conducted by Volume
Services, Inc. and TW Recreational Services, Inc., including
event catering provided at sporting venues, entertainment
complexes and marinas and at United States National Parks and
state parks.
Section 1.3. "Business Day" means a day (other than a
Saturday, a Sunday or a public holiday in the United Kingdom or
the United States) on which banks are open for business both in
New York City and in London.
Section 1.4. "Buyer Group" means collectively,
Compass, Buyer and, after the Closing, the Canteen Group.
Section 1.5. "Canteen Group" means collectively, IMV,
Canteen and the Canteen Subsidiaries.
Section 1.6. "Canteen Subsidiaries" means those
subsidiary corporations identified in Section 1.6 of the
Disclosure Schedule.
Section 1.7. "Closing" means the consummation and
effectuation of the transactions contemplated herein pursuant to
the terms and conditions of this Agreement which shall be held on
the 17th day of June, l994, at 9:00 AM in the offices of Smith
Helms Mulliss & Moore, L.L.P. in Charlotte, North Carolina or on
such other date or at such other time or place as is mutually
agreed by the parties hereto.
Section 1.8. "Closing Date" means the date on which
the Closing actually occurs.
Section 1.9. "CM Assets" has the meaning given in
Section 4.10.
Section 1.10. "CM Corp." means Canteen Management
Services, Inc., a wholly owned subsidiary of Seller.
Section 1.11. "Code" means the Internal Revenue Code
of 1986, as amended.
Section 1.12. "Confidentiality Agreement" means the
Confidentiality Agreement dated February 11, 1994 between Flagstar
and Compass.
Section 1.13. "Customers" means the customers of
Canteen or a Canteen Subsidiary relating to the rendering of
contract food and vending services by Canteen or a Canteen
Subsidiary; a list of the top five (5) such Customers in each of
the Canteen Group's designated geographic regions is set forth in
Section 1.13 of the Disclosure Schedule.
Section 1.14. "Disclosure Schedule" means the
disclosure schedule document executed by Flagstar, Seller, Compass
and Buyer as of the date hereof, as amended in the manner
contemplated by Section 6.15 hereof.
Section 1.15. "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
Section 1.16. "Exon-Florio Amendment" means Section
721 of the Defense Production Act of 1950, as amended by Section
5021 of the Omnibus Trade and Competitiveness Act of 1988.
Section 1.17. "Financial Statements" means the Canteen
Group consolidated financial statements as identified and defined
in Section 4.7 hereof.
Section 1.18. "Flagstar Parent" means Flagstar
Companies, Inc., a Delaware corporation.
Section 1.19. "GAAP" means generally accepted
accounting principles.
Section 1.20. "HSR Act" means the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder.
Section 1.21. "Indebtedness" means, indebtedness for
money borrowed from any third party and any intercompany
obligations of any nature, other than current liabilities for
goods or services furnished in the ordinary course of business.
Section 1.22. "Independent Accounting Firm" means
Price Waterhouse or such other nationally recognized accounting
firm in the United States as shall be mutually acceptable to
Buyer and Seller.
Section 1.23. "Interim Statement of Assets and
Liabilities" means the unaudited consolidated statement of assets
and liabilities of the Canteen Group for the two-month period
ending February 19, 1994 (and any related notes thereto), a copy
of which is included as part of the Financial Statements.
Section 1.24. "Key Customer" means the largest fifty
(50) customers of the Canteen Group determined by gross revenues
during 1993.
Section 1.25. "Key Customer Contract" has the meaning
given that term in Section 4.10.
Section 1.26. "Listing Particulars" means the listing
particulars to be published by Compass in accordance with the
Listing Rules.
Section 1.27. "Listing Rules" means the Listing Rules
made by the London Stock Exchange pursuant to Part IV of the
Financial Services Act 1986 (as amended from time to time).
Section 1.28. "London Stock Exchange" means The
International Stock Exchange of the United Kingdom and the
Republic of Ireland Limited.
Section 1.29. "Material Adverse Effect" means an
effect that is reasonably likely to have a material adverse
effect on the business, financial condition or results of
operations of the Canteen Group, taken as a whole.
Section 1.30. "Net Asset Value" means, as of any date,
the amount, if any, by which the (i) aggregate book value of
assets of the Canteen Group exceeds (ii) the aggregate book value
of liabilities of the Canteen Group; in each case determined on a
consolidated basis in accordance with GAAP consistently applied
and in a manner consistent with and subject to such adjustments
as are provided in the determination of the Net Asset Value as of
December 25, 1993 set forth in Section 1.30 of the Disclosure
Schedule.
Section 1.31. "Permitted Encumbrances" means each of
the following: (i) liens for property taxes and special
assessments with respect to the Real Property and/or the personal
property owned by the Canteen Group with respect to 1994 and
subsequent years; (ii) mechanic's and materialmen's liens arising
in the ordinary course of business; (iii) restrictions,
easements, covenants, reservations and rights of
way of record with respect to the Real Property; (iv) matters
which would be revealed by an accurate, current survey of the
Real Property; (v) zoning ordinances, restrictions, prohibitions
and other requirements imposed by governmental authority; and
(vi) rights of others in party walls, if any, relative to the
Real Property.
Section 1.32. "Person" means an individual,
partnership, corporation, trust, unincorporated organization,
association or joint venture or a government, agency, political
subdivision or instrumentality thereof.
Section 1.33. "Plan" means all pension, retirement,
profit sharing, savings, thrift, stock bonus, stock option, stock
purchase, restricted stock purchase, stock ownership, stock
appreciation right, phantom stock, deferred compensation,
supplemental retirement, deferred bonus, severance, change of
control, parachute, medical, health, dental, fitness, vision,
prescription drugs, sick pay, dependent care, educational
assistance, group legal services, life insurance, accidental
death, accidental dismemberment or disability, short-term and
long-term disability group insurance, Code Section 125 "cafeteria
plan," supplemental unemployment income, training,
apprenticeship, scholarship, tuition reimbursement, employee
assistance, employee discount, subsidized cafeteria, fringe
benefit, vacation, holiday, employer sponsored recreational
facility, or other employee pension benefit or welfare plan,
policy, contract, or arrangement, or other similar fringe or
employee benefit plan, program, policy, contract, or arrangement,
written or oral, qualified or nonqualified, funded or unfunded,
foreign or domestic, or any other plan described in Section 3(3)
of ERISA. Notwithstanding the foregoing, the term "Plan" shall
not include: (a) any benefit, program, contract or arrangement
that is not described in Section 3(3) of ERISA unless (i) it
provides material benefit to a material number of employees, (ii)
it otherwise represents a material cost in the Canteen Group's
business, or (iii) any reports or other filings regarding it are
required to be made to the Internal Revenue Service, the
Department of Labor, or any other governmental agency, or (b) any
Plan that is not maintained or contributed to by any member of
the Canteen Group.
Section 1.34. "Proprietary Rights" means all patents,
patent applications and patent disclosures; all inventions
(whether or not patentable and whether or not reduced to
practice); all trademarks, service marks, trade dress, trade
names and corporate names and all goodwill associated therewith;
all registered and unregistered statutory and common law
copyrights; all registrations, applications and renewals for any
of the foregoing; all trade secrets, confidential information,
ideas, formulas, composition, know-how, manufacturing and
production processes and techniques, research information,
drawings, specifications, designs, plans, improvements,
proposals, technical and computer data, documentation and
software, financial business and marketing plans, customer and
supplier lists and related information, marketing materials and
all other proprietary intangible rights.
Section 1.35. "Purchase Price" means the sum of Four
Hundred Fifty Million Dollars ($450,000,000), as such sum may be
adjusted pursuant to and in accordance with Section 3.2 hereof.
Section 1.36. "Real Property" means the real property
owned by any member of the Canteen Group, including the
buildings, improvements and fixtures located thereon, which real
property is described in Section 1.36 of the Disclosure Schedule.
Section 1.37. "Restated Credit Agreement" shall have
the meaning set forth in Section 4.2 of the Disclosure Schedule.
Section 1.38. "Restated Credit Lender" shall mean a
lender as a party to the Restated Credit Agreement.
Section 1.39. "Retained Group" means Flagstar and all
direct and indirect subsidiaries of Flagstar other than the
Canteen Group.
Section 1.40. "Rights Issue" means the issue by
Compass by way of rights of ordinary shares in the capital of
Compass underwritten in accordance with the terms of the
Underwriting Agreement.
Section 1.41. "Section 338(h)(10) Elections" means the
joint elections by Flagstar Parent and Buyer with respect to the
purchase and sale of the Shares under this Agreement under
Section 338(h)(10) of the Code as described in Section 3.3 below.
Section 1.42. "Selling Group" means collectively,
Flagstar and Seller.
Section 1.43. "Taxes" means all taxes, assessments,
and charges imposed by any federal, state, local, or foreign
taxing authority, including interest, penalties and additions
thereto.
Section 1.44. "Underwriting Agreement" means the
agreement to be dated April 27, 1994, between Compass and Morgan
Grenfell & Co. Limited relating to the underwriting of the
Rights Issue substantially in the form delivered to Seller
contemporaneously with the execution of this Agreement.
ARTICLE II
PURCHASE AND SALE OF SHARES
Upon the terms and subject to the conditions hereof, at the
Closing, Seller shall sell, assign, transfer and convey to Buyer,
and Buyer shall purchase and accept from Seller, all of the
Shares for the Purchase Price free and clear of all pledges,
security interests, liens, claims, options, charges, encumbrances
and restrictions whatsoever.
ARTICLE III
PURCHASE PRICE
Section 3.1. Payment of Purchase Price. The Purchase
Price shall be payable and paid as follows:
(a) Four Hundred Fifty Million Dollars
($450,000,000) shall be paid by Buyer on the Closing Date by wire
transfer of immediately available funds (i) in accordance with
Seller's written wire instructions (such wire instructions to be
delivered no later than three (3) business days prior to
Closing), or (ii) to the extent necessary to obtain the release
of the Canteen Group from obligations with respect to the
Restated Credit Agreement and related interest rate exchange
agreements and to obtain the release of the shares of the Canteen
Group and other assets of (or to be conveyed to) the Canteen
Group as collateral for the Restated Credit Agreement, Buyer may
make payments of some or all of the Purchase Price as directed by
Citibank, N.A., as agent under the Restated Credit Agreement.
(b) In the event of a reduction in the Purchase
Price pursuant to Section 3.2 hereof, the amount of such
reduction shall be paid by Seller by wire transfer of immediately
available funds in accordance with Buyer's written wire
instructions within five (5) Business Days following the
determination in accordance with Section 3.2 hereof of the amount
of such reduction.
Section 3.2. Post-Closing Purchase Price Adjustment.
The Purchase Price shall be reduced by the amount, if any, by
which Forty-One Million Five Hundred Thousand Dollars
($41,500,000) exceeds the Net Asset Value as of the Closing
Date. As soon as practicable following the Closing, the Canteen
Group, at its expense, shall prepare the consolidated balance
sheet as of the Closing Date and the related statements of
operations and cash flows of the Canteen Group for the period
from December 25, 1993 through the Closing Date, together with a
calculation of the Net Asset Value as of the Closing Date, and
shall deliver such balance sheet and related statements and Net
Asset Value calculation to Seller as soon as available and in any
event within sixty (60) days of the Closing Date. Such balance
sheet and related statements shall be prepared on a basis
consistent with the Financial Statements but shall not be
adjusted to reflect the Section 338(h)(10) Elections or any
federal and state income tax liabilities associated therewith.
Such balance sheets, related statements and Net Asset Value
calculation shall be reviewed within such sixty (60) day period
by the Accountants regularly employed by the Canteen Group and
shall be accompanied by a review report confirming the
calculation of the Net Asset Value as of the Closing Date
determined in accordance with Section 1.30 of the Disclosure
Schedule . Upon request, Flagstar shall be provided with access,
during normal business hours, to the accounting books and records
and accounting personnel of the Canteen Group during such sixty
(60) day period and thereafter until the Net Asset Value as of
the Closing Date has been finally determined in accordance with
the provisions of this Section 3.2. If within thirty (30) days
following receipt of such balance sheet, related statements and
Net Asset Value calculation, the Seller determines in good faith
that it disagrees with the calculation, it shall notify the Buyer
and Compass of its objection setting forth its determination of
Net Asset Value as of the Closing Date and the basis for its
disagreement. A failure by Seller to notify Buyer and Compass of
its disagreement within such thirty (30) day period will
constitute acceptance by Seller of the calculation of Net Asset
Value as of the Closing Date. Seller and Buyer will negotiate in
good faith to resolve any disagreement during the fifteen (15)
day period following Seller's notification of a disagreement. In
the event such disagreements not resolved within such fifteen
(15) day period, the calculation of Net Asset Value shall
promptly be submitted to the Independent Accounting Firm for a
final resolution within forty-five (45) days after the expiration
of the fifteen (15) day negotiation period. The Independent
Accounting Firm will be requested to review such balance sheet
and related statements and independently determine the Net Asset
Value as of the Closing Date in accordance with the provisions of
this Section 3.2.. In its determination, the Independent
Accounting Firm shall be entitled to rely on the work papers and
similar items generated by the Canteen Group in the course of
their generation of such balance sheet, related statements and
Net Asset Value calculation and the work papers of the
Accountants in respect thereof. The decision of the Independent
Accounting Firm shall be final and binding on the parties. If
the determination of the Independent Accounting Firm is that the
Net Asset Value as of the Closing Date is the same or less than
the Net Asset Value calculated by the Canteen Group, the fees and
expenses of the Independent Accounting Firm will be paid by the
Seller. If the determination of the Independent Accounting Firm
is that the Net Asset Value as of the Closing Date is greater
than the Net Asset Value calculated by the Canteen Group, the
fees and expenses of the Independent Accounting Firm will be paid
by Buyer.
Section 3.3.Section 338 Election and Forms.
(a) Flagstar Parent and Buyer have executed an
agreement and election of even date herewith pursuant to which
Flagstar Parent and Buyer shall jointly make timely Section
338(h)(10) Elections in accordance with the Code with respect to
the purchase and sale of the Shares and with respect to the
deemed purchase and sale of the shares of Canteen and of all
Canteen Subsidiaries. Flagstar Parent and Buyer shall report,
for federal income tax purposes, the transactions under this
Agreement consistent with the Section 338(h)(10) Elections; and
neither Flagstar Parent nor Buyer will take a position under the
Code contrary thereto unless required to do so by applicable tax
laws pursuant to a determination as defined in Section 1313(a) of
the Code. The federal taxable income and loss of the Canteen
Group will be included on Flagstar Parent's consolidated federal
income tax returns for all periods through and including the
Closing Date, including income and loss attributable to the
Section 338(h)(10) Elections, and Flagstar Parent shall pay any
federal income taxes attributable to such income. The federal
income and loss of the Canteen Group will be allocated to the
period up to and including the Closing Date, by closing the books
of the Canteen Group as of the end of the Closing Date. Buyer
shall not cause any member of the Canteen Group to engage, on the
Closing Date, in any transaction outside the ordinary course of
business that could affect the federal taxable income and loss of
any member of the Canteen Group included in Flagstar Parent's
federal consolidated income tax return.
(b) Buyer and Seller shall enter into an
allocation agreement within thirty (30) days following the
determination of the Purchase Price pursuant to Section 3.2
concerning the computation of the Modified Aggregate Deemed Sale
Price (as defined under applicable treasury regulations)
("MADSP") of the assets of the Canteen Group and the allocation
of such MADSP among such assets (the "Allocation Agreement").
The Allocation Agreement shall provide that if there is a dispute
as to the computation of the MADSP or its allocation among the
assets, the fair market value of the assets of the Canteen Group
shall be determined by an appraisal conducted by the Independent
Accounting Firm and based upon such appraisal, such firm shall
determine MADSP and its allocation among the assets. Buyer shall
pay all fees and expenses of such appraisal and determination.
Flagstar Parent's consolidated federal income tax return and all
filings for which Buyer is responsible under (c) below shall,
when required to reflect MADSP or its allocation, reflect such
items as determined pursuant to this paragraph (b).
