EXHIBIT 99.2
STOCK PURCHASE AGREEMENT
BY AND BETWEEN
PILGRIM'S PRIDE CORPORATION
AND
CONAGRA FOODS, INC.
DATED AS OF JUNE 7, 2003
STOCK PURCHASE AGREEMENT
AGREEMENT, dated as of June 7, 2003, by and between Pilgrim's Pride
Corporation, a Delaware corporation ("Buyer"), and ConAgra Foods, Inc., a
Delaware corporation ("Seller").
RECITALS:
(a) Seller is the owner of all of the issued and outstanding
capital stock of ConAgra Poultry Company ("CPC"), To-Ricos,
Inc. ("To-Ricos"), Lovette Company, Inc. ("Lovette") and
Hester Industries, Inc. ("Hester").
(b) Seller desires to sell all of the issued and outstanding
shares of capital stock of CPC (the "CPC Stock"), To-Ricos
(the "To-Ricos Stock"), Lovette (the "Lovette Stock") and
Hester (the "Hester Stock" and, together with the CPC Stock,
To-Ricos Stock and Lovette Stock, the "Stock") to Buyer, and
Buyer desires to purchase the Stock from Seller, for the
consideration and upon the terms and conditions contained in
this Agreement.
AGREEMENT:
In consideration of the foregoing recitals and in further consideration
of the mutual covenants and agreements hereinafter contained, the parties hereto
agree, subject to the terms and conditions hereinafter set forth, as follows:
1. DEFINITIONS.
1.1 CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following respective meanings:
"Acquired Companies" means CPC, To-Ricos, Lovette,
Hester and the Company Subsidiary, and "Acquired Company"
means any of them.
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"Action" shall mean any claim, action, litigation,
suit, arbitration, inquiry, proceeding or investigation by or
before any Governmental Authority.
"Affiliate" shall mean, with respect to any specified
Person, any other Person that directly, or indirectly through
one or more intermediaries, Controls, is Controlled by, or is
under common Control with, such specified Person.
"Agreement" shall mean this Agreement.
"Ancillary Agreements" shall mean, collectively, the
Registration Rights Agreements, the Transition Services
Agreement, the Transition Trademark License Agreement, the
ConAgra Supply Agreement, the Molinos Supply Agreement, the
Montgomery Supply Agreement, the Environmental License
Agreement, the Buyer Release, the Seller Release and any other
agreement, certificate or instrument executed and delivered at
Closing pursuant to this Agreement.
"Applicable Accounting Principles" shall mean GAAP,
consistently applied, in effect on the date hereof, subject,
however, to the principles and procedures set forth on Exhibit
1.1(a).
"Business" shall mean all of the chicken business
(including grow-out, slaughter, processing, further
processing, rendering, sales and distribution, both at retail
and foodservice, and related assets and employees), including
the "Pierce" and "PFS" businesses, conducted by the Acquired
Companies as of the date hereof at and from the facilities
described on Exhibit 1.1(b), excluding, however, the Retained
Businesses. Without limitation, "Business" shall include the
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businesses and operations managed by Seller's management team
based out of Duluth, Georgia, including the "Pierce" and "PFS"
businesses.
"Buyer Closing Material Adverse Effect" shall mean
any result, occurrence, fact, change or event arising between
March 29, 2003 and the Closing Date (whether or not such
result, occurrence, fact, change or event has manifested
itself in the historical financial statements of Buyer, and
whether known or unknown as of the date of this Agreement),
that has had, or can reasonably be expected to have, a
material adverse impact on the business, operations, financial
condition, results of operations or capitalization, in each
case, of Buyer, taken as a whole, provided that any such
result, occurrence, fact, change or event has had, or can
reasonably be expected to have, individually or in the
aggregate, a negative impact on Buyer in excess of
$25,000,000, net of any tax benefits, recoveries and/or
receivables relating thereto; provided, however, that the
following shall not be taken into account in determining
whether there has been a "Buyer Closing Material Adverse
Effect":
(1) any such effects attributable to general
conditions affecting the Mexican economy or the
United States economy nationally or regionally
(including, without limitation, prevailing interest
rate and securities market levels);
(2) any such effects attributable to
conditions (whether economic, legal, regulatory,
financial, political or otherwise) affecting the
poultry industry generally which do not effect Buyer
materially
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disproportionally relative to other similarly
situated participants in the poultry industry;
(3) any such effects relating to or
resulting from, directly or indirectly, the
transactions contemplated by this Agreement or the
announcement or pendency thereof;
(4) fees and expenses, severance and other
benefit or compensation costs paid or to be paid by
Buyer or Seller pursuant to this Agreement in
connection with the transactions contemplated in this
Agreement;
(5) any action taken by, or any action of,
Buyer with the prior written consent of Seller; and
(6) any failure by Buyer to meet any
internal projections, expectations or forecasts or
published revenue or earnings predictions for any
period ending on or after the date of this Agreement
as a result of any one or more of the events
described in items (1)-(5) above.
"Buyer Material Adverse Effect" shall mean any
result, occurrence, fact, change or event (whether or not such
result, occurrence, fact, change or event has manifested
itself in the historical financial statements of Buyer, and
whether known or unknown as of the date of this Agreement or
the Closing Date), that has had, or can reasonably be expected
to have, a material adverse impact on (a) the business,
operations, financial condition, results of operations or
capitalization, in each case, of Buyer, taken as a whole, or
(b) the ability of Seller or Buyer to consummate the
transactions contemplated by this Agreement; provided,
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however, that the following shall not be taken into account in
determining whether there has been a "Buyer Material Adverse
Effect":
(1) any such effects attributable to general
conditions affecting the Mexican economy or the
United States economy nationally or regionally
(including, without limitation, prevailing interest
rate and securities market levels);
(2) any such effects attributable to
conditions (whether economic, legal, regulatory,
financial, political or otherwise) affecting the
poultry industry generally which do not effect Buyer
materially disproportionally relative to other
similarly situated participants in the poultry
industry;
(3) any such effects relating to or
resulting from, directly or indirectly, the
transactions contemplated by this Agreement or the
announcement or pendency thereof;
(4) fees and expenses, severance and other
benefit or compensation costs paid or to be paid by
Buyer or Seller pursuant to this Agreement in
connection with the transactions contemplated in this
Agreement;
(5) any action taken by, or any action of,
Buyer with the prior written consent of Seller; and
(6) any failure by Buyer to meet any
internal projections, expectations or forecasts or
published revenue or earnings predictions for
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any period ending on or after the date of this
Agreement as a result of any one or more of the
events described in items (1)-(5) above.
"Buyer Retention Obligations" shall mean the
obligations to pay (or reimburse Seller for Seller's payment
of) the restricted stock benefits, stock option ($24) benefits
and 24 month severance benefits payable pursuant to the
Retention Agreements listed in Exhibit 1.1(j)(y), or any
substitute or replacement agreements agreed to by Buyer and
Seller, plus payroll taxes with respect to the payment of such
amounts. Such amounts are summarized in Exhibit 1.1(j)(x) and
total $722,400, $1,079,153, and $4,491,738, respectively.
"Code" shall mean the Internal Revenue Code of 1986,
as amended.
"Company Closing Material Adverse Effect" shall mean
any result, occurrence, fact, change or event arising between
April 20, 2003 and the Closing Date (whether or not such
result, occurrence, fact, change or event has manifested
itself in the historical financial statements of the Business,
and whether known or unknown as of the date of this
Agreement), that has had, or can reasonably be expected to
have, a material adverse impact on the business, operations,
financial condition, results of operations or capitalization,
in each case, of the Business, taken as a whole, provided that
any such result, occurrence, fact, change or event has had, or
can reasonably be expected to have, individually or in the
aggregate, a negative impact on the Business in excess of
$25,000,000, net of any tax benefits, recoveries and/or
receivables relating thereto; provided, however, that the
following shall not be taken into account in determining
whether there has been a "Company Closing Material Adverse
Effect":
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(1) any such effects attributable to general
conditions affecting the Puerto Rican economy or the
United States economy nationally or regionally
(including, without limitation, prevailing interest
rate and securities market levels);
(2) any such effects attributable to
conditions (whether economic, legal, regulatory,
financial, political or otherwise) affecting the
poultry industry generally which do not effect the
Business materially disproportionally relative to
other similarly situated participants in the poultry
industry;
(3) any such effects relating to or
resulting from, directly or indirectly, the
transactions contemplated by this Agreement or the
announcement or pendency thereof;
(4) fees and expenses, severance and other
benefit or compensation costs paid or to be paid by
Buyer or Seller pursuant to this Agreement in
connection with the transactions contemplated in this
Agreement;
(5) any action taken by, or any action of,
Seller with the prior written consent of Buyer; and
(6) any failure by the Business to meet any
internal projections, expectations or forecasts or
published revenue or earnings predictions for any
period ending on or after the date of this Agreement
as a result of any one or more of the events
described in items (1)-(5) above.
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"Company Material Adverse Effect" shall mean any
result, occurrence, fact, change or event (whether or not such
result, occurrence, fact, change or event has manifested
itself in the historical financial statements of the Business,
and whether known or unknown as of the date of this Agreement
or the Closing Date), that has had, or can reasonably be
expected to have, a material adverse impact on (a) the
business, operations, financial condition, results of
operations or capitalization, in each case, of the Business,
taken as a whole, or (b) the ability of Seller or Buyer to
consummate the transactions contemplated by this Agreement;
provided, however, that the following shall not be taken into
account in determining whether there has been a "Company
Material Adverse Effect":
(1) any such effects attributable to general
conditions affecting the Puerto Rican economy or the
United States economy nationally or regionally
(including, without limitation, prevailing interest
rate and securities market levels);
(2) any such effects attributable to
conditions (whether economic, legal, regulatory,
financial, political or otherwise) affecting the
poultry industry generally which do not effect the
Business materially disproportionally relative to
other similarly situated participants in the poultry
industry;
(3) any such effects relating to or
resulting from, directly or indirectly, the
transactions contemplated by this Agreement or the
announcement or pendency thereof;
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(4) fees and expenses, severance and other
benefit or compensation costs paid or to be paid by
Buyer or Seller pursuant to this Agreement in
connection with the transactions contemplated in this
Agreement;
(5) any action taken by, or any action of,
Seller with the prior written consent of Buyer; and
(6) any failure by the Business to meet any
internal projections, expectations or forecasts or
published revenue or earnings predictions for any
period ending on or after the date of this Agreement
as a result of any one or more of the events
described in items (1)-(5) above.
"Company Subsidiary" shall mean ConAgra Poultry
Company of Kentucky, Inc., a Kentucky corporation.
"ConAgra Supply Agreement" shall mean that certain
agreement between Buyer and Seller in the form attached hereto
as Exhibit 1.1(c).
"Confidentiality Agreement" shall mean the
Confidentiality Agreements between Buyer and Seller, each
dated March 7, 2003.
"Control" (including the terms "Controlled by" and
"under common Control with"), with respect to the relationship
between or among two or more Persons, shall mean the
possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person,
whether through the ownership of voting securities, by
contract or otherwise, including, without limitation, the
ownership, directly or indirectly, of securities having the
power to
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elect a majority of the board of directors or similar body
governing the affairs of such Person.
"Deloitte" shall mean Deloitte & Touche LLP.
"Discount Amount" shall mean $100,000,000 less the
sum of (i) the Seller Retention Obligations, (ii) the lesser
of the cost of the audit referred to in Section 9.15 and
$600,000 and (iii) any out-of-pocket costs and expenses
incurred by Seller in providing environmental reports, title
searches, insurance (or commitments therefor) or real estate
surveys requested by Buyer in a writing confirming that any
such costs and expenses will reduce the Discount Amount.
"DOJ" shall mean the United States Department of
Justice.
"DOL" shall mean the United States Department of
Labor.
"Encumbrances" shall mean any mortgage, lien, pledge,
hypothecation, security interest, encumbrance, covenant, title
defect, easement, title retention agreement, voting trust
agreement or right-of-first refusal.
"Environmental License Agreement" shall mean that
certain agreement between Buyer and Seller in the form
attached hereto as Exhibit 1.1(d).
"Environmental Site Assessments" shall mean the
reports, surveys and site assessments listed on Exhibit 1.1(e)
attached hereto.
"Estimated Purchase Price" shall mean estimated
Adjusted Net Book Value, as derived from the Estimated Closing
Balance Sheet.
"Equity Securities" shall mean any capital stock or
other equity interest or any securities convertible into or
exchangeable for capital stock or other equity interest or any
other rights, warrants or options to acquire any of the
foregoing securities.
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"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
"FTC" shall mean the United States Federal Trade
Commission.
"GAAP" shall mean United States generally accepted
accounting principles.
"Governmental Authority" shall mean any federal,
state, local or foreign government, any governmental,
regulatory or administrative authority, agency or commission
or any court, tribunal, or judicial or arbitral body.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" shall mean a party entitled to
indemnification hereunder.
"Indemnifying Party" shall mean a party obligated to
provide indemnification hereunder.
"IRS" shall mean the United States Internal Revenue
Service.
"Law" shall mean any currently existing federal,
state, local or foreign statute, law, ordinance, regulation,
rule, executive order, code, governmental restriction or other
requirement of law or any judicial or administrative
interpretation thereof.
"Liabilities" shall mean any and all debts,
liabilities and obligations, whether known or unknown or
contingent or liquidated.
"Molinos Supply Agreement" shall mean that certain
agreement between Buyer and Seller in the form attached hereto
as Exhibit 1.1(f).
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"Montgomery Supply Agreement" shall mean that certain
agreement between Buyer and Seller in the form attached hereto
as Exhibit 1.1(g).
"Net Book Value" shall mean the combined,
consolidated stockholders' equity of the Acquired Companies as
of the Effective Time and calculated in accordance with
Applicable Accounting Principles.
"Permitted Encumbrances" shall mean the Encumbrances
listed on Exhibit 1.1(h) hereto.
"Person" shall mean any individual, partnership,
firm, corporation, limited liability company, association,
trust, unincorporated organization, other entity or
Governmental Authority.
"Pre-Closing Period" means all taxable periods ending
on or before the Closing Date, including that portion of any
Straddle Period ending on the Closing Date.
"Registration Rights Agreements" shall mean the
Registration Rights and Transfer Restriction Agreement and the
10.50% Subordinated Notes due March 4, 2011 Registration
Rights Agreement, both as attached hereto as Exhibit 1.1(i).
"Retained Assets" shall mean the assets of Seller,
CPC or their Affiliates listed on Exhibit 9.4.3.
"Retained Businesses" shall mean all businesses and
operations of Seller and its Affiliates other than those
relating to the Business, including, without limitation,
business and operations relating to the Butterball, Banquet
and Country Skillet businesses and operations and the Retained
Assets.
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"SEC" shall mean the United States Securities and
Exchange Commission.
"Seller Retention Obligations" shall mean (i)
$7,074,202, comprised of (x) the Transaction Bonuses, and (y)
the $2,500,000 payment pursuant to the agreement attached as
Exhibit 1.1(j)(z), plus (ii) the amount of payroll taxes
payable by Seller with respect to the payment of such amounts.
"Straddle Period" means any taxable year or period
beginning on or before the Closing Date and ending after the
Closing Date.
"Subordinated Promissory Note" shall mean a
Subordinated Promissory Note to be delivered by Buyer to
Seller pursuant to a customary indenture having covenants
substantially as described on Exhibit 1.1(k).
"Subsidiary" shall mean, with respect to any Person,
another Person owned directly or indirectly by such Person by
reason of such Person owning or controlling an amount of the
voting securities, other voting ownership or voting
partnership interests of another Person which is sufficient to
elect at least a majority of its Board of Directors or other
governing body of another Person or, if there are no such
voting interests, at least a majority of the equity interests
of another Person.
"Tax" or "Taxes" means all federal, state, local,
foreign and other taxes, charges, fees, duties (including
customs duties), levies or assessments, including income,
gross receipts, net proceeds, alternative or add-on minimum,
ad valorem, turnover, real and personal property (tangible and
intangible), gains, sales, use, franchise, excise, value
added, stamp, leasing, lease, user, transfer, fuel, excess
profits, occupational, windfall profits, severance, license,
payroll, environmental,
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capital stock, employee's income withholding, other
withholding, unemployment and social security taxes, that are
imposed by any Governmental Authority, and including any
interest, penalties or additions to tax attributable thereto.
"Tax Return" means any report, return or other
information required to be supplied to a Governmental
Authority in connection with any Taxes and all claims for
refunds of Taxes.
"Transaction Bonuses" shall mean the transaction
bonuses identified on Exhibit 1.1(j)(x), which total
$4,574,202 in the aggregate, and are paid pursuant to the
Retention Agreements listed in Exhibit 1.1(j)(y), or any
substitute or replacement agreements agreed to by Seller and
Buyer.
"Transfer Taxes" means any Taxes (other than Taxes
imposed on net income or gains) imposed on the sale of the
Stock or as a result of the joint election under Section
338(h)(10) for the Acquired Companies pursuant to or in
connection with the transactions contemplated in this
Agreement.
"Transition Services Agreement" shall mean that
certain agreement between Buyer and Seller in the form
attached hereto as Exhibit 1.1(l); provided that at any time
prior to the 30th day prior to Closing, Buyer may specify that
it does not want some of the transition services to be
provided to it under such agreement and Seller may specify
that it does not want some of the transition services to be
provided to it under such agreement, in which case appropriate
adjustments shall be made to such agreement to remove from the
agreement the provision of the specified transition services
and the cost identified therewith.
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"Transition Trademark License Agreement" shall mean
that certain agreement between Buyer and Seller in the form
attached hereto as Exhibit 1.1(m).
"United States" shall mean the United States of
America.
"Voting Agreement" shall mean that certain agreement
between Seller and certain stockholders of Buyer in the form
attached hereto as Exhibit 1.1(n) hereto.
1.2 OTHER DEFINED TERMS. The following terms shall have the
meanings given to such terms in the Sections indicated below.
<Table>
<Caption>
TERM SECTION
---- -------
Adjustment Amount............................................................ 5.2
Adjusted Net Book Value...................................................... 5.1(a)
Audit........................................................................ 5.1(b)
Average Price................................................................ 3.3.2
Balance Sheets............................................................... Exhibit 1.1(a)
Business Confidential Information............................................ 9.16
Buyer........................................................................ first paragraph
Buyer Capital Stock.......................................................... 8.3
Buyer Disclosure Schedule.................................................... 8
Buyer Indemnified Persons.................................................... 13.3
Buyer Indemnities............................................................ 12.2
Buyer Major Customers........................................................ 8.23
Buyer Material Contracts..................................................... 8.13
Buyer Owned Real Property.................................................... 8.18
Buyer Permits................................................................ 8.12
Buyer Release................................................................ 4.1.7
Buyer SEC Documents.......................................................... 8.10
Buyer Stockholder Meeting.................................................... 9.10(a)
Buyer's 125 Plan............................................................. 6.6
Cash Payment................................................................. 3.3.1
Charter Documents............................................................ 7.2
Chattanooga Plan............................................................. 6.2(b)
Claim Notice................................................................. 12.3
Closing...................................................................... 4
Closing Date................................................................. 4
Company Employees............................................................ 6.1(a)
</Table>
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<Table>
<Caption>
TERM SECTION
---- -------
Company Litigation........................................................... 9.8.1
Company Material Contracts................................................... 7.14
Company Permits.............................................................. 7.13
CPC.......................................................................... recital (a)
CPC Stock.................................................................... recital (b)
Corporate Services........................................................... 9.4.2
Disabled Company Employees................................................... 6.1(a)
Effective Time............................................................... 4
Employee Plan................................................................ 7.17
Environmental Claims......................................................... 7.18(e)(i)
Environmental Laws........................................................... 7.18(e)(ii)
Environmental Permits........................................................ 7.18(a)
Estimated Closing Balance Sheet.............................................. 3.2
Executive Officers........................................................... 14.13
Expired Intellectual Property Rights......................................... 9.18
Financial Statements......................................................... 7.8.1
Final Closing Balance Sheet.................................................. 5.1(d)
Final Adjusted Net Book Value................................................ 5.2
Final Adjusted Net Book Value Calculation.................................... 5.1(d)
Frozen Plan.................................................................. 6.2(b)
Guarantees................................................................... 9.2.4
Hazardous Materials.......................................................... 7.18(e)(iii)
Hester....................................................................... recital (a)
Hester Stock................................................................. recital (b)
Impairment Charge............................................................ 5.1(a)
Intellectual Property Right.................................................. 7.11
Interim Financials........................................................... 7.8.1
knowledge, knows or known.................................................... 14.13
Lovette...................................................................... recital (a)
Lovette Stock................................................................ recital (b)
Major Customers.............................................................. 7.24
Multiemployer Plan........................................................... 7.17.7
Notice Period................................................................ 12.3
OSHA Laws.................................................................... 7.26
Owned Real Property.......................................................... 7.21(a)
Pension Plan................................................................. 7.17
Preliminary Audited Closing Balance Sheet.................................... 5.1(b)
Preliminary Closing Balance Sheet............................................ 5.1(a)
Proxy Statement.............................................................. 8.19
Purchase Price............................................................... 3.1
Records...................................................................... 9.5
</Table>
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<Table>
<Caption>
TERM SECTION
---- -------
Reimbursement Accounts....................................................... 6.6
Release...................................................................... 7.18(e)(iv)
Report....................................................................... 5.1(b)
Retained Intellectual Property............................................... 9.4.1
Retained Litigation.......................................................... 9.8.2
Retained Records............................................................. 9.5
Rights....................................................................... 9.12
Seller....................................................................... first paragraph
Seller's Counsel............................................................. 4
Seller Disclosure Schedule................................................... 7
Seller 401(k) Plans.......................................................... 6.3
Seller Indemnified Persons................................................... 13.4
Seller Indemnities........................................................... 12.1
Seller Release............................................................... 4.2.5
Seller's 125 Plan............................................................ 6.6
Share Amount................................................................. 3.3.2
Share Price Adjustment....................................................... 3.3.4
Shared Property.............................................................. 9.11
Shares....................................................................... 3.3.2
Stock........................................................................ recital (b)
Subsequent Buyer SEC Documents............................................... 8.10
Termination Date............................................................. 11.1(b)
To-Ricos..................................................................... recital (a)
To-Ricos Stock............................................................... recital (b)
Voting Debt.................................................................. 7.6
WARN Act..................................................................... 6.4
Year-end Statements.......................................................... 7.8.1
</Table>
2. PURCHASE AND SALE OF STOCK. Subject to the terms and conditions set
forth in this Agreement, at Closing, Seller shall sell, transfer, assign, convey
and deliver to Buyer, and Buyer shall purchase, accept and acquire from Seller,
all of the outstanding shares of the Stock.
3. CONSIDERATION.
3.1 PURCHASE PRICE. The purchase price payable by Buyer for the
Stock (the "Purchase Price") shall be an amount equal to Final
Adjusted Net Book Value, as set forth in the Final Adjusted
Net Book Value Calculation.
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3.2 ESTIMATED CLOSING BALANCE SHEET. On the fourth (4th) business
day prior to the Closing Date, Seller shall prepare and
deliver an estimated combined consolidated balance sheet for
the Business (the "Estimated Closing Balance Sheet"), along
with an estimate of the calculation of Adjusted Net Book
Value, which shall be prepared pursuant to the provisions of
Section 5.1(a) using the amounts reflected on the Estimated
Closing Balance Sheet, both of which shall be estimated as of
the Closing Date. Seller shall prepare the Estimated Closing
Balance Sheet in good faith and in accordance with Applicable
Accounting Principles. Buyer and its representatives shall
have the right to consult with Seller in connection with the
preparation of the Estimated Closing Balance Sheet but shall
not have the right to approve the Estimated Closing Balance
Sheet.
3.3 PAYMENT OF THE PURCHASE PRICE. The Purchase Price shall be
paid as follows:
3.3.1 CASH PAYMENT. $100,000,000 shall be paid by Buyer to
Seller in cash at Closing (the "Cash Payment").
3.3.2 BUYER'S SHARES. A portion of the Purchase Price (the
"Share Amount") shall be paid by Buyer issuing and
delivering to Seller at Closing shares of Buyer's
Class A common stock (the "Shares"). The number of
Shares to be issued to Seller at Closing shall be
equal to the lesser of 39,400,000 or the number of
Shares determined by dividing (i) forty-five percent
(45%) of the Estimated Purchase Price by (ii) the
greater of (1) the volume weighted average trading
price of
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Buyer's Class A common stock on the New York Stock
Exchange, as reported by Bloomberg, L.P., during the
period from the first trading day following the date
the parties publicly announce their signing of this
Agreement through the date that is five (5) trading
days prior to the Closing Date (the "Average Price")
and (2) $5.35. The value of such Shares for purposes
of determining the amount of the Subordinated
Promissory Note shall be equal to such number of
Shares multiplied by the greater of the Average Price
and $5.35.
3.3.3 SUBORDINATED PROMISSORY NOTE. The balance of the
Purchase Price shall be paid by Buyer executing and
delivering to Seller the Subordinated Promissory Note
in the principal amount of such balance. The
principal balance of the Subordinated Promissory Note
delivered at Closing shall be based upon the
Estimated Purchase Price, and shall subsequently be
adjusted to reflect the final Purchase Price in
accordance with Section 5.2.
3.3.4 SHARE PRICE ADJUSTMENT. Notwithstanding anything to
the contrary in this Agreement, in the event the
Average Price is less than $5.35, then, at Buyer's
option, by written notice to Seller delivered not
more than three (3) business days prior to the
Closing Date specifying which option Buyer elects,
one of the following shall apply: (i) Buyer shall
issue to Seller that number of additional Shares
equal to (x) the amount by which $5.35 exceeds the
Average Price, multiplied by the number of Shares
determined in accordance with Section 3.3.2
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(the "Share Price Adjustment") divided by (y) the
Average Price; (ii) Buyer shall issue to Seller
additional subordinated debt on the same terms as the
Subordinated Promissory Note, the principal amount of
which shall equal the Share Price Adjustment; (iii)
Buyer shall deliver to Seller an additional amount in
cash equal to the Share Price Adjustment; (iv) Buyer
shall deliver to Seller a combination of the forms of
additional consideration referred to in clauses (i),
(ii) and (iii) above having an aggregate value equal
to the Share Price Adjustment, such aggregate value
determined by adding (a) the amount of cash, if any,
(b) the principal amount of additional subordinated
debt, if any, and (c) the number of additional
shares, if any, multiplied by the Average Price; (v)
Buyer and Seller shall mutually agree that Buyer
shall deliver to Seller some other consideration
having a value equal to the Share Price Adjustment;
or (vi) Buyer may terminate this Agreement in
accordance with Section 11.1(g) hereof, unless Seller
agrees in writing, within 48 hours after receipt of
written notice from Buyer of its intent to terminate
this Agreement pursuant to Section 11.1(g), that the
Purchase Price shall be reduced by an amount equal to
the Share Price Adjustment, in which case Seller will
not be entitled to the Share Price Adjustment and
this Agreement will not be terminated pursuant to
Section 11.1(g).
3.3.5 ASSET RETENTION. Notwithstanding anything to the
contrary in this
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Agreement, in the event the Estimated Purchase Price
exceeds $600,000,000, then, at Seller's option, by
written notice to Buyer delivered concurrently with
the Estimated Closing Date Balance Sheet specifying
which option Seller elects, one of the following
shall apply: (i) Seller may agree that the Purchase
Price shall be adjusted to an amount equal to
$600,000,000 in the event that, and notwithstanding
that, the Purchase Price as determined pursuant to
the terms and conditions of this Agreement (but for
the application of this Section 3.3.5) would exceed
$600,000,000, in which event, for all purposes of
this Agreement, the Estimated Purchase Price shall
equal $600,000,000 and the Purchase Price shall equal
the lesser of (x) $600,000,000 and (y) the Purchase
Price as determined pursuant to the terms and
conditions of this Agreement but for the application
of this Section 3.3.5, (ii) the Moorefield, West
Virginia facility, and all assets located thereat and
rights relating thereto, shall be retained by Seller,
excluded from the term "Business", and included
within the term "Retained Assets", for all purposes
of this Agreement and the Estimated Purchase Price
shall be recalculated on the basis that such
facility, assets and rights are excluded from the
Business and retained by Seller, or (iii) Seller may
terminate this Agreement in accordance with Section
11.1(j) hereof, unless in the case of clause (ii) or
(iii) immediately above, Buyer agrees in writing,
within 48 hours after receipt of written notice from
Seller of its intent to
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exclude such assets or terminate this Agreement in
accordance with either clause (ii) or (iii)
immediately above, that Buyer will pay the Purchase
Price in full, as determined in accordance with the
terms and conditions of this Agreement,
notwithstanding that the Purchase Price exceeds
$600,000,000, in which case such assets will not be
excluded and this Agreement will not be terminated
pursuant to Section 11.1(j). Seller represents that,
if Seller elects to exclude the assets and rights
referred to in clause (ii) immediately above, the
Purchase Price will be no greater than $600,000,000.
3.3.6 FORM OF PAYMENT. All cash payments required to be
made pursuant to this Agreement shall be made by wire
transfer of immediately available funds to the
account designated by the receiving party.
4. CLOSING. Subject to the terms and conditions contained in this
Agreement, the closing of the transactions contemplated hereby (the "Closing")
will occur at the offices of McGrath North Mullin & Kratz, PC LLO, First
National Tower, 1601 Dodge Street, Suite 3700, Omaha, Nebraska 68102 ("Seller's
Counsel"), on the fifth business day after the conditions set forth in Section
10 (other than those to be fulfilled at Closing) have been satisfied, or at such
other place or on such other date as the parties hereto may mutually agree (the
"Closing Date"). Closing shall be effective as of 11:59 p.m. central time on the
Closing Date (the "Effective Time").
4.1 BUYER'S OBLIGATIONS AT CLOSING. At the Closing, Buyer shall:
4.1.1 CONSIDERATION. Deliver or cause to be delivered to
Seller the Cash Payment in accordance with Section 3
hereof.
4.1.2 SHARES. Deliver to Seller stock certificates
representing the Shares to be
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delivered in accordance with the provisions of
Section 3.3.2 above.
4.1.3 SUBORDINATED PROMISSORY NOTE. Execute and deliver to
Seller the Subordinated Promissory Note.
4.1.4 CERTIFICATES. Deliver to Seller the certificates
contemplated in Section 10.3.
4.1.5 CONAGRA SUPPLY AGREEMENT. Execute and deliver to
Seller the ConAgra Supply Agreement.
4.1.6 TRANSITION SERVICES AGREEMENT. Execute and deliver to
Seller the Transition Services Agreement.
4.1.7 RELEASE. Cause each of the Acquired Companies to
execute and deliver, to Seller a release in the form
attached hereto as Exhibit 4.1.7 (the "Buyer
Release"), pursuant to which each such entity shall
irrevocably discharge and forever release Seller and
its Affiliates and their respective stockholders,
directors, officers and employees (in their
capacities as stockholders, directors, officers and
employees of each of Seller, its Affiliates or the
Acquired Companies) from any and all Liabilities,
Actions, causes of action or other matters, whether
known or unknown, arising or accruing on or prior to
the Closing Date, other than those claims arising
from this Agreement or the Ancillary Agreements or
otherwise described therein.
4.1.8 REGISTRATION RIGHTS AGREEMENTS. Execute and deliver
to Seller the Registration Rights Agreements.
4.1.9 TRANSITION TRADEMARK LICENSE AGREEMENT. Execute and
deliver to Seller the Transition Trademark License
Agreement.
4.1.10 ENVIRONMENTAL LICENSE AGREEMENT. Execute and deliver
to Seller the Environmental License Agreement.
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4.1.11 LEGAL OPINION. Deliver to Seller the executed legal
opinion of Baker & McKenzie, Buyer's counsel, in the
form attached hereto as Exhibit 4.1.11.
4.1.12 SHARE PRICE ADJUSTMENT. If applicable and at Buyer's
election, deliver to Seller the additional Shares,
subordinated debt, cash and/or other consideration in
accordance with the provisions of Section 3.3.4
hereof.
4.1.13 MOLINOS SUPPLY AGREEMENT. Execute and deliver to
Seller the Molinos Supply Agreement.
4.1.14 MONTGOMERY SUPPLY AGREEMENT. Execute and deliver to
Seller the Montgomery Supply Agreement.
4.2 SELLER'S OBLIGATIONS AT CLOSING. At the Closing, Seller shall:
4.2.1 STOCK CERTIFICATES. Deliver or cause to be delivered
to Buyer stock certificates representing all of the
Stock, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank.
4.2.2 CERTIFICATES. Deliver to Buyer the certificates
contemplated in Section 10.2.
4.2.3 RESIGNATIONS. Deliver to Buyer, to the extent
requested by Buyer, written resignations of the
officers and directors of the Acquired Companies,
pursuant to which such individuals will relinquish
their titles. Such resignations will not affect
ongoing employment with the Acquired Companies.
4.2.4 TRANSITION SERVICES AGREEMENT. Execute and deliver to
Buyer the Transition Services Agreement.
4.2.5 RELEASE. Execute and deliver, and cause its
Subsidiaries that have had any
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business dealings with the Acquired Companies
whatsoever to execute and deliver, to Buyer a release
in the form attached hereto as Exhibit 4.2.5 (the
"Seller Release"), pursuant to which Seller and such
Subsidiaries shall irrevocably discharge and forever
release the Acquired Companies and the Company
Employees (in their capacities as Company Employees)
from any and all Liabilities, Actions, causes of
action or other matters, whether known or unknown,
arising or accruing on or prior to the Closing Date,
other than those claims arising from this Agreement
or the Ancillary Agreements or otherwise described
therein.
4.2.6 REGISTRATION RIGHTS AGREEMENTS. Execute and deliver
to Buyer the Registration Rights Agreements.
4.2.7 TRANSITION TRADEMARK LICENSE AGREEMENT. Execute and
deliver to Buyer the Transition Trademark License
Agreement.
4.2.8 ENVIRONMENTAL LICENSE AGREEMENT. Execute and deliver
to Buyer the Environmental License Agreement.
4.2.9 LEGAL OPINION. Deliver to Buyer the executed legal
opinion of McGrath North Mullin & Kratz, PC LLO,
Seller's counsel, in the form attached hereto as
Exhibit 4.2.9.
4.2.10 CERTIFICATE OF NON-FOREIGN STATUS. Deliver to Buyer a
certificate in the form required by Treas. Reg.
Section 1.1445-2(b)(3)(iii)(B) executed by Seller.
4.2.11 REPRESENTATION LETTER. Execute and deliver to Buyer a
representation letter in the form attached as Exhibit
4.2.11.
4.2.12 CONAGRA SUPPLY AGREEMENT. Execute and deliver to
Buyer the ConAgra Supply Agreement.
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4.2.13 MOLINOS SUPPLY AGREEMENT. Execute and deliver to
Buyer the Molinos Supply Agreement.
4.2.14 MONTGOMERY SUPPLY AGREEMENT. Execute and deliver to
Buyer the Montgomery Supply Agreement.
5. POST-CLOSING SETTLEMENT.
5.1 CLOSING BALANCE SHEET.
(a) As soon as reasonably practicable following the
Closing Date, but in no event more than sixty (60)
days after Closing, Buyer shall prepare a combined,
consolidated balance sheet of the Acquired Companies
as of the Effective Time in accordance with the
Applicable Accounting Principles (the "Preliminary
Closing Balance Sheet") and within such sixty (60)
day period Buyer shall submit the Preliminary Closing
Balance Sheet to Seller, together with a preliminary
calculation of Adjusted Net Book Value. For purposes
of this Agreement, "Adjusted Net Book Value" shall
mean Net Book Value as reflected on the Estimated
Closing Balance Sheet, Preliminary Closing Balance
Sheet, Preliminary Audited Closing Balance Sheet and
Final Closing Balance Sheet, as applicable, as
adjusted as necessary to: (i) provide that any charge
or credit as a result of FAS 133 which would
otherwise result in an increase or decrease in
stockholder's equity shall be an asset or liability,
as the case may be, (ii) eliminate from Net Book
Value the effect of recorded income Tax assets and
Liabilities (current and deferred), (iii) give effect
to the Buyer Release and the Seller
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Release as though they had been executed immediately
prior to the Effective Time and (iv) reduce Net Book
Value by the amount, if any, by which the Discount
Amount exceeds the Impairment Charge. The "Impairment
Charge" shall mean the impairment charge with respect
to the Business arising after April 20, 2003 as
reflected in the audited financial statements for the
fiscal year ended May 25, 2003 referred to in Section
9.15 of this Agreement so long as the impairment
charge pertains to the write-off of no more than
$36,343,582 of goodwill. If the impairment charge
pertains to the write-off of more than $36,343,582 in
goodwill, then for purposes of this definition, the
impairment charge shall be reduced by an amount equal
to the excess of the goodwill write-off included in
the impairment charges over $36,343,582. Buyer shall
consult with Seller in good faith in connection with
the preparation of the Preliminary Closing Balance
Sheet and employees of Seller shall be permitted to
meet with employees of Buyer and the Acquired
Companies in connection with the preparation of the
Preliminary Closing Balance Sheet.
(b) Promptly following execution of this Agreement,
Seller shall engage Deloitte to (i) audit the
Preliminary Closing Balance Sheet in accordance with
the Applicable Accounting Principles (the "Audit"),
and (ii) upon completion of the Audit, deliver to
Seller and Buyer its draft preliminary audit report
in the form attached hereto as Exhibit 5.1(b) (the
"Report") together with the accompanying draft
audited balance sheet of the
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Acquired Companies (the "Preliminary Audited
Closing Balance Sheet"), and a revised calculation of
Adjusted Net Book Value. Seller shall instruct
Deloitte to complete the Audit and issue its Report
and revised calculation of Adjusted Net Book Value
within sixty (60) days after its receipt of the
Preliminary Audited Closing Balance Sheet. Buyer and
Seller acknowledge and agree that Deloitte shall not
issue its final audit report until all objections
have been resolved in accordance with Section 5.1(d)
and such resolution is incorporated into the
Preliminary Audited Closing Balance Sheet. Seller
shall pay or cause to be paid all of the fees and
expenses of Deloitte in connection with the Audit and
the Report.
(c) Buyer shall provide, and shall cause the Acquired
Companies to provide, to Deloitte such assistance and
access to employees, books, records and other
supporting documents as is necessary for Deloitte to
timely conduct the Audit and prepare, issue and
deliver the Report and the Preliminary Audited
Closing Balance Sheet. Buyer and Seller and their
respective representatives (including without
limitation Buyer's independent auditors) shall have
the right to be present to observe the taking of any
physical inventory, or perform any other audit
activity in connection with or separate and apart
from Deloitte's audit activity necessary to issue an
independent audit opinion on the Closing Balance
Sheet on behalf of Buyer, in connection with
Deloitte's preparation of the Preliminary Audited
Closing Balance Sheet and may review and examine the
procedures, books, records and work papers used in
their preparation, or
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conduct such independent review, or any other audit
activity as they deem necessary.
(d) Unless Seller or Buyer notifies the other party in
writing within sixty (60) calendar days after
delivery of the Preliminary Audited Closing Balance
Sheet and revised calculation of Adjusted Net Book
Value that such party objects to the calculation
contained therein, specifying in detail each
objection and the basis for each objection, the
Preliminary Audited Closing Balance Sheet shall be
issued in final form by Deloitte and such Preliminary
Audited Balance Sheet and revised calculation of
Adjusted Net Book Value shall be final and binding
upon the parties. Neither Seller nor Buyer shall have
the right to dispute the principles and procedures
used in the preparation of the Preliminary Audited
Closing Balance Sheet so long as the principles and
procedures used are consistent with the Applicable
Accounting Principles; provided that the foregoing
shall in no event effect the right of Seller or Buyer
to object to any estimates or judgments made in
connection with the preparation of the Preliminary
Audited Closing Balance Sheet. If Buyer and Seller
are unable to resolve the disputed items within
thirty (30) calendar days after any such notification
has been given (or within such extended time period
as is mutually agreed to by the parties), the
unresolved disputed items shall be referred for a
final determination to a mutually acceptable
independent accountant. Such determination shall be
final and binding upon the parties, absent manifest
error. Such accountant shall be jointly retained by
the
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parties hereto on a mutually acceptable basis and
Buyer and Seller shall each pay one-half of the fees
and expenses of such accountant. Promptly following
the date that Seller and Buyer reach agreement upon
the disputed items pursuant to Section 5.1(d), or, if
applicable, the date of the final determination of
such accountant of the disputed items pursuant to
Section 5.1(d), the parties shall cause such
resolution to be incorporated into the Preliminary
Audited Closing Balance Sheet and shall cause
Deloitte to issue its final audit report and final
revised calculation of Adjusted Net Book Value. The
Preliminary Audited Closing Balance Sheet, as may be
adjusted pursuant to the terms hereof (the "Final
Closing Balance Sheet"), and Deloitte's final revised
calculation of Adjusted Net Book Value, as
appropriately modified to reflect any changes (the
"Final Adjusted Net Book Value Calculation"), shall
be final, binding and conclusive for all purposes
hereunder.
5.2 SETTLEMENT OF PURCHASE PRICE. On the second business day
following (i) the expiration of sixty (60) calendar days
following delivery of the Preliminary Audited Closing Balance
Sheet to Buyer and Seller if neither Seller nor Buyer has
objected to the Preliminary Audited Closing Balance Sheet, or
(ii) if either Seller or Buyer shall have objected to the
Preliminary Audited Closing Balance Sheet, final determination
of the disputed items pursuant to Section 5.1(d), Buyer shall
deliver to Seller a revised Subordinated Promissory Note in
exchange for the Subordinated Promissory Note delivered to
Seller at Closing, which Seller shall deliver to Buyer for
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cancellation. Such revised Subordinated Promissory Note will
reflect the principal outstanding equal to the Final Adjusted
Net Book Value, less the sum of (i) the Share Amount, (ii) the
Cash Payment and (iii) the Share Price Adjustment, if
applicable pursuant to Section 3.3.4 (such difference being
referred to as the "Adjustment Amount"). This revised
Subordinated Promissory Note shall otherwise be on the same
terms and conditions as the Subordinated Promissory Note
delivered by Buyer to Seller and substituted for the
Subordinated Promissory Note delivered by Buyer at Closing. As
used herein, "Final Adjusted Net Book Value" shall mean Net
Book Value, as of the Closing Date, as reflected in the Final
Adjusted Net Book Value Calculation. If the Adjustment Amount
is a negative number, then Seller shall promptly pay to Buyer
an amount of cash equal to the Adjustment Amount and return to
Buyer for cancellation the Subordinated Promissory Note
delivered by Buyer to Seller at Closing. To the extent the
revised Subordinated Promissory Note shall have a principal
amount that is less than the principal amount of the
Subordinated Promissory Note delivered by Buyer at Closing,
Seller shall refund to Buyer any interest previously paid by
Buyer on such excess amount, and shall cancel any accrued but
unpaid interest payable by Buyer on such excess amount (or, if
not permitted by the Subordinated Promissory Note, repay to
Buyer such interest after payment of such interest by Buyer)
with respect to periods ending prior to the date of
substitution. To the extent the revised Subordinated
Promissory Note shall have a principal amount that exceeds
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the principal amount of the Subordinated Promissory Note
delivered by Buyer at Closing, Buyer shall pay to Seller, on
the next succeeding interest payment date under the terms of
the Subordinated Promissory Note, interest at the rate
specified in the Subordinated Promissory Note on the amount of
such difference with respect to the period beginning on the
Closing Date and ending prior to the date of substitution.
Seller agrees that it shall not sell or otherwise transfer the
Subordinated Promissory Note until the Final Adjusted Net Book
Value is determined in accordance with this Section 5.2 and
the exchange of notes contemplated by this Section 5.2 has
occurred.
6. EMPLOYEE MATTERS.
6.1 GENERAL.
(a) Continued Employment. As of the Effective Time, Buyer
will cause the Acquired Companies to provide
continuation of employment to each individual
employed by any of the Acquired Companies (or
otherwise in connection with the Business) on the
Closing Date (including employees absent from work
due to short-term or long term disability, sick
leave, military leave or other employer approved
absences of a short duration) other than those
employees employed in connection with the Retained
Businesses (the "Company Employees"). Notwithstanding
the foregoing, nothing contained in this Agreement
shall prohibit Buyer from terminating or changing the
terms of employment of any Company Employee after the
Effective Time. Notwithstanding the preceding,
Company Employees on
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long term disability on the Closing Date ("Disabled
Company Employees") will continue to be provided long
term disability benefits under the Seller's long term
disability plan, subject to the terms and conditions
of such plan, as long as the Disabled Company
Employee meets the conditions for benefits.
(b) Retention Bonuses. Buyer shall be responsible for and
pay the Buyer Retention Obligations, provided that
Buyer's maximum aggregate liability for Buyer
Retention Obligations shall be $2,925,798. Seller
shall be responsible for and pay the Seller Retention
Obligations and any Buyer Retention Obligations that
exceed $2,925,798. Buyer shall be responsible for and
pay any other liabilities, obligations and claims of
any kind arising out of employment (or termination of
employment, whether actual or constructive) of the
Company Employees on and after the Closing Date
resulting from actions taken by Buyer. Seller agrees
that, from and after the Closing, it will not consent
to the termination of any Company Employee's
employment and that in the event prior to the first
anniversary of the Closing any Company Employee
voluntarily terminates his employment with an
Acquired Company, then upon the written request of
Buyer, Seller will assign to Buyer any rights Seller
may have to recover any Transaction Bonuses paid to
such Company Employee.
(c) COBRA. Seller agrees to maintain the group health
plan continuation coverage pursuant to Section 4980B
of the Code and Sections 601-609 of ERISA for the
"qualifying beneficiaries" (within the meaning of
Section 4980B of the Code) and Company Employees who
are "covered employees"
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(within the meaning of Section 4980B(f)(7) of the
Code) who experience a "qualifying event" (within the
meaning of Section 4980B(f)(3) of the Code) prior to
the Closing Date ("COBRA Participants"). Subject to
the terms of the Transition Services Agreement, the
parties agree that any Company Employee or qualifying
beneficiaries who becomes eligible for COBRA for the
period between the Closing Date and the later of (i)
December 31, 2003 and (ii) 120 days after the Closing
Date shall receive COBRA benefits from certain
benefit plans which will continue to be maintained by
the Seller. Buyer shall reimburse Seller for all
costs and expenses incurred by Seller to maintain
continuation coverage for the COBRA Participants as
reasonably determined by Seller. Buyer shall
indemnify and hold Seller and Seller's Affiliates
harmless from and against any Liability Seller or
Seller's Affiliates incur at any time after Closing
under the provisions of Section 4980B of the Code or
Sections 601-609 of ERISA with respect to any covered
employee who is a Company Employee, or the qualified
beneficiary of any such employee, who has a
"qualifying event" on or after the Closing Date.
6.2 SELLER PENSION PLANS.
(a) Non-Union Employees. As of the Closing Date, the
Company Employees whose benefits are not governed by
a collective bargaining agreement shall cease to
actively participate in any pension plan offered by
Seller, any Acquired Company or any subsidiary
thereof, including but not limited to, (a) the
ConAgra Pension Plan for Salaried Employees and (b)
the ConAgra Pension Plan for Hourly Rate Production
Employees, in each case pursuant
-34-
to the provisions in the plan documents and not
because of any amendment to either of the
aforementioned pension plans. The non-union Company
Employees described in the preceding sentence shall
receive no further benefit accrual under said pension
plans.