(c) Buyer shall be responsible for the
preparation and timely filing of all documents, returns and other
forms and schedules required to be submitted to the
Internal Revenue Service in connection with the Section
338(h)(10) Elections in accordance with the Code and the terms of
this Agreement, including the IRS Form 8023 (but excluding
Flagstar Parent's consolidated return), which documents, returns,
forms and schedules shall reflect MADSP and its allocation as
determined pursuant to the Allocation Agreement. To the extent
not executed and completed as of the date hereof. Flagstar Parent
shall execute and deliver to Buyer such documents or forms,
including any amended or replacement Forms 8023, as are
reasonably requested and are required by the Code in order to
properly complete these Section 338 forms and schedules at least
twenty (20) days prior to the date such forms are required to be
filed. Flagstar shall provide Buyer with such information as
Buyer reasonably requests in order to prepare any remaining
Section 338 forms and schedules within thirty (30) days of
Buyer's request for such further information or such shorter
period as is necessary to comply with applicable law.
Notwithstanding the foregoing, Buyer shall request any such
information as promptly as practicable following the Closing Date.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FLAGSTAR
Flagstar hereby represents and warrants to Compass and Buyer
as of the date hereof and as of the Closing Date, subject to the
updating and amendment of the Disclosure Schedule contemplated by
Section 6.15 hereof, as follows:
Section 4.1. Corporate Organization. Seller is a
corporation duly organized, validly existing and in good standing
under the laws of the State of New York and has the full
corporate right, power and authority and all material
authorizations, licenses and permits necessary to own, lease and
operate all of its properties and assets and to carry out its
business as it is presently conducted. Each of Flagstar and each
member of the Canteen Group is a corporation duly organized,
validly existing and in good standing under the laws of the State
of its incorporation and has the full corporate right, power and
authority and all material authorizations, licenses and permits
necessary to own, lease and operate all of its properties and
assets and to carry out its business as it is presently
conducted. Each member of the Canteen Group is duly licensed or
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the ownership of property
or the conduct of its business requires such qualification or
license. Except for the Canteen Subsidiaries, and except as set
forth in Section 4.1 of the Disclosure Schedule, Canteen has no
subsidiaries and there are no corporations, joint ventures,
partnerships or other entities
or arrangements in which Canteen, directly or indirectly, owns
any capital stock or an equity interest. Canteen is a wholly
owned subsidiary of IMV. Other than Canteen and the Canteen
Subsidiaries, IMV has no subsidiaries and there are no
corporations, joint ventures, partnerships or other entities or
arrangements in which IMV, directly or indirectly, owns any
capital stock or an equity interest. Seller is a wholly owned
subsidiary of Flagstar.
Seller has delivered to Buyer correct and complete
copies of the articles of incorporation and bylaws of each member
of the Canteen Group and all of the minute books currently
maintained by each member of the Canteen Group of the meetings of
the Board of Directors, all committees of the Board of Directors
and the stockholders of each member of the Canteen Group. The
minute books of each member of the Canteen Group are correct and
complete in all material respects. The books of Seller and each
member of the Canteen Group accurately reflect all transactions
involving the issue or transfer of certificates for shares of
their respective common stock.
Section 4.2. Capitalization of IMV. The authorized
capital stock of IMV consists solely of one thousand (1,000)
shares of voting common stock, $.01 par value per share, of which
only one hundred (100) shares are issued and outstanding. Such
one hundred (100) shares constitute the Shares. No shares are
held as treasury shares. All issued and outstanding shares of
capital stock of IMV are owned of record by Seller, have been
duly authorized and validly issued, are fully paid and
nonassessable, were issued without violation of any preemptive
rights and are free of any preemptive rights and, except as set
forth in Section 4.2 of the Disclosure Schedule, are owned free
and clear of any security interests, claims, liens, pledges,
encumbrances, charges, agreements, voting trusts, proxies or
other arrangements or restrictions whatsoever. Except for this
Agreement and as set forth in Section 4.2 of the Disclosure
Schedule, there are no options, warrants or other rights, nor any
agreements, commitments or arrangements of any kind, relating to
the subscription to or the issuance, voting, acquisition, sale,
repurchase, transfer or disposition of (i) any capital stock of
IMV or securities convertible into or exchangeable for capital
stock of IMV, or (ii) any options, warrants or subscription
rights relating to any such capital stock or securities of IMV.
The consummation of the transactions contemplated hereby will
convey to Buyer good title to the Shares free and clear of all
claims, liens, encumbrances, security interests, charges or
restrictions of any nature whatsoever, except as created by
Buyer. Except as set forth in Section 4.3 of the Disclosure
Schedule, IMV is the sole record and beneficial holder of all the
outstanding capital stock of Canteen subject to no pledges,
security interests, liens, claims, options, proxies, voting
agreements, charges or
encumbrances of any kind whatsoever. IMV engages in no trade or
business and holds no other assets other than the shares of
Canteen. Except as set forth in Section 4.4 of the Disclosure
Schedule, Canteen is the sole record and beneficial owner of all
the outstanding capital stock of each Canteen Subsidiary free and
clear of any security interests, claims, liens, pledges,
encumbrances, charges, agreements, proxies, voting trusts or
other arrangements.
Section 4.3. Capitalization of Canteen. The
authorized capital stock of Canteen consists solely of one
thousand (1,000) shares of voting common stock, $.01 par value
per share, of which all one thousand (1,000) shares are issued
and outstanding. No shares are held as treasury shares. All
issued and outstanding shares of capital stock of Canteen have
been duly authorized and validly issued, are fully paid and
nonassessable, were issued without violation of any preemptive
rights and are free of any preemptive rights and, except as set
forth in Section 4.3 of the Disclosure Schedule, are owned free
and clear of any security interests, claims, liens, pledges,
encumbrances, charges, agreements, voting trusts, proxies or
other arrangements or restrictions whatsoever. Except as set
forth in Section 4.3 of the Disclosure Schedule, there are no
options, warrants or other rights, nor any agreements,
commitments or arrangements of any kind, relating to the
subscription to or issuance, voting, acquisition, sale,
repurchase, transfer or disposition of (i) any capital stock of
Canteen or securities convertible into or exchangeable for
capital stock of Canteen or (ii) any options, warrants or
subscription rights relating to any such capital stock or
securities of Canteen. Except as set forth in Section 4.3 of the
Disclosure Schedule, none of the members of the Canteen Group has
any other equity securities or securities containing any equity
features authorized, issued or outstanding, and there are no
agreements or other rights or arrangements existing which provide
for the sale or issuance of any of the foregoing by any member of
the Canteen Group.
Section 4.4. Canteen Subsidiaries. All of the
Canteen Subsidiaries, together with their respective
jurisdictions of incorporation or organization and their
authorized and issued shares of capital stock, are listed in
Section 1.6 of the Disclosure Schedule. All issued and
outstanding shares of capital stock of each Canteen Subsidiary
have been duly authorized and validly issued, are fully paid and
nonassessable, were issued without violation of preemptive rights
and are free of any preemptive rights and, except as set forth
in Section 4.4 of the Disclosure Schedule, are owned free and
clear of any security interests, claims, liens, pledges,
encumbrances, charges, agreements, voting trusts, proxies or
other arrangements or restrictions whatsoever. Except as set
forth in Section 4.4 of the Disclosure Schedule, there are no
options, warrants, or other rights, nor any agreements,
commitments or arrangements of any kind, relating to the
subscription to or issuance, voting, acquisition, sale,
repurchase, transfer or disposition of (i) any capital stock of
any Canteen Subsidiary or securities convertible into or
exchangeable for capital stock of a Canteen Subsidiary, or (ii)
any options, warrants, or subscription rights relating to any
such capital stock or securities of a Canteen Subsidiary. Except
as set forth in Section 4.4 of the Disclosure Schedule, the
shares of the Canteen Subsidiaries are subject to no shareholders
agreements, none of the Canteen Subsidiaries has any other
subsidiaries, and there are no corporations, joint ventures,
partnerships or other entities or arrangements in which any
Canteen Subsidiary, directly or indirectly, owns any capital
stock or an equity interest.
Section 4.5. Authority. Each of Seller and Flagstar
has all requisite corporate right, power and authority to
execute, deliver and perform this Agreement. The execution,
delivery and performance of this Agreement by each of Seller and
Flagstar have been duly and validly authorized and approved by
all necessary corporate action. This Agreement has been duly and
validly executed and delivered by each of Seller and Flagstar
and, assuming this Agreement has been duly authorized, executed
and delivered by Buyer, constitutes the legal, valid and binding
obligation of each of Seller and Flagstar, enforceable against it
in accordance with its terms.
Section 4.6. Consents and Approvals; No Violations;
Release of Indebtedness and Liens.
(a) Except as set forth in Part I of Section 4.6
of the Disclosure Schedule, the execution, delivery and
performance of this Agreement by Flagstar and Seller will not
(with or without the giving of notice or the passage of time, or
both) (i) violate any applicable provision of law or any rule or
regulation of any federal, state or local administrative agency
or governmental authority applicable to Flagstar, Seller or any
member of the Canteen Group, or any order, writ, injunction,
judgment or decree of any court, administrative agency or
governmental authority applicable to Flagstar, Seller or any
member of the Canteen Group, (ii) violate the articles of
incorporation or bylaws of Flagstar, Seller or any member of the
Canteen Group, (iii) require any consent under or constitute a
default under any material agreement, indenture, mortgage, deed
of trust, lease, license, or other instrument to which Flagstar,
Seller, or any member of the Canteen Group is a party or by which
any of them is bound, or any material license, permit or
certificate held by any of them, (iv) require any material
consent or approval by, notice to or registration with any
governmental or regulatory authority other than the appropriate
filings pursuant to the HSR Act and the Exon-Florio Amendment,
and the expiration of the applicable waiting periods thereunder
or (v) result in the creation of any lien, claim, encumbrance or
charge upon any of the shares or any property or assets of any
member of the Canteen Group. Other than the consent of Flagstar
as the sole shareholder of Seller (which has, or by Closing will
be, obtained) no consent of any shareholder of Flagstar Parent or
of any member of the Retained Group is required for the execution
and performance of this Agreement by Flagstar or Seller.
(b) Set forth in Part II of Section 4.6 of the
Disclosure Schedule is a schedule of all Indebtedness (direct,
indirect, contingent or otherwise) of any member of the Canteen
Group to any member of the Retained Group (the "Intercompany
Indebtedness") and all other Indebtedness of any member of the
Canteen Group. Such information is true and complete and sets
forth the holder of such Indebtedness, the amount as of February
12, 1994 and the maturities thereof. In connection with the
payment or release of any Indebtedness prior to Closing, Flagstar
represents and warrants that reasonably equivalent value shall be
received.
Section 4.7. Financial Statements.
(a) Seller has previously provided Buyer with (i)
the audited consolidated statement of assets and liabilities and
the related unaudited consolidated statement of operations and
earnings and statement of cash flows (including any related notes
thereto) of the Canteen Group as of and for the fiscal year ended
December 25, 1993, and (ii) the unaudited consolidated statement
of assets and liabilities and the related consolidated statement
of operations and earnings and statement of cash flows (including
any related notes thereto) of the Canteen Group as of and for the
two-month period ended February 26, 1994 (collectively, the
"Financial Statements") copies of which are set forth in Section
4.7 of the Disclosure Schedule.
(b) Except as set forth on Section 4.7 of the
Disclosure Schedule, the Financial Statements have been prepared
in accordance with GAAP applied on consistent basis throughout
the periods involved and fairly present (i) the consolidated
financial condition of the Canteen Group as of the respective
dates thereof; and (ii) the consolidated results of operations,
earnings, cash flows and retained earnings and changes in
financial position, respectively, of the Canteen Group for the
fiscal year ended December 25, 1993 and for the two-month period
ended February 26, 1994.
Section 4.8 Undisclosed Liabilities. Except as set
forth on Section 4.8 of the Disclosure Schedule, no member of the
Canteen Group has any liabilities except (i) liabilities
reflected or reserved against in the consolidated statement of
assets and liabilities of the Canteen Group as of December 25,
1993, (ii) liabilities reflected or reserved against in the
Interim Statement of Assets and Liabilities, (iii) liabilities
(absolute, accrued, contingent or otherwise) required by GAAP to
be reflected on a consolidated statement of assets and
liabilities of the Canteen Group which were incurred since
February 26, 1994 in the ordinary course of business, and (iv)
liabilities which, in the aggregate, do not have a Material
Adverse Effect. For purposes of this Section 4.8, the term
"liabilities" shall exclude (i) all claims which have not been
asserted, and for which Flagstar or any member of the Canteen
Group has no knowledge of the basis for such assertion, against
any member of the Canteen Group as of the date hereof and (ii)
all claims for future payroll and operating lease obligations
arising in the ordinary course of business.
Section 4.9. Taxes.
(a) Except as set forth in Section 4.9 of the
Disclosure Schedule, each member of the Canteen Group has timely
filed all material returns, declarations, reports, information
returns and statements required to be filed by it in respect of
any Taxes and paid all Taxes due and payable by any of them.
Except as set forth in Section 4.9 of the Disclosure Schedule, no
notice of any material proposed tax deficiency, assessment or
levy has been received by any member of the Canteen Group, nor by
Flagstar in respect of the Business, and each member of the
Canteen Group has duly withheld from each payment from which such
withholding is required by law, the amount of all Taxes required
to be withheld therefrom and has paid the same (to the extent
due) together with the employer's share of the same, if any, to
the proper tax receiving officers.
(b) Since January 1, 1990, neither IMV nor any of
its subsidiaries has been a member of an affiliated group (within
the meaning of Code Section 1504) filing a consolidated federal
income tax return, other than an affiliated group the common
parent of which is Flagstar Parent.
(c) Effective as of the Closing Date, no member of
the Canteen Group shall have any obligation or liability in
respect of any tax sharing agreement between Flagstar Parent and
any member of its affiliated group, on the one hand, and any
member of the Canteen Group, on the other hand.
(d) Neither Canteen nor any member of the Canteen
Group has any liability for the payment of (i) a parachute
payment as that term is defined by Code Section 280G or (ii) any
liability resulting from an accounting method change pursuant to
Code Section 481.
Section 4.10. Business and Contracts. Section 4.10 of
the Disclosure Schedule contains a list of the business functions
and assets of CM Corp which, on or prior to the Closing Date,
will be transferred to the Canteen Group at
historical cost free and clear of all claims, liens, encumbrances
and security interests (the "CM Assets"). The conveyance of the
Shares and the ownership by the Canteen Group of the CM Assets
will allow Buyer to operate the Business in all material respects
as it was operated as of December 25, 1993 and as of the date
hereof. The Canteen Group serviced approximately
1,500 food service clients and approximately 11,500 vending
locations at March 19, 1994. Section 4.10 of the Disclosure
Schedule contains a list of Key Customers. True and complete
copies of the customer contracts for each Key Customer ("Key
Customer Contracts") have been delivered to Buyer. Except as
otherwise indicated in Section 4.10 of the Disclosure Schedule,
each Key Customer Contract is in full force and effect. To the
best knowledge of Flagstar and except as otherwise indicated in
Section 4.10 of the Disclosure Schedule, relationships with such
Key Customers are believed to be good and no written notices of
termination have been delivered by any such Key Customer. True
and complete copies of all customer contracts with the Customers
listed on Section 1.13 of the Disclosure Schedule where such
contract permits the Customer to terminate, modify or renegotiate
its contract upon a change of control of Canteen have been
delivered to Buyer.
Section 4.11. Properties and Assets.
(a) Section 1.36 of the Disclosure Schedule is an
accurate and complete list of all Real Property owned by any
member of the Canteen Group. Except for Permitted Encumbrances
and as set forth in Section 4.11 of the Disclosure Schedule, each
member of the Canteen Group which owns Real Property has good,
valid and marketable title to such Real Property, in each case
free and clear of all mortgages, liens, security interests or
encumbrances.
(b) Except for Permitted Encumbrances and for the
liens and encumbrances set forth in Section 4.11 of the
Disclosure Schedule, each member of the Canteen Group owns good
and marketable title to all of the personal property reflected on
the Interim Statement of Assets and Liabilities or acquired since
February 26, 1994 (except for properties and assets disposed of
since such date in the ordinary course of business and consistent
with past practice), and has such title free and clear of all
liens, charges, security interests or other encumbrances of any
nature whatsoever.
(c) Each member of the Canteen Group owns or
leases all material assets necessary for the conduct of its
business as presently and historically conducted. Such assets
have been maintained in accordance with normal industry practice,
are in reasonable operating condition and repair (subject to
normal wear and tear), and are suitable for the purpose for which
they are presently used.
(d) Except as otherwise indicated in Section 4.11
of the Disclosure Schedule, all of the Canteen Group's assets
(real, personal, intangible or otherwise) are reflected on the
books and records of the Canteen Group.
(e) Except as otherwise indicated in Section 4.11
of the Disclosure Schedule, all of the material assets owned by
the Canteen Group, or in respect of which any member of the
Canteen Group has the right of use, are in the possession of or
under control of the Canteen Group.
(f) Where any material assets are used but not
owned by any Canteen Group member or any facilities or services
are provided to any Canteen Group member by any third party,
there has not occurred any event of default or any other event or
circumstance which may entitle any third party to terminate any
agreement or license in respect of the provision of such
facilities or services (or any event or circumstance which with
the giving of notice and/or the lapse of time and/or a relevant
determination would constitute such an event or circumstance).
Section 4.12. Absence of Changes.
(a) Except as set forth in Section 4.12 of the
Disclosure Schedule, since December 25, 1993 there has not been:
(i) any change in the business, financial
condition, results of operations or assets or liabilities of any
member of the Canteen Group, other than changes in the ordinary
course of the Business and any changes which would not,
singularly or in the aggregate, result in a Material Adverse
Effect;
(ii) any material payment or agreement to
make any material payments by any member of the Canteen Group
other than payments in the ordinary course of business and
consistent with past practice;
(iii) any damage or destruction, loss or other
casualty, however arising and whether or not covered by
insurance, which would, singularly or in the aggregate, result in
a Material Adverse Effect;
(iv) any labor dispute or any other event or
condition of any character which will, singularly or in the
aggregate, result in a Material Adverse Effect;
(v) any Indebtedness incurred by any member
of the Canteen Group for borrowed money (except by endorsement
for collection or for deposit of negotiable instruments received
in the ordinary course of the Business), or any agreement to
incur any such Indebtedness;
(vi) any material change in the accounting
methods or practices of Seller or any member of the Canteen Group
or any change in depreciation or amortization policies or rates
theretofore adopted;
(vii) any amendment or termination by any
member of the Canteen Group of any material contract, agreement,
lease, franchise or license;
(viii) any amendment of the Certificate or
Articles of Incorporation or Bylaws of any member of the Canteen
Group;
(ix) except for Permitted Encumbrances and
other than in the ordinary course of business, any mortgage,
pledge or other encumbering of any material property or assets of
any member of the Canteen Group;
(x) any material liability or obligation
incurred by any member of the Canteen Group, except current
liabilities incurred in the ordinary course of business and
consistent with past practice, or any cancellation or compromise
by any member of the Canteen Group of any material debt or claim,
or any waiver or release by any member of the Canteen Group of
any right of substantial value to the Business;
(xi) any sale, transfer, lease, abandonment
or other disposal of any material portion of the properties or
assets of any member of the Canteen Group (real, personal or
mixed, tangible or intangible), except in the ordinary course of
business and consistent with past practices;
(xii) any transfer, disposal or grant of any
rights under any Proprietary Rights or license owned by any
member of the Canteen Group, or any disposal of or disclosure to
any Person other than representatives of Buyer of any material
trade secret, formula, process or know-how owned by IMV or
Canteen not theretofore a matter of public knowledge; except, in
each case, in the ordinary course of business and consistent with
past practice;
(xiii) any grant of any general increase in the
compensation of officers, employees or directors of any member of
the Canteen Group; or any grant of any increase in compensation
payable to or to become payable to any officer, employee or
director; or any agreement entered into with any officer,
employee or director; except, in each case, in the ordinary
course of business and consistent with past practice;
(xiv) any single capital expenditure made, or
any commitment to make any capital expenditure, in excess of One
Hundred Thousand Dollars ($100,000) for any tangible or
intangible capital assets, additions or improvements, except in
the ordinary course of the Business;
(xiv) except as expressly permitted by Section
6.12 hereof, any declaration, payment or reservation for payment
of any dividend or other distribution in respect of the capital
stock or other securities of any member of the Canteen Group, or
any redemption, purchase or other acquisition, directly or
indirectly, of any shares of capital stock or other securities of
any member of the Canteen Group;
(xvi) except in the ordinary course of
business and consistent with past practice, any grant or
extension of any power-of-attorney or guaranty by the Canteen
Group in respect of the obligation of any Person;
(xvii) any issuance, or any agreement to issue
or sell, any capital stock, options, warrants, rights or calls to
purchase any stock or securities convertible into the capital
stock of any member of the Canteen Group;
(xviii) any material reduction in the cash
balances of the Canteen Group from those set out in the Interim
Statement of Assets and Liabilities; or
(xix) any entry by any member of the Canteen
Group into any binding agreement, whether in writing or
otherwise, to take any action described in this Section 4.12.
(b) Except as set forth in Section 4.12 of the
Disclosure Schedule, since December 25, 1993, no member of the
Canteen Group has:
(i) suffered any extraordinary losses;
(ii) issued, sold or transferred any of its
equity securities, securities convertible into its equity
securities or warrants, options or other rights to acquire its
equity securities, or any bonds or debt securities; or
(iii) deferred payment of its creditors or
deferred capital expenditures in any manner out of the ordinary
course of business, or accelerated collection of receivables in a
manner inconsistent with its ordinary course of business.
Section 4.13. Proprietary Rights.
(a) Section 4.13 of the Disclosure Schedule (the
"Proprietary Rights Schedule") contains a complete and accurate
list of (i) all patented and registered Proprietary Rights owned
by any member of the Canteen Group, and all pending patent
applications and applications for the registration of other
Proprietary Rights owned by any member of the Canteen Group, (ii)
all trade or corporate names used by any member of the Canteen
Group; (iii) all material licenses of rights or covenants not to
sue by any member of the Canteen Group to any third party with
respect to Proprietary Rights; and (iv) all material licenses of
rights or covenants not to sue by any third party to any member
of the Canteen Group with respect to Proprietary Rights,
together, in each case, with a brief description of the subject
matter licensed, and of any limit as to time or right of
termination affecting the use of any Proprietary Right. Seller
has delivered to Buyer correct and complete copies of all
documents embodying the material licenses referred to in items
(iii) and (iv) above.
(b) Except as set forth on the Propriety Rights
Schedule, the Canteen Group owns all rights to the Canteen name
and all associated trademarks in respect of the Business. Except
as set forth on the Proprietary Rights Schedule, (i) the Canteen
Group owns and possesses all right, title and interest in and to,
and free and clear of all encumbrances, all of the Proprietary
Rights necessary for the operation of the Business as presently
conducted; (ii) no royalties or other payments are due to any
third party in connection with any member of the Canteen Group's
use and/or ownership of any Proprietary Rights; (iii) reasonable
efforts have been made to preserve the confidentiality of all
those Proprietary Rights, the value of which is dependent in
whole or in significant part on confidentiality; (iv) all
material software used in the Business is available to the
members of the Canteen Group and will remain available to Buyer
after Closing in accordance with the terms of the Administrative
and Data Support Services Agreement; (v) all patents,
registrations and applications therefor will be in full force and
effect at Closing; (vi) no claim by any third party contesting
the validity, enforceability, use or ownership of any Proprietary
Rights owned or used by any member of the Canteen Group is
currently pending; (vii) no written notice has been received
which indicates any infringement or misappropriation by or
conflict with, any third party with respect to the Proprietary
Rights of any members of the Canteen Group; (viii) none of the
members of the Canteen Group has received any written claims
alleging infringement or misappropriation of, or other conflict
with, any Proprietary Rights of any third party; (ix) none of the
members of the Canteen Group has infringed, misappropriated or
otherwise conflicted in any material respect with any Proprietary
Rights of any third party; (x) there is no individual Proprietary
Right or license of Proprietary Rights the loss of which would
have a Material Adverse Effect; (xi) all material Proprietary
Rights owned or used by any member of the Canteen Group
immediately prior to Closing will be owned or available for use
by such member of the Canteen Group on substantially equivalent
terms and conditions immediately subsequent to Closing and no
consent or other agreement from any
third party is required for such use; (xii) none of the members
of the Canteen Group is currently obligated to indemnify any
Person with respect to any Proprietary Rights; and (xiii) no
member of the Canteen Group is in default under any material
license, sub-license or assignment granted to it in respect of
any Proprietary Rights used by any member of the Canteen Group.
Section 4.14. Leases.
(a) Section 4.14 of the Disclosure Schedule
contains an accurate and complete list of all real property
leases pursuant to which each member of the Canteen Group leases
real property whether as landlord or tenant. Section 4.14 of the
Disclosure Schedule also contains an accurate and complete list
of all material personal property leases necessary for the
operation of the Business as presently conducted and after giving
effect to the transfer of the CM Assets. Except as set forth in
Section 4.14 of the Disclosure Schedule, all such leases are in
full force and effect and are valid, binding and enforceable in
accordance with their terms; there are no existing defaults or
events which, with the giving of notice or the lapse of time or
both, would constitute a default thereunder by any member of the
Canteen Group. All rentals and other payments due under the
terms of such leases have been paid in full and there are no
material unpaid obligations under any of such leases. No
payments made under the terms of such leases are subject to
renegotiation or adjustment. The sale of the Shares will not
result in any termination of, or right to renegotiate, any such
lease.
(b) Except as otherwise indicated in Section 4.14
of the Disclosure Schedule, Seller has delivered to Buyer
complete and accurate copies of each of the leases described in
Section 4.14 of the Disclosure Schedule and none of the leases
has been modified, except to the extent that such modifications
are disclosed by the copies delivered to Buyer. None of the
members of the Canteen Group and, to Flagstar's knowledge, no
other party to any lease or sublease, is in breach or default and
no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination,
modification or acceleration thereunder and no party has
repudiated any provisions of such leases.
(c) Except as set forth in Section 4.21 of the
Disclosure Schedule, there are no (i) pending litigation,
administrative proceedings, governmental investigations or
actions relating to any of the Real Property covered by any
lease, or (ii) other matters which reasonably would be expected
to materially and adversely affect the current use or occupancy
of any property covered by a lease or the value of the leases.
(d) No member of the Canteen Group has assigned,
transferred, conveyed, mortgaged, granted a deed of trust or
encumbered any interest in any leasehold or subleasehold.
(e) All facilities leased or subleased thereunder
have received all material approvals of governmental authorities
(including licenses and permits) required to be obtained by the
Canteen Group in connection with the operation thereof and have
been operated and maintained in all material respects in
accordance with applicable laws.
Section 4.15. Bank Accounts. Section 4.15 of the
Disclosure Schedule sets forth the names and locations of all
banks, trust companies, savings and loan associations and other
financial institutions at which any member of the Canteen Group
maintains a current account, credit line, credit card or safe
deposit box of any nature and the names of all persons authorized
to draw thereon, make withdrawals therefrom or have access
thereto.
Section 4.16. Material Contracts and Customers.
(a) Excluding contracts with Customers, Section
4.16 of the Disclosure Schedule contains a true and correct list
of each (i) written contract for the employment by any member of
the Canteen Group of any officer, individual employee, or other
person on a full-time or consulting basis involving annual
compensation in excess of $100,000; (ii) agreement or indenture
relating to the borrowing of money by any member of the Canteen
Group or to the mortgaging, pledging or otherwise placing a lien
on the assets of any member of the Canteen Group; (iii) guaranty
by any member of the Canteen Group of any obligation for borrowed
money or other guaranty; (iv) contract or group of related
contracts by any member of the Canteen Group with the same party
for the purchase of products or services, under which the
undelivered balance of such products and services has a selling
price in excess of $50,000 (other than purchase orders entered
into in the ordinary course of business); (v) contract limiting
the freedom of any member of the Canteen Group to compete with
any Person in any line of business in any territory; and (vi) any
other contract that is material to the Canteen Group taken as a
whole (collectively, the "Contracts"; provided that the term
"Contract" shall not include any contracts with Customers nor any
other agreement listed on any Section of the Disclosure Schedule
other than Section 4.16 of the Disclosure Schedule). True and
complete copies of each of the Contracts have been made available
to Buyer by Seller. Except as set forth in Section 4.16 of the
Disclosure Schedule, each of the Contracts is in full force and
effect and there exists no default or event which, with the
giving of notice or lapse of time or both, would constitute a
default thereunder by any member of the Canteen Group. Except as
set forth in
Section 4.16 of the Disclosure Schedule, no written notice of
termination or nonrenewal has been given under any Contract. The
dollar amounts set forth in this Section 4.16 with respect to the
Contracts shall not be deemed to represent any standard of
"materially" with respect to the Contracts or otherwise for any
other purpose and shall have no application to any other Section
of this Agreement. Each Canteen Group member a party thereto has
performed all obligations required to be performed by it through
the date hereof under the Contracts so listed and is not (and
will not be, with or without the lapse of time or the giving of
notice, or both) in breach or default in any material respect
thereunder nor has any party repudiated any provisions of the
Contracts.
(b) Except as set forth in Section 4.16 of the
Disclosure Schedule, there is not outstanding any material
contract to which any member of the Canteen Group is a party:
(i) which, as a result of the acquisition of
the Shares by Buyer or other performance of the terms
of this Agreement, will result in:
(1) any party being relieved of any
material obligation or becoming entitled to
exercise any material right (including any right
of termination); or
(2) any Canteen Group member being in
default under any such contract or losing any
material benefit, right or license which it
currently enjoys or any liability or obligation of
any Canteen Group member being created or
increased;
(ii) to which any member of the Retained
Group is a party or in which any member of the Retained
Group (or any director of any member of the Retained
Group) is interested or from which any such person
takes benefit, whether directly or indirectly, except
as expressly contemplated in Section 6.13 hereof;
(iii) which requires (or confers any right to
require) the issue of any shares, debentures or other
securities of any Canteen Group member now or at any
time in the future;
(iv) which establishes any guarantee,
indemnity, suretyship, form of comfort or support
(whether or not legally binding) given by any Canteen
Group member in respect of the obligations or solvency
of any other Person;
(v) pursuant to which any Canteen Group
member has sold or otherwise disposed of any company or
business in circumstances such that it remains subject
to any liability (whether contingent or otherwise)
which is not reflected on the Financial Statements or
the footnotes related thereto;
(vi) which established any joint venture,
consortium, partnership or profit (or loss) sharing
agreement or arrangement to which any Canteen Group
member is a party, except in the ordinary course of
business and consistent with past practice;
(vii) which provides any power of attorney
given by any Canteen Group member or any other
authority which would enable any person not employed by
any Canteen Group member to enter into any contract or
commitment on behalf of any Canteen Group member;
(viii) which establishes any material agency,
distributorship, marketing, purchasing, manufacturing
or licensing agreement or arrangement to which any
Canteen Group member is a party not terminable without
penalty upon not more than sixty (60) days notice;
(ix) which is a currency and/or interest rate
swap agreement, asset swap, future rate or forward rate
agreement, interest cap, collar and/or floor agreement
or other exchange or rate protection transaction or
combination thereof or any option with respect to any
such transaction or any other similar transaction to
which any Canteen Group member is a party;
(x) which is any other agreement or
arrangement having a material effect on the financial
or business position of the Canteen Group taken as
whole; or
(xi) which is a bid, tender, proposal or
offer which, if accepted, would result in any Canteen
Group member becoming a party to any agreement or
arrangement of a kind described above, except in the
ordinary course of business.
(c) Section 1.13 of the Disclosure Schedule
identifies the name and location of the top five (5) Customers in
each of the Canteen Group's designated geographic regions.
Section 4.17. Related Transactions. Except as set
forth in Section 4.17 of the Disclosure Schedule, neither
Flagstar nor Seller nor any director or officer of any member of
the Canteen Group has any material interests, direct or indirect,
in any Person which (i) is a competitor, customer, subcontractor
or supplier of any member of the Canteen Group, or (ii) has an
existing material relationship with, or a material interest in,
any member of the Canteen Group, including but not limited to
lessors of real or personal property and Persons against which
rights or options are exercisable by any member of the Canteen
Group.