(b) Union Employees. As of the Closing Date, the Company
Employees whose pension benefits are governed by a
collective bargaining agreement shall cease to
actively participate in any pension plan offered by
Seller, any Acquired Company or any Subsidiary
thereof and shall receive no further benefit accrual
thereunder. As of the Closing Date, Buyer shall
become the plan sponsor of the Retirement Income Plan
of Production Employees of Seaboard Farms of
Chattanooga, Inc. (the "Chattanooga Plan") with
respect to the Company Employees participating in
that plan and no further benefits shall accrue
thereunder with respect to any other employees of
Seller and its Affiliates. To the extent any Company
Employee whose benefits are governed by a collective
bargaining agreement is entitled to receive pension
benefits under a defined benefit plan after the
Closing Date in accordance with the terms of the
applicable collective bargaining agreement, Buyer
will provide such Company Employee his or her accrued
benefit (under the Chattanooga Plan) less any benefit
accrued under a defined benefit pension plan of
Seller as of the Closing Date. Notwithstanding the
foregoing, if a Company Employee, whose pension
benefits are governed by a collective bargaining
agreement, is not vested in his or her accrued
benefit under a defined benefit pension plan of
Seller and if the vesting requirements are
-35-
subsequently met under a defined benefit pension plan
of Buyer, then Seller shall cause the benefit accrued
under Seller's pension plan to be paid to such
Company Employee as if that benefit was fully vested
as of the Closing. As of the Closing, Seller will
provide Buyer with a list of Company Employees, whose
benefits are governed by a collective bargaining
agreement, that are entitled to an accrued benefit
under a pension plan of Seller and the dollar amount
of such benefit as of the Closing Date. As of the
Closing Date, the union Company Employees at the
facilities located in Batesville and Clinton,
Arkansas shall receive no further benefit accruals
under the Banquet Employees Unions Pension Fund.
Seller shall amend the Pension Plan for Employees of
Country Pride, a frozen defined contribution plan,
(the "Frozen Plan") so that, on or before the Closing
Date, it shall become the sponsor of that Frozen Plan
and the Company Employees will be eligible to receive
a distribution of their accounts in the Frozen Plan
within a reasonable period after the Closing Date.
Seller and Buyer shall cooperate in preparing
communications to Company Employees regarding the
distribution and their rollover options, including
Buyer's 401(k) plan.
6.3 401(k) PLANS. As of the Closing Date, the Company Employees
shall cease to actively participate in the ConAgra Retirement
Income Savings Plan and the ConAgra Retirement Income Savings
Plan for Hourly Rate Production Employees (the "Seller 401(k)
Plans") and no further contributions shall be made to the
Seller 401(k) Plans for the benefit of the Company Employees.
As of the Closing Date, the interests of the Company Employees
in the Seller 401(k) Plans shall be one hundred
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percent (100%) vested and shall be fully nonforfeitable.
Except as expressly set forth herein, no assets of the Seller
401(k) Plans shall be transferred to Buyer or any of its
Affiliates or to any plan of Buyer or any of its Affiliates.
As soon as practical following receipt by Buyer and Seller of
favorable determination letters or Buyer's certification to
Seller, and Seller's certification to Buyer, in a manner
reasonably acceptable to both Seller and Buyer, that Buyer's
401(k) Plan and Seller's 401(k) plans are qualified under the
applicable provisions of the Code, and contingent on Buyer's
401(k) Plan administrator's ability to accept an in-kind
transfer of the assets (except for shares of Seller's stock)
and Seller's 401(k) Plan's ability to make an in-kind transfer
of assets, Seller shall cause the trustee of Seller's 401(k)
Plans to transfer, solely in the form of the mutual funds
currently available, cash from the sale of Seller's stock, or
notes representing outstanding participant loans or assets
representing the full account balances of the Company
Employees, and upon such transfer, Buyer and Buyer's 401(k)
Plan shall be responsible for proper administration of such
account balances and the related liability to the Company
Employees.
6.4 WELFARE PLANS. The parties acknowledge that the Company
Employees participate in Seller's welfare benefit plans and
programs disclosed in Exhibit 7.17.1. Subject to the terms of
the Transition Services Agreement, the parties agree for the
period between the Closing Date and the later of (i) December
31, 2003 and (ii) 120 days after the Closing Date the Company
Employees will continue their participation in certain
specified welfare plans and programs that provide health,
disability, life and other insurance type benefits, which will
continue to be maintained by Seller. In
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accordance with the terms of the Transition Services Agreement
Buyer agrees to reimburse Seller for all costs and expenses
(as reasonably determined by Seller) to maintain the continued
participation in such plans, and Seller agrees to modify its
welfare plans to permit the continued participation by the
Company Employees after the Closing Date. After the later of
(i) December 31, 2003 and (ii) 120 days after the Closing
Date, Buyer shall provide those welfare benefits to the
Company Employees as Buyer deems appropriate. On and after the
Closing Date, Buyer shall be responsible, and shall indemnify
and hold Seller and its Affiliates harmless from and against,
all Liabilities with respect to such welfare benefit plans and
programs, including, but not limited to, any Liability under
the Worker Adjustment and Retraining Notification Act (29
U.S.C. Sections 2101-2109) or any similar foreign, state or
local laws or ordinances (such laws collectively described as
the "WARN Act"). Prior to the Closing Date, Seller will
cooperate with the reasonable request of Buyer, to provide
notices and other communications to Company Employees in order
to avoid Liability under the WARN Act.
6.5 BUYER PLANS. Buyer shall cause periods of service with Seller,
Seller's Affiliates and the Acquired Companies to count for
purposes of eligibility and vesting under any benefit plan
provided to the Company Employees after the Closing Date.
After the Closing Date, Buyer shall cause the Acquired
Companies to waive pre-existing condition requirements,
evidence of insurability provisions, waiting period
requirements or any similar provisions under any employee
benefit plan providing medical, disability or life insurance
benefits provided to any Company Employees enrolled in such
plans of the Seller as of the Closing Date. After the Closing
Date,
-38-
Buyer shall also cause the Acquired Companies to apply toward
any deductible requirements and out of pocket limits under its
employee welfare benefit plans any amounts paid (or accrued)
by each Company Employee prior to Closing under welfare
benefit plans during the then current Plan Year and Seller
shall provide the relevant Plan Year deductible and out of
pocket amounts paid (or accrued) by each Company Employee.
6.6 FLEXIBLE SPENDING ACCOUNTS. Seller maintains a plan qualified
under I.R.C. Section 125 ("Seller's 125 Plan") that includes
flexible spending accounts for medical care reimbursements and
dependent care reimbursements ("Reimbursement Accounts"). As
soon as reasonably practicable following the Closing Date,
cash equal to the aggregate value of the Reimbursement
Accounts of the Company Employees shall be transferred from
Seller to a plan established by Buyer intended to qualify
under I.R.C. Section 125 ("Buyer's 125 Plan") and the annual
election and claims history for each Company Employee
participating in the Reimbursement Accounts shall be provided
to Buyer not later than the date of the cash transfer. Upon
receipt of such amount, Buyer and Buyer's 125 Plan shall
assume all obligations and liabilities with respect to the
Reimbursement Accounts for the Company Employees. Buyer shall
recognize the elections of the Company Employees under
Seller's 125 Plan for purposes of Buyer's 125 Plan for
calendar year 2003.
6.7 RETAINED EMPLOYEES. All employees of the Retained Businesses
shall be transferred out of the Acquired Companies prior to
Closing.
6.8 COOPERATION. The parties shall cooperate with each other and
exchange any
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information, filings or notices as appropriate to implement
the provisions of this Section 6. Buyer shall assist in
providing any information, filings or notices (including the
notice required by Section 204(h) of ERISA and Section 4980F
of the Code) as needed to cease the benefit accruals. Seller
agrees to hold Buyer harmless for any Liability for any
failure to comply with the provisions of Section 204(h) of
ERISA and Section 4980F of the Code.
6.9 INDEMNITY. Buyer shall indemnify and hold Seller and Seller's
Affiliates harmless from and against any Liability resulting
directly or indirectly from any breach or nonfulfillment of
any agreement or covenant on the part of Buyer or the Acquired
Companies under this Section 6.
6.10 NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement shall
create or establish, or be deemed to create or establish, any
Company Employee as a third party beneficiary of this
Agreement.
6.11 NOTICE OBLIGATIONS. Seller and Buyer shall cooperate with
respect to any notice obligation, disclosure requirement, or
employee communication that is necessary or appropriate as a
result of this transaction with respect to any Employee Plan
that affects a Company Employee.
7. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Buyer as set forth below. Such representations and warranties are
made subject to those matters set forth in the Seller Disclosure Schedule dated
as of the date hereof and delivered as a separate document (the "Seller
Disclosure Schedule") in the manner provided for in the introductory paragraph
of the Seller Disclosure Schedule and those matters set forth in the schedules
are subject to the terms of Section 14.11.
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7.1 ORGANIZATION, GOOD STANDING AND CORPORATE POWER. Each of
Seller and the Acquired Companies is a corporation duly
organized, validly existing and in good standing under the
laws of the state of its incorporation. Each of the Acquired
Companies has the corporate power to own, operate and lease
its properties and to carry on its business as now being
conducted. Each Acquired Company is qualified to conduct the
Business in all jurisdictions in which such qualification or
authorization is required, except for those jurisdictions in
which failure to be so qualified or authorized has not had and
will not have a Company Material Adverse Effect.
7.2 CERTIFICATE AND BY-LAWS. Seller has previously made available
to Buyer complete and correct copies of the certificate or
articles of incorporation and by-laws of each of the Acquired
Companies as in effect as of the date of the Agreement
(collectively, "Charter Documents"). Such Charter Documents
have not been further amended and are in full force and
effect. The Seller Disclosure Schedule contains a complete and
accurate list of all officers and directors of each of the
Acquired Companies.
7.3 CORPORATE AUTHORIZATION; BINDING EFFECT. Seller has all
requisite corporate power and authority to enter into this
Agreement and the Ancillary Agreements, and to consummate the
transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the Ancillary Agreements by
Seller have been duly and validly authorized by all necessary
corporate action on the part of Seller and no other corporate
proceedings on the part of Seller are necessary to authorize
this Agreement or the Ancillary Agreements or to consummate
the transactions contemplated hereby or thereby. This
Agreement constitutes, and the Ancillary
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Agreements when executed by Seller will constitute, the valid
and binding obligations of Seller enforceable against Seller
in accordance with their terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and
remedies generally and subject, as to enforceability, to
general principles of equity.
7.4 EFFECT OF AGREEMENT. The execution, delivery and performance
of this Agreement and the Ancillary Agreements by Seller and
the consummation by Seller of the transactions contemplated
hereby and thereby will not, with or without the giving of
notice or the lapse of time or both, assuming compliance with
the matters referred to in Section 7.5: (a) violate any Law to
which Seller or any Acquired Company is subject; (b) violate
any judgment, order, writ or decree of any court applicable to
Seller, or any Acquired Company; (c) conflict with or result
in the violation of any provision of Seller's or any Acquired
Company's Charter Documents, or (d) result in any violation
of, or default under, or give rise to a right of termination,
cancellation or acceleration of any obligation or the loss of
a material benefit under, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which Seller or any of its
Subsidiaries is bound or affected, or result in the creation
of any Encumbrance upon the Stock or any of the properties or
assets of the Acquired Companies, other than any such
violation, conflict, default, right, cancellation or
acceleration, loss or Encumbrance that, individually or in the
aggregate, would not have a material adverse effect on the
business, operations, financial condition, results of
operations, or capitalization of the Business or on the
ability of Seller or Buyer to consummate the transactions
contemplated by this Agreement.
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7.5 GOVERNMENT AUTHORIZATION. The execution, delivery and
performance by Seller of this Agreement and the Ancillary
Agreements requires no action by or in respect of, or filing
with, any Governmental Authority other than: (a) the filing of
a pre-merger notification report under the HSR Act; and (b)
such consents, authorizations, orders, approvals, filings or
registrations the failure of which to be obtained or made
would not have a material adverse effect on the business,
operations, financial condition, results of operations or
capitalization of the Business, or prevent the consummation of
the transactions contemplated hereby.
7.6 CAPITAL STOCK; TITLE TO SHARES. The authorized capital stock
of CPC consists solely of 10,000 shares of common stock, $1.00
par value, of which 10,000 shares are issued and outstanding.
Seller is the lawful and equitable owner of all of such shares
of common stock of CPC, free and clear of all claims, options,
charges and Encumbrances. The authorized capital stock of
To-Ricos consists solely of (i) 100,000 shares of common
stock, $1.00 par value, of which 66,000 shares are issued and
outstanding, and (ii) 50,000 shares of preferred stock, $10.00
par value, of which none are issued and outstanding. Seller is
the lawful and equitable owner of all of such shares of common
stock of To-Ricos, free and clear of all claims, options,
charges and Encumbrances. The authorized capital stock of
Lovette consists solely of (i) 500,000 shares of common stock,
$1.00 par value, of which 1,000 shares are issued and
outstanding. Seller is the lawful and equitable owner of all
of such shares of common stock of Lovette, free and clear of
all claims, options, charges and Encumbrances. The authorized
capital stock of Hester consists solely of 15,000
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shares of common stock, $1.00 par value, of which 1,000 shares
are issued and outstanding. Seller is the lawful and equitable
owner of all of such shares of common stock of Hester, free
and clear of all claims, options, charges and Encumbrances. At
the Closing, Buyer's ownership of CPC, To-Ricos, Lovette and
Hester as contemplated herein shall constitute ownership of
all the outstanding securities of CPC, To-Ricos, Lovette and
Hester and, through Buyer's ownership of the CPC Stock, the
Company Subsidiary, and such ownership shall be free and clear
of all claims, options, charges and Encumbrances. No shares of
capital stock or other ownership interests in any Acquired
Company are reserved for issuance for any purpose. As to each
Acquired Company, there are no bonds, debentures, notes or
other indebtedness issued or outstanding having the right to
vote ("Voting Debt") on any matter on which holders of capital
stock, voting securities or other ownership interests thereof
may vote. All of the issued and outstanding shares of the
capital stock of CPC, To-Ricos, Lovette, Hester and the
Company Subsidiary are duly authorized, validly issued, fully
paid and nonassessable and have not been issued in violation
of any preemptive or similar rights. There are no options,
warrants, calls, rights, commitments or agreements of any
character to which CPC, To-Ricos, Lovette, Hester or the
Company Subsidiary is a party by which it is bound or
obligated to issue, deliver or sell, or caused to be delivered
or sold, additional shares of capital stock, voting securities
or other ownership interests or any Voting Debt, or obligating
any Acquired Company to grant, extend or enter into any such
option, warrant, call, right, commitment or agreement. There
are no outstanding contractual
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obligations of any Acquired Company to repurchase, redeem or
otherwise acquire any shares of its capital stock.
7.7 SUBSIDIARIES.
7.7.1 The Company Subsidiary and its jurisdiction of
incorporation are identified on the Seller Disclosure
Schedule. The Company Subsidiary is a corporation
duly organized, validly existing and in good standing
under the laws of its jurisdiction of incorporation,
and it has the corporate power to own, operate and
lease its properties and to carry on its business as
now being conducted. The Company Subsidiary is
qualified to conduct its business in all
jurisdictions in which such qualification or
authorization is required, except for those
jurisdictions in which failure to be so qualified or
authorized would not have a Company Material Adverse
Effect.
7.7.2 All of the outstanding capital stock of, or other
ownership interests in, the Company Subsidiary, is
owned by CPC, free and clear of all claims, options,
charges and Encumbrances, and all of the outstanding
shares of capital stock or other equity interests of
the Company Subsidiary are validly issued, fully paid
and nonassessable.
7.8 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
7.8.1 Seller has heretofore delivered to Buyer (i) pro
forma combined, consolidated balance sheets of the
Business as of May 28, 2000, May 27, 2001 and May 26,
2002, and the related combined, consolidated
statements of earnings for each of the years then
ended (the "Year-end Statements"), and (ii) a pro
forma combined, consolidated balance sheet of the
Business as
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of April 20, 2003, and the related combined
consolidated statements of earnings for the eleven
(11) month period then ended (the "Interim
Financials"). The Year-end Statements and the Interim
Financials (together, the "Financial Statements")
present fairly, in all material respects, the
financial position, results of operation of the
Business as of the dates and for the periods then
ended, and have been prepared in accordance with GAAP
and the Applicable Accounting Principles, except in
the case of the Interim Financials, for normal
year-end adjustments that are not material and the
omission of footnote disclosures required by GAAP.
The Year-end Statements for 2001 and 2002 and the
Interim Financials do not contain any material
(individually or in the aggregate) items of
non-recurring income required by GAAP to be
separately disclosed.
7.8.2 As of the date hereof, to Seller's knowledge, none of
the Acquired Companies has any Liabilities of a type
required to be reflected on a balance sheet prepared
in accordance with GAAP consistently applied except
those (i) set forth or provided for in the balance
sheet (including notes thereto) included in the
Interim Financials, (ii) incurred since April 20,
2003, in the ordinary course of business, or (iii)
recorded as part of normal year end adjustments.
Notwithstanding the foregoing, no representation and
warranty is made pursuant to this Section 7.8.2 with
respect to any matter that is specifically addressed
by another representation or warranty contained in
this Section 7 or any certificate or instrument
delivered pursuant to this Agreement. As of the date
hereof, except for such matters that would not
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have a Company Material Adverse Effect, (i) the
receivables of the Business, either reflected on the
Interim Financials or created subsequent to April 20,
2003 were created in the ordinary course of the
Business, (ii) to the knowledge of Seller and subject
to any reserves established therefor in the
applicable financial statements, will be collected in
accordance with their terms and at their recorded
amounts, in accordance with the Business' prior
practices, and (iii) between April 20, 2003 and the
date hereof, to the knowledge of Seller, neither
Seller nor any of its Affiliates has (a) permitted or
agreed to any extension in the time for payment of
receivables relating to the Business other than in
the ordinary course of business and consistent with
past practice or (b) changed its policies or
practices with respect to the extension of credit to
customers of the Business other than in the ordinary
course of business and consistent with past practice.
7.9 CONDUCT OF BUSINESS SINCE APRIL 20, 2003. Since April 20, 2003
and except for the transactions contemplated herein:
7.9.1 As of the date hereof, there has not been a Company
Material Adverse Effect.
7.9.2 As of the date hereof, no event has occurred that
would have been prevented by Section 9.1.1 if the
terms of said Section had been in effect as of and
after April 20, 2003.
7.9.3 Except for indebtedness owed by an Acquired Company
to Seller or a subsidiary thereof (which will be
released prior to Closing to the extent
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provided in the Seller Release), none of the Acquired
Companies has incurred or assumed any indebtedness
for borrowed funds or purchase money indebtedness, or
assumed, guaranteed, endorsed or otherwise become
liable or responsible (either directly, contingently
or otherwise), for the obligations of any other
Person, except in respect of such assumption,
guarantees or endorsements for such amounts that are
immaterial and incurred in the ordinary course of
Business.
7.10 TAXES AND TAX RETURNS.
(a) With respect to the Acquired Companies; (i) all
material Tax Returns required to be filed by them
have been filed, (ii) all Taxes shown to be due on
such returns have been paid or accrued, (iii) all
Taxes for which a notice of assessment or collection
has been received (other than amounts being contested
in good faith by appropriate proceedings), have been
paid or accrued. No Governmental Authority has
asserted any material claim for Taxes, or to the
Seller's knowledge has threatened to assert any
material claim for Taxes.
(b) The statute of limitations has closed for all Tax
Returns of the Acquired Companies.
(c) All material Taxes required by law to be withheld or
collected with respect to the Acquired Companies have
been withheld or collected and paid to the
appropriate Governmental Authorities (or are properly
being held for such payment).
(d) There are no liens for Taxes upon the material assets
of the Acquired
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Companies (other than Liens for Taxes that are not
yet due and payable).
(e) None of the assets of the Acquired Companies are
considered tax-exempt use property or tax-exempt bond
financed property within the meaning of sections
168(g)(1)(B) or (C) of the Code.
(f) To Seller's knowledge, To-Ricos is an "existing
credit claimant" within the meaning of Section
936(j)(9)(A)(i) of the Code. To-Ricos has had in
effect an election under Section 936(a) of the Code
during the ten taxable years ending immediately prior
to the taxable year that includes the Closing Date.
Such election has not been revoked during such ten
year period.
(g) All Tax Returns filed by To-Ricos with any Puerto
Rican Governmental Authority are true and correct in
all material respects.
(h) To Seller's knowledge, none of the Acquired Companies
has a material taxable presence in any jurisdiction
where they do not file a Tax Return.
(i) The Acquired Companies have not made or become
obligated to make, and will not as a result of the
transactions contemplated hereby become obligated to
make, any payments that could be nondeductible by
reason of Section 280G (without regard to subsection
(b)(4) thereof) or 162(m) of the Code, nor will any
Acquired Company be required to "gross up" or
otherwise compensate any individual because of the
imposition of any excise tax on such a payment to the
individual.
7.11 INTELLECTUAL PROPERTY. The Acquired Companies own, or possess
adequate licenses or other rights to use (or will as of the
Closing Date own or possess adequate
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licenses or other rights to use), all material Intellectual
Property Rights currently used or necessary to conduct the
Business as now operated by them. Without limitation to the
foregoing, the Acquired Companies own (or will as of the
Closing Date own) the trademarks and related Intellectual
Property Rights described in Section 7.11 of the Seller
Disclosure Schedule and those trademarks include the only
material trademarks used in the Business (other than the
Retained Intellectual Property). To the knowledge of Seller,
and other than such infringements that would not have a
Company Material Adverse Effect, (i) the Intellectual Property
Rights of the Acquired Companies currently used to conduct the
Business do not infringe upon any Intellectual Property Rights
of others, and (ii) no third party is infringing on the
Intellectual Property Rights of any of the Acquired Companies
currently used to conduct the Business. For purposes of this
Agreement, "Intellectual Property Right" means any trademark,
service mark, trade name, mask work, copyright, patent,
software license, data base, invention, trade secret, know-how
(including any registrations or applications for registration
of any of the foregoing) or any other similar type of
proprietary intellectual property right.
7.12 ACTIONS AND PROCEEDINGS. As of the date hereof, there are no
outstanding orders, judgments, injunctions, awards or decrees
of any Governmental Authority against any of the Acquired
Companies other than those that would not have a Company
Material Adverse Effect. As of the date hereof, there are no
actions, suits or legal, administrative, regulatory or
arbitration proceedings pending or, to the knowledge of
Seller, threatened against any Acquired Company that, if
adversely determined, would result, individually or in the
aggregate, in a Company Material Adverse
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Effect. As of the date hereof, none of the Acquired Companies
nor any property or asset of any of them is subject to (other
than as apply to the poultry industry in general) or in
violation of any order, executive order, writ, stay, decree,
judgment, determination, award or injunction that could
reasonably be expected to have a Company Material Adverse
Effect.
7.13 COMPLIANCE WITH LAWS. As of the date hereof, except for such
matters that would not have a Company Material Adverse Effect,
(i) each of the Acquired Companies holds, owns or possesses,
and is in compliance with the terms of, all permits, licenses,
exemptions, orders and approvals of all Governmental
Authorities (other than Environmental Permits, which are
exclusively provided for in Section 7.18) necessary for the
conduct of their respective businesses and to own, lease and
operate their respective properties (the "Company Permits"),
(ii) with respect to the Company Permits, no action or
proceeding is pending or, to the knowledge of Seller,
threatened, by any Governmental Authority, (iii) the Business
is being conducted in compliance with all applicable Laws, and
(iv) no investigation or review by any Governmental Authority
with respect to an Acquired Company is pending or, to the
knowledge of Seller, threatened.
7.14 MATERIAL CONTRACTS. The Seller Disclosure Schedule sets forth,
as of the date hereof, a listing of all of the following
written agreements to which any of the Acquired Companies is a
party to or bound by: (a) employment agreement with an
individual requiring payments of compensation in excess of
$50,000 per year; (b) consulting agreement with an individual
requiring payments of compensation in excess of $50,000 per
year; (c) material distributor agreement which is not
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terminable on ninety (90) days' (or less) notice; (d) joint
venture, partnership or similar contract or agreement or
equity or debt investment agreements; (e) contracts which are
terminable by the other party or parties thereto upon a change
of control of an Acquired Company, other than such contracts
the termination of which would not, individually or in the
aggregate, have a Company Material Adverse Effect; (f)
contracts or agreements that limit or purport to limit the
ability of an Acquired Company to compete in any line of
business or in any geographic area; (g) any contracts or
agreements between or among any of the Acquired Companies, on
the one hand, and Seller or its other Subsidiaries, on the
other hand; (h) collective bargaining or labor agreements; (i)
leases and licenses of, and options to purchase, real property
pursuant to which an Acquired Company is required to pay or is
entitled to receive (x) consideration in excess of $100,000 in
any calendar year after December 31, 2002, or (y)
consideration in excess of $200,000 in the aggregate over the
remaining term of such lease; (j) agreements, notes, bonds,
indentures or other instruments governing indebtedness for
borrowed money, and any guarantee thereof or the pledge of any
assets or other security therefor; (k) material requirements,
"take or pay" or similar agreements relating to the Business;
(l) material powers of attorney or agency agreements of the
Business; (m) material feed ingredient contracts or commodity
future contracts, option contracts or similar agreements of
the Business, including without limitation, all such
agreements that extend beyond sixty (60) days from the date
hereof; (n) material agreements or arrangements establishing,
creating or relating to any rebate, promotion, advertising
coupon or other allowance of the Business; (o) material
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toll processing, co-packing or similar agreement; or (p) other
contract, agreement or arrangement involving an estimated
total future payment or payments in excess of $1,000,000
(other than one time purchase orders with respect to raw
materials and one time sales contracts relating to the sale of
inventory, each in the ordinary course of business). The
contracts required to be so listed are referred to herein as
the "Company Material Contracts." With respect to all Company
Material Contracts, (i) all such contracts are the valid and
binding obligation of an Acquired Company in full force and
effect, (ii) none of the Acquired Companies nor, to Seller's
knowledge, any other party to any such Company Material
Contract is in material breach thereof, or default thereunder,
and (iii) there does not exist under any provision thereof, or
any event that, with the giving of notice or the lapse of time
or both, would constitute such a breach or default, except for
such breaches, defaults and events which in the case of
clauses (i), (ii) and (iii) would not, individually or in the
aggregate, have a Company Material Adverse Effect. Seller has
made available to Buyer true and correct copies of all Company
Material Contracts.
7.15 RELATED PARTY TRANSACTIONS. The Seller Disclosure Schedule
sets forth a description of all material services provided by
Seller or its Affiliates to the Business, as well as a
description of material sales or purchase relationships
between any of the Acquired Companies, on the one hand, and
Seller, Seller's other Affiliates or, to the knowledge of
Seller, the Acquired Companies' salaried employees having base
compensation in excess of $50,000, on the other hand.
7.16 LABOR RELATIONS.
7.16.1 Except as set forth in the Seller Disclosure
Schedule, none of the Acquired
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Companies is a party to any collective bargaining
agreement or other labor union contract applicable to
any Company Employees.
7.16.2 Except for such matters as would not have a Company
Material Adverse Effect, as of the date hereof, there
are no (i) labor strikes, disputes, slowdowns,
representation or certification campaigns or work
stoppages with respect to Company Employees pending,
or to Seller's knowledge, threatened against or
affecting the Business or any Acquired Company, (ii)
grievance or arbitration proceedings, letter
agreements or settlement agreements arising out of
collective bargaining agreements to which an Acquired
Company is a party, or (iii) unfair labor practice
(within the meaning of the National Labor Relations
Act or applicable state statute) complaints pending
or, to Seller's knowledge, threatened against an
Acquired Company.
7.16.3 As of the date hereof, except for such matters as
would not have a Company Material Adverse Effect, the
Acquired Companies are in compliance with all
applicable laws respecting employment and employment
practices, terms and conditions of employment and
wages and hours.
7.16.4 Except for such matters as would not have a Company
Material Adverse Effect, as of the date hereof, there
are, with respect to the Acquired Companies, no
lawsuits or pending administrative matters before any
federal, state or local courts or agencies regarding
violations or alleged violations of any federal,
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state or local wage and hour law or any federal,
state or local law with respect to discrimination or
harassment on the basis of sex, age, race, color,
creed, national origin, religion, disability or any
other protected characteristics under such federal,
state or local law or involving allegations by any
employee concerning alleged discrimination or
harassment based on "whistleblower" claims involving
allegations of fraud, corporate misconduct, financial
mismanagement, environmental compliance or similar
claims asserted under federal, state or local laws.
7.16.5 To Seller's knowledge, as of the date hereof, there
is no activity involving any Company Employees
seeking to certify a collective bargaining unit. To
Seller's knowledge, as of the date hereof, except as
described in the Seller Disclosure Schedule, no
executive, key employee, or group of employees has
any plans to terminate employment with any Acquired
Company.
7.17 EMPLOYEE PLANS. For purposes of this Section 7.17, and
Sections 6 and 8.15, the term "Employee Plan" includes all
pension, retirement, disability, medical, dental or other
health insurance plans, sickness, disability, life insurance
or other death benefit plans, profit sharing, deferred
compensation, supplemental retirement plan, stock option,
bonus or other incentive plans, stock purchase plans, vacation
benefit plans, severance plans, employee assistance plans, or
other employee benefit plans or arrangements, including,
without limitation, any "pension plan" ("Pension Plan") as
defined in Section 3(2) of ERISA, and any "welfare plan," as
defined in Section 3(1) of ERISA, covering: (i) for purposes
of this Section 7.17 and Section 6, the Company Employees,
former employees, or their dependents, survivors or
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beneficiaries whether or not legally binding and for which
Seller, its Affiliates or any of the Acquired Companies could
reasonably have any Liabilities and (ii) for purposes of
Section 8.15, Buyer's employees, former employees, or their
dependents, survivors or beneficiaries whether or not legally
binding and for which Buyer and its Affiliates could
reasonably have any Liabilities. "Employee Plan" shall not
include any government sponsored employee benefit
arrangements. Except as reflected in the Seller Disclosure
Schedule or as would not have, individually or in the
aggregate, a Company Material Adverse Effect:
7.17.1 The Seller Disclosure Schedule identifies all of the
Employee Plans.
7.17.2 The Seller, the Acquired Companies, each Employee
Plan, and the administrator and fiduciaries of each
Employee Plan have complied in all material respects
with all applicable legal requirements governing each
Employee Plan including, but not limited to, the
Code, ERISA, HIPAA and the changes made under the
Sarbanes-Oxley Act of 2002. No lawsuits or complaints
to, or by, any Person are pending with respect to any
Employee Plan.
7.17.3 No Employee Plan is currently under audit,
examination or investigation by any government
agency, including but not limited to the IRS, the SEC
or the DOL.
7.17.4 To the best of Seller's knowledge, neither Seller,
its Affiliates, the Acquired Companies, an Employee
Plan, nor an administrator or fiduciary of any
Employee Plan has taken any action, or failed to take
any action, that could subject it or him or her or
any other Person to any liability for any excise tax,
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fine or other penalty under applicable laws or for
breach of fiduciary duty under ERISA or the Code with
respect to or in connection with any Employee Plan.
7.17.5 Neither Seller, their Affiliates, the Acquired
Companies, an Employee Plan, an administrator or
fiduciary of any Employee Plan, nor any other Person
has any liability to any Employee Plan participant,
beneficiary or other Person under any provision of
ERISA, the Code or any other applicable law by reason
of any payment of benefits or other amounts or
failure to pay benefits or any other amounts, or by
reason of any credit or failure to give credit for
any benefits or rights (such as, but not limited to,
vesting rights) with respect to benefits under or in
connection with any Employee Plan. Neither Seller,
their Affiliates nor any of the Acquired Companies is
in arrears with respect to any contributions under or
premiums payable for any Employee Plan.
7.17.6 Each Pension Plan is qualified under Section 401(a)
of the Code, and the trust or trusts maintained in
connection with such Pension Plan is or are exempt
from tax under Section 501(a) of the Code. A
favorable IRS determination letter as to the
qualification under the Code has been received for
each such Pension Plan and its related trust or
trusts and has been, or will be, timely amended for
the recent tax changes commonly referred to as
"GUST," since the date of such determination letter
there are no circumstances that are likely to
adversely affect the qualification of such Pension
Plans, and each such Pension Plan has been, or will
be, timely
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amended to comply with the provisions of the Economic
Growth and Tax Relief Reconciliation Act of 2001.
7.17.7 The Acquired Companies are not and have not at any
time during the last six (6) years been a
participating employer in or has contributed to any
multiemployer plan (as defined in Section 3(37) of
ERISA) ("Multiemployer Plan"), or incurred any
withdrawal liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such
Multiemployer Plan that has not been satisfied in
full or has any potential withdrawal liability.
7.17.8 None of the Pension Plans have incurred an
"accumulated funding deficiency" as defined in
Section 412 of the Code, whether or not waived.
Seller has no knowledge with respect to any
Multiemployer Plan covering Company Employees that
has incurred an accumulated funding deficiency to
which it or the Acquired Companies are contributing.
7.17.9 No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by the
Acquired Companies either directly or indirectly with
respect to any ongoing, frozen or terminated "single
employer plan," within the meaning of Section
4001(a)(14) of ERISA.
7.17.10 All accrued obligations of the Acquired Companies for
payments by it to trust or other funds or to any
governmental or administrative agency, with respect
to pension benefits, unemployment compensation
benefits, social security benefits or any other
benefits for employees of the Acquired Companies have
been paid or adequate accruals therefore have been
made in the Financial Statements, and none of the
foregoing has been rendered not
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due by reason of any extension, whether at the
request of any of the Acquired Companies or
otherwise.
7.17.11 The Acquired Companies are in material compliance
with the requirements of Sections 162(k) (to the
extent applicable prior to its amendment by the
Technical and Miscellaneous Revenue Act of 1988) and
4980B of the Code and Section 601 of ERISA and no
event or condition exists with respect to any welfare
plan that could subject the Acquired Companies to any
tax under the foregoing sections of the Code and
ERISA.
7.17.12 With respect to each Employee Plan, except for
Employee Plans for which Seller is the plan sponsor
as of the Closing Date, Seller has delivered to Buyer
complete and correct copies of the following
documents, as applicable: (i) the most recent (and
prior two (2) years') annual report (Form 5500)
together with 3 years' schedules, as required, filed
with the IRS or DOL, and any financial statements and
opinions required by Section 103(a)(3) of ERISA or,
for each "top-hat" plan, a copy of all filings with
the DOL; (ii) the most recent determination letter
issued by the IRS; (iii) plan documents, including
amendments, trust agreement and the most recent
summary plan description and all modifications; and
(iv) the most recent actuarial valuation, study or
estimate of any retiree medical, life insurance or
supplemental retirement benefits plan.
Notwithstanding the preceding, Seller shall not be
required to provide Form 5500's and related schedules
which Seller does not have with respect to the
Chattanooga Plan.
7.17.13 Neither Seller, its Affiliates, nor any of the
Acquired Companies has any
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obligation to provide post-retirement medical or
other benefits to the Company Employees or former
employees of the Acquired Companies or their
survivors, dependents and beneficiaries, except as
may be required by Section 4980B of the Code or Part
6 of Title I of ERISA or applicable state medical
benefits continuation law, and Seller, its Affiliates
and the Acquired Companies may terminate any such
post-retirement medical or other benefits upon thirty
(30) days' notice or less without any liability
therefore.
7.17.14 Seller and the Acquired Companies have no obligation
to any former employee, or any Company Employee under
any Employee Plan or otherwise, other than as
disclosed in the Seller Disclosure Schedule to this
Section 7.17, and any Employee Plan may be terminated
as of or after the Closing Date without resulting in
any liability to Buyer for any additional
contributions, penalties, premiums, fees, fines,
excise taxes or any other charges or liabilities.
7.18 ENVIRONMENTAL. Except for immaterial items and except for items
reflected in any Environmental Site Assessments or in the Seller
Disclosure Schedule, as of the date hereof:
(a) The Acquired Companies possess all environmental, health and
safety permits, licenses and governmental authorizations
(collectively, "Environmental Permits") necessary under
applicable Environmental Laws to conduct their business and
operations as currently conducted.
(b) The Acquired Companies are, and at all times have been, in
compliance with and have not been and are not in violation of
or liable under any
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applicable Environmental Laws and Environmental Permits, and
none of the Acquired Companies has received any written
communication from any Person that alleges that any of the
Acquired Companies is not in such compliance.
(c) There are no Environmental Claims pending or, to Seller's
knowledge, threatened, against any of the Acquired Companies,
in either case arising out of (i) any real property currently
or formerly owned, leased or operated by any of the Acquired
Companies, (ii) any current or former operations of any of the
Acquired Companies, or (iii) any other properties and assets
(whether real, personal or mixed) in which any of the Acquired
Companies has or had an interest.
(d) None of the Acquired Companies has retained, or assumed,
either contractually or by operation of law, any liabilities
of which Seller has knowledge arising under applicable
Environmental Laws or Environmental Permits.
(e) (i) "Environmental Claims" means any and all
administrative, regulatory or judicial actions,
suits, demands, demand letters, directives, claims,
liens, investigations, proceedings or notices of
noncompliance or violation (in each case in writing)
by any Person, alleging noncompliance, violation or
potential liability (including potential
responsibility or liability for costs of enforcement,
investigation, cleanup, governmental response,
removal or remediation, for natural resources
damages,
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property damage, personal injuries or penalties or
for contribution, indemnification, cost recovery,
compensation or injunctive relief) arising out of, or
related to (x) the presence, Release or threatened
Release of any Hazardous Materials, or (y)
circumstances forming the basis of any violation or
alleged violation of, or liability under, any
Environmental Law or Environmental Permit.
(ii) "Environmental Laws" mean all foreign,
federal, state and local laws, rules,
regulations, orders, decrees, common law,
judgments or binding agreements existing as
of the date hereof issued, promulgated or
entered into by or with any Governmental
Authority, relating to pollution, the
environment (including ambient air, surface
water, groundwater, soil, land surface or
subsurface strata and any other similar
medium or natural resource) or protection of
human health as it relates to the
environment, including laws and regulations
relating to Releases or threatened Releases
of Hazardous Materials, the prevention or
reduction to acceptable levels the Release
of Hazardous Materials into the Environment,
or otherwise relating to the generation,
manufacture, processing, distribution, use,
treatment, storage, transport, handling of
or exposure to Hazardous Materials.
"Environmental Laws" shall also include, but
not by way of limitation, the U.S.
Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA).
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(iii) "Hazardous Materials" means: (x) any
petroleum or petroleum products,
derivatives, fractions or wastes,
radioactive materials, wastes or mixtures,
asbestos-containing materials and
polychlorinated biphenyls; and (y) any other
chemical, material, substance or waste the
generation, manufacture, processing,
distribution, possession, use, treatment,
storage or Release of which is prohibited,
limited or regulated under any applicable
Environmental Law, or defined, designated or
classified as hazardous, toxic, a pollutant
or a contaminant under any applicable
Environmental Law.
(iv) "Release" means any release, spill,
emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge,
dispersal, leaching or migration into the
environment (including ambient air, surface
water, groundwater, soil, land surface or
subsurface strata, any other similar medium
or natural resource) or within any building,
structure or facility.
(f) This Section 7.18 contains the exclusive
representations and warranties of Seller with regard
to Environmental Claims, Environmental Laws,
Environmental Permits and any other environmental
matters in this Agreement.
7.19 SUFFICIENCY OF ASSETS. Except for the services to be provided
pursuant to the Transition Services Agreement, and except for
the assets, systems and personnel utilized by Seller or its
Affiliates to provide the services pursuant to the Transition
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Services Agreement, upon consummation of the transactions
contemplated under this Agreement, the Acquired Companies,
collectively, shall have in all material respects all the
personnel, assets, properties, agreements, licenses and
services necessary and presently utilized to conduct the
Business as presently conducted. Upon consummation of the
transactions contemplated by this Agreement, the Acquired
Companies will have good and, in the case of real property,
marketable title to all material properties, material
agreements, material licenses and other material assets owned
by Seller and its Affiliates and utilized exclusively in the
Business, except for Intellectual Property Rights, which are
covered by the representations in Section 7.11, and will have
all of the books, records, correspondence, files, customer and
vendor lists, sales materials and other data used by Seller's
management team based out of Duluth, Georgia or primarily
relating to the Business.
7.20 ABSENCE OF LIENS. Except for assets disposed of in the
ordinary course of business, each of the Acquired Companies
has valid title to or a valid leasehold in, or a contractual
or common law right to use, each item of tangible personal
property used in the conduct of the Business, free and clear
of any Encumbrances, other than Permitted Encumbrances and
Encumbrances described in Section 7.21 of the Seller
Disclosure Schedule.
7.21 REAL ESTATE.
(a) The Seller Disclosure Schedule sets forth a list and
description of all material real property owned in
fee by the Acquired Companies (the "Owned Real
Property"). With respect to each such parcel of Owned
Real Property:
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(i) an Acquired Company has good and marketable
title to the parcel of Owned Real Property,
free and clear of any Encumbrance, except
for Permitted Encumbrances and Encumbrances
described in Section 7.21 of the Seller
Disclosure Schedule;
(ii) as of the date hereof, there are no pending
or, to Seller's knowledge, threatened
condemnation, expropriation, eminent domain
or other similar proceedings, lawsuits or
administrative actions relating to the Owned
Real Property which materially and adversely
affect the current use or occupancy thereof;
(iii) there are no outstanding written or, to
Seller's knowledge, oral rights, agreements,
options or rights of first refusal to
purchase the parcel of Owned Real Property,
or any portion thereof or interest therein,
which have been granted to any other Person;
(iv) to Seller's knowledge, there are no parties
(other than the Acquired Companies) in
possession of or holding any rights to take
possession of the parcel of Owned Real
Property; and
(v) except for any matter which would not
materially adversely affect the current use
of a parcel of Owned Real Property, to
Seller's knowledge, (a) the legal
description for the parcel contained in the
deed thereof describes such parcel fully and
adequately, (b) the buildings and
improvements are located within the boundary
lines of the described parcels of land, are
not in violation of applicable setback
requirements, zoning laws, and ordinances
(and none of
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the properties or buildings or improvements
thereon are subject to "permitted
non-conforming use" or "permitted
non-conforming structure" classifications),
and do not encroach on any easement which
may burden the land, (c) the land does not
serve any adjoining property for any purpose
inconsistent with the use of the land, and
(d) the property is not located within any
flood plain or subject to any similar type
restriction for which any permits or
licenses necessary to the use thereof have
not been obtained.
(b) The Seller Disclosure Schedule sets forth a list and
description of all material real property leased or
subleased to the Acquired Companies. Seller has
delivered to Buyer correct and complete copies of the
leases and subleases listed in the Seller Disclosure
Schedule. With respect to each such lease and
sublease, except as disclosed in the Seller
Disclosure Schedule:
(i) to Seller's knowledge, such lease or
sublease is legal, valid, binding,
enforceable, and in full force and effect;
(ii) to Seller's knowledge, such lease or
sublease will continue to be legal, valid,
binding, enforceable, and in full force and
effect on identical terms following the
consummation of the transactions
contemplated hereby;
(iii) as of the date hereof, none of the Acquired
Companies nor, to Seller's knowledge, any
other party to the lease or sublease is in
material breach or default, and no event has
occurred which, with
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notice or lapse of time, would constitute a
material breach or default or permit
termination, modification, or acceleration
thereunder;
(iv) to Seller's knowledge, no party to the lease
or sublease has repudiated any provision
thereof;
(v) as of the date hereof, there are no material
disputes, oral agreements, or forbearance
programs in effect as to the lease or
sublease;
(vi) to Seller's knowledge, with respect to each
sublease, the representations and warranties
set forth in subsections (i) through (v)
above are true and correct with respect to
the underlying lease; and
(vii) none of the Acquired Companies has assigned,
transferred, conveyed, mortgaged, deeded in
trust, or encumbered any interest in the
leasehold or subleasehold.
7.22 BROKERS AND FINDERS. Except for Gleacher & Co., Seller has not
employed any investment banker, broker or finder or incurred
any liability for any brokerage fees, commissions or finders
fees in connection with the transactions contemplated by this
Agreement.
7.23 INVENTORY. Except for such matters that would not have a
Company Material Adverse Effect, to Seller's knowledge, the
inventory of the Acquired Companies consists of live, raw
materials and supplies, manufactured and purchased parts,
goods in process, and finished goods, all of which is
merchantable and fit for the
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purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged, or defective, subject
only to applicable reserves. Since April 20, 2003, the
inventory of the Acquired Companies has been maintained in all
material respects at levels in the ordinary course of
business. The inventory of the Acquired Companies existing on
the date of the Interim Financials was recorded on the Interim
Financials at the lower of its cost or its market value
consistent with poultry industry practices.
7.24 CUSTOMERS. The Seller Disclosure Schedule sets forth a list of
(a) as of the end of the Acquired Companies' three (3) fiscal
years ended May 27, 2001, May 26, 2002 and May 25, 2003,
respectively, the Business' top 25 customers determined by
chicken product sales during such year (the "Major Customers")
and (b) for the Acquired Companies' fiscal year ended May 25,
2003, by facility, the amount of revenue and type of product
generating such revenue attributable to sales by the Business
to operations of Seller that do not constitute the Business
(including the Retained Business). Seller has previously
provided to Buyer a schedule of each of the Business'
long-term pricing commitments for the Major Customers for the
fiscal year ending May 30, 2004 in effect as of the date of
this Agreement, and no material reduction in any such
commitment has occurred between February 23, 2003 and the date
of this Agreement. Except as indicated in the Seller
Disclosure Schedule, none of the Business' top 25 customers,
determined by outstanding receivables as of February 23, 2003,
has terminated or materially altered its relationship with the
Acquired Companies between February 23, 2003 and the date of
this Agreement, or, to Seller's knowledge, threatened to do so
or otherwise
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notified any Acquired Company of its intention to do so, and
there has been no material dispute with any of such customers
between February 23, 2003 and the date of this Agreement.
7.25 NO OTHER BUSINESS. As of the Closing, the Acquired Companies
will not have (a) any material amount of assets or Liabilities
that do not primarily relate to the Business or (b) any
employees that have not historically spent substantially all
of their time performing services for the Business
7.26 OSHA MATTERS. As of the date hereof, there are no pending
citations against the Acquired Companies under any Law
designed to provide safe and healthful working conditions and
to reduce occupational safety and health hazards, or any
program, whether government or private, designed to provide
safe and healthful working conditions, including the
Occupational Safety and Health Act (OSHA) (collectively, "OSHA
Laws") or state equivalent other than those that would not
have a Company Material Adverse Effect. As of the date hereof,
to Seller's knowledge, none of the Acquired Companies is in
violation of any OSHA Laws that could reasonably be expected
to have a Company Material Adverse Effect. This Section 7.26
contains the exclusive representations and warranties of
Seller with regard to OSHA Laws, and any violation thereof or
other matter related thereto, in this Agreement.
8. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and warrants
to Seller as set forth below. Such representations and warranties are made
subject to those matters set forth in the Buyer Disclosure Schedule dated as of
the date hereof and delivered as a separate document (the "Buyer Disclosure
Schedule") in the manner provided for in the introductory
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paragraph of the Buyer Disclosure Schedule and those matters set forth in the
schedules are subject to the terms of Section 14.11.