Section 4.18. Insurance. Section 4.18 of the
Disclosure Schedule contains an accurate and complete list of all
policies of insurance and related agreements (including any self
insurance arrangements affecting any member of the Canteen Group)
presently maintained with respect to any member of the Canteen
Group, including, without limitation, "key man" insurance with
respect to any employee. All such policies are in full force and
effect and no notice of cancellation or termination has been
received with respect to any such policy and there is, and has
been, no material default by Flagstar, Seller or any member of
the Canteen Group with respect to its obligations under any such
policy and related agreements. Except as set forth in Section
4.18 of the Disclosure Schedule, none of Flagstar, Seller, IMV,
Canteen and the Canteen Subsidiaries has received during the past
two (2) years any written notice or other written communication
from any insurance company declining to write insurance with
respect to the Business, or cancelling or materially amending any
of the insurance policies of any member of the Canteen Group or
proposing to do so. Except as set forth in Section 4.18 of the
Disclosure Schedule, no claim is outstanding by or against any
Canteen Group member under any such policy of insurance or
related agreements.
Section 4.19. Employees; Labor Matters. The Canteen
Group employs approximately 20,000 employees, each of which is
engaged only in performing services in connection with the
Business. Effective as of the Closing, Flagstar will transfer to
the Canteen Group the employees of the Retained Group identified
in Section 4.19 of the Disclosure Schedule. Buyer has been
furnished with a complete and accurate list of all Canteen Group
employees and all employees of the Retained Group to be
transferred to the Canteen Group as of the Closing. Each member
of the Canteen Group has paid in full to its respective
employees, agents and contractors all wages, salaries,
commissions and other direct compensation for all services
performed by them, other than amounts that have not yet become
payable in accordance with such company's customary practices and
amounts that have not yet been paid but have been properly
reflected on the Financial Statements. Except as set forth in
Section 4.19 of the Disclosure Schedule, each member of the
Canteen Group is in compliance in all material respects with all
applicable laws respecting employment and employment practices,
terms and conditions of employment and wages and hours
(including, without limitation, the provisions of the Worker
Adjustment and Retraining Act of 1988). Except to the extent set
forth in Section 4.19 of the Disclosure Schedule and except where
it would not have a Material Adverse Effect, (a) there is no
unfair labor practice charge or complaint against any member of
the Canteen Group pending before the National Labor Relations
Board or any other labor grievance board, authority or tribunal;
(b) there is no labor strike, dispute, slowdown, or stoppage
pending against or affecting any member of the Canteen Group; (c)
no member of the Canteen Group is a party to any collective
bargaining agreement or contract with any labor union (and no
such agreement is currently being negotiated) and, to the
knowledge of Flagstar, no union representation question exists
respecting the employees of any member of the Canteen Group; (d)
no material grievance nor any arbitration proceeding arising out
of or under collective bargaining agreements is pending; (e) no
event has occurred, and no member of the Canteen Group will take
any action prior to the Closing, which would require notification
to employees under the Worker Adjustment and Retraining Act of
1988 and the regulations promulgated thereunder; and (f) there
are no other controversies pending between the Canteen Group and
any of its employees, including, without limitation, claims
arising under any labor laws, which controversies have had or
will have a Material Adverse Effect.
Section 4.20. Employee Benefit Plans.
(a) Set forth in Section 4.20 of the Disclosure
Schedule is an accurate and complete list of each Plan
maintained, or contributed to by any member of the Canteen
Group. Except as set forth in Section 4.20 of the Disclosure
Schedule, no member of the Canteen Group maintains or contributes
to a benefit program, contract or arrangement that is not
described in Section 3(3) of ERISA which provides a material
benefit to a material number of employees or represents a
material cost in the Canteen Group's business.
(b) Except as required by Part 6 of Title I of
ERISA and any applicable state continuation or conversion laws
and except as set forth in Section 4.20 of the Disclosure
Schedule, no such Plan that is a welfare plan provides any
medical or life insurance coverage to any individual for events
occurring, or expenses incurred, after retirement or any other
termination of employment.
(c) Except as set forth in Section 4.20 of the
Disclosure Schedule, each Plan maintained or contributed to by
any member of the Canteen Group is with respect to form,
operation and administration in material compliance with ERISA
and the Code and other applicable laws and regulations, and no
member of the Canteen Group nor any such Plan is liable for any
material penalty, excise tax or loss of income tax deduction with
respect to the operation of any such Plan. Except as set forth
in Section 4.20 of the Disclosure Schedule, each such Plan
maintained by any member of the Canteen Group that is intended to
be tax qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to be so qualified and
each trust maintained in connection with such Plan has been
determined by the Internal Revenue Service to be tax-exempt under
Section 501(a) of the Code, and Flagstar has no knowledge of any
circumstances which would cause any Plan to be subject to
disqualification or a related trust to lose its tax-exempt status.
(d) Except as set forth in Section 4.20 of the
Disclosure Schedule, there has occurred (i) no reportable event,
as defined in Section 4043 of ERISA, (ii) no prohibited
transactions, as defined in Section 406 and 407 of ERISA or
Section 4975 of the Code, and (iii) no breach of any duty imposed
by Title I of ERISA by any member of the Canteen Group, nor by
any director, officer, employee or other fiduciary (as such term
is defined in Section 3(21) of ERISA) of any member of the
Canteen Group, that could have a Material Adverse Effect with
respect to any Plan maintained or contributed to by any member of
the Canteen Group.
(e) Except as set forth in Section 4.20 of the
Disclosure Schedule, no waiver of the funding standards under
ERISA or the Code has been requested or received for any such
Plan and all amounts that the Canteen Group is required to have
contributed to any such Plan have been contributed within the
time prescribed by applicable law and all benefits, expenses and
other amounts due and payable and all transfers or payments
required to be made with respect to any Plan have been paid
within the time prescribed by the applicable documents and
governing law. Except as set forth in Section 4.20 of the
Disclosure Schedule, no Plan has any material unfunded liability
as of the date hereof, and the present value of all vested
accrued benefits under any Plan did not, as of the most recent
valuation date for the Plan, exceed by any material portion the
then current value of the assets of the Plan allocable to such
benefits.
(f) Except as set forth in Section 4.20 of the
Disclosure Schedule, all material required reports and
descriptions (including, but not limited to, Form 5500 annual
reports, summary annual reports and summary plan descriptions)
with respect to each Plan have been properly filed with the
appropriate governmental authority and distributed to
participants substantially as required by law, and each member of
the Canteen Group has substantially performed its obligations
under Section 4980B of the Code and Part 6 of Title I of ERISA
("COBRA").
(g) Except as set forth in Section 4.20 of the
Disclosure Schedule, none of the members of the Canteen Group has
incurred nor expects to incur any material liability to the PBGC
(as defined under ERISA), the Internal Revenue Service, the
Department of Labor of the United States, or otherwise with
respect to any Plan currently or previously maintained or
contributed to by any company or by members of the controlled
group of companies (as defined in Section 414(b), (c) and (m) of
the Code) that includes any member of the Canteen Group (the
"Controlled Group") that has not been satisfied in full, and no
condition exists that presents a material risk to any member of
the Canteen Group or any member of the Controlled Group of
incurring such a material liability, other than liability for
premiums due to the PBGC.
(h) Except as set forth in Section 4.20 of the
Disclosure Schedule, to the best knowledge of Flagstar none of
the members of the Canteen Group has withdrawn from or caused a
partial withdrawal to occur with respect to a multi-employer plan
resulting in any assessed and unpaid withdrawal liability.
(i) Except as set forth in Section 4.20 of the
Disclosure Schedule, there are no material claims (other than
routine claims for benefits) or lawsuits pending with respect to
any Plan maintained or contributed to by any member of the
Canteen Group.
(j) Each "fiduciary" and "plan official," as
defined in Section 412 of ERISA, of each Plan is bonded to the
extent required by Section 412 of ERISA.
(k) Except as set forth in Section 4.20 of the
Disclosure Schedule, there are no leased employees within the
meaning of Code Section 414(n) or (o), or the regulations
thereunder, who perform services for any of the members of the
Canteen Group.
(l) Any Plan that provides for "parachute
payments" within the meaning of Section 280G of the Code provides
that "excess parachute payments" will not be paid thereunder.
(m) Except as set forth in Section 4.20 of the
Disclosure Schedule, Seller has previously delivered to Buyer
true and complete copies of: (i) all Plans and plan documents
identified in Section 4.20 of the Disclosure Schedule, and (ii)
to the extent applicable for each such Plan, the most recent
Internal Revenue Service determination letters, annual reports
(Form 5500 series) and accompanying schedules (or such alternate
reports in lieu thereof), actuarial reports or valuations, and
Pension Benefit Guaranty Corporation Forms 1.
Section 4.21. Litigation. Except as set forth in
Section 4.21 of the Disclosure Schedule, there are no material
claims, actions, suits, or proceedings pending or, to the best
knowledge of Flagstar or Seller, threatened, against any member
of the Canteen Group, at law or in equity or before or by any
federal, state, local, or foreign court or other governmental
department, commission, board, agency, instrumentality or
authority, nor any arbitration proceeding, in each case
including, without limitation, any claims relating to
environmental matters or defective food products sold by the
Canteen Group or affecting the consummation of the transactions
described herein. None of the Canteen Group is subject to any
judgment, order, writ, injunction or decree of any court or
governmental body which has had or, insofar as Flagstar can
reasonably foresee, may have a Material Adverse Effect.
Section 4.22. Compliance with Laws. Except as set
forth in Section 4.22 of the Disclosure Schedule, each of Seller
and the Canteen Group is not in violation of, nor has it received
any written notice claiming it is in violation of, any order,
law, ordinance, statute, rule or regulation applicable to it, or
to the Business or any of the property or assets of the Canteen
Group, except such violations which, in the aggregate, are not
reasonably likely to have a Material Adverse Effect. The Canteen
Group has all material licenses, permits, certificates of
occupancy and authorizations (governmental and otherwise)
necessary to conduct the Business. No member of the Canteen
Group is in default of any order, decree or judgment of any court
or any governmental or regulatory authority.
Section 4.23. Environmental Matters. Except as set
forth in Section 4.23 of the Disclosure Schedule:
(a) all properties owned or used by the Canteen
Group in connection with its operation of the Business and during
the period of the Canteen Group's ownership or use thereof have
been maintained, and all activities of the Canteen Group have
been conducted, in compliance with all applicable laws, statutes,
ordinances, regulations, permits, licenses or authorizations
relating to public health and safety, worker health and safety,
and pollution or protection of the environment, including without
limitation laws relating to emissions, discharges, releases or
threatened releases of toxic, hazardous or otherwise regulated
materials, substances, or wastes into the ambient air, surface
water, groundwater, subsurface soil, or lands or otherwise
relating to the generation, manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of toxic, hazardous, or otherwise regulated materials,
substances, or wastes ("Environmental and Safety Requirements"),
except where the failure to be in compliance would not have a
Material Adverse Effect;
(b) none of Flagstar, Seller, or any member of the
Canteen Group has received written notification from any
governmental authority with respect to current, existing
violations relating to the Business of any of the laws referred
to in clause (a) above, or pursuant to any of the respective
implementing regulations or state analogues to such laws,
statutes, ordinances or regulations;
(c) none of the members of the Canteen Group (i)
has received written notification from the United States
Environmental Protection Agency that it is a Potentially
Responsible Party under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") for "removal" or
"remedial" action at a waste site listed on the National
Priorities List to which it sent or arranged for the
transportation or disposal of hazardous waste, or (ii) has
received written notification that it is liable for contribution
for costs incurred by another person in taking "removal" or
"remedial" action under CERCLA;
(d) to the knowledge of Flagstar, none of the
Real Property is subject to a private or governmental lien
arising under Environmental and Safety Requirements.
Section 4.24. Books and Records. The books, accounts
and records of IMV and Canteen are correct and complete in all
material respects and have been maintained in accordance with
good business practice.
Section 4.25. Accounts Receivable; Inventories. All
Customer accounts receivable of each member of the Canteen Group
have arisen from bona fide transactions in the ordinary course of
business and are valid. All accounts receivable of each member
of the Canteen Group are reflected properly on its books and
records. The inventories of each member of the Canteen Group are
reflected properly on its books and records. The inventories of
each member of the Canteen Group are reflected on the Interim
Statement of Assets and Liabilities in accordance with GAAP
applied on a basis consistent with past practices. Such
inventories are, subject to normal GAAP reserves and variances,
useable in the normal course of business of each member of the
Canteen Group.
Section 4.26. Adequacy of Assets.
(a) The assets of the Canteen Group and the
facilities, assets and services to which each member of the
Canteen Group has a contractual right include all rights,
properties, assets, facilities and services necessary for the
carrying on of the business of the Canteen Group in the manner in
which it is currently being and has historically been carried on.
(b) Except with respect to matters covered by the
Computer Agreement and Administrative and Data Services Agreement
and to the insurance policies identified on Section 4.18 of the
Disclosure Schedule and except as set forth in Section 4.26 of
the Disclosure Schedule, no Canteen Group member depends in any
material respect upon the use of assets owned by, or facilities
or services provided by, any member of the Retained Group.
(c) No Canteen Group member has sold or supplied
any product or service which is or was or is likely to become in
any material respect faulty, defective or dangerous (unless
inherently dangerous) or which does not comply in any material
respect with any warranties or representations expressly or
impliedly made by the Canteen Group or with all applicable laws,
regulations, standards and requirements in circumstances where
the liability of the Canteen Group is not fully covered by
product liability insurance and will exceed any provision or
reserve for product liability claims included in the Financial
Statements.
Section 4.27. Canteen Group Receivables. Except as
set forth in Section 4.27 of the Disclosure Schedule, there is no
Indebtedness owing to any member of the Canteen Group other than
accounts receivable incurred in the ordinary course of business
and no Indebtedness owing to one member of the Canteen Group by
another member of the Canteen Group.
Section 4.28. Licenses. Set forth in Section 4.28 of
the Disclosure Schedule is a summary of all material licenses,
permits, authorization and consents necessary to operate the
Business. All such licenses, permits, authorizations and
consents are in full force and effect, and have been complied
with in all material respects. To the best knowledge of
Flagstar, no such licenses, permits, authorizations or consents
will be revoked or not renewed, in whole or in part, as a result
of the acquisition of the Shares by Buyer.
Section 4.29. Disclosures. None of the
representations or warranties by Flagstar herein or in the
Disclosure Schedule, taken as a whole, contains or will contain
any untrue statement of a material fact or omits or will omit to
state a material fact necessary in order to make the statements
contained herein or therein not misleading.
Section 4.30. Liquidation or Insolvency. None of the
following have occurred in respect of Flagstar Parent, Flagstar,
Seller or any member of the Canteen Group and none shall occur as
a result of the transactions contemplated in this Agreement:
liquidation or dissolution, suspension of the business of any of
them, or filing by any of them of a voluntary petition or an
answer seeking reorganization, arrangement, readjustment of its
debts or for any other relief under the United States Bankruptcy
Code, as amended, (11 U.S.C. Section 101 et. seq.) or under any
other insolvency law, state or federal, now or hereafter
existing, or any other action of any of them indicating its
consent to, approval of, or acquiescence in, any such petition or
proceeding; the application by any of them for, or the
appointment by consent or acquiescence of, a receiver, a trustee
or a custodian of such Person or for all or a substantial part of
its property; the making by any of them of an assignment for the
benefit of creditors; the inability of any of them or the
admission by any of them in writing of its inability to pay its
debts as they mature or of its insolvency; or filing of an
involuntary petition against any of Flagstar Parent, Flagstar,
Seller or any member of the Canteen Group in bankruptcy or
seeking reorganization, arrangement, readjustment of its or their
debts or for any other relief under the Bankruptcy Code, as
amended, or under any other insolvency act or law, state or
federal, now or hereafter existing; or the involuntary
appointment of a receiver, a trustee or a custodian of Flagstar
Parent, Flagstar, Seller or any member of the Canteen Group or
for all or a substantial part of its or their property; or the
issuance of a warrant of attachment, execution or similar process
against any substantial part of the property of any of them.