8.1 ORGANIZATION AND GOOD STANDING. Buyer is a corporation duly
organized, validly existing and in good standing under the
laws of the State of Delaware. Buyer has the corporate power
and authority to carry on its business as it is now being
conducted. Buyer is qualified to conduct business in all
jurisdictions in which such qualification or authorization is
required or necessary, except for those jurisdictions in which
failure to be so qualified or authorized has not had and will
not have a Buyer Material Adverse Effect.
8.2 CERTIFICATE AND BY-LAWS. Buyer has previously made available
to Seller complete and correct copies of Buyer's Charter
Documents. Except for the amendment to Buyer's certificate of
incorporation contemplated by Section 9.2.1, such Charter
Documents have not been further amended and are in full force
and effect. The Buyer Disclosure Schedule contains a complete
and accurate list of all officers and directors of Buyer and
its Subsidiaries.
8.3 CAPITALIZATION. The authorized capital stock of Buyer consists
solely of (i) 100,000,000 shares of Class A Common Stock, par
value $.01 per share, constituting Buyer Class A Common Stock,
(ii) 60,000,000 shares of Class B Common Stock, $.01 par
value, constituting Buyer Class B Common Stock, and (iii)
5,000,000 shares of Preferred Stock. The Buyer Class A Common
Stock, together with Buyer Class B Common Stock, is referred
to as the "Buyer Capital Stock." As of March 29, 2003,
13,523,429 shares of Buyer Class A Common Stock were issued
and outstanding, 27,589,250 shares of Buyer Class B Common
Stock
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were issued and outstanding, no shares of Buyer's Preferred
Stock were issued and outstanding, and no shares of Buyer
Capital Stock or Buyer's Preferred Stock were reserved for
issuance upon the exercise of outstanding options to purchase
Buyer Capital Stock. Buyer's Class A Common Stock is duly
listed for trading on the New York Stock Exchange and trades
independently of and from Buyer's Class B Common Stock.
8.4 CORPORATE AUTHORIZATION; BINDING EFFECT.
(a) Buyer has all requisite corporate power and authority
to enter into this Agreement and the Ancillary
Agreements and to consummate the transactions
contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary
Agreements by Buyer have been duly authorized by its
Board of Directors. This Agreement constitutes, and
the Ancillary Agreements when executed by Buyer will
constitute, the valid and binding obligations of
Buyer enforceable against Buyer in accordance with
their terms, subject to applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors'
rights and remedies generally and subject, as to
enforceability, to general principles of equity.
(b) Prior to the execution and delivery of this
Agreement, the Board of Directors of Buyer (at a
meeting duly called and held) has (i) approved this
Agreement and the transactions contemplated hereby,
(ii) approved the issuance of the Shares to Seller in
accordance with this Agreement, (iii) directed and
authorized a meeting of the stockholders of Buyer for
the purpose of
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approving the issuance of the Shares, and (iv)
determined that the transactions contemplated hereby
are fair to and in the best interests of the holders
of Buyer Capital Stock.
(c) Except as contemplated in Section 8.4(b), no other
corporate proceedings on the part of Buyer are
necessary to authorize this Agreement or the
Ancillary Agreements or to consummate the
transactions contemplated hereby or thereby.
8.5 EFFECT OF AGREEMENT. The execution, delivery and performance
of this Agreement and the Ancillary Agreements by Buyer and
the consummation by Buyer of the transactions contemplated
hereby and thereby will not, with or without the giving of
notice or the lapse of time or both, assuming compliance with
the matters referred to in Section 8.6, (a) violate any Law to
which Buyer is subject; (b) violate any judgment, order, writ
or decree of any court applicable to Buyer; (c) conflict with
or result in the violation of any provision of Buyer's Charter
Documents, or (d) result in any violation of, or default
under, or give rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material
benefit under, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other
instrument or obligation to which Buyer or any of its
Subsidiaries is bound or affected, or result in the creation
of any Encumbrance upon any of the properties or assets of
Buyer or any of its Subsidiaries, other than any such
violation, conflict, default, right, loss, cancellation or
acceleration, or Encumbrance that, individually or in the
aggregate, would not have a material adverse effect on the
business, operations, financial condition, results of
operations, or capitalization of Buyer or on
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the ability of Seller or Buyer to consummate the transactions
contemplated by this Agreement.
8.6 GOVERNMENT AUTHORIZATION. No filing or registration with, or
authorization, consent or approval of, any Governmental Entity
is required by or with respect to Buyer or any of its
Subsidiaries in connection with the execution and delivery of
this Agreement by Buyer or is necessary for the consummation
of the transactions contemplated hereby except: (i) in
connection, or in compliance, with the provisions of the
Securities Act, the Exchange Act and any applicable state
securities or "blue sky" law, (ii) under the HSR Act, (iii) in
connection, or in compliance with the provisions of federal,
state and local tax laws, and (iv) such other consents,
orders, authorizations, registrations, declarations and
filings the failure of which to obtain or make would not have
a material adverse effect on the business, operations,
financial condition, results of operations or capitalization
of Buyer, or prevent the consummation of the transactions
contemplated hereby.
8.7 NO OPTIONS, WARRANTS, RIGHTS. Buyer does not have outstanding
Equity Securities other than the Buyer Capital Stock. Neither
Buyer nor any of its Subsidiaries has any outstanding
commitments to issue or sell any Equity Securities, and no
securities or obligations evidencing any such right are
outstanding. There are no outstanding obligations, written or
otherwise, of Buyer or any of its Subsidiaries to repurchase,
redeem or otherwise acquire any Buyer Capital Stock. There are
no preemptive rights in respect of any Buyer Capital Stock.
Neither Buyer nor any of its Subsidiaries owns any Equity
Securities of any Person other than its Subsidiaries. Buyer is
not a party to any agreements, arrangements or understandings
with respect
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to the voting, transfer or assignment of the Buyer Capital
Stock.
8.8 SUBSIDIARIES.
8.8.1 Buyer's Subsidiaries and their respective
jurisdictions of incorporation are identified on the
Buyer Disclosure Schedule. Each Subsidiary of Buyer
is a corporation duly organized, validly existing and
in good standing under the laws of its jurisdiction
of incorporation, and each has the corporate power to
own, operate and lease its properties and to carry on
its business as now being conducted. Each Subsidiary
of Buyer is qualified to conduct its business in all
jurisdictions in which such qualification or
authorization is required, except for those
jurisdictions in which failure to be so qualified or
authorized would not have a Buyer Material Adverse
Effect.
8.8.2 Except as identified on the Buyer Disclosure
Schedule, all of the outstanding capital stock of, or
other ownership interests in, each Subsidiary of
Buyer, is owned by Buyer, free and clear of all
claims, options, charges and Encumbrances, and all of
the outstanding shares of capital stock or other
equity interests of each Subsidiary of Buyer are
validly issued, fully paid and nonassessable.
8.9 CONDUCT OF BUSINESS SINCE MARCH 29, 2003. Since March 29, 2003
and except for transactions contemplated herein or set forth
on the Buyer Disclosure Schedule:
8.9.1 There has not been a Buyer Material Adverse Effect.
8.9.2 No event has occurred that would have been prevented
by Section 9.2.1 if the terms of said Section had
been in effect as of and after March 29, 2003.
8.9.3 Neither Buyer nor any of its Subsidiaries has
incurred or assumed any
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indebtedness for borrowed funds or purchase money
indebtedness, or assumed, guaranteed, endorsed or
otherwise become liable or responsible (either
directly, contingently or otherwise) for the
obligations of any other Person, except in respect of
such assumption, guarantees or endorsements for such
amounts that are incurred in the ordinary course of
Buyer's business.
8.10 SEC DOCUMENTS AND OTHER REPORTS. Buyer has filed all documents
required to be filed by it and its Subsidiaries with the SEC
since September 28, 2000 (the "Buyer SEC Documents"). As of
their respective dates, or if amended as of the date of the
last such amendment, the Buyer SEC Documents complied, and all
documents required to be filed by Buyer with the SEC after the
date hereof and prior to the Effective Time ("Subsequent Buyer
SEC Documents") will comply, in all material respects with the
requirements of the Securities Act or the Exchange Act, as the
case may be, and the applicable rules and regulations
promulgated thereunder. The consolidated financial statements
(including related notes) of Buyer included in the Buyer SEC
Documents fairly present in all material respects, and the
consolidated financial statements (including related notes) of
Buyer included in the Subsequent Buyer SEC Documents will
fairly present in all material respects, the consolidated
financial position of Buyer and its consolidated Subsidiaries,
as at the respective dates thereof and the consolidated
results of their operations and their consolidated cash flows
for the respective periods then ended (subject, in the case of
the unaudited statements, to normal year-end audit adjustments
and to any other adjustments described therein and the fact
that certain information and notes have been condensed or
omitted in accordance with the Exchange Act and the rules and
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regulations promulgated thereunder) in conformity with GAAP
(except in the case of the unaudited statements) applied on a
consistent basis during the periods involved (except as may be
indicated therein or in the notes thereto). Since September
28, 2002, Buyer has not made any change in the accounting
practices or policies applied in the preparation of its
financial statements, except as may be required by GAAP or
disclosed in the Buyer SEC Documents. Except for such matters
that would not have a Buyer Material Adverse Effect, (i) the
receivables of Buyer, as reflected on the latest financial
statements included in the Buyer SEC Documents or created
subsequent to the date of such financial statements were
created in the ordinary course of Buyer's business, (ii) to
the knowledge of Buyer and subject to any reserves established
therefor in such financial statements, will be collected in
accordance with their terms and at their recorded amounts, in
accordance with Buyer's prior practices, and (iii) between the
date of such financial statements and the date hereof, to the
knowledge of Buyer, neither Buyer nor any of its Affiliates
has (a) permitted or agreed to any extension in the time for
payment of receivables relating to its business other than in
the ordinary course of business and consistent with past
practice or (b) changed its policies or practices with respect
to the extension of credit to customers of Buyer other than in
the ordinary course of business and consistent with past
practice.
8.11 ACTIONS AND PROCEEDINGS. There are no outstanding orders,
judgments, injunctions, awards or decrees of any Governmental
Authority against Buyer or any of its Subsidiaries other than
those that would not have a Buyer Material Adverse Effect.
Except as disclosed in the SEC Documents filed prior to the
date hereof, there are no
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actions, suits or legal, administrative, regulatory or
arbitration proceedings pending or, to the knowledge of Buyer,
threatened against Buyer or any of its Subsidiaries that, if
adversely determined, would result, individually or in the
aggregate, in a Buyer Material Adverse Effect. Neither Buyer
nor any of its Subsidiaries nor any property or asset of Buyer
or any of its Subsidiaries is subject to (other than as apply
to the poultry industry in general) or in violation of any
order, executive order, writ, stay, decree, judgment,
determination, award or injunction that could reasonably be
expected to have a Buyer Material Adverse Effect.
8.12 COMPLIANCE WITH LAWS. Except for such matters that would not
have a Buyer Material Adverse Effect, (i) Buyer holds, owns or
possesses, and is in compliance with the terms of, all
permits, licenses, exemptions, orders and approvals of all
Governmental Authorities (other than Environmental Permits,
which are exclusively provided for in Section 8.16) necessary
for the conduct of its businesses and to own, lease and
operate its properties (the "Buyer Permits"), (ii) with
respect to the Buyer Permits, no action or proceeding is
pending or, to the knowledge of Buyer, threatened by any
Governmental Authority, (iii) Buyer's business is being
conducted in compliance with all applicable Laws, and (iv) no
investigation or review by any Governmental Authority with
respect to Buyer is pending or, to the knowledge of Buyer,
threatened, in each case, other than disclosed on the Buyer
Disclosure Schedule.
8.13 MATERIAL CONTRACTS. The Buyer Disclosure Schedule sets forth,
as of the date hereof, a listing of all of the following
written (or, to the knowledge of Buyer, oral) agreements to
which Buyer or any of its Subsidiaries is a party to or bound
by: (a)
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employment agreement with an individual requiring payments of
compensation in excess of $50,000 per year; (b) consulting
agreement with an individual requiring payments of
compensation in excess of $50,000 per year; (c) material
distributor agreement which is not terminable on ninety (90)
days' (or less) notice; (d) joint venture, partnership or
similar contract or agreement or equity or debt investment
agreements; (e) contracts which are terminable by the other
party or parties thereto upon a change of control of Buyer,
other than such contracts the termination of which would not,
individually or in the aggregate, have a Buyer Material
Adverse Effect; (f) contracts or agreements that limit or
purport to limit the ability of Buyer or any of its
Subsidiaries to compete in any line of business or in any
geographic area; (g) collective bargaining or labor
agreements; (h) leases of real property pursuant to which
Buyer or any of its Subsidiaries is entitled to receive (x)
consideration in excess of $100,000 in any calendar year after
December 31, 2002, or (y) consideration in excess of $200,000
in the aggregate over the remaining term of such lease; (i)
agreements, notes, bonds, indentures or other instruments
governing indebtedness for borrowed money, and any guarantee
thereof or the pledge of any assets or other security
therefore; (j) material requirements, "take or pay" or similar
agreements; (k) material powers of attorney or agency
agreements; (l) material feed ingredient contracts or
commodity future contracts, option contracts or similar
agreements, including without limitation, all such agreements
that extend beyond sixty (60) days from the date hereof; (m)
material agreements or arrangements establishing, creating or
relating to any rebate, promotion, advertising coupon or other
allowance; (n) material toll processing, co-packing or
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similar agreement; or (o) other contract, agreement or
arrangement, involving an estimated total future payment or
payments in excess of $1,000,000 (other than one time purchase
orders with respect to raw materials and one time sales
contracts relating to the sale of inventory, each in the
ordinary course of business). The contracts required to be so
listed are referred to herein as the "Buyer Material
Contracts." With respect to all Buyer Material Contracts, (i)
all such contracts are the valid and binding obligations of
Buyer in full force and effect, (ii) neither Buyer nor any of
its Subsidiaries nor, to Buyer's knowledge, any other party to
any such Buyer Material Contract is in breach thereof, or
default thereunder, and (iii) there does not exist under any
provision thereof, or any event that, with the giving of
notice or the lapse of time or both, would constitute such a
breach or default except for such breaches, defaults and
events which in the case of clauses (i), (ii) and (iii) would
not, individually or in the aggregate, have a Buyer Material
Adverse Effect. Buyer has made available to Seller true and
correct copies of all Buyer Material Contracts.
8.14 LABOR RELATIONS.
8.14.1 Except as set forth in the Buyer Disclosure Schedule,
neither Buyer nor any of its Subsidiaries is a party
to any collective bargaining agreement or other labor
union contract applicable to persons employed by
Buyer or any of its Subsidiaries.
8.14.2 Except for such matters as would not have a Buyer
Material Adverse Effect, there are no (i) labor
strikes, disputes, slowdowns, representation or
certification campaigns or work stoppages pending, or
to Buyer's
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knowledge, threatened against or affecting Buyer or
any of its Subsidiaries, (ii) grievance or
arbitration proceedings, letter agreements or
settlement agreements arising out of collective
bargaining agreements to which Buyer or any of its
Subsidiaries is a party, or (iii) unfair labor
practice (within the meaning of the National Labor
Relations Act or applicable state statute) complaints
pending or, to Buyer's knowledge, threatened against
Buyer or any of its Subsidiaries.
8.14.3 Except for such matters as would not have a Buyer
Material Adverse Effect, Buyer and its Subsidiaries
are in compliance with all applicable laws respecting
employment and employment practices, terms and
conditions of employment and wages and hours.
8.14.4 Except for such matters as would not have a Buyer
Material Adverse Effect, there are, with respect to
Buyer and its Subsidiaries, no lawsuits or pending
administrative matters before any federal, state or
local courts or agencies regarding violations or
alleged violations of any federal, state or local
wage and hour law or any federal, state or local law
with respect to discrimination or harassment on the
basis of sex, age, race, color, creed, national
origin, disability, religion or any other protected
characteristics under such federal, state or local
law or involving allegations by any employee
concerning alleged discrimination or harassment based
on "whistleblower" claims involving allegations of
fraud, corporate misconduct, financial mismanagement,
environmental compliance or similar claims asserted
under federal, state or local laws.
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8.14.5 To Buyer's knowledge, as of the date hereof, there is
no activity involving any employees seeking to
certify a collective bargaining unit. To Buyer's
knowledge, as of the date hereof, except as described
in the Buyer Disclosure Schedule, no executive, key
employee, or group of employees has any plans to
terminate employment with Buyer or its Subsidiaries.
8.15 EMPLOYEE PLANS. Except as reflected in the Buyer Disclosure
Schedule or as would not have, individually or in the
aggregate, a Buyer Material Adverse Effect:
8.15.1 The Buyer Disclosure Schedule sets forth the Employee
Plans maintained by Buyer or any Subsidiary of Buyer.
8.15.2 Buyer, each Employee Plan, and the administrator and
fiduciaries of each Employee Plan have complied in
all material respects with all applicable legal
requirements governing each Employee Plan, including,
but not limited to, the Code, ERISA, HIPAA and the
changes made under the Sarbanes-Oxley Act of 2002. No
lawsuits or complaints to, or by, any Person are
pending with respect to any Employee Plan.
8.15.3 No Employee Plan is currently under audit,
examination or investigation by any government
agency, including but not limited to the IRS, the SEC
or the DOL.
8.15.4 To the best of Buyer's knowledge, neither Buyer, its
Affiliates, an Employee Plan, nor an administrator or
fiduciary of any Employee Plan has taken any action,
or failed to take any action, that could subject it
or him or her or any other Person to any liability
for any excise tax, fine or other penalty under
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applicable laws or for breach of fiduciary duty under
ERISA or the Code with respect to or in connection
with any Employee Plan.
8.15.5 Neither Buyer, its Affiliates, an Employee Plan, an
administrator or fiduciary of any Employee Plan, nor
any other Person has any liability to any Employee
Plan participant, beneficiary or other Person under
any provision of ERISA, the Code or any other
applicable law by reason of any payment of benefits
or other amounts or failure to pay benefits or any
other amounts, or by reason of any credit or failure
to give credit for any benefits or rights (such as,
but not limited to, vesting rights) with respect to
benefits under or in connection with an Employee
Plan. Neither Buyer nor its Affiliates is in arrears
with respect to any contributions under or premiums
payable for any Employee Plan.
8.15.6 Each funded Employee Plan that is a Pension Plan is
qualified under Section 401(a) of the Code, and the
trust or trusts maintained in connection with such
Employee Plan is or are exempt from tax under Section
501(a) of the Code. A favorable IRS determination
letter as to the qualification under the Code has
been received for each such Pension Plan. A favorable
IRS determination letter as to the qualification
under the Code has been received for each such
Pension Plan and its related trust or trusts and has
been or will be timely amended for the recent tax
changes commonly referred to as "GUST", since the
date of such determination letter there are not
circumstances that are likely to adversely affect the
qualification of such Pension Plans, and each such
Pension Plan has been
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or will be timely amended to comply with the
provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001.
8.15.7 Buyer is not a participating employer in any
Multiemployer Plan (as defined in Section 3(37) of
ERISA).
8.15.8 No liability under Subtitle C or D of Title IV of
ERISA has been or is expected to be incurred by Buyer
of its Affiliates either directly or indirectly with
respect to any ongoing, frozen or terminated "single
employer plan", within the meaning of Section
4001(a)(14) of ERISA.
8.15.9 All accrued obligations of Buyer or its Affiliates
for payments by it to trust or other funds or to any
governmental or administrative agency, with respect
to pension benefits, unemployment compensation
benefits, social security benefits or any other
benefits for employees of Buyer and its Affiliates
have been paid or adequate accruals therefore have
been made in Buyer's financial statements, and none
of the foregoing has been rendered not due by reason
of any extension, whether at the request of any of
Buyer, its Affiliates or otherwise.
8.15.10 Buyer and its Affiliates are in material compliance
with the requirements of Sections 162(k) (to the
extent applicable prior to its amendment by the
Technical and Miscellaneous Revenue Act of 1988) and
4980B of the Code and Section 601 of ERISA and no
event or condition exists with respect to any welfare
plan that could subject Buyer or its Affiliates to
any tax under the foregoing sections of the Code and
ERISA.
8.15.11 Neither Buyer nor its Affiliates has any obligation
to provide post-retirement
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medical or other benefits, except as may be required
by Section 4980B of the Code or Part 6 of Title I of
ERISA or applicable state medical benefits
continuation law, and Buyer and its Affiliates may
terminate any such post-retirement medical or other
benefits upon thirty (30) days' notice or less
without any liability therefore.
8.16 ENVIRONMENTAL. Except as reflected in any environmental site
assessments made available to Seller, as are immaterial, or as
reflected in the Buyer Disclosure Schedule:
(a) Buyer and its Subsidiaries possess all Environmental
Permits necessary under applicable Environmental Laws
to conduct their business and operations as currently
conducted.
(b) Buyer and its Subsidiaries are, and at all times have
been, in compliance with and have not been and are
not in violation of or liable under any applicable
Environmental Laws and Environmental Permits, and
none of Buyer and its Subsidiaries has received any
written communication from any Person that alleges
that Buyer and its Subsidiaries is not in such
compliance.
(c) There are no Environmental Claims pending or, to
Buyer's knowledge, threatened, against any of Buyer
and its Subsidiaries in either case arising out of
(i) any real property currently or formerly owned,
leased or operated by any of Buyer and its
Subsidiaries, (ii) any current or former operations
of any of Buyer and its Subsidiaries, or (iii) any
other
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properties and assets (whether real, personal or
mixed) in which any of Buyer and its Subsidiaries has
or had an interest.
(d) None of Buyer and its Subsidiaries has retained, or
assumed, either contractually or by operation of law,
any liabilities of which Buyer has knowledge arising
under applicable Environmental Laws or Environmental
Permits.
(e) This Section 8.16 contains the exclusive
representations and warranties of Buyer with regard
to Environmental Claims, Environmental Laws,
Environmental Permits and any other environmental
matters in this Agreement.
8.17 ABSENCE OF LIENS. Except for assets disposed of in the
ordinary course of business, Buyer and each of its
Subsidiaries has valid title to or a valid leasehold in, or a
contractual or common law right to use, each item of tangible
personal property used in the conduct of Buyer's business free
and clear of any Encumbrances, other than Permitted
Encumbrances and Encumbrances described in Section 8.17 of the
Buyer Disclosure Schedule.
8.18 REAL ESTATE.
(a) The Buyer Disclosure Schedule sets forth a list and
description of all material real property owned in
fee by Buyer or any of its Subsidiaries (the "Buyer
Owned Real Property"). With respect to each such
parcel of Buyer Owned Real Property:
(i) Buyer or any of its Subsidiaries has good
and marketable title to the parcel of Buyer
Owned Real Property, free and clear of any
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Encumbrance, except for Permitted
Encumbrances and Encumbrances described in
Section 8.18(a)(i) of the Buyer Disclosure
Schedule;
(ii) there are no pending or, to Buyer's
knowledge, threatened condemnation,
expropriation, eminent domain or other
similar proceedings, lawsuits or
administrative actions relating to the Buyer
Owned Real Property which materially and
adversely affect the current use or
occupancy thereof;
(iii) there are no outstanding written or, to
Buyer's knowledge, oral rights, agreements,
options or rights of first refusal to
purchase the parcel of Buyer Owned Real
Property, or any portion thereof or interest
therein, which have been granted to any
other Person;
(iv) to Buyer's knowledge, except as described in
Section 8.18(a)(iv) of the Buyer Disclosure
Schedule, there are no parties (other than
Buyer or any of its Subsidiaries) in
possession of or holding any rights to take
possession of the parcel of Buyer Owned Real
Property; and
(v) except for any matter which would not
materially adversely affect the current use
of a parcel of Buyer Owned Real Property, to
Buyer's knowledge, (a) the legal description
for the parcel contained in the deed thereof
describes such parcel fully and adequately,
(b) the buildings and improvements are
located within the boundary lines of the
described parcels of land, are not in
violation of applicable setback
requirements, zoning laws, and
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ordinances (and none of the properties or
buildings or improvements thereon are
subject to "permitted non-conforming use" or
"permitted non-conforming structure"
classifications), and do not encroach on any
easement which may burden the land, (c) the
land does not serve any adjoining property
for any purpose inconsistent with the use of
the land, and (d) the property is not
located within any flood plain or subject to
any similar type restriction for which any
permits or licenses necessary to the use
thereof have not been obtained.
(b) The Buyer Disclosure Schedule sets forth a list and
description of all material real property leased or
subleased to Buyer or any of its Subsidiaries. Buyer
has made available to Seller correct and complete
copies of the leases and subleases listed in the
Buyer Disclosure Schedule. With respect to each such
lease and sublease, except as disclosed in the Buyer
Disclosure Schedule:
(i) to Buyer's knowledge, such lease or sublease
is legal, valid, binding, enforceable, and
in full force and effect;
(ii) to Buyer's knowledge, such lease or sublease
will continue to be legal, valid, binding,
enforceable, and in full force and effect on
identical terms following the consummation
of the transactions contemplated hereby;
(iii) neither Buyer, its Subsidiaries, nor, to
Buyer's knowledge, any other party to the
lease or sublease is in material breach or
default,
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and no event has occurred which, with notice
or lapse of time, would constitute a
material breach or default or permit
termination, modification, or acceleration
thereunder;
(iv) to Buyer's knowledge, no party to the lease
or sublease has repudiated any provision
thereof;
(v) there are no material disputes, oral
agreements, or forbearance programs in
effect as to the lease or sublease;
(vi) to Buyer's knowledge, with respect to each
sublease, the representations and warranties
set forth in subsections (i) through (v)
above are true and correct with respect to
the underlying lease; and
(vii) neither Buyer nor any of its Subsidiaries
has assigned, transferred, conveyed,
mortgaged, deeded in trust, or encumbered
any interest in the leasehold or
subleasehold.
8.19 PROXY STATEMENT. The proxy statement to be distributed in
connection with Buyer's meeting of stockholders to vote upon
the issuance of the Shares pursuant to this Agreement (the
"Proxy Statement") will comply as to form in all material
respects with the applicable requirements of the Exchange Act,
and the rules and regulations promulgated thereunder.
Notwithstanding the foregoing, Buyer makes no representation
with respect to any statement in the foregoing documents based
upon information about Seller or the Acquired Companies
supplied by Seller for inclusion therein.
8.20 BROKERS AND FINDERS. Except for Credit Suisse First Boston LLC
and Houlihan
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Lokey Howard & Zukin Financial Advisors, Inc., Buyer has not
employed any investment banker, broker or finder or incurred
any liability for any brokerage fees, commissions or finders
fees in connection with the transactions contemplated by this
Agreement.
8.21 FINANCING. Buyer has obtained all financing, bank consents and
bank authorizations necessary to consummate the transactions
contemplated hereunder as long as the Purchase Price does not
exceed $600,000,000.
8.22 INVENTORY. Except for such matters that would not have a Buyer
Material Adverse Effect, to Buyer's knowledge, the inventory
of Buyer consists of live, raw materials and supplies,
manufactured and purchased parts, goods in process, and
finished goods, all of which is merchantable and fit for the
purpose for which it was procured or manufactured, and none of
which is slow-moving, obsolete, damaged, or defective, subject
only to applicable reserves. Since March 29, 2003, the
inventory of Buyer has been maintained in all material
respects at levels in the ordinary course of business. The
inventory of Buyer existing on March 29, 2003 was recorded on
the balance sheet of such date included in the Buyer SEC
Documents at the lower of its cost or its market value
consistent with poultry industry practices.
8.23 CUSTOMERS. The Buyer Disclosure Schedule sets forth a list of
as of the end of the Buyer's three (3) fiscal years ended
September 30, 2000, September 29, 2001, and September 28,
2002, the top 25 customers determined by chicken product sales
during such year (the "Buyer Major Customers"). Buyer has
previously provided to Seller a schedule of each of the
Buyer's long-term pricing
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commitments for the Buyer Major Customers for the fiscal year
ending in September 2003 in effect as of the date of this
Agreement, and no material reduction in any such commitment
has occurred between March 29, 2003 and the date of this
Agreement. Except as indicated in the Buyer Disclosure
Schedule, none of Buyer's top 25 customers, determined by
outstanding receivables as of March 29, 2003, has terminated
or materially altered its relationship with the Buyer between
March 29, 2003 and the date of this Agreement, or, to Buyer's
knowledge, threatened to do so or otherwise notified Buyer of
its intention to do so, and there has been no material dispute
with any of such customers between March 29, 2003 and the date
of this Agreement.
8.24 INTELLECTUAL PROPERTY. Buyer owns, or possesses adequate
licenses or other rights to use, all material Intellectual
Property Rights currently used or necessary to conduct its
business. Without limitation to the foregoing, Buyer owns the
trademarks and related Intellectual Property Rights described
in Section 8.24 of the Buyer Disclosure Schedule and those
trademarks are the only material trademarks used in the
business of Buyer. To the knowledge of Buyer, and other than
such infringements that would not have a Buyer Material
Adverse Effect, (i) the Intellectual Property Rights of the
Buyer currently used to conduct its business do not infringe
upon any Intellectual Property Rights of others, and (ii) no
third party is infringing on the Intellectual Property Rights
of Buyer currently used to conduct its business.
8.25 OSHA MATTERS. There are no pending citations against Buyer
under any OSHA Laws other than those that would not have a
Buyer Material Adverse Effect. To
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Buyer's knowledge, neither Buyer nor any of its Subsidiaries
is in violation of any OSHA Laws that could reasonably be
expected to have a Buyer Material Adverse Effect. This Section
8.25 contains the exclusive representations and warranties of
Buyer with regard to OSHA Laws, and any violation thereof or
other matter related thereto, in this Agreement.
8.26 TAXES AND TAX RETURNS.
(a) With respect to the Buyer and its Subsidiaries; (i)
all material Tax Returns required to be filed by them
have been filed, (ii) all Taxes shown to be due on
such returns have been paid or accrued, (iii) all
Taxes for which a notice of assessment or collection
has been received (other than amounts being contested
in good faith by appropriate proceedings), have been
paid or accrued. No Governmental Authority has
asserted any material claim for Taxes, or to the
Buyer's knowledge, has threatened to assert any
material claim for Taxes.
(b) The statute of limitations has closed for all Tax
Returns of the Buyer and its Subsidiaries.
(c) All material Taxes required by law to be withheld or
collected with respect to the Buyer and its
Subsidiaries have been withheld or collected and paid
to the appropriate Governmental Authorities (or are
properly being held for such payment).
(d) There are no liens for Taxes upon the material assets
of the Buyer and its Subsidiaries (other than Liens
for Taxes that are not yet due and payable).
(e) None of the assets of the Buyer and its Subsidiaries
are considered tax-
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exempt use property or tax-exempt bond financed
property within the meaning of sections 168(g)(1)(B)
or (C) of the Code.
(f) To Buyer's knowledge, none of the Buyer or its
Subsidiaries has a material taxable presence in any
jurisdiction where they do not file a Tax Return.
(g) The Buyer and its Subsidiaries have not made or
become obligated to make, and will not as a result of
the transactions contemplated hereby become obligated
to make, any payments that could be nondeductible by
reason of Section 280G (without regard to subsection
(b)(4) thereof) or 162(m) of the Code, nor will any
of the Buyer or its Subsidiaries be required to
"gross up" or otherwise compensate any individual
because of the imposition of any excise tax on such a
payment to the individual.
(h) To Buyer's knowledge, no facts or circumstances have
occurred or failed to occur which would cause the
inclusion of the suspense account (that Buyer
established pursuant to Code Section 447(i)(1)) into
the gross income of the Buyer or any member of its
affiliated group other than ratably as provided by
Code Section 447(i)(5), consistent with Buyer's past
practice. In addition, the transactions contemplated
in this Agreement will not cause the Buyer or its
affiliated group to include the balance of such
suspense account into gross income for Tax purposes.
9. COVENANTS.
9.1 COVENANTS OF SELLER.
9.1.1 CONDUCT OF BUSINESS. During the period from the date
hereof to the Closing Date, unless Buyer shall
otherwise agree in writing or as contemplated by
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this Agreement or as necessary or appropriate to
satisfy its obligations hereunder, Seller covenants
that Seller and its Affiliates, including, without
limitation, the Acquired Companies, shall (i) conduct
and operate the Business in all material respects in
the usual and ordinary course consistent with past
practice, (ii) use reasonable commercial efforts to
preserve intact the Business and its relationships
with growers, suppliers, labor unions, customers and
others having business dealings with them that are
material to the Business, and (iii) use reasonable
commercial efforts to keep available the services of
the Business' present officers and key employees.
Without limiting the generality of the foregoing,
unless Buyer shall otherwise agree in writing (which
agreement will not be unreasonably withheld) or as
contemplated by this Agreement or as necessary or
appropriate to satisfy its obligations hereunder,
during the period from the date hereof to the Closing
Date, Seller covenants that:
(a) none of the Acquired Companies shall adopt
or propose any change in its Charter
Documents;
(b) none of Seller or its Affiliates shall
authorize for issuance, issue, deliver,
sell, pledge, dispose of, encumber or grant
any lien on, or authorize or propose the
issuance, delivery, sale, pledge,
disposition of, encumber or grant of any
lien on, any shares of the capital stock of
any Acquired Company, or other voting
securities or any securities convertible
into or exercisable for, or any rights,
warrants or options to acquire, any such
securities or voting securities or any
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other ownership interest in any of the
Acquired Companies (or interest the value of
which is derived by reference to any of the
foregoing), or enter into any agreement with
respect to any of the foregoing;
(c) none of the Acquired Companies shall acquire
or agree to acquire any business or any
corporation, partnership, association or
other business, operation, organization or
division thereof;
(d) subject to Section 9.4 hereof, none of
Seller and its Affiliates shall sell,
abandon or otherwise dispose of, or pledge,
mortgage or otherwise encumber any material
assets of the Business other than in the
ordinary course of business;
(e) subject to Section 9.4 hereof, none of
Seller and its Affiliates shall other than
in the ordinary course of business, waive,
release, grant or transfer any rights of
material value relating to the Business;
(f) none of Seller and its Affiliates shall
modify or amend, or waive any benefit of,
any noncompetition agreement benefiting the
Business;
(g) none of Seller and its Affiliates shall make
any change in any method of financial
accounting or financial accounting practice
relating to the Business, except as required
by applicable Law or to comply with GAAP;
(h) except as required by its terms or in the
ordinary course of business, none of Seller
and its Affiliates shall amend in any
material respect, terminate, renew (except
as contemplated by Section 9.1.1(p)) or
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renegotiate any Company Material Contract or
default in any material respect (or take or
omit to take any action that with or without
the giving of notice or passage of time or
both, would constitute a default in any
material respect) under any Company Material
Contract or, except as contemplated by
Section 9.1.1(p), enter into any new
contract which would have been deemed to be
a Company Material Contract if it had been
in effect on the date hereof;
(i) none of the Acquired Companies shall
declare, issue or make any direct or
indirect redemption, purchase or other
acquisition of any shares of its capital
stock or property, declare, issue or make
any distribution or dividend to its
stockholders in cash or in kind (except as
otherwise contemplated by this Agreement) or
split, combine, dividend, distribute or
reclassify any shares of its capital stock;
(j) none of Seller and its Affiliates shall
dispose of or permit to lapse any rights to
the use of any material Intellectual
Property Rights benefiting the Business, or
disclose any such material Intellectual
Property Rights not a matter of public
knowledge, except for any such disclosure
required by applicable Law or judicial
process and disclosures made in the ordinary
course of business;
(k) none of Seller and its Affiliates shall
effect any increase in, amendment to or
establishment of any bonus, insurance,
severance, deferred compensation, pension,
retirement, profit sharing, stock
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option, stock purchase or other employee
benefit plan or collective bargaining
agreement relating to employees of the
Business;
(l) except in the ordinary course of business,
and except as required by contracts in
effect on the date hereof, none of Seller
and its Affiliates shall effect any increase
in compensation, bonus, severance or
termination pay or other benefits payable to
the employees of the Business;
(m) none of the Acquired Companies shall make
any loan, advance or capital contribution to
or investment in any Person in an aggregate
amount in excess of $100,000 (excluding any
loan, advance or capital contribution to, or
investment in, any Acquired Company);
(n) none of the Acquired Companies shall incur
or assume any indebtedness for borrowed
funds (including obligations in respect of
capital leases), assume, guarantee, endorse,
or otherwise become liable or responsible
(whether directly, contingently, or
otherwise) for the obligations of any other
Person;
(o) none of Seller and its Affiliates shall
change in any material respect its existing
practices and procedures with respect to the
extension of credit or collection of
accounts receivable relating to the
Business;
(p) none of Seller and its Affiliates will enter
into, with respect to the Business, any
fixed price agreement having a term greater
than one (1) year and involving greater than
$2,500,000 during the term of the contract;
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(q) other than the routine replacement and
repair of equipment and facilities in the
ordinary course of business and capital
expenditure commitments existing as of the
date hereof, none of Seller and its
Affiliates will make any individual capital
expenditure on behalf of the Business in an
amount in excess of $250,000;
(r) none of Seller and its Affiliates will make
material changes in the production
capabilities or capacities of the Business'
production facilities; and
(s) agree or commit to do any of the actions
prohibited by paragraphs (a) through (r) of
this Section 9.1.1.
9.1.2 ACCESS TO INFORMATION. During the period from the
date hereof until the Closing Date, Seller will, and
will cause its Affiliates and their employees,
officers, auditors and agents to, provide Buyer and
Buyer's counsel, financial advisors, accountants and
other authorized representatives (except to the
extent not permitted under applicable Law or to the
extent resulting in the waiver of attorney-client
privilege, as advised by counsel) with reasonable
access during normal business hours to the Business'
books and records and properties, plants and
personnel.
9.1.3 INTERIM FINANCIAL INFORMATION. During the period from
the date hereof until the Closing Date, Seller shall
promptly provide Buyer with copies of: (i) all
monthly financial management reports, Agristat
reports and weekly consolidated summary profit and
loss statements relating to the Business;
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(ii) any notice, report or other document filed with
or sent to any Governmental Authority in connection
with the transactions contemplated by this Agreement;
and (iii) any material notice, report or other
document received by any of the Acquired Companies
from any Governmental Authority.
9.1.4 NOTICE OF DEVELOPMENTS. During the period from the
date hereof until the Closing Date, Seller shall
promptly notify Buyer in writing of: (i) the
discovery by Seller of any event, condition, fact or
circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or
constitutes a material inaccuracy in any
representation or warranty made by Seller in this
Agreement or in the Seller Disclosure Schedule; (ii)
any event, condition, fact or circumstance that
occurs, arises or exists after the date of this
Agreement and that would cause or constitute a
material inaccuracy in any representation or warranty
made by Seller in this Agreement or in the Seller
Disclosure Schedule if (A) such representation or
warranty or delivery of information had been made as
of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance, or
(B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date
of this Agreement; (iii) any material breach of any
covenant or obligation of Seller; and (iv) any event,
condition, fact or circumstance that would make the
timely satisfaction of any of the conditions set
forth in Section 10 impossible or unlikely or that
has had or could reasonably be expected to have a
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Company Material Adverse Effect. Without limiting the
generality of the foregoing, Seller shall promptly
advise Buyer in writing of any Action threatened,
commenced or asserted against or with respect to any
of the Acquired Companies, except where such Action
would not be reasonably likely to have a Company
Material Adverse Effect. No notification given to
Buyer pursuant to this Section 9.1.4 shall limit or
otherwise affect any of the representations,
warranties, covenants or obligations of Seller
contained in this Agreement.
9.2 COVENANTS OF BUYER.
9.2.1 CONDUCT OF BUSINESS. During the period from the date
hereof to the Closing Date, unless Seller shall
otherwise agree in writing or as contemplated by this
Agreement or as necessary or appropriate to satisfy
its obligations hereunder, Buyer covenants and agrees
that it shall (i) conduct and operate its business
and operations in all material respects in the usual
and ordinary course consistent with past practice,
(ii) use its reasonable commercial efforts to
preserve intact its business organization and
preserve its relationships with growers, suppliers,
labor unions, customers and others having business
dealings with it that are material to Buyer and (iii)
use its reasonable commercial efforts to keep
available the services of its present officers and
key employees. Without limiting the generality of the
foregoing, unless Seller shall otherwise agree in
writing (which agreement shall not be unreasonably
withheld) or as contemplated by this Agreement or as
necessary or appropriate to satisfy its obligations
hereunder, during the
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period from the date hereof to the Closing Date,
Buyer covenants that it shall not:
(a) adopt or propose any change to its Charter
Documents, except for the amendment to Buyer's
certificate of incorporation described on Exhibit
9.2.1;
(b) authorize for issuance, issue, deliver,
sell, pledge, dispose of, encumber or grant
any lien on, or authorize or propose the
issuance, delivery, sale, pledge,
disposition of, encumber or grant of any
lien on, any shares of its capital stock, or
other voting securities or any securities
convertible into or exercisable for, or any
rights, warrants or options to acquire, any
such securities or voting securities or any
other ownership interest (or interest the
value of which is derived by reference to
any of the foregoing), or enter into any
agreement with respect to any of the
foregoing;
(c) acquire or agree to acquire any material
business or any material corporation,
partnership, association or other business,
operation, organization or division thereof;
or
(d) declare, issue or make any direct or
indirect redemption, purchase or other
acquisition of any shares of its capital
stock, declare, issue or make any
distribution or dividend to its stockholders
in cash or in kind (except as otherwise
contemplated by this Agreement and normal
cash dividends consistent with past
practices) or split, combine, dividend,
distribute or reclassify any shares of its
capital stock.
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9.2.2 ACCESS TO INFORMATION. During the period from the
date hereof until the Closing Date, Buyer will, and
will cause its Affiliates and their employees,
officers, auditors and agents to, provide Seller and
Seller's counsel, financial advisors, accountants and
other authorized representatives (except to the
extent not permitted under Law or to the extent
resulting in the waiver of attorney-client privilege,
as advised by counsel), with reasonable access during
normal business hours to Buyer's and its
Subsidiaries' books and records and properties, plant
and personnel.
9.2.3 CONTRACTS. Buyer acknowledges that various contracts
relating to the Business were originally entered into
in the name of Seller or an Affiliate of Seller
(other than the Acquired Companies). Such contracts
have been or, subject to Section 9.12, will be
assigned to CPC at or prior to Closing. Buyer shall
indemnify and hold Seller and its Affiliates harmless
from and against all Liability arising under such
contracts, except to the extent Buyer is entitled to
indemnification with respect to such Liability
pursuant to Section 12.1 hereof. Buyer and Buyer's
Affiliates shall use commercially reasonable efforts
to obtain the release of Seller and its Affiliates
(other than the Acquired Companies) from all
Liabilities arising under such contracts. Buyer
shall, and shall cause the Acquired Companies to, not
renew or otherwise extend, or permit the renewal or
extension of, the existing term of any such contracts
to the extent Buyer has or gains knowledge of such
contracts, other than any such contract with respect
to which Seller and its
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Affiliates (other than the Acquired Companies) would
have no potential Liability.
9.2.4 GUARANTEES. Buyer and Seller shall use their
commercially reasonable efforts to cause Buyer to be
substituted in all respects for Seller and its
Affiliates (other than the Acquired Companies), and
Seller and its Affiliates (other than the Acquired
Companies) fully released, effective as of the
Closing or as soon as possible thereafter, in respect
of all obligations of Seller and its Affiliates
(other than the Acquired Companies) under each of the
guarantees, indemnities, bonding arrangements,
letters of credit and letters of comfort given by
Seller or its Affiliates (other than the Acquired
Companies) for the benefit of the Business (the
"Guarantees"), including, without limitation, those
which are identified on Exhibit 9.2.4 hereto. If any
such release cannot be obtained, (i) Buyer shall
indemnify and hold Seller and Seller's Affiliates
(other than the Acquired Companies) harmless from and
against any Liability relating to any Guarantee not
released except to the extent Buyer is entitled to
indemnification with respect to such Liability
pursuant to Section 12.1 hereof, and (ii) Buyer
shall, and shall cause the Acquired Companies to, not
renew or otherwise extend the original term of any
contract, agreement, lease, or other document or
instrument to which such unreleased Guarantee relates
to the extent Buyer has or gains knowledge of such
unreleased Guarantee.
9.2.5 INTERIM FINANCIAL INFORMATION. During the period from
the date hereof until the Closing Date, Buyer shall
promptly provide Seller with copies of:
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(i) all monthly financial management reports,
Agristat reports and weekly consolidated summary
profit and loss statements relating to Buyer; (ii)
any notice, report or other document filed with or
sent to any Governmental Authority in connection with
the transactions contemplated by this Agreement; and
(iii) any material notice, report or other document
received by Buyer from any Governmental Authority.
9.2.6 NOTICE OF DEVELOPMENTS. During the period from the
date hereof until the Closing Date, Buyer shall
promptly notify Seller in writing of: (i) the
discovery by Buyer of any event, condition, fact or
circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or
constitutes a material inaccuracy in any
representation or warranty made by Buyer in this
Agreement or in the Buyer Disclosure Schedule; (ii)
any event, condition, fact or circumstance that
occurs, arises or exists after the date of this
Agreement and that would cause or constitute a
material inaccuracy in any representation or warranty
made by Buyer in this Agreement or in the Buyer
Disclosure Schedule if (A) such representation or
warranty or delivery of information had been made as
of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance, or
(B) such event, condition, fact or circumstance had
occurred, arisen or existed on or prior to the date
of this Agreement; (iii) any material breach of any
covenant or obligation of Buyer; and (iv) any event,
condition, fact or circumstance that would make the
timely satisfaction of any of the conditions set
forth in Section 10 impossible or
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unlikely or that has had or could reasonably be
expected to have a Buyer Material Adverse Effect.
Without limiting the generality of the foregoing,
Buyer shall promptly advise Seller in writing of any
Action threatened, commenced or asserted against or
with respect to Buyer, except where such Action would
not be reasonably likely to have a Buyer Material
Adverse Effect. No notification given to Seller
pursuant to this Section 9.2.6 shall limit or
otherwise affect any of the representations,
warranties, covenants or obligations of Buyer
contained in this Agreement.
9.2.7 SHARE LISTING. Buyer shall obtain approval for
listing, subject to notice of issuance, on the New
York Stock Exchange, all Shares to be issued to
Seller pursuant to this Agreement.
9.3 NO SOLICITATION. From the date hereof through the date two (2)
years after the earlier of the Closing Date and the
termination of this Agreement pursuant to Section 11, neither
Buyer or any of its Subsidiaries or Affiliates, on the one
hand, nor Seller or any of its Subsidiaries or Affiliates, on
the other, will, directly or indirectly, except as
contemplated by this Agreement, solicit for employment or
employ any management level employee of the other party;
provided, however, nothing herein shall restrict the above
referenced parties from (i) soliciting any such employee by
general employment advertising or third party employment
agencies (so long as such agencies are not directed by such
parties to target such employees), or (ii) hiring any employee
who responds to such permitted solicitation or seeks
employment on an unsolicited basis. The parties hereto agree
that the terms of this Section 9.3 shall
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specifically supercede Section 7 of the Confidentiality
Agreement and Section 7 of the Confidentiality Agreement is
hereby terminated.