Section 4.31. Working Capital. The Canteen Group has
sufficient working capital available to it as at the date of this
Agreement to enable it to continue to carry on its business in
its present form and at its present level.
Section 4.32. Accuracy of Information Contained in
Certain Filings. The information relating to the Canteen Group
set forth in Flagstar's 1993 Annual Report on Form 10-K did not
contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading.
Section 4.33. Not Subject to Certain Regulations.
None of the Canteen Group is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power Act
or the Investment Company Act of 1940, each as amended. In
addition, none of the Canteen Group is (i) an "investment
company" registered or required to be registered under the
Investment Company Act of 1940, as amended, and is not controlled
by such a company, or (ii) a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding
company," within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 4.34. Knowledge. Where any warranty is
qualified by the expression "to Flagstar's knowledge" or "so far
as the Seller is aware" or any similar expression, there shall
be deemed to be an additional warranty on behalf of Flagstar that
it has made appropriate inquiries of Seller and Canteen
Corporation in relation to the matter so qualified.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF COMPASS
Compass hereby represents and warrants to Seller as follows:
Section 5.1. Corporate Organization. Compass is duly
incorporated under the laws of England and Wales. Buyer is a
corporation duly organized, validly existing and in good
standing under the laws of Delaware. Each of Compass and Buyer
has the full corporate right, power and authority to own, lease
and operate all of its properties and assets and to carry out its
business as it is presently conducted.
Section 5.2. Authority. Each of Compass and Buyer
has all requisite corporate right, power and authority to
execute, deliver and perform this Agreement. Except for the
requisite approval of the shareholders of Compass, the execution,
delivery and performance of this Agreement by Compass and Buyer
have been duly and validly authorized and approved by all
necessary corporate action. Prior to the Closing, the execution,
delivery and performance of this Agreement by Compass shall have
been duly and validly authorized and approved by all necessary
action of the shareholders of Compass. This Agreement has been
duly and validly executed and delivered by Compass and Buyer and,
assuming this Agreement has been duly authorized, executed and
delivered by the other parties hereto and subject only to Compass
shareholder approval, constitutes the legal, valid and binding
obligation of Compass and Buyer enforceable against them in
accordance with its terms. Upon approval by the Compass
shareholders and at the Closing, this Agreement shall constitute
the legal, valid and binding obligation of Compass enforceable
against it in accordance with its terms.
Section 5.3. Consents and Approvals; No Violations.
Except as set forth in Section 5.3 of the Disclosure Schedule,
the execution, delivery and performance of this Agreement by
Compass and Buyer will not (with or without the giving of notice
or the passage of time, or both), (i) violate any applicable
provision of law or any rule or regulation of any administrative
agency or governmental authority applicable to Compass or Buyer,
or any order, writ, injunction, judgment or decree of any court,
administrative agency or governmental authority applicable to
Buyer or Compass, (ii) violate the Memorandum and Articles of
Association or Articles of Incorporation (as applicable) or
Bylaws of Buyer or Compass, (iii) require any consent under or
constitute a default under any material agreement, indenture,
mortgage, deed of trust, lease, license, or other instrument to
which Compass or Buyer is a party or by which any of them is
bound, or any material license, permit or certificate held by
either of them, or (iv) require any material consent or approval
by, notice to or registration with any governmental or regulatory
authority other than the appropriate filings pursuant to the HSR
Act, and the Exon-Florio Amendment, and the expiration of the
applicable waiting period thereunder.
Section 5.4. Litigation. Neither Compass nor Buyer
is engaged in, nor is there pending or, to the knowledge of
Compass, threatened, any action, dispute, claim, litigation,
arbitration, investigation or other proceeding at law or in
equity or before any governmental or other administrative agency
which could materially and adversely affect Compass' or Buyer's
ability to perform any of their payment or other obligations
hereunder or the transactions contemplated by this Agreement.
Section 5.5. Investment Intent. Buyer is purchasing
the Shares for its own account for investment and not with a view
to, or for resale in connection with, the distribution thereof,
nor with any present intention of distributing or selling any
such Shares. Buyer agrees that the Shares may not be sold,
transferred, or offered for sale, pledged, hypothecated or
otherwise disposed of without registration under the Securities
Act of 1933, as amended, and/or any applicable state securities
laws, except pursuant to an exemption from such registration
under such Act and such laws.
Section 5.6 Buyer's Investigation. Each of Compass
and Buyer is an informed and sophisticated purchaser, and has
engaged expert advisors, experienced in the evaluation and
purchase of companies such as Canteen. Without prejudice to the
rights of Compass and Buyer under Article X, each of Compass and
Buyer has undertaken such investigation as it has deemed
necessary under the circumstances of this transaction to enable
it to make an informed and intelligent decision with respect to
this Agreement and the transactions contemplated hereby and
Compass acknowledges that Flagstar, Seller and the Canteen Group
have allowed Compass and Buyer such access as has been requested
by Compass or Buyer to the personnel, properties, premises and
records of the Canteen Group for this purpose. To the extent
expressly permitted hereafter under this Agreement, each of
Compass and Buyer will undertake such further investigation as it
deems necessary. Compass acknowledges that in Compass and Buyer
entering into this Agreement, in Buyer's acquiring the Shares and
in consummating the other transactions contemplated herein, each
of Compass and Buyer has relied solely upon its own investigation
analysis and, to the extent expressly permitted by this
Agreement, the representations and warranties contained in this
Agreement and the information contained in the Disclosure
Schedule, and that none of Flagstar, Seller, and the Canteen
Group (or their agents, officers, directors, employees,
affiliates or representatives) has made any representation or
warranty as to the Canteen Group or the Business, except as
expressly set forth in this Agreement (as modified or
supplemented by the Disclosure Schedule). Except as otherwise
expressly provided herein, Compass agrees, to the fullest extent
permitted by law, that none of Flagstar, Seller, and the Canteen
Group (or any of their agents, officers, directors, employees,
affiliates or representatives) shall have any liability to
Compass or Buyer (or its agents, officers, directors, employees,
affiliates or representatives) on any basis (other than fraud)
based upon any information made available or statements made to
Compass or Buyer (or its agents, officers, directors, employees,
affiliates or representatives).
ARTICLE VI
FURTHER COVENANTS AND AGREEMENTS
Section 6.1. Covenants of Flagstar and Seller Pending
the Closing. Each of Flagstar and Seller covenants and agrees
that, pending the Closing and prior to the termination of this
Agreement, and except as otherwise agreed to in writing by
Compass and Buyer, Flagstar and Seller shall or, as appropriate,
shall cause each member of the Canteen Group to:
(a) conduct the Business solely in the ordinary
course and consistent with past practices;
(b) not take or intentionally omit to take any
action which would result in a breach of any of Flagstar's
representations and warranties hereunder in any material respect;
(c) continue to maintain and service the physical
assets used by the Canteen Group in the conduct of the Business
consistent with past practices;
(d) use its and their reasonable best efforts to
keep available the services of each member of the Canteen Group's
present employees and agents and to maintain the relations and
goodwill with lessors, licensors, suppliers, customers,
distributors and any others having business relations with the
Canteen Group in connection with the Business;
(e) use its and their reasonable best efforts to
maintain all assets of each member of the Canteen Group in
customary repair, order and condition (normal wear and tear
excepted) and maintain insurance with respect thereto reasonably
comparable to that in effect on the date of this Agreement;
(f) promptly disclose to Buyer any information
relating to Flagstar's representations and warranties hereunder
which, because of an event occurring after the date hereof, is
incomplete or is no longer correct in any material respect;
(g) use its and their reasonable best efforts to
cause all of the conditions to the obligations of Compass and
Buyer under this Agreement required to be satisfied by Seller or
Flagstar to be satisfied on or prior to the Closing Date and to
obtain, prior to the Closing, all consents of all third parties
and governmental authorities necessary for the consummation by
Flagstar, Seller, and the Canteen Group of the transactions
contemplated hereby. Subject to Section 9-A.1 (viii), all such
consents will be in writing and executed counterparts will be
delivered to Buyer at or prior to the Closing;
(h) continue to maintain its material licenses
and permits and cooperate with Buyer in Buyer's making
arrangements to obtain licenses, permits and certificates
required to conduct the Business or own the Shares at Closing;
(i) provide the officers, employees, counsel,
accountants and other representatives of Compass and Buyer with
full access to, during normal business hours, all of the books
and records of each member of the Canteen Group, make available
to representatives of Compass and Buyer, knowledgeable employees
of the Canteen Group for reasonable periods of time to answer
inquiries of such representatives with respect to the
investigation by Compass and Buyer of the Canteen Group and
permit such representatives of Compass and Buyer to consult with
the officers, employees, accountants and counsel of Seller;
provided that no such activities shall unreasonably interfere
with the operation of the Business;
(j) not make any investments in the stock or
assets of any other company;
(k) maintain proper business and accounting
records in accordance with past practices;
(l) not solicit, initiate discussions concerning,
encourage (including by way of furnishing non-public information
concerning the Canteen Group) or enter into any negotiations or
agreements concerning the acquisition of the Shares, the assets
of the Business or the Canteen Group, or a controlling interest
in any member of the Canteen Group;
(m) not borrow any amount, except for current
liabilities incurred in the ordinary course of business and
consistent with past practices;
(n) use its and their reasonable best efforts to
obtain releases of the Canteen Group executed by the individuals
identified in Section 9-A.1 of the Disclosure Schedule;
(o) use its and their reasonable best efforts to
cause each member of the Canteen Group, effective on the Closing
Date, to be fully and effectively released from all obligations
and liabilities unrelated to the Business, including those as
identified in Section 6.1(o) of the Disclosure Schedule;
(p) use its and their reasonable best efforts to
cause each member of the Retained Group, effective on the Closing
Date, to be fully and effectively released from all obligations
and liabilities arising out of or relating to the Business,
including those identified in Section 6.1(p) of the Disclosure
Schedule; and
(q) on or prior to Closing cause to be delivered
to Buyer evidence of the payment in full or the release of the
Canteen Group (including release of related liens on any assets
of the Canteen Group ) from the following:
(i) any liens or obligations relating to the
Restated Credit Agreement and related
interest rate exchange agreements;
(ii) any Indebtedness, including Intercompany
Indebtedness, except those items shown in
Part III of Section 4.6 of the Disclosure
Schedule as not being paid or released on
or before the Closing Date; and
(iii) any tax sharing agreements referred to in
Section 4.9(c) hereof.
Section 6.2. Covenants of Compass and Buyer Pending the
Closing. Each of Compass and Buyer covenants and agrees that,
pending the Closing and prior to the termination of this
Agreement, and except as otherwise agreed to in writing by
Flagstar and Seller:
(a) Neither shall take or intentionally omit to
take any action which would result in a breach of any of its
representations and warranties hereunder in any material respect.
(b) As of the Closing Date, Buyer will have
available sufficient funding to enable Buyer to consummate the
purchase of the Shares from Seller and otherwise to perform all
of Buyer's obligations under this Agreement.
(c) Each shall use its reasonable best efforts to
cause all of the conditions to the obligations of Flagstar and
Seller under this Agreement required to be satisfied by
Buyer or Compass to be satisfied on or prior to the Closing Date
and to obtain prior to the Closing, all consents of all third
parties and governmental authorities necessary for the
consummation by Buyer and Compass of the transactions
contemplated hereby. All such consents will be in writing and
executed counterparts thereof will be delivered to Seller at or
prior to the Closing; except that the consent of Compass
shareholders will be evidenced by a secretary's certificate to
that effect.
(d) Each shall promptly disclose to Seller any
information relating to Compass' representations and warranties
hereunder which, because of an event occurring after the date
hereof, is incomplete or is no longer correct in any material
respect.
(e) Compass shall take all reasonable actions to
procure fulfillment of the Buyer's conditions precedent reflected
in Sections 8.1, 8.4, 8.7 and 8.9 hereof and shall for this
purpose within five (5) Business Days of the date hereof post a
circular to its shareholders relating substantially to the
matters contemplated in this Agreement and the Rights Issue in
due compliance with the applicable rules of the London Stock
Exchange together with a notice convening the general meeting
referred to in Section 8.4 hereof; Compass shall take all
reasonable actions to obtain all requisite approval of the
shareholders of Compass with respect to the execution, delivery
and performance of this Agreement by Compass as soon as
reasonably practicable and in no event later than May 25, 1994.
(f) Each of Compass and Buyer shall use its and
their reasonable best efforts to cause each member of the
Retained Group, effective on the Closing Date, to be fully and
effectively released from all obligations and liabilities arising
out of or relating to the Business, including those matters
identified in Section 6.1(p) of the Disclosure Schedule.
Section 6.3. Filings. Promptly after the execution
of this Agreement, each of the parties hereto shall prepare and
make or cause to be made any required filings, submissions and
notifications under the laws of any domestic or foreign
jurisdictions to the extent that such filings are necessary to
consummate the transactions contemplated hereby and will use its
reasonable efforts to take all other actions necessary to
consummate the transactions contemplated hereby in a manner
consistent with applicable law. Each of the parties hereto will
furnish to the other party such necessary information and
reasonable assistance as such other party may reasonably request
in connection with the foregoing.
Section 6.4. Effective Time of Closing and Transfer.
The Closing shall be effective for all purposes as of the close
of business on the Closing Date.
Section 6.5. Announcements. Except as expressly
contemplated by this Agreement, the parties will mutually agree
(such agreement not to be unreasonably withheld or delayed) as to
the time, form and content before issuing any press releases or
otherwise making any public statements or statements to third
parties with respect to transactions contemplated hereby and
shall not issue any press release or, except as necessary to
perform their respective obligations hereunder, discuss the
transactions contemplated hereby with any third party prior to
reaching mutual agreement with respect thereto, except as may be
required by law. Notwithstanding the foregoing, in the event
prior to the Closing any party hereto is required by law or
applicable regulation or the rules of any stock exchange on which
such party's securities are traded to make or dispatch any
statement, public announcement, communication or circular with
respect to the transactions contemplated herein, it shall, so far
as is practicable be made or dispatched after consultation with
Flagstar (in the case of statements, etc. to be made or
dispatched by Compass or Buyer) or with Compass (in the case of
statements, etc. to be made or dispatched by Flagstar or Seller)
and after taking into account the reasonable requirements of such
person(s) relating to statements made about them or any of their
subsidiaries or the transactions contemplated herein, but any
reference in any such statement, announcement, communication or
circular to Flagstar, Seller, Compass or Buyer must be agreed to
by Flagstar, Seller, Compass or Buyer as the case may be (such
agreement not to be unreasonably withheld or delayed).
Section 6.6 Costs and Expenses. Whether or not the
transactions contemplated by this Agreement are consummated, each
party hereto shall pay its own costs and expenses (including
legal fees and expenses) incurred in connection with due
diligence reviews, the preparation, negotiation and execution of
this Agreement and all other agreements, certificates,
instruments and documents delivered hereunder, and all other
matters relating to the transactions contemplated hereby;
provided that, notwithstanding the foregoing, the fees and
expenses of the Accountants incurred in connection with the
preparation of the Financial Statements shall be borne by Seller,
and the fees and expenses of the Accountants incurred in
connection with the determination of the Net Asset Value as of
the Closing Date and the Purchase Price pursuant to Section 3.2
hereof shall be borne by Buyer. All transfer and intangible
taxes, if any, in connection with the sale and delivery of the
Shares hereunder shall be paid by Buyer.
Section 6.7. Further Assurances. Subject to the
terms and conditions herein provided, each of the parties hereto
agrees to use its reasonable efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions
contemplated by this Agreement (provided that none of the parties
hereto shall be required to pursue litigation or to sell or
dispose of its assets in order to obtain regulatory approval).
If at any time after the Closing Date any further action is
necessary or desirable to carry out the purposes of this
Agreement, the parties hereto shall take or cause to be taken all
necessary action, including, without limitation, the execution
and delivery of such further instruments and documents as may be
reasonably requested by the other party for such purposes or
otherwise to consummate and give effect to the transactions
contemplated hereby. The actions required hereunder shall
include, but not be limited to, Flagstar's (or its subsidiaries')
execution and delivery of such documents and instruments as may
be reasonably requested by Buyer to more effectively transfer the
Business to Buyer, including but not limited to deeds, bills of
sale, assignments and any corrective instruments.
Section 6.8. Cooperation and Preservation of Records.
(a) The parties covenant that they will cooperate
with each other after the Closing to provide each other with
reasonable information relating to the Business. From and after
the Closing Date, all books, records and documents which were not
acquired by Buyer pursuant to this Agreement and which directly
relate to the Business shall be available during regular business
hours, upon reasonable notice, to the officers, attorneys,
accountants and other authorized representatives of Buyer.
Subject to the following, Flagstar shall, for a period of at
least four (4) years, from and after the Closing Date, maintain
and preserve all such books, records and documents. If upon or
prior to the end of four (4) years Flagstar desires to dispose of
any such records, Flagstar shall give Buyer not less than sixty
(60) days' prior written notice specifying the categories desired
to be destroyed and shall give Buyer reasonable access to inspect
such records, and Buyer shall have the right to remove, at
Buyers' expense, any records covered by such notice it may desire
to retain. Any records not removed within one hundred twenty
(120) days after the date of the mailing of the notice to Buyer
by Flagstar may be disposed of, without further obligation to
Buyer under this subparagraph (a). Flagstar acknowledges and
agrees that the books and records of Flagstar and the Canteen
Group relating to the employees of any member of the Canteen
Group shall be acquired by Buyer pursuant to this Agreement;
provided, that Buyer acknowledges and agrees that Seller may make
and retain a copy of such books and records relating to such
employees.
(b) From and after the Closing Date, all books,
records and documents which were acquired by Buyer pursuant to
this Agreement and/or which directly relate to the Business
shall be available during regular business hours, upon reasonable
notice, to the officers, attorneys, accountants and other
authorized representatives of Flagstar. Subject to the
following, Compass and Buyer shall for a period of at least four
(4) years from and after the Closing Date, maintain and preserve
all such books, records and documents. If upon or prior to the
end of four (4) years Buyer desires to dispose of any such
records, Buyer shall give Flagstar not less than sixty (60) days'
prior written notice specifying the categories desired to be
destroyed and shall give Flagstar reasonable access to inspect
such records, and Flagstar shall have the right to remove, at
Flagstar's expense, any records covered by such notice it may
desire to retain. Any records not removed within one hundred
twenty (120) days after the date of the mailing of the notice to
Flagstar by Buyer may be disposed of, without further obligation
to Flagstar under this subparagraph (b).
(c) In the event Flagstar or Seller is required
to defend any action, suit or proceeding arising out of a claim
pertaining to the Business which involves actions or events
occurring prior to the Closing Date, Compass and Buyer shall
provide assistance and cooperation to Seller and Flagstar,
including witnesses and documentary or other evidence, as may
reasonably be requested by Flagstar or Seller in connection with
its defense. Flagstar and Seller shall reimburse each of Compass
and Buyer for its reasonable out-of-pocket expenses (including
attorneys' fees and expenses) incurred in providing such
assistance and cooperation.
(d) In the event Compass or Buyer is required to
defend against any action, suit or proceeding arising out of a
claim pertaining to the Business conducted by Compass or Buyer
as a result of the consummation of the transactions contemplated
by this Agreement, Flagstar and Seller shall provide assistance
and cooperation to Compass and Buyer, including witnesses and
documentary or other evidence, as may reasonably be requested by
Compass or Buyer in connection with its defense. Compass and
Buyer shall reimburse Flagstar and Seller for their reasonable
out-of-pocket expenses (including attorneys' fees and expenses)
incurred in providing such assistance.
(e) Until the final adjudication or settlement of
any dispute or investigation involving Taxes arising out of the
Business or the operations or affairs of the Canteen Group prior
to the Closing Date, Buyer will cause the Canteen Group to
maintain all tax books and records of the Canteen Group relating
to the Business or to the operations and affairs of the Canteen
Group before the Closing on a basis consistent with past
practice, but in any event until final closing or remedy is
reached with respect to any such tax year.
(f) Without the prior written consent of
Flagstar, Buyer shall take no action, and Buyer shall cause the
Canteen Group to refrain from taking any action, that affects the
federal consolidated income tax return or tax liability of
Flagstar or Flagstar Parent, including without limitation
amending any federal tax return of any member of the Canteen
Group covering any period or periods ending on or prior to the
Closing Date, or settling any examination, administrative appeal
or judicial action with respect to any such return. In the event
any member of the Canteen Group shall receive any notice of
examination, proposed deficiency, statutory notice of deficiency
or other communication from the Internal Revenue Service with
respect to any federal income tax liability or return of any
member of the Canteen Group for any period through the Closing
Date, Buyer shall cause such communication to be immediately
forwarded to Flagstar and shall cause the Canteen Group to
cooperate with Flagstar and Flagstar Parent in permitting
Flagstar Parent to control the response to and defense of any
matter reflected on such communication that could affect the
federal consolidated income tax return or tax liability of
Flagstar or Flagstar Parent.
(g) Flagstar will allow Buyer and IMV an
opportunity to review and comment upon any tax returns (including
any amended returns) to be filed after the Closing Date to the
extent such tax returns relate to the Canteen Group.
Flagstar will take no position on such returns that relates to
the Canteen Group that could reasonably be expected to affect
materially and adversely the Canteen Group taken as a whole after
the Closing Date without IMV's prior written consent, which
consent shall not be unreasonably withheld.
Section 6.9. Limitation of Liabilities. From and
after the Closing Date, except as expressly provided for in this
Agreement, all guaranties, obligations and liabilities of
Flagstar and Seller relating to the Business or the properties,
assets or liabilities of the Canteen Group as the same exist at
the Closing Date or arise thereafter, including, without
limitation, obligations or liabilities for any deductibles with
respect to any insurance policies (including, without limitation,
any arrangement between any member of the Canteen Group, on the
one hand, and Seller and/or Flagstar, on the other hand, with
respect to self-insurance) and obligations or liabilities under
any guaranties by Seller and/or Flagstar of worker's compensation
or other similar insurance or other obligations or liabilities of
the Canteen Group shall terminate. Buyer and Compass shall
release, indemnify and hold Seller and Flagstar harmless from all
such guaranties, obligations and liabilities (including the cost
of defense thereof and reasonable attorneys' fees and expenses
incurred in litigation or otherwise and including without
limitation the matters identified in Section 6.1(p) of the
Disclosure Schedule
to the extent not fully released on or prior to the Closing Date)
that are alleged against or might otherwise be imposed on Seller
or Flagstar. The provisions of this Section 6.9 shall not limit,
impair or otherwise affect in any manner any indemnification
expressly provided under Article X hereof. Buyer and Compass
shall cooperate with Seller and Flagstar, both before and after
the Closing Date, by taking, and after Closing, causing the
Canteen Group to take, all actions which Flagstar or Seller shall
reasonably request to effect the termination of any such Seller
or Flagstar guaranty, obligation or liability and, both before
and after the Closing, Buyer and Compass shall use their best
efforts to provide a substitute guaranty or other arrangement to
release Seller and Flagstar from any liability or obligation
under such guaranty of the worker's compensation or other
obligations or liabilities of the Canteen Group. In addition, on
or prior to the Closing, Buyer and Compass will obtain, or will
cause IMV or Canteen to obtain, appropriate insurance polices or
other arrangements covering all liabilities and obligations
associated with worker's compensation claims by employees of the
Canteen Group.
(b) From and after the Closing Date, except as
expressly provided for in this Agreement, all guaranties,
obligations and liabilities of any member of the Canteen Group
relating to the business retained by the Retained Group or the
properties, assets or liabilities of the Retained Group as the
same exist at the Closing Date or arise thereafter, including,
without limitation, obligations or liabilities for any
deductibles with respect to any insurance policies covering any
member of the Retained Group (including, without limitation, any
arrangement between any member of the Canteen Group, on the one
hand, and any member of the Retained Group, on the other hand,
with respect to self-insurance) and obligations or liabilities
under any guaranties by any member of the Canteen Group of any of
the worker's compensation or other obligations or liabilities of
the Retained Group shall terminate. Flagstar and Seller shall
release, indemnify and hold Compass, Buyer and the members of the
Canteen Group harmless from all such obligations and liabilities
(including the cost of defense thereof and reasonable attorneys'
fees and expenses incurred in litigation or otherwise and
including without limitation the matters identified in Section
6.1(o) of the Disclosure Schedule to the extent not fully
released on or prior to the Closing Date) that are alleged
against or might otherwise be imposed on Compass, Buyer or any
member of the Canteen Group. Flagstar and Seller shall cooperate
with any member of the Canteen Group, both before and after the
Closing Date, by taking, and after Closing, causing Flagstar (or
any subsidiary) to take, all actions which such member of the
Canteen Group shall reasonably request to effect the termination
of any such guaranty, obligation or liability and, both before
and after the Closing, Flagstar and Seller shall use their best
efforts to provide a substitute
guaranty or other arrangement to release such member of the
Canteen Group from any liability or obligation under such
guaranty of the worker's compensation or other obligations or
liabilities of the Retained Group.
Section 6.10. Employees and Employee Benefit Plans.
(a) General Employment, Medical Plans, Unions.
(1) Group Employees. The term "Group
Employees" shall refer to the active employees of the Canteen
Group on the Closing Date, including employees of Flagstar or any
of its other affiliates who are transferred to and employed by
the Canteen Group on the Closing Date, and all other employees of
the Canteen Group subject to union contracts (including those who
have been laid off and may have a contractual right to return to
work).
(2) Service Credit. Buyer agrees that Group
Employees' service with the Canteen Group, Flagstar or any
affiliate or predecessor shall be credited in determining
eligibility and vesting under any employee benefit plans,
programs, policies or arrangements covering such Group Employees
established, continued, or otherwise sponsored by the Canteen
Group or by Buyer after the Closing Date to the maximum extent
permissible under the Code and applicable regulations.
(3) Medical Plans and COBRA. As of the
Closing Date, the Canteen Group shall establish or make available
for Group Employees a medical benefits and premium conversion
plan substantially similar to the medical benefits and premium
conversion plans sponsored by the Canteen Group as part of the
Flagstar group prior to the Closing Date and shall continue or
extend coverage to Group Employees and retired former employees
entitled to be covered under such plans on the Closing Date
(including former employees of Flagstar or other affiliates who
have been allowed by written contract to participate in the
Canteen Group medical plan) of the Canteen Group (and their
eligible spouses and dependents) on a no loss/no gain basis
(without the imposition of any new or amended pre-existing
condition clauses). The Canteen Group shall continue to provide
continuation coverage as mandated by Part 6 of Title I of ERISA
or Section 4980B of the Code to its former employees (and their
eligible spouses and dependents), other than former employees
(and their eligible spouses and dependents) whose last employment
was with Flagstar or operating subsidiaries of Flagstar or of
Seller other than the Canteen Group.
(4) Medical Claims. The Canteen Group shall
remain liable for any claims of Group Employees and retired
former employees of the Canteen Group for the
reimbursement of medical, hospital or dental expenses
reimbursable under any of the Canteen Group's medical benefit
plans referenced in Section 4.20 of the Disclosure Schedule
incurred on or before the Closing Date whether or not such Group
Employees filed such claims with such medical benefit plan by the
Closing Date. The Flagstar group medical plan shall not pay or
be responsible for any such claim regardless of whether the claim
was for goods or services rendered prior to the Closing Date, and
regardless of whether the claim arose due to illness or injury
arising before the Closing Date, and shall forward any such claim
to the new Canteen Group medical plan.
(5) Union Agreements and Benefits. Buyer
agrees that as of the Closing Date and thereafter the Canteen
Group shall continue to maintain the terms and conditions of
employment (including without limitation the establishment of,
maintenance of and/or contributions to all the benefit plans and
arrangements referenced in Section 4.20 of the Disclosure
Schedule) provided for in the union contracts listed in Section
4.19 of the Disclosure Schedule. The Canteen Group's obligations
under this section shall include without limitation contributions
to all multiemployer plans (as defined in Section 4001(a)(3) of
ERISA) in which the Canteen Group employees participate.
(b) Employee Pension and Profit Sharing Plans.
Buyer agrees that as of the Closing Date and thereafter the
Canteen Group shall continue to have responsibility for (and
future liability with respect to) the Canteen Corporation
Retirement Plan for Salaried Employees (including all previous
plans merged therein), the Canteen Food and Vending Service -
Council 30 Retirement Plan, the Canteen Corporation Employee
Thrift Plan for Green Bay, Wisconsin and the Canteen Corporation
Profit Sharing Plan ("Canteen Qualified Plans"). Active
participants in the Canteen Qualified Plans who are employed by
any Flagstar affiliate on the Closing Date but who are not Group
Employees and Group Employees who are participants in the
Flagstar Thrift Plan shall be fully vested as of the Closing
Date. Such participants shall be treated as separating from
service on the Closing Date for purposes of the Canteen Qualified
Plans and the Flagstar Thrift Plan and benefits shall be
maintained in the Canteen Qualified Plans and the Flagstar Thrift
Plan until such time as distributions can be made in accordance
with the plans, including any provisions permitting distributions
upon sale of assets or a subsidiary under Code Section 401(k)(10)
and the regulations thereunder.
(c) Nonqualified Plans. Buyer agrees that as of
the Closing Date and thereafter, the Canteen Group shall continue
to have responsibility for (and future liability with respect to)
the nonqualified retirement plans, welfare plans (including
arrangements with franchisees and distributors),
severance agreements and other benefit arrangements listed in
Section 6.10 of the Disclosure Statement ("Nonqualified Plans").
Buyer agrees that the Canteen Group shall not reduce the accrued
benefits of any individual or the benefits to which an individual
has become entitled under the current Nonqualified Plans
regardless of whether the individual is a Group Employee.
(d) Cooperation and Temporary Support. Seller
will cooperate with Buyer to transfer employee records as may be
necessary to facilitate this Agreement. In addition, Seller
agrees to provide Buyer with ongoing support and access to
Seller's benefits administration systems pursuant to the separate
administrative services agreement executed in connection with
this Agreement. Buyer agrees to maintain such records in
confidence as required by applicable law.
(e) No Claims Based on Agreement. No person
(other than parties to this Agreement), including without
limitation Group Employees and their spouses and beneficiaries,
shall be entitled to assert any claim based on any of the
provisions of this Section against any party to this Agreement
(or any of their subsidiaries or affiliates).
Section 6.11.Brokers.
(a) No agent, broker, investment banker, or other
Person acting on behalf of Flagstar or Seller or under their
authority is or will be entitled to any broker's or finder's fee
or any other commission or similar fee, directly or indirectly,
in connection with the transactions contemplated by this
Agreement. Each of Flagstar and Seller shall be fully
responsible for, and shall indemnify Buyer against, all amounts,
if any, payable by Flagstar or Seller as a result of the
consummation of the transactions contemplated by this Agreement.
(b) Except for NationsBank Investment Bank, no
agent, broker, investment banker, or other Person acting on
behalf of Buyer or under its authority is or will be entitled to
any broker's or finder's fee or any other commission or similar
fee, directly or indirectly, in connection with the transactions
contemplated by this Agreement. Each of Buyer and Compass shall
be fully responsible for, and shall indemnify Seller and Flagstar
against, all amounts payable by Buyer or Compass as a result of
the consummation of the transactions contemplated by this
Agreement.
Section 6.12. Distributions in the Ordinary Course.
Notwithstanding any other provision of this Agreement to the
contrary (but acknowledging nevertheless the provisions of
Section 3.2 hereof), from and after the date hereof, each of IMV
and Canteen and each of the Canteen Subsidiaries shall be
entitled to declare and pay dividends and make other
distributions to its respective parent corporation, in the
ordinary course of the business of Flagstar and its direct and
indirect subsidiaries, consistent with past practice.
Section 6.13. Certain Agreements. The following
agreements or documents have been executed and delivered by the
applicable parties thereto to be effective upon Closing:
(a) A Noncompetition Agreement between the
Retained Group and the Canteen Group.