9.4 EXCLUDED ASSETS.
9.4.1 RETAINED INTELLECTUAL PROPERTY. Seller specifically
and exclusively retains all right, title and interest
in and to the name "ConAgra," "Butterball," "Country
Skillet," "Banquet," "Fresh Trace," "Oven Bake" and
"Game Time" (and derivations thereof) and to any
logos, trademarks, service marks, trade names, domain
names, copyrights and trade dress related thereto
(the "Retained Intellectual Property"). Buyer
acknowledges that, except as provided in the
Transition Trademark License Agreement, it will not
acquire, and that the Acquired Companies do not own,
any right, title or interest in or to the Retained
Intellectual Property. Buyer agrees that as promptly
as practicable after Closing, except as required by
any agreement to which an Acquired Company was bound
immediately prior to Closing, it will cause the
Acquired Companies to discontinue the use of any
advertising or other form of media that uses or
references any such Retained Intellectual Property,
except as permitted by the Transition Trademark
License Agreement. Buyer further agrees that as soon
as practicable, but in no event longer than one (1)
year after the Closing Date, it shall remove all
signage which refers to any Retained Intellectual
Property, and take all such other action as may be
necessary to dissociate Seller with the operations of
the Business after Closing, except as permitted by
the Transition Trademark License Agreement.
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9.4.2 CORPORATE SERVICES; INSURANCE. Buyer acknowledges
that the Acquired Companies are covered by certain
insurance policies and insurable risk programs made
available through Seller and described on Exhibit
9.4.2. With respect to any loss, Liability or damage
relating to, resulting from or arising out of the
conduct of the Business on or prior to the Closing
Date for which Seller would be entitled to assert, or
cause any Affiliate or other Person to assert, a
claim for recovery under any policy of insurance
maintained by or for the benefit of Seller or any
Affiliate thereof in respect of the Business, at the
request of the Acquired Companies, (x) Seller shall
use its reasonable efforts to assert, or to assist
the Acquired Companies to assert, one or more claims
under such insurance covering such loss, Liability or
damage if none of the Acquired Companies are entitled
to assert such claim, but Seller or an Affiliate
thereof is so entitled, in all events subject to
applicable deductibles and retentions, (y) Seller
shall provide the Acquired Companies with any
recoveries under such insurance, in all events
subject to applicable deductibles and retentions, and
(z) Seller shall provide the Acquired Companies with
access to any applicable insurance policies. Buyer
further acknowledges that the systems and services
listed on Exhibit 9.4.2 hereto (the "Corporate
Services") are supplied by Seller or its Affiliates
to the Business, and (ii) Buyer will not acquire, and
the Acquired Companies do not own, any right, title
or interest in or to the Corporate Services.
9.4.3 RETAINED ASSETS. The Retained Assets shall be
distributed by the Acquired Companies to Seller or
its designees at or before Closing.
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9.5 RECORD RETENTION. Except as set forth below and also subject
to Section 13 hereof, Buyer will cause all books and records
relating to the Business as of the Closing (the "Records") to
be retained for seven (7) years after Closing. In addition,
except as set forth below and also subject to Section 13
hereof, to the extent any books and records relating to the
Business are retained by Seller following Closing (the
"Retained Records"), Seller shall retain the Retained Records
for seven (7) years after Closing. During such term, each
party shall allow the other party and its representatives
access to inspect or copy the Records and Retained Records, as
appropriate, during normal business hours. In the event a
party intends to destroy any Records or Retained Records in
its control at the end of such seven (7) year term, such party
shall first notify the other party at which time the other
party shall have the right to remove the Records at its own
cost. The parties acknowledge that, in the past, they have
routinely disposed of certain books and records on a periodic
basis and have not retained such books and records for seven
(7) years. Notwithstanding the foregoing, each party may
continue such routine periodic record destruction so long as
prior to such destruction, the party intending to destroy the
records notifies the other party of the nature of such
destruction and permits the other party to remove and retain
such records at its expense.
9.6 GOVERNMENTAL APPROVALS.
9.6.1 Subject to the terms and conditions herein provided
and applicable legal requirements, each of the
parties hereto agrees to use its commercially
reasonable efforts to take, or cause to be taken, all
action, and to do, or
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cause to be done, and to assist and cooperate with
the other parties hereto in doing, as promptly as
practicable, all things necessary, proper or
advisable under applicable Laws to ensure that the
conditions set forth in Section 10 are satisfied and
to consummate and make effective the transactions
contemplated by this Agreement.
9.6.2 Each of the parties shall use its commercially
reasonable efforts to obtain as promptly as
practicable all consents, waivers, approvals,
authorizations or permits of, or registration or
filing with or notification to, any Governmental
Authority or any other Person required in connection
with, and waivers of any violations, defaults or
breaches that may be caused by, such party's
consummation of the transactions contemplated by this
Agreement.
9.6.3 Each party hereto shall promptly inform the other of
any communication from the FTC, the DOJ, the SEC or
any other Governmental Authority regarding any of the
transactions contemplated by this Agreement. If any
party hereto or any Affiliate thereof receives a
request for additional information or documentary
material from any such Governmental Authority with
respect to the transactions contemplated by this
Agreement, then such party shall use commercially
reasonable efforts to cause to be made, as soon as
reasonably practicable and after consultation with
the other party, an appropriate response in
compliance with such request.
9.6.4 Without limiting the generality of the foregoing,
each of the parties will
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use commercially reasonable efforts to obtain all
authorizations or waivers required under the HSR Act
to consummate the transactions contemplated hereby,
including, without limitation, making all filings
required of it with the Antitrust Division of the DOJ
and the FTC required in connection therewith (the
initial filings to occur no later than three (3)
business days following the execution and delivery of
this Agreement) and responding as promptly as
practicable to all inquiries received from the DOJ,
the FTC or any Governmental Authority for additional
information or documentation. Buyer shall pay all of
its filing and its legal fees associated with the
filings referenced in this Section 9.6.4, and Seller
shall pay all of its filing and its legal fees
associated with the filings referenced in this
Section 9.6.4. Each of Buyer and Seller shall furnish
to the other such necessary information and
reasonable assistance as the other may request in
connection with its preparation of any filing or
submission which is necessary under the HSR Act.
9.7 INVESTIGATION AND AGREEMENT BY THE PARTIES; NO OTHER
REPRESENTATIONS OR WARRANTIES.
(a) Buyer, on the one hand, and Seller, on the other
hand, each acknowledge and agree that it has made its
own inquiry and investigation into, and, based
thereon, has formed an independent judgment
concerning, the other party and its Subsidiaries and
their business and operations, and such party has
requested such documents and information from the
other party as such party considers material in
determining whether to enter into this Agreement and
to consummate the transactions contemplated in this
Agreement. Buyer, on the one hand, and Seller, on the
other hand, each acknowledges and agrees that it has
had an opportunity to ask all questions of and
receive answers from the other party with respect to
any matter such party considers material in
determining whether to enter into this
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Agreement and to consummate the transactions
contemplated in this Agreement. In connection with
each party's investigation of the other party and its
Subsidiaries and their business and operations, each
party and its representatives have received from the
other party or its representatives certain
projections and other forecasts for the other party
and its Subsidiaries and certain estimates, plans and
budget information. Each party acknowledges and
agrees that there are uncertainties inherent in
attempting to make such projections, forecasts,
estimates, plans and budgets; that such party is
familiar with such uncertainties; that such party is
taking full responsibility for making its own
evaluation of the adequacy and accuracy of all
estimates, projections, forecasts, plans and budgets
so furnished to it or its representatives; and that
such party will not (and will cause all of its
respective Subsidiaries or other Affiliates or any
other Persons acting on its behalf to not) assert any
claim or cause of action against the other party or
any of the other party's directors, officers,
employees, agents, stockholders, Affiliates,
consultants, counsel, accountants, investment bankers
or representatives with respect thereto, or hold any
such other Person liable with respect thereto.
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(b) Each of Buyer, on the one hand, and Seller, on the other hand,
agree that, except for the representations and warranties made
by the other party that are expressly set forth in this
Agreement, the other party has not made and shall not be
deemed to have made to such party or to any of its
representatives or Affiliates any representation or warranty
of any kind. Without limiting the generality of the foregoing,
each party agrees that neither the other party nor any of its
representatives or Affiliates makes or has made any
representation or warranty to such party or to any of its
representatives or Affiliates with respect to:
(i) any projections, forecasts, estimates, plans or
budgets of future revenues, expenses or expenditures,
future results of operations (or any component
thereof), future cash flows (or any component
thereof) or future financial condition (or any
component thereof) of the other party or any of its
Subsidiaries or the future business, operations or
affairs of the other party or any of its Subsidiaries
heretofore or hereafter delivered to or made
available to such party or its counsel, accountants,
advisors, lenders, representatives or Affiliates; and
(ii) any other information, statement or documents
heretofore or hereafter delivered to or made
available to such party or its counsel, accountants,
advisors, lenders, representatives or Affiliates with
respect to the other party or any of its
Subsidiaries, except to the extent and as expressly
covered by a representation
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and warranty made by the other party and contained in
this Agreement.
9.8 LITIGATION.
9.8.1 COMPANY LITIGATION. Buyer acknowledges that various
Actions are now pending or may arise after the date
hereof which result from operations of the Business
or Acquired Companies and which name, or may in the
future name, Seller (and/or one or more of Seller's
Affiliates), either individually, together with one
or more Acquired Companies, or otherwise, as a party
thereto, including, without limitation, the Actions
which are described in the Seller Disclosure Schedule
(the "Company Litigation"); provided, however, that
for purposes of this Agreement, the term "Company
Litigation" shall not include the Retained
Litigation. Except as to matters subject to Seller's
indemnification obligations under Section 12.1, Buyer
shall indemnify and hold Seller and Seller's
Affiliates harmless from and against all Liability
relating to the Company Litigation including, without
limitation, all costs and expenses of defending the
Company Litigation. Buyer may settle or compromise
any such Company Litigation (i) with the written
consent of Seller, which consent shall not be
unreasonably withheld or delayed, or (ii) without
such consent, so long as such settlement or
compromise includes (A) an unconditional release of
Seller and/or its Affiliates, as the case may be,
from all Liability in respect of such Company
Litigation, (B) does not subject Seller or its
Affiliates to any injunctive relief or other
equitable remedy, and (C) does not include a
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statement or omission of fault, culpability or
failure to act by or on behalf of Seller or its
Affiliates. Seller and its Affiliates shall have the
right, but not the obligation, to participate at
their own expense in the defense of any Company
Litigation and any such participation shall not in
any way diminish or lessen the obligations of Buyer
hereunder. Seller shall reasonably cooperate with
Buyer, at Buyer's cost and expense, in connection
with the defense of any Company Litigation and, in
connection therewith, shall furnish on a timely basis
all such information, records, documents and
testimony and attend such conferences, discovery
proceedings, hearings, trials and appeals as may be
reasonably requested by Buyer, and provide, on a
timely basis, access to and availability of its
employees for purposes of such litigation, including,
without limitation, for purposes of assisting in
trial preparation and the conduct of any trial.
9.8.2 RETAINED LITIGATION. Notwithstanding anything
contained in this Agreement to the contrary, the
parties hereto agree that Seller, at its cost and
expense, shall retain, and shall have the sole right
to control, all claims and causes of action which
have been asserted or may be asserted in the future
by or on behalf of the Acquired Companies in the
following captioned lawsuits and/or any other
lawsuits which may be filed in the future with
respect to the subject matter of such captioned
lawsuits (hereinafter collectively referred to as the
"Retained Litigation"):
(a) In re Linerboard Antitrust Litigation, MDL
Docket No. 1261 (E.D. Pa.),
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(b) In re Vitamins Antitrust Litigation (MDL No.
1285) Misc. 99-0197 (D.D.C.), and
(c) Giral v. F-Hoffman LaRoche, Civil Action No.
98 CA 7467 (D.C. Sup. Ct.); including any
appeals thereof.
Seller shall be entitled to receive and retain the
benefits of any judgment awarded or settlement
reached in connection with the Retained Litigation.
Buyer shall, and shall cause the Acquired Companies
to, reasonably cooperate with Seller, at Seller's
cost and expense, in respect to the Retained
Litigation and, in connection therewith shall
furnish, on a timely basis, all information, records,
documents and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals
as may be reasonably requested by Seller and provide,
on a timely basis, access to, and availability of,
Company Employees for purposes of such litigation,
including, without limitation, for purposes of
assisting in trial preparation and the conduct of any
trial. Seller may settle or compromise the Retained
Litigation (i) with the written consent of Buyer,
which consent shall not be unreasonably withheld or
delayed, or (ii) without such consent, so long as
such settlement or compromise includes (a) an
unconditional release of the Acquired Companies from
all Liability in respect of such Retained Litigation
to the extent any of the Acquired Companies are named
as a defendant in such Retained Litigation or it
would be reasonable to expect that any of the
Acquired Companies will be named as defendants in
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connection with such Retained Litigation, (b) does
not subject Buyer or its Affiliates (including the
Acquired Companies) to any injunctive relief or any
equitable remedy and (c) does not include a statement
or admission of fault, culpability, or failure to act
by or in behalf of Buyer or its Affiliates (including
the Acquired Companies).
9.9 PROXY STATEMENT. As promptly as practicable, Buyer shall
prepare and, after receipt from Seller of the audited
financial statements referred to in Section 9.15, file with
the SEC the Proxy Statement in preliminary form. Buyer shall
use commercially reasonable efforts to have the Proxy
Statement cleared by the SEC as soon as practicable. Seller
shall cooperate with Buyer in the preparation of the Proxy
Statement, including providing Buyer with such information
relating to Seller and its Affiliates and the Business as may
be required to comply with the rules of the SEC. If, at any
time prior to the Effective Time, any event or circumstance
relating to Buyer or Seller, any Subsidiary of Buyer or
Seller, or their respective officers or directors, should be
discovered by a party which should be set forth in an
amendment or a supplement to the Proxy Statement, such party
shall promptly inform the other party and the parties shall
cooperate in taking appropriate action in respect thereof.
9.10 PROXY STATEMENT; STOCKHOLDER APPROVAL.
(a) Buyer, acting through its Board of Directors, shall,
subject to and in accordance with applicable Law, its
Certificate of Incorporation and its By-Laws,
promptly and duly call, give notice of, convene and
hold as soon as practicable following the date the
Proxy Statement has been
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cleared by the SEC, a meeting of the holders of Buyer
Common Stock for the purpose of voting to approve the
issuance of the Shares pursuant to this Agreement and
the rules of the New York Stock Exchange (the "Buyer
Stockholder Meeting"), and recommend to the
stockholders of Buyer the issuance of the Shares and
include in the Proxy Statement such recommendation.
(b) Buyer, as promptly as practicable, shall cause the
definitive Proxy Statement to be mailed to its
stockholders as soon as practicable following the
date on which it is cleared by the SEC.
9.11 BATESVILLE PROPERTY. Seller shall, following the date hereof,
take all necessary action to "split" or otherwise "subdivide"
the real estate relating to Seller's and CPC's Batesville,
Arkansas facilities (the "Shared Property") along the lines as
set forth on Exhibit 9.11 hereof. Parcel X as identified on
Exhibit 9.11 is and shall be a Retained Asset and shall, as of
and after the Closing Date, continue to be owned by Seller.
Parcels Y and Z as identified on Exhibit 9.11 are and shall be
included with the Business and, prior to the Closing Date,
shall be conveyed by Seller to CPC. Buyer and Seller shall use
their mutual best efforts to identify and resolve on or prior
to the Closing Date, or as soon as possible thereafter, all
issues relating to the Shared Property to provide for the
independent use and enjoyment of Parcel X by Seller and
Parcels Y and Z by CPC, such that such properties can be
independently operated after Closing on substantially the same
basis as such properties were operated prior to such split or
subdivision, including, without limitation, executing and
delivering cross-use and/or cross-easement agreements
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relating to access, use, parking and the like, and obtaining
separate utility services for each parcel.
9.12 UNASSIGNABLE CONTRACTS. If (i) any third-party's (including
any Governmental Authority's) consent or approval to the
assignment or other transfer to the applicable Acquired
Company of a contract to be transferred pursuant to a
provision of this Agreement has not been obtained prior to the
Closing, then as to the burdens, obligations, rights or
benefits under or pursuant to such contracts (collectively,
the "Rights") not assignable to the applicable Acquired
Company because such consent or approval has not been
obtained:
(a) Seller shall, and shall cause its Subsidiaries to,
hold the Rights in trust for the applicable Acquired
Company, for the account and benefit of the
applicable Acquired Company;
(b) After the Closing, (i) Seller shall, and shall cause
its Affiliates other than the applicable Acquired
Company, to take such reasonable actions and do all
such things as shall be reasonably necessary or
desirable in order that the value of the Rights shall
be preserved and shall inure to the benefit of the
applicable Acquired Company and such that all
benefits under the Rights may be received by the
applicable Acquired Company, and (ii) Buyer shall
cause the applicable Acquired Company to perform the
burdens and obligations under such Rights; and
(c) After the Closing, Seller and Buyer shall continue to
use their respective reasonable efforts to obtain
such consent or approval.
9.13 NON-COMPETITION AND NON-INTERFERENCE. From Closing through a
period of five
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(5) years after the Closing Date, neither Seller nor any of
its Subsidiaries will, within North America or Central America
(including Puerto Rico and the Caribbean region), without the
prior written consent of Buyer, (A) directly or indirectly
engage in (i) the growing or slaughtering of chickens, (ii) an
integrated chicken operation that grows, slaughters and
processes chickens, (iii) the sale of fresh chicken, or (iv)
the sale of fresh frozen chicken (whole or parts) that has not
been further processed (collectively, the "Restricted
Activities") (other than through their ownership of Shares or
other ownership interests in Buyer and other than as a holder
of less than 2% of the outstanding capital stock of a publicly
traded corporation), or (B) (i) use, license or otherwise
allow any third party to use (to the extent Seller has rights
to limit such use) the name "Butterball," or use or license
any third party to use the name "Country Skillet," or in
either case any derivation thereof, as a trademark, service
mark, trade name or domain name in connection with any
Restricted Activity, or (ii) use, license or convey any rights
to a third party to any trade dress or copyright associated
with products marketed under such name or mark in connection
with any Restricted Activity. If Seller fails to keep or
perform every covenant of this Section 9.13, Buyer shall be
entitled to specifically enforce the same by injunction in
equity in addition to any other remedies which Buyer may have.
If any portion of this Section 9.13 shall be invalid or
unenforceable, such invalidity or unenforceability shall in no
way be deemed or construed to affect in any way the
enforceability of any other provision of this Section 9.13. If
any court in which Buyer seeks to have the provisions of this
Section 9.13 enforced determines that the activities, time or
geographic area
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hereinabove specified are too broad, such court may determine
a reasonable activity, time or geographic area and shall
enforce this Section 9.13 for such activity, time and
geographic area.
9.14 TRANSFERS OF BUSINESS ASSETS. Seller shall cause its assets
and Liabilities to be transferred and assigned so that the
representations and warranties contained in Sections 7.19 and
7.25 are true and correct in all material respects as of the
Closing.
9.15 AUDIT. Seller shall cause combined, consolidated financial
statements meeting the requirements of Regulation S-X and
otherwise in a form that meets the requirement of Schedule 14A
under the Exchange Act for, with respect to the balance sheets
required thereby, the two (2) consecutive fiscal years ending
May 25, 2003 and, with respect to the related statements of
earnings and cash flows required thereby, the three (3)
consecutive fiscal years ending May 25, 2003, to be prepared
for the Business and audited by Deloitte as promptly as
practicable. Buyer shall be able to review such draft
combined, consolidated financial statement for the Business,
and the related workpapers, prior to issuance to ensure that
they are appropriate for inclusion in its proxy statement to
be filed with the SEC. At the request of Buyer, Seller shall
use its commercially reasonable efforts to cause Deloitte to
consent to the inclusion of their related audit report in
Buyer's future SEC filings.
9.16 COVENANT NOT TO DISCLOSE. Seller agrees that as the owner of
the Business, it and its Affiliates may possess certain data
and knowledge of operations of the Business which may be
proprietary in nature and confidential, including certain
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trade secrets (herein, "Business Confidential Information").
Seller covenants and agrees that neither it nor any of its
Affiliates will, at any time after the Closing, reveal,
divulge or make known to any Person (other than Buyer) or use
for its own account or for the account of any Person, any
Business Confidential Information. Seller further covenants
and agrees that neither it nor any of its Affiliates shall
divulge any such Business Confidential Information which it
may acquire during any transition period in which it assists
or consults with Buyer or its Affiliates to facilitate the
transfer and the continued success of the Business.
Notwithstanding the foregoing, it is understood that the
foregoing provisions shall apply only to Business Confidential
Information which relates exclusively to the Business and not
to information which is otherwise used in connection with
Seller's other operations. In addition, notwithstanding the
foregoing, it shall not be a violation of the covenant set
forth in this Section 9.16 for Seller to disclose information
if required to do so by court order or if any information
disclosed by Seller is in the public domain other than as a
result of conduct by Seller or its Affiliates which
constitutes the breach of a confidentiality obligation to
Buyer.
9.17 STANDSTILL. During the period from the date hereof until the
earlier of the Closing Date and the termination of this
Agreement pursuant to Section 11, Seller agrees not to, and
will not permit any of its Affiliates to, directly or
indirectly (a) trade in the Buyer's securities in violation of
applicable securities laws, (b) offer, pledge, sell, contract
to sell, grant or otherwise transfer or dispose of any of the
Buyer Capital Stock or any securities convertible into or
exercisable or exchangeable for Buyer Capital Stock or (c)
enter into any swap, short position or other
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arrangement that transfers all or a portion of the economic
consequences associated with the ownership of any Buyer
Capital Stock (regardless of whether any of the transactions
described in clause (b) or (c) is to be settled by the
delivery of Buyer Capital Stock, or such other securities, in
cash or otherwise).
9.18 EXPIRED INTELLECTUAL PROPERTY RIGHTS. Section 9.18 of the
Seller Disclosure Schedule contains a list of expired, lapsed
and/or abandoned trademarks and patents ("Expired Intellectual
Property Rights") in which Seller or the Acquired Companies
may or may not hold some residual rights. Notwithstanding
anything in this Agreement to the contrary, Buyer agrees that,
effective as of the Effective Time, the Expired Intellectual
Property Rights shall be deemed conveyed to Buyer on an "as
is" basis without any representations and warranties
whatsoever except that, to the knowledge of Seller, none of
Seller or its Affiliates have sold, licensed or otherwise
assigned any such Expired Intellectual Property Rights.
Without limiting the generality of the foregoing, Buyer agrees
that the representations and warranties set forth in Section
7.11 shall not apply to the Expired Intellectual Property
Rights and that Seller hereby disclaims all other warranties
and representations relating to the Expired Intellectual
Property Rights, including but not limited to, warranties of
title, validity, enforceability, revival rights and
non-infringement.
9.19 CUBAN INTELLECTUAL PROPERTY RIGHTS. Notwithstanding anything
in this Agreement to the contrary, no right, title or interest
in or to any Intellectual Property Rights in Cuba shall be
assigned, transferred or licensed from Seller to Buyer unless
and until the parties have complied with all applicable laws
and
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regulations, including the receipt of any necessary approval,
consent or license from the Office of Foreign Assets Control
of the United States Department of the Treasury.
9.20 LIABILITIES AND INVESTMENTS. Except as disclosed on Exhibit
9.20, Seller shall cause the Acquired Companies not to be
obligated under any Indebtedness or hold any Restricted
Investments (as those terms are defined in the subordinated
indenture related to the Subordinated Promissory Note)
immediately prior to the Closing.
9.21 RIGHTS AS HOLDER OF SHARES. As long as Seller holds any Shares
issued pursuant to this Agreement, the rights and privileges
of Buyer's Class A common stock and Class B common stock
(including dividend rights) will be identical, except as
otherwise set forth in subparts (1) through (6) under the
heading "Common Stock" of Article Fourth of Buyer's
Certificate of Incorporation in effect as of the Closing Date.
10. CONDITIONS PRECEDENT TO OBLIGATIONS.
10.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The respective
obligations of each party to consummate the transactions
contemplated herein shall be subject to the satisfaction or
waiver on or prior to the Closing Date of the following
conditions:
(a) GOVERNMENTAL APPROVALS. All authorizations, consents,
orders, declarations or approvals of, or filings
with, or terminations or expirations of waiting
periods imposed by, any Governmental Authority, which
the failure to obtain, make or occur would have the
effect of making any of the transactions contemplated
hereby illegal, shall have been obtained, shall have
been made or shall have occurred.
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(b) HSR ACT. The waiting period (and any extension
thereof) under the HSR Act and any other applicable
antitrust Laws shall have expired or been terminated.
(c) NO INJUNCTION. No Governmental Authority having
jurisdiction over Seller or Buyer, or any of their
respective Subsidiaries, shall have enacted, issued,
promulgated, enforced or entered any Law, decree,
injunction or other order (whether temporary,
preliminary or permanent) which is then in effect and
has the effect of making the transactions
contemplated herein illegal or otherwise prohibiting
consummation of the transactions contemplated herein.
(d) STOCKHOLDER APPROVAL. The issuance of the Shares
pursuant to this Agreement shall have been adopted by
the requisite vote of the stockholders of Buyer in
accordance with the rules of the New York Stock
Exchange.
10.2 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the transactions contemplated herein shall be
subject to the satisfaction on or prior to the Closing Date of
the following additional conditions, unless waived in writing
by Buyer:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties of Seller set forth in
this Agreement shall be true and correct in all
respects as of the date of this Agreement and (except
to the extent such representations and warranties
speak as of an earlier date) as of the
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Closing Date as though made on and as of the Closing
Date, except for such inaccuracies (without giving
effect to any limitations as to materiality or a
Company Material Adverse Effect set forth in such
representations and warranties) that, individually or
in the aggregate, would not have a Company Material
Adverse Effect. Buyer shall have received an
officers' certificate signed on behalf of Seller by
the Chief Executive Officer and Chief Financial
Officer (or any other two executive officers) of
Seller to such effect.
(b) PERFORMANCE OF OBLIGATIONS OF SELLER. Seller shall
have performed in all material respects all
obligations required to be performed by it under this
Agreement on or prior to the Closing Date, and Buyer
shall have received an officers' certificate signed
on behalf of Seller by the Chairman and Chief
Financial Officer (or any other two executive
officers) of Seller to such effect.
(c) DELIVERIES. The deliveries by Seller referred to in
Section 4 shall have been made.
(d) AUDITED FINANCIAL STATEMENTS. Seller shall have
delivered to Buyer the audited combined, consolidated
financial statements referred to in Section 9.15.
Subject to the matters described in A.19 of Section
7.8 of the Seller Disclosure Schedule, the results of
operations and financial condition reflected in such
combined, consolidated financial statements shall not
be materially different from the results of
operations and financial condition reflected in the
Financial Statements for the corresponding periods.
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(e) COMPANY CLOSING MATERIAL ADVERSE EFFECT. No Company
Closing Material Adverse Effect shall have been
incurred or suffered and Buyer shall have received an
officers' certificate signed on behalf of Seller by
the Chief Executive Officer and the Chief Financial
Officer (or any other two executive officers) of
Seller to such effect.
10.3 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller
to consummate the transactions contemplated herein shall be
subject to the satisfaction on or prior to the Closing Date of
the following additional conditions, unless waived in writing
by Seller:
(a) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Buyer set forth in this Agreement
shall be true and correct in all respects as of the
date of this Agreement and (except to the extent such
representations and warranties speak as of an earlier
date) as of the Closing Date as though made on and as
of the Closing Date, except for such inaccuracies
(without giving effect to any limitations as to
materiality or a Buyer Material Adverse Effect set
forth in such representations and warranties) that,
individually or in the aggregate, would not have a
Buyer Material Adverse Effect. Seller shall have
received an officers' certificate signed on behalf of
Buyer by the Chairman and Chief Financial Officer (or
any other two executive officers) of Buyer to such
effect.
(b) PERFORMANCE OF OBLIGATIONS OF BUYER. Buyer shall have
performed in all material respects all obligations
required to be performed by it under this Agreement
on or prior to the Closing Date, and Seller shall
have received
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an officers' certificate signed on behalf of
Buyer by the Chairman and Chief Financial Officer (or
any other two executive officers) of Buyer to such
effect.
(c) DELIVERIES. The deliveries by Buyer referred to in
Section 4 shall have been made.
(d) LISTING OF SHARES. The Shares to be issued to Seller
pursuant to this Agreement shall have been approved
for listing, subject to notice of issuance, on the
New York Stock Exchange.
(e) BUYER CLOSING MATERIAL ADVERSE EFFECT. No Buyer
Closing Material Adverse Effect shall have been
incurred or suffered and Seller shall have received
an officers' certificate signed on behalf of Buyer by
the Chief Executive Officer and the Chief Financial
Officer (or any other two executive officers) of
Buyer to such effect.
11. TERMINATION.
11.1 TERMINATION. This Agreement may be terminated, and the
transactions contemplated hereby may be abandoned, at any time
prior to the Closing Date:
(a) by mutual written agreement of Seller and Buyer;
(b) by either Seller or Buyer, if Closing shall not have
occurred on or before December 31, 2003, as such date
may be extended by the 30-day cure period provided
for in Sections 11.1(d) and (e) (the "Termination
Date"); provided that the party seeking to terminate
this Agreement pursuant to this Section 11.1(b) shall
not have breached in any material respect its
obligations under this Agreement in any manner that
shall have
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proximately caused the failure to consummate the
transactions contemplated herein on or before the
Termination Date;
(c) by either Seller or Buyer, if: (i) any permanent
injunction, order, decree or ruling by any
Governmental Authority of competent jurisdiction
preventing the consummation of the transactions
contemplated herein shall have become final and
nonappealable, or (ii) the HSR Act waiting period has
failed to terminate prior to the Termination Date, or
any approval or consent of the FTC, DOJ or any
Governmental Authority required in order to
consummate the transactions contemplated under this
Agreement has not been obtained by such date;
(d) by Buyer, if there has been a breach of one or more
representations or warranties of Seller set forth in
this Agreement or one or more material breaches of
the covenants or agreements of Seller set forth in
this Agreement, which breach is not curable or, if
curable, is not cured within thirty (30) days after
written notice of such breach is given by Buyer to
Seller; provided, however, that this termination
right under this Section 11.1(d) shall not be
available with respect to breaches of representation
and warranties unless the individual or aggregate
impact of all inaccuracies of such representations
and warranties (without regard to any materiality or
Company Material Adverse Effect qualifier(s)
contained in such representations and warranties)
would have a Company Material Adverse Effect;
(e) by Seller, if there has been a breach of one or more
representations or
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warranties of Buyer set forth in this Agreement or
one or more material breaches of the covenants or
agreements of Buyer set forth in this Agreement,
which breach is not curable or, if curable, is not
cured within thirty (30) days after written notice of
such breach is given by Seller to Buyer; provided,
however, that this termination right under this
Section 11.1(e) shall not be available with respect
to breaches of representations and warranties unless
the individual or aggregate impact of all
inaccuracies of such representations and warranties
(without regard to any materiality or Buyer Material
Adverse Effect qualifier(s) contained in such
representations and warranties) would have a Buyer
Material Adverse Effect;
(f) by either Buyer or Seller if (i) the Stockholders'
Meeting (including any adjournments and postponements
thereof) shall have been held and completed and
Buyer's stockholders shall have voted on a proposal
to approve the issuance of shares pursuant to this
Agreement, and (ii) the issuance of shares pursuant
to this Agreement shall not have been approved at
such meeting (and shall not have been approved at any
adjournment or postponement thereof) by the required
stockholder vote; provided, however, that (A) a party
shall not be permitted to terminate this Agreement
pursuant to this Section 11.1(f) if the failure to
obtain such stockholder approval is attributable to a
failure on the part of such party to perform any
material obligation required to be performed by such
party at or prior to the Closing, and (B) Buyer shall
not be permitted to terminate
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this Agreement pursuant to this Section 11.1(f)
unless Buyer shall have made the payment required to
be made to Seller pursuant to Section 11.3;
(g) by Buyer if the Average Price is less than $5.35 and
the conditions precedent to Closing contained in
Section 10.1 have been satisfied or waived and Seller
shall not have taken the actions described in Section
3.3.4 to prevent such termination;
(h) by Buyer if, since the date of this Agreement, there
shall have occurred any Company Closing Material
Adverse Effect, or any event or circumstance that, in
combination with any other events or circumstances,
could reasonably be expected to have a Company
Closing Material Adverse Effect, which effect, or the
underlying event or circumstance, is not curable or,
if curable, is not cured within thirty (30) days
after written notice thereof is given by Buyer to
Seller;
(i) by Seller if, since the date of this Agreement, there
shall have occurred any Buyer Closing Material
Adverse Effect, or any event or circumstance that, in
combination with any other events or circumstances,
could reasonably be expected to have a Buyer Closing
Material Adverse Effect, which effect, or the
underlying event or circumstance, is not curable, or,
if curable, is not cured within thirty (30) days
after written notice thereof is given by Seller to
Buyer; and
(j) by Seller if the Estimated Purchase Price exceeds
$600,000,000 and Buyer shall not have taken the
actions described in Section 3.3.5 to prevent such
termination.
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11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement pursuant to this Section 11, the transactions
contemplated hereby shall be deemed abandoned and this
Agreement shall forthwith become void, except that the
provisions of this Section 11.2, Section 9.3, Section 11.3,
Section 14.3 and the terms of the Confidentiality Agreement
shall survive any termination of this Agreement; provided,
however, that nothing in this Agreement shall relieve any
party from liability for any breach of this Agreement.
11.3 TERMINATION PAYMENT. If Seller terminates the transactions
contemplated hereunder for any reason, other than pursuant to
Sections 11.1(a), (b), (c), (e), (f), (i) or (j), then Seller
shall immediately pay Buyer $25,000,000. If Buyer terminates
the transactions contemplated under this Agreement for any
reason other than pursuant to Sections 11.1(a) (b), (c), (d)
or (h) then Buyer shall immediately pay Seller $25,000,000.
Such payments shall be in addition to any other remedies or
damages available to the non-breaching party resulting from or
arising in connection with the other party's breach of this
Agreement.
12. GENERAL INDEMNITY.
12.1 INDEMNIFICATION OF BUYER BY SELLER. In addition to the other
indemnification obligations of Seller set forth in this
Agreement (the "Seller Indemnities"), from and after the
Closing, Seller shall indemnify and hold Buyer, and the
directors, officers, employees and Affiliates of Buyer,
harmless against and in respect of:
12.1.1 Any liability, loss, claim, damage or deficiency
resulting from any breach of representation or
warranty (without regard to any materiality or
Company Material Adverse Effect qualifier(s)
contained in any such representations
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and warranties) or nonfulfillment of any covenant or
agreement on the part of Seller under this Agreement,
or from any misrepresentation in or omission from any
certificate or other instrument furnished or to be
furnished to Buyer hereunder (provided that, for
purposes of this Section 12.1.1 and Section 12.5.1,
all such representations and warranties shall be
deemed to be made as of the Closing Date as though
made on and as of the Closing Date and all references
to "as of the date hereof" or similar phrase in such
representations and warranties shall be deemed to be
references to "as of the Closing Date"
notwithstanding any provision of this Agreement that
any such representation or warranty speaks as of an
earlier date);
12.1.2 Any liability, loss, claim, damage or deficiency
resulting from the ownership or the operation of the
Retained Business or relating to Retained Assets;
12.1.3 Any Liabilities of the Acquired Companies existing at
or arising out of a state of facts or circumstances
existing or business conducted before the Effective
Time, to the extent such Liabilities are not (i)
accrued or reserved in the Final Closing Balance
Sheet, (ii) disclosed in Section 7.12, Section
7.16.2, Section 7.16.3 or Section 7.26 of the Seller
Disclosure Schedule, (iii) disclosed in Exhibit
12.1.3 hereto or (iv) obligations under any contract
or agreement either (x) to furnish goods, services
and other non-cash benefits to another Person after
the Closing or (y) to pay for goods, services and
other non-cash benefits that another Person will
furnish to it after the Closing;
12.1.4 Any claim by any Person for brokerage or finder's
fees or commissions or
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similar payments based upon any agreement or
understanding alleged to have been made by any such
Person with Seller or any of its Affiliates in
connection with the transactions contemplated by this
Agreement; and
12.1.5 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing or the Seller Indemnities and
including, without limitation, reasonable attorneys'
fees and other out-of-pocket expenses.
12.2 INDEMNIFICATION OF SELLER BY BUYER. In addition to the other
indemnification obligations of Buyer set forth in this
Agreement (the "Buyer Indemnities"), from and after the
Closing, Buyer shall indemnify and hold Seller, and the
directors, officers, employees and Affiliates of Seller,
harmless against and in respect of:
12.2.1 Any liability, loss, claim, damage or deficiency
resulting from any breach of representation or
warranty (without regard to any materiality or Buyer
Material Adverse Effect qualifier(s) contained in
such representations and warranties) or
nonfulfillment of any covenant or agreement on the
part of Buyer under this Agreement, or from any
misrepresentation in or omission from any certificate
or other instrument furnished or to be furnished to
Seller hereunder;
12.2.2 Any liability, loss, claim, damage or deficiency
incurred or suffered by Seller or its Affiliates that
relate to the failure of Buyer or the Acquired
Companies to pay, perform or discharge any of the
Liabilities of the Acquired Companies, except as to
matters subject to Seller's indemnification
obligations under Section 12.1 or under any of
Seller's other
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indemnity obligation under this Agreement or the
Ancillary Agreements;
12.2.3 All other actions, suits, proceedings, demands,
assessments, adjustments, costs and expenses incident
to the foregoing or the Buyer Indemnities and
including, without limitation, reasonable attorneys'
fees and other out-of-pocket expenses.
12.3 THIRD PARTY CLAIMS. All claims for indemnification relating to
third party claims shall be asserted and resolved as set forth
in this section 12.3 subject, however, to the terms,
conditions and limitations otherwise set forth in this
Agreement. In the event that any written claim or demand for
which an Indemnifying Party would be liable is asserted
against or sought to be collected from any Indemnified Party
by a third party, such Indemnified Party shall promptly, but
in no event more than 30 days following such Indemnified
Party's receipt of such claim or demand, notify the
Indemnifying Party in writing of such claim or demand and the
amount or the estimated amount thereof to the extent then
feasible (which estimate shall not be conclusive of the final
amount of such claim and demand) (the "Claim Notice"). The
Indemnified Party shall not be foreclosed by any failure to
provide timely notice of the existence of a third party claim
or demand to the Indemnifying Party except to the extent that
the Indemnifying Party incurs any out-of-pocket expense as a
result of such delay or otherwise has been prejudiced as a
result of such delay. The Indemnifying Party shall have
fifteen days from the receipt of the Claim Notice (the "Notice
Period") to notify the Indemnified Party (a) whether or not
the Indemnifying Party disputes the liability of the
Indemnifying Party to the Indemnified Party hereunder with
respect to such claim or demand, and (b) whether or not it
desires to
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defend the Indemnified Party against such claim or demand. All
costs and expenses incurred by the Indemnifying Party in
defending such claim or demand shall be a liability of, and
shall be paid by, the Indemnifying Party. In the event that
the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified
Party against such claim or demand and except as hereinafter
provided, the Indemnifying Party shall have the right to
select legal counsel, reasonably acceptable to the Indemnified
Party, to represent and defend the Indemnified Party and to
otherwise control the proceedings relating to such claim or
demand. The Indemnified Party shall cooperate in all
reasonable respects with the Indemnifying Party and its
counsel in defending any claims or demands, including, without
limitation, making available to the Indemnifying Party all
information reasonably available to the Indemnified Party
relating to such claim or demand, and shall not take any
action which is reasonably likely to be detrimental to such
defense. In addition, the Indemnified Party and the
Indemnifying Party shall render to each other such assistance
as may reasonably be requested in order to ensure the proper
and adequate defense of any such claim or demand. The party in
charge of the defense shall keep the other party fully
apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. If any
Indemnified Party desires to participate in, but not control,
any such defense or settlement it may do so at its sole cost
and expense provided, the Indemnifying Party shall pay the
attorneys' fees of the Indemnified Party if (i) the employment
of separate counsel shall have been authorized in writing by
any such Indemnifying Party in connection with the defense of
such third party claim, (ii) the Indemnifying Party
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shall not have employed counsel reasonably satisfactory to the
Indemnified Party to have charge of such third party claim, or
(iii) the Indemnified Party's counsel shall have advised the
Indemnified Party in writing with a copy to the Indemnifying
Party that there is conflict of interest that could make it
inappropriate under applicable standards of professional
conduct to have common counsel. In the event that the
Indemnifying Party does not elect to defend the claim, the
Indemnified Party shall not settle a claim or demand without
the consent of the Indemnifying Party (which consent shall not
unreasonably be withheld). The Indemnifying Party shall not,
without the prior written consent of the Indemnified Party,
consent to the entry of a judgment, settle, compromise or
offer to settle or compromise any such claim or demand or
admit or acknowledge any liability (i) on a basis which would
result in the imposition of a consent order, injunction,
decree or equitable remedy which would restrict the future
activity or conduct of the Indemnified Party or any Subsidiary
or Affiliate thereof without the written consent of the
Indemnified Party and (ii) without obtaining (a) a release of
the Indemnified Party with respect to such claim or demand and
(b) the dismissal with prejudice of any litigation or other
proceeding with respect to such claim or demand, in each case
for the benefit of and in form and substance reasonably
satisfactory to the Indemnified Party. If the Indemnifying
Party elects not to defend the Indemnified Party against a
claim or demand for which the Indemnifying Party would be
liable, whether by not giving the Indemnified Party timely
notice as provided above or otherwise, then the amount of any
such claim or demand, or, if the same is to be contested by
the Indemnified Party, then that portion thereof as to which
such
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defense is unsuccessful (and the reasonable costs and expenses
pertaining to such defense) shall be the liability of the
Indemnifying Party hereunder. To the extent the Indemnifying
Party shall control or participate in the defense or
settlement of any third party claim or demand, the Indemnified
Party will give to the Indemnifying Party and its counsel
access to, during normal business hours, the relevant business
records and other documents, and shall permit them to consult
with the employees and counsel of the Indemnified Party. The
Indemnified Party shall use commercially reasonable efforts in
the defense of all such claims and demands.
12.4 DIRECT CLAIMS. In any case in which an Indemnified Party seeks
indemnification hereunder which is not subject to Section 12.3
because no third party action is involved, the Indemnified
Party shall promptly notify the Indemnifying Party in writing
of any liability, loss, claim, damage or deficiency which such
Indemnified Party claims are subject to indemnification under
the terms of this Agreement. Subject to the terms, conditions
and limitations set forth in this Agreement, the Indemnified
Party shall not be foreclosed by any failure to provide timely
notice of existence of a claim to the Indemnifying Party
except to the extent that the Indemnifying Party incurs any
out-of-pocket expense or otherwise has been prejudiced as a
result of such delay.
12.5 LIMITATIONS.
12.5.1 BASKET. Neither Seller nor Buyer shall have any
Liability for indemnification obligations under
Section 12.1.3, or resulting from a breach of a
representation or warranty under Sections 7 or 8 of
this Agreement (including a deemed breach of a
representation or warranty as provided in
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the proviso in Section 12.1.1 of this Agreement),
except to the extent such party's aggregate Liability
for all such indemnification obligations (without
regard to any materiality, Company Material Adverse
Effect qualifier(s) or Buyer Material Adverse Effect
qualifier(s) contained in any representations and
warranties set forth in this Agreement) exceeds
Thirty Million Dollars ($30,000,000); provided,
however, Seller's indemnity obligations set forth in
Section 7.6 and any matter constituting fraud or
intentional misrepresentation by Buyer or Seller in
connection with the transactions contemplated herein
shall not be subject to the foregoing limitation.
12.5.2 CAP. Each party's aggregate Liability for
indemnification under this Agreement shall in no
event exceed Two Hundred Million Dollars
($200,000,000); provided however, that each party's
indemnity obligations set forth in Section 13 and any
matter constituting fraud, intentional
misrepresentation or criminal activity under
applicable Law shall not be subject to the foregoing
limitation.
12.5.3 REMEDIES. Other than equitable remedies available at
law to either party (including specific performance),
after Closing the provisions of this Section 12 and
Section 13 shall be the exclusive basis for the
assertion of claims against, or the imposition of
Liability on, Seller or its Affiliates, or Buyer or
its Affiliates, in respect to the transactions
contemplated herein, including, without limitation,
any breach or alleged breach of this Agreement;
provided that this paragraph shall not limit any
remedies available for breaches of the Voting
Agreement or any agreement executed at Closing
pursuant to this Agreement.
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12.5.4 MITIGATION. Buyer and Seller shall, and shall cause
their Affiliates to, use commercially reasonable
efforts to mitigate the losses, costs, expenses and
damages for which such party or their Affiliates may
become entitled to indemnification hereunder.
12.5.5 NET RECOVERY. The amount to which an Indemnified
Party may become entitled pursuant to the
indemnification provisions of this Agreement shall be
net of any recovery (whether by way of payment,
discount, credit, set off, tax benefit, counterclaim
or otherwise) received by such party or its
Affiliates from a third party (including any insurer
or taxation authority) in respect of such claim. Any
such recovery shall be promptly repaid by Buyer to
Seller, or Seller to Buyer, as applicable, less any
taxes payable on the recovery and all reasonable
costs, charges and expenses incurred in obtaining
such recovery from the third party. For the avoidance
of doubt, a Tax benefit shall only be taken into
account under this paragraph to the extent that that
the Tax benefit results in a lower Tax liability for
the Indemnified Party than would have occurred absent
the indemnity payment and the Tax benefit is actually
recognized on a Tax Return.
12.5.6 LIMITATION OF DAMAGES. Each party shall be
responsible only for direct damages, and shall in no
event be liable for special, consequential or similar
damages or losses.
12.5.7 SATISFACTION OF INDEMNITY CLAIMS. Notwithstanding any
of the terms and conditions of this Agreement to the
contrary, except for each party's
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indemnity obligations under Section 13, all amounts
payable by Seller to Buyer with respect to any
indemnity claim brought by Buyer under this
Agreement, shall be satisfied, at the Seller's
option, either by Seller delivering to Buyer for
cancellation that portion of the Subordinated
Promissory Note that has a principal amount equal to
the amount of the indemnity claim owed by Seller, or
by payment of cash. Notwithstanding any of the terms
and conditions of this Agreement to the contrary, all
amounts payable by Buyer to Seller with respect to
any indemnity claim brought by Seller under this
Agreement, shall be satisfied, at Buyer's option,
either by increasing the amounts due and owing under
the Subordinated Promissory Note in an amount equal
to the amount of the indemnity claim owed by Buyer,
or by the payment of cash. All payments with respect
to indemnity claims shall be made promptly.
13. SPECIAL TAX INDEMNITY.
13.1 TAX RETURNS.
13.1.1 Buyer shall cause the Acquired Companies to consent
to join, for all taxable periods of the Acquired
Companies ending on or before the Closing Date for
which the Acquired Companies are eligible to do so,
in any consolidated or combined federal, state or
local Tax Returns of Seller or Seller's Affiliates.
Seller will prepare and file, or cause to be prepared
and filed, all of the Acquired Company Tax Returns
for all taxable years or periods ending on or before
the Closing Date (to the extent they have not already
done so). Seller will pay to the applicable
Governmental
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Authority, or cause the payment to the applicable
Governmental Authority of, any Taxes shown as due
thereon. Seller will prepare, or cause to be
prepared, such