(b) A Supply Contract between Proficient Food
Company and the Canteen Group permitting the Canteen Group to
purchase certain supplies and other goods at quantities and upon
terms at least as favorable as exist on the date hereof.
(c) Employment Contracts between the Canteen
Group and those key executives of Flagstar and the Canteen Group
and administrative personnel of Flagstar identified in Section
6.13(c) of the Disclosure Schedule.
(d) A Section 338(h)(10) Election by Flagstar
Parent, containing an undertaking by Flagstar Parent to fulfill
the covenants of Flagstar Parent contemplated by Section 3.3
hereof and together with any necessary supporting information.
(e) An Assignment between Flagstar and IMV
pursuant to which Flagstar transfers to IMV all right, title and
interest in and to any Proprietary Rights owned by Flagstar (or
any of its subsidiaries not included in the Canteen Group) but
used by the Canteen Group as indicated in Section 4.13 of the
Disclosure Schedule.
(f) An instrument conveying from CM Corp. to
Canteen all right, title and interest in and to the CM Assets
free and clear of all claims, liens, encumbrances and security
interests, and providing for the assumption by IMV or Canteen of
the liabilities of CM Corp. associated with the Business, which
liabilities are identified in Section 6.13(f) of the Disclosure
Schedule.
(g) An instrument conveying from Canteen to
Seller or a subsidiary thereof all rights, title and interest in
and to the contracts identified in Section 6.13(g) of the
Disclosure Schedule.
(h) An Administrative and Data Support Services
Agreement between Flagstar and the Canteen Group providing for
(i) administrative office space, general management information
systems support and programming, data processing, payroll,
billing support, accounting support and similar services to the
Canteen Group, and (ii) assistance to the
Canteen Group to transfer such functions to the Canteen Group or
a third party supplier.
(i) A Computer Software Agreement among Flagstar,
Seller, CM Corp., Compass and Buyer assigning to Compass and
Buyer all right, title and interest of Flagstar, Seller and CM
Corp. in and to certain software programs currently used by the
Canteen Group and allowing Flagstar to continue to use all
software currently used by the Retained Group during the term of
the agreement.
On or prior to May 13, 1994, Flagstar shall, if needed,
execute or cause to be executed an Assignment conveying from
Flagstar (or any of its subsidiaries not included in the Canteen
Group) to IMV or Canteen all rights, title and interest of such
entity in any other assets which constitute a part of the
Business but are owned by an entity other than a member of the
Canteen Group in order that Buyer may acquire the entire Business
(such property the "Transferred Property"), in each case free and
clear of all claims, liens, encumbrances and security interests,
other than Permitted Encumbrances, and providing for the
assumption by IMV or Canteen of liabilities of the transferor
associated with the Transferred Property, which obligations shall
be specifically identified in such Assignment.
Section 6.14. Financing Commitment. Compass has
delivered to Flagstar contemporaneously with the execution of
this Agreement copies of (i) the Underwriting Agreement; and
(ii) a loan agreement providing for financing to Compass and the
Buyer in the aggregate amount of $175,000,000 in connection with
the consummation of the transactions contemplated by this
Agreement.
Section 6.15. Updating and Amendment of Disclosure
Schedule. The parties acknowledge and agree that Flagstar may
need, and shall be entitled, to amend the representations and
warranties referred to in Section 10.1(a)(v) by updating and
amending the specific portions of the Disclosure Schedule
relating to such representations and warranties, at any time and
from time to time prior to Closing, to reflect matters which (i)
become first known to Seller and Flagstar on or after the date of
this Agreement and (ii) relate to facts, circumstances or events
arising on or after the date of this Agreement which were outside
the control of Flagstar, Seller or any member of the Canteen
Group. Other than the updating and amendment of the Disclosure
Schedule permitted by this Section 6.15, no other changes may be
made to the Disclosure Schedule after the date hereof.
Section 6.16. Certain Additional Understandings. All
policies (including any arrangements between any member of the
Canteen Group, on the one hand, and Seller or Flagstar, on the
other hand, with respect to self insurance) set forth in
Section 4.18 of the Disclosure Schedule will, as agreed by the
parties hereto, either terminate or be apportioned between the
Retained Group and the Canteen Group upon the occurrence of the
Closing.
Section 6.17. Franchise Rights. Flagstar and Compass
have approved schedules of "deal points" or terms for the
development of the Denny's, Quincy's and El Pollo Loco concepts
and for the grant to Compass or its subsidiaries, including
Canteen, of exclusive franchises for Denny's and El Pollo Loco
in certain United States markets and for Denny's and Quincy's in
the United Kingdom and European markets, copies of which are
attached as Exhibit A (the "Deal Points"). From time to time as
provided in the Deal Points, Flagstar shall enter or cause the
appropriate franchisor to enter into franchise agreements with
Compass, or any of its subsidiaries designated by it, based upon
and incorporating the Deal Points and to take such other actions
as may be necessary under the circumstances to permit the use of
such brands in the markets, for the periods and upon the terms
outlined in the Deal Points. In connection with the foregoing,
Flagstar agrees that it shall promptly provide Compass with all
disclosures required by applicable law in connection with the
execution of each franchise agreement. Compass' obligation to
enter into any such franchise agreement shall be subject to
receipt of such disclosures. Flagstar's obligation to enter
into any such franchise agreement shall be subject to Compass'
release of Flagstar for any claims it may have relating to such
franchise through the date of the franchise agreement.
ARTICLE VII
TERMINATION
Section 7.1. Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement executed by
Seller, Flagstar, Buyer and Compass;
(b) by Seller or Buyer at any time after July 15,
1994 if, through no fault of the party seeking termination, the
Closing shall not have occurred;
(c) by Seller or Buyer, if any governmental or
regulatory authority, agency or commission, domestic or
foreign, shall have issued an order, decree, or ruling or taken
other action, restraining, enjoining or otherwise prohibiting
the transactions contemplated hereby and such order, decree,
ruling or other action shall have become final and nonappealable;
(d) by Buyer, if there has been a material
violation or breach by Seller or Flagstar of any agreement or,
subject to Section 8.2 hereof, any representation or warranty,
contained in this Agreement which (i) is not curable, (ii) has
rendered the satisfaction of any condition to the obligations of
Compass and Buyer impossible, and (iii) has not been waived by
Buyer; or
(e) by Seller, if there has been a material
violation or breach by Buyer or Compass of any agreement or,
subject to Section 9.3 hereof, any representation or warranty
contained in this Agreement which (i) is not curable, (ii) has
rendered the satisfaction of any condition to the obligations of
Flagstar and Seller impossible, and (iii) has not been waived by
Seller.
Section 7.2. Automatic Termination. If any of the
conditions precedent set out in Sections 8.1 to 8.12 (inclusive)
or in Section 9.1 to 9.9 (inclusive) are not fulfilled (or
waived, to the extent capable of being waived) by July 31, 1994
then this Agreement shall thereupon automatically cease and
terminate and the transactions contemplated hereby shall be
abandoned without further action by the parties hereto.
Section 7.3. Procedure and Effect of Termination. In
the event of termination of this Agreement pursuant to
subparagraphs (b), (c), (d) or (e) of Section 7.1 hereof,
written notice thereof shall forthwith be given to the other
parties hereto and this Agreement (other than Section 6.6
hereof) shall terminate and the transactions contemplated hereby
shall be abandoned without further action by the parties
hereto. If this Agreement is terminated as provided herein:
(a) all information received by Compass or its
subsidiaries with respect to the Business or the Canteen Group
shall be held subject to and in accordance with the terms of the
Confidentiality Agreement, which agreement shall continue
notwithstanding the termination of this Agreement, and all
copies of such information in Compass' or Buyer's possession or
in the possession of any representative thereof shall be
returned to Flagstar or destroyed by Compass or Buyer;
(b) all information received by Flagstar or its
subsidiaries with respect to the business and financial plans of
Compass shall be held in confidence and all copies of such
information in Flagstar's or Seller's possession or in the
possession of any representative thereof shall be returned to
Compass or destroyed by Flagstar or Seller;
(c) any termination pursuant to subparagraph (b),
(c), (d) or (e) of Section 7.1 shall not be deemed a waiver of
any rights or remedies otherwise available under this Agreement
or the Confidentiality Agreement, by operation of law or
otherwise; and
(d) all filings, applications and other
submissions made pursuant to Section 6.3 hereof or prior to
execution of this Agreement in contemplation thereof shall, to
the extent practicable, be withdrawn from the agency or other
person to which made.
ARTICLE VIII
CONDITIONS TO COMPASS' AND BUYER'S OBLIGATIONS
Each and every obligation of Compass and Buyer to consummate
the transactions described in this Agreement shall be subject to
the fulfillment, on or before the Closing Date, of the following
conditions precedent:
Section 8.1. Financing. The obligations of the
lenders under the loan agreement referred to in Section 6.14 to
advance monies in the aggregate amount of $175,000,000 to the
borrowers shall have become unconditional in all respects, except
to the extent that such obligations are conditioned upon Closing.
Section 8.2. Representations and Warranties True. The
representations and warranties of Flagstar contained in this
Agreement, as modified by the form of Disclosure Schedule in
effect as of the date of this Agreement, shall have been true on
the date hereof, and shall be true on the Closing Date with the
same effect as though such representations were made as of such
date (except to the extent that any representations and
warranties specifically apply to conditions existing at a
particular date); provided, however, that notwithstanding
anything contained herein to the contrary, this Section 8.2 shall
be deemed to have been satisfied upon delivery of the certificate
contemplated by Section 9-A.1(x) and unless the failure of any of
the representations or warranties to be true would have or would
be reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect.
Section 8.3 Performances. Each of Flagstar and
Seller shall have, in all material respects, performed and
complied with all covenants required by this Agreement to be
performed or complied with by it prior to or at the Closing.
Section 8.4. Compass' Shareholder Approval. There
shall have been passed at a general meeting of the shareholders
of Compass the necessary resolution or resolutions to approve the
transaction described herein and its implementation.
Section 8.5. Governmental Consents and Approvals.
All necessary and appropriate governmental consents, approvals
and filings, including those pursuant to the HSR Act and the
Exon-Florio Amendment, shall have been obtained or made and all
applicable waiting periods (including any extensions thereof)
relating thereto shall have expired or otherwise terminated.
Section 8.6. No Injunction or Proceeding. No action
or proceeding shall have been instituted before a court or other
governmental body or any public authority to restrain or prohibit
any of the transactions contemplated hereby in which an order
restraining or prohibiting any of the transactions contemplated
hereby has been entered.
Section 8.7. Agreement to Admit. The London Stock
Exchange shall have agreed to admit to its Official List the new
ordinary shares to be issued by Compass under the Rights Issue
subject to the posting of the provisional allotment letters.
Section 8.8 No Amendment to Disclosure Schedule.
There shall have been no amendment to the Disclosure Schedule
pursuant to Section 6.15 hereof. In the event of each such
amendment, if any, Compass and Buyer shall notify Flagstar and
Seller as soon as practicable but in any event within fifteen
(15) business days after notice of any such amendment whether
Compass and Buyer will waive satisfaction of this condition with
respect to the matters added to the Disclosure Schedule by such
amendment.
Section 8.9. Rights Issue Underwriting. The
obligations of the underwriting institutions under the
Underwriting Agreement shall have become unconditional in all
respects.
Compass and Buyer may at any time waive by notice in writing, in
whole or in part, any of the conditions precedent set out in
Section 8.1 to 8.9 inclusive and any such waiver shall not limit
or impair in any manner any remedies of Compass or Buyer
available under Article X hereof.
ARTICLE IX
CONDITIONS TO FLAGSTAR'S AND SELLER'S OBLIGATIONS
Each and every obligation of Flagstar and Seller to
consummate the transactions described in this Agreement shall be
subject to the fulfillment, on or before the Closing Date, of the
following conditions precedent:
Section 9.1. No Injunction or Proceeding. No action
or proceeding shall have been instituted before a court or other
governmental body or any public authority to restrain or
prohibit any of the transactions contemplated hereby in which an
order restraining or prohibiting any of the transactions
contemplated hereby has been entered.
Section 9.2. Compass Shareholder Approval. Not later
than June 8, 1994, there shall have been passed at a general
meeting of the shareholders of Compass the necessary resolution
or resolutions to approve the transactions described herein and
the Rights Issue and their implementation.
Section 9.3. Representations and Warranties True.
The representations and warranties of Compass contained in this
Agreement, as modified by the form of Disclosure Schedule in
effect as of the date of this Agreement, shall have been true on
the date hereof in all material respects and shall be true on the
Closing Date in all material respects, with the same effect as
though such representations were made as of such date (except as
otherwise expressly provided in this Agreement).
Section 9.4. Performances. Each of Compass and Buyer
shall have, in all material respects, performed and complied with
all covenants required by this Agreement to be performed or
complied with by it prior to or at the Closing.
Section 9.5. Governmental Consents and Approvals.
All necessary and appropriate governmental consents, approvals
and filings, including those pursuant to the HSR Act and the
Exon-Florio Amendment, shall have been obtained or made and all
applicable waiting periods (including any extensions thereof)
relating thereto shall have expired or otherwise terminated.
Flagstar and Seller may at any time waive, by notice in writing,
in whole or in part, any of the conditions precedent set out in
Section 9.1 to 9.5 inclusive.
ARTICLE IX-A
CLOSING DELIVERIES
Section 9-A.1 Seller's Closing Deliveries. Seller
shall deliver, or cause to be delivered, to Buyer at the Closing
each of the following:
(i) stock certificates representing the
Shares, duly endorsed in blank, or accompanied by duly endorsed
stock transfer powers, with signatures guaranteed;
(ii) a certified copy of the Certificate or
Articles of Incorporation of each of IMV, Canteen and each of the
Canteen Subsidiaries as in effect on the Closing Date (certified
by the Secretary of State or equivalent officer of the state of
incorporation);
(iii) with respect to each member of the
Canteen Group, a certificate of good standing issued by the
secretary of state of each of the states of incorporation and a
certificate of qualification of good standing in each of the
states in which such corporation is required to be qualified to
transact business issued by the secretary of state or other
appropriate authority of each such state except where the failure
to be so qualified would not have a Material Adverse Effect, and
in each case, dated no more than thirty (30) days prior to the
Closing Date;
(iv) a copy of the bylaws of each of IMV,
Canteen and each of the Canteen Subsidiaries which shall be
certified to be accurate and complete as of the Closing Date by
the Secretary of such entity;
(v) the minute book, stock book and corporate
seal of IMV, Canteen and each of the Canteen Subsidiaries;
(vi) stock certificates representing all
outstanding shares of each member of the Canteen Group, other
than The Oak Room, Inc., and stock certificate(s) representing
the shares of The Oak Room, Inc. owned by Canteen;
(vii) the resignations of those officers and
directors of IMV, Canteen and each Canteen Subsidiary as are
identified in Section 9-A.1 of the Disclosure Schedule, together
with such releases as Seller shall have obtained as contemplated
by paragraph (n) of Section 6.1 hereof;
(viii) valid and binding consents of all Persons
whose consent or approval is required as set forth on Section
4.6 of the Disclosure Schedule, other than those which, if not
obtained, would not have a Material Adverse Effect;
(ix) a certified copy of the resolutions of
the Board of Directors of each of Flagstar and Seller and the
shareholder of Seller authorizing the execution, delivery and
performance of this Agreement;
(x) certificates confirming the matters set
forth in Sections 8.2 and 8.3 hereof; and
(xi) an opinion from counsel for Flagstar and
Seller addressed to Compass and Buyer substantially in the form
of Exhibit B attached hereto.
Section 9-A.2. Buyer's Closing Deliveries. Buyer shall
deliver, or cause to be delivered, to Seller at the Closing each
of the following:
(i) the Purchase Price payable at Closing
pursuant to Article III hereof.
(ii) valid and binding consents of all
Persons, if any, whose consent or approval is required to be set
forth on Section 5.3 of the Disclosure Schedule;
(iii) a certified copy of the resolutions of
the Board of Directors of each of Compass and Buyer authorizing
the execution, delivery and performance of this Agreement;
(iv) certificates confirming the matters set
forth in Sections 9.3 and 9.4 hereof; and
(v) an opinion from counsel for Compass and
Buyer addressed to Flagstar and Seller substantially in the form
of Exhibit C attached hereto.
ARTICLE X
INDEMNIFICATION
Section 10.1. Indemnification by Flagstar.
(a) Flagstar agrees to indemnify in accordance
with the procedures set forth in this Article X and hold the
Canteen Group, Compass and Buyer harmless from and against any
and all demands, claims, actions, suits, liabilities, damages,
losses, judgments, costs and expenses (including reasonable
attorneys' fees) (collectively, "Obligations"), relating to,
resulting from or arising out of (i) the breach or inaccuracy of
the representations or warranties of Flagstar set forth in
Section 4.2 hereof, (ii) the breach or violation of any covenant
or agreement by Flagstar or Flagstar Parent set forth in Section
3.3 hereof, (iii) any federal income tax liability (including
penalties and interest) of Flagstar Parent, Flagstar, the
Retained Group or any member of the Canteen Group for any and all
periods prior to and including the period which includes the
Closing Date, including any liability arising because of Treasury
Regulation Section 1.1502-6, (iv) any additional state income tax
liability in any of the states identified in Section 10.1 of the
Disclosure Schedule as a result of the Section 338(h)(10)
Elections, (v) the breach or inaccuracy of the representations or
warranties of Flagstar set forth in Sections 4.6, 4.7, 4.8, 4.9,
4.17, 4.18, 4.19, 4.21, 4.22 and 4.23, the second sentence of
Section 4.10, paragraph (a) of Section 4.11, subparagraph (a)(i)
of Section 4.12, the first sentence of
paragraph (a) of Section 4.14, paragraph (b) of Section 4.14 and
Section 4.29 (to the extent such Section 4.29 is directly related
to the Sections, or portions thereof, expressly identified in
this subparagraph (v)) and (vi) any state income tax liability
arising out of cancellation or forgiveness of indebtedness after
December 26, 1993 and prior to the Closing Date. It is expressly
agreed that Flagstar shall have no liability under the indemnity
set forth in (a)(v) except for Obligations relating, resulting
from or arising out of the breach or inaccuracy of any
representation or warranty described in (a)(v) as modified by the
Disclosure Schedule. It is expressly agreed by the parties
hereto that the indemnification accorded to the Canteen Group,
Compass and Buyer shall include Obligations directly incurred by
the Canteen Group, Compass and Buyer as well as Obligations
incurred as a result of third party claims. For purposes of
Section 10.1(a)(v), in determining whether any of the
representations and warranties, or portions thereof, expressly
identified in Section 10.1(a)(v) have been breached or are
inaccurate, (i) all express references in any such
representation or warranty or portion thereof to "material",
"materiality" or "Material Adverse Effect" shall be ignored, and
such, representations and warranties shall be construed as though
such references to material, materiality and Material Adverse
Effect were omitted therefrom and (ii) the text of Section 4.8
which reads "and (iv) liabilities which, in the aggregate, do not
have a Material Adverse Effect" shall be deleted. The
representations and warranties referred to in (a)(v) survive for
the indemnification period provided under paragraph (b) below for
such representations and warranties. Except with respect to
information reflected herein or in the Disclosure Schedule, it is
expressly agreed by the parties hereto that no knowledge of
facts, circumstances or events and no investigation or
information received by Buyer or Compass from any investigation
shall limit or impair in any manner any rights or remedies
available to Compass or Buyer under this Article X.
(b) The indemnification obligations of Flagstar
under subparagraph (a)(i), (a)(ii), (a)(iii), (a)(iv) and (a)(vi)
above shall expire and terminate upon the expiration of all
applicable limitation periods (including the expiration of any
period for which the otherwise applicable limitation period has
been or is extended). The indemnification obligations of
Flagstar under subparagraphs (a)(v) above shall expire as of
November 30, 1995 unless, prior thereto, Buyer shall have
provided written notice to Flagstar of an assertion by Buyer of a
right to indemnification under such subparagraph (a)(v). If
Buyer provides such notice prior to the expiration of the
applicable periods, the obligations of Flagstar with respect to
the asserted right to indemnification under paragraph (a) above
shall continue until the appropriate amount of indemnification,
if any, is determined, paid and satisfied in full.
Section 10.2 Threshold for Indemnification.
(a) Except as set forth in (b) and (c) below,
Flagstar shall be fully liable to the Indemnified Party (as
defined below) for all Obligations with respect to any
established claims of indemnification under this Article X.
(b) Notwithstanding the foregoing,
Flagstar shall have no liability under subparagraph (a)(v) of
Section 10.1 hereof with respect to any Obligation unless such
Obligation exceeds Two Hundred Fifty Thousand ($250,000) (the
"Threshold Amount") provided, however, that Obligations arising
out of a single or related set of facts, circumstances or events
shall be aggregated for purposes of determining whether the
Obligations exceed the Threshold Amount.
(c) In addition, notwithstanding the foregoing,
Flagstar shall have no liability under subparagraph (a)(v) of
Section 10.1 hereof unless and until the aggregate amount of all
established claims for indemnification for Obligations pursuant
to such subparagraph exceeds the sum of (i) Fifteen Million
Dollars ($15,000,000) plus (ii) the amount if any by which the
Net Asset Value as of the Closing Date exceeds the sum of
Forty-Three Million Five Hundred Thousand Dollars ($43,500,000),
in which case Flagstar shall be liable for indemnification
hereunder for the amount of the Obligations under Section 10.1
(a)(v) hereof, but only to the extent such Obligations exceed the
sum of (i) Fifteen Million Dollars ($15,000,000) plus (ii) the
amount if any by which the Net Asset Value as of the Closing Date
exceeds Forty-Three Million Five Hundred Thousand Dollars
($43,500,000).
Section 10.3. Third Party Claims.
(a) If any claim, action, suit or proceeding (an
"Action") shall be instituted or asserted against a party hereto
(an "Indemnified Party") in respect of which Flagstar shall have
an obligation of indemnification hereunder, then the Indemnified
Party shall, prior to the expiration date of such obligation of
indemnification, if any, give prompt written notice of such
Action to Flagstar. Upon receipt of such notice, Flagstar shall
be entitled at its expense to defend such Action by counsel of
its own choosing, either in Flagstar's name, or in the
Indemnified Party's name, and the Indemnified Party agrees to
cooperate with such counsel. If Flagstar shall not, within
thirty (30) days after the date of any notice given by the
Indemnified Party to Flagstar under this Section 10.3, serve a
return written notice indicating or stating that Flagstar shall
take over the defense of such Action as hereinabove provided,
such failure to give notice within the time specified shall be
deemed an election by Flagstar not to take over the defense of
such Action. The Indemnified Party shall be entitled at any
time to participate, at its own expense, in any and all aspects
of such Action (regardless of the parties named therein) with
counsel of its own choosing, and Flagstar agrees to cooperate
with such counsel. Flagstar shall keep the Indemnified Party
reasonably apprised of the course of any negotiations or
proceedings with respect to such Action and, without regard to
the Indemnified Party's participation therein, will notify the
Indemnified Party prior to the submission to the claiming party
of any proposed settlement or compromise of such Action.
(b) If Flagstar elects or is deemed to have
elected not to take over the defense of such Action, the
Indemnified Party shall have the right to defend, compromise and
settle such Action on such terms as the Indemnified Party in its
discretion may determine, subject to the prior consent of
Flagstar, which consent shall not be unreasonably withheld, and
Flagstar shall continue to be bound to indemnify the Indemnified
Party in accordance with the terms of this Article X.
Notwithstanding the foregoing, to the extent that the Action
involves or could result in claims against, or potential
liability of, Flagstar the extent or nature of which were not
known by Flagstar as of the date Flagstar elects or is deemed to
have elected not to take over the defense of such Action, the
Indemnified Party shall promptly notify Flagstar and the
procedure described in subparagraph (a) above shall once again
apply to the Action.
Section 10.4 Notice of Direct Claims. In the event
an Indemnified Party should have a direct claim under this
Agreement against Flagstar hereunder which does not involve a
claim or demand being asserted against or sought to be collected
from the Indemnified Party by a third party, the Indemnified
Party shall give prompt written notice thereof to Flagstar.
ARTICLE XI
MISCELLANEOUS
Section 11.1. Limited Survival of Representations and
Warranties. Subject to the provisions of, and except to the
extent otherwise expressly provided in, Article X hereof, each
and every representation and warranty contained in this Agreement
shall expire with, and be terminated and extinguished by any of
(i) the Closing, or (ii) the termination of this Agreement
pursuant to Article VII hereof, and thereafter, except to the
extent expressly provided in Article X hereof, none of Flagstar,
Seller, Compass and Buyer or any officer, director or
representative thereof shall be under any liability whatsoever
with respect to any such representation and warranty. In
addition, upon the expiration and extinguishment of such
representations and warranties, none of the parties hereto nor
any of their officers, directors or representatives shall have
any liability whatsoever arising out of or with respect to the
accuracy or completeness of the Disclosure Schedule or any
certificate delivered pursuant to Section 8.2 or Section 9.3
hereof. This Section 11.1 shall have no effect upon any other
obligation of the parties hereto, whether to be performed before
or after the Closing.
Section 11.2. Entire Understanding, Waiver, Etc. This
Agreement sets forth the entire understanding of the parties and
supersedes any and all prior or contemporaneous agreements,
arrangements and understandings relating to the subject matter
hereof (other than the Confidentiality Agreement), and the
provisions hereof may not be changed, modified, waived or altered
except by an agreement in writing signed by the party entitled to
the benefit of the provision(s) to be waived hereto. A waiver by
any party of any of the terms or conditions of this Agreement, or
of any breach thereof, shall not be deemed a waiver of such term
or condition for the future, or of any other term or condition
hereof, or of any subsequent breach thereof.
Section 11.3. Severability. If any provision of this
Agreement or the application of such provision shall be held by a
court of competent jurisdiction to be unenforceable, the
remaining provisions of this Agreement shall remain in full force
and effect.
Section 11.4. Captions. The captions herein are for
convenience only and shall not be considered a part of this
Agreement for any purpose, including, without limitation, the
constructions or interpretation of any provision hereof.
Section 11.5. Notices. All notices, requests, demands
and other communications (collectively, "Notices") that are
required or may be given under this Agreement shall be in
writing. All Notices shall be deemed to have been duly given or
made: if by hand, immediately upon delivery; if by telecopier or
similar device, immediately upon the beginning of the first
Business Day after being sent; if by Federal Express, Express
Mail or any other reputable overnight delivery service, one day
after being placed in the exclusive custody and control of said
courier; and if mailed by certified mail, return receipt
requested, seven (7) Business Days after mailing.
Notwithstanding the foregoing, with respect to any Notice given
or made by telecopier or similar device, such Notice shall not be
effective unless and until (i) the telecopier or similar advice
being used prints a written confirmation of the successful
completion of such communication by the party sending the Notice,
and (ii) a copy of such Notice is deposited in first class mail
to the appropriate address for the party to whom the Notice is
sent. In addition, notwithstanding the foregoing, a
notice of a change of address by a party hereto shall not be
effective until received by the party to whom such notice of a
change of address is sent. All Notices are to be given or made
to the parties at the following addresses (or to such other
address as either party may designate by notice in accordance
with the provisions of this Section):
(a) If to Flagstar or Seller:
Flagstar Corporation
203 E. Main Street
Spartanburg, SC 29319-0001
Attention: Robert L. Wynn, III,
Senior Vice President and Associate
General Counsel
Fax Number: (803) 597-8327
(b) If to Compass or Buyer:
Compass Group PLC
Queen's Wharf
Queen Caroline Street
London W6 9RJ
Attention: Corporate Secretary
Fax Number: 011-44-81-846-8556
Section 11.6. Successors and Assigns. Neither this
Agreement nor any of the rights or obligations arising hereunder
shall be assignable without the prior written consent of the
parties hereto; provided, however, that notwithstanding the
foregoing, Compass and Buyer may assign their rights and
obligations under this Agreement to (i) any lender providing the
commitment referred to in Section 8.12 hereof or (ii) to any
wholly owned subsidiary of Compass which agrees in writing to be
bound by and to perform fully all of Compass' and Buyer's
obligations hereunder. In the event of any such assignment,
Compass and Buyer shall remain liable hereunder for the
performance of their obligations hereunder notwithstanding such
assignment.
Section 11.7. Parties in Interest. This Agreement
shall be binding upon and shall inure to the benefit of the
parties hereto and their respective successors and permitted
assigns. Nothing in this Agreement, express or implied, shall
confer upon any Person, other than the parties hereto, and their
successors and permitted assigns, any rights or remedies under or
by reason of this Agreement.
Section 11.8. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be
deemed an original, but all of which, together, shall constitute
one and the same instrument.
Section 11.9. Construction of Terms. Any reference
herein to the masculine or neuter shall include the masculine,
the feminine and the neuter, and any reference herein to the
singular or plural shall include the opposite thereof. The
parties to this Agreement acknowledge that each party and counsel
to each party has participated in the drafting of this Agreement
and agree that this Agreement shall not be interpreted against
one party or the other based upon who drafted it.
Section 11.10. Governing Law. This Agreement shall be
controlled, construed and enforced in accordance with the laws of
the State of North Carolina applicable to agreements made and to
be performed in that State.
Section 11.11. Specific Performance. Each of the
parties acknowledge and agrees that the other parties would be
damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific
terms or otherwise are breached. Accordingly, each of the
parties agrees that the other parties shall be entitled to any
injunction or injunctions to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and
the terms and provisions hereof. This remedy shall be in
addition to, and not in substitution of, any other remedies
available to the injured party; except that notwithstanding the
foregoing, in the event any party elects to exercise its rights
under this Section 11.11, such party shall be conclusively deemed
to have waived all conditions precedent under Article VIII or
Article IX, as the case may be.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the day and year first above written.
FLAGSTAR:
FLAGSTAR CORPORATION
By:
Its:
SELLER:
CANTEEN HOLDINGS, INC.
By:
Its:
COMPASS:
COMPASS GROUP PLC
By:
Its:
BUYER:
COMPASS HOLDINGS, INC.
By:
Its:
RKS/569
DISCLOSURE SCHEDULE
Section 1.6 Canteen Subsidiaries
Section 1.13 Major Customers by Geographic Region
Section 1.30 Net Asset Value
Section 1.36 Real Property
Section 4.1 Corporate Organization
Section 4.2 Capitalization of IMV
Section 4.3 Capitalization of Canteen
Section 4.4 Capitalization of Canteen Subsidiaries
Section 4.6 Seller's Consents and Approvals; Indebtedness
and Liens
Section 4.7 Financial Statements
Section 4.8 Undisclosed Liabilities
Section 4.9 Taxes
Section 4.10 Business and Contracts
Section 4.11 Properties
Section 4.12 Absence of Changes
Section 4.13 Proprietary Rights Schedule
Section 4.14 Leases
Section 4.15 Bank Accounts
Section 4.16 Material Contracts
Section 4.17 Related Transactions
Section 4.18 Insurance
Section 4.19 Transferred Employees and Labor Matters
Section 4.20 Employee Benefit Plans
DISCLOSURE SCHEDULE (CONTINUED)
Section 4.21 Litigation
Section 4.22 Compliance with Laws
Section 4.23 Environmental Matters
Section 4.26 Additional Services
Section 4.27 Canteen Group Receivables
Section 4.28 Material Licenses
Section 5.3 Buyer's Consents and Approvals; No Violations
Section 6.1(o) Release of Canteen Group from Contractual Obligations
Section 6.1(p) Release of Retained Group from Contractual Obligations
Section 6.10 Nonqualified Plans
Section 6.13(c) Administrative Personnel
Section 6.13(f) CM Corp. Liabilities
Section 6.13(g) Transferred Canteen Contracts
Section 9-A.1 Resignations of officers and directors of
the Canteen Group
Section 10.1 Section 338(h)(10) Election States
EXHIBIT B
OPINION OF COUNSEL FOR
FLAGSTAR AND SELLER
(to be agreed upon by May 2, 1994)
EXHIBIT C
OPINION OF COUNSEL FOR
COMPASS AND BUYER
(to be agreed upon by May 2, 1994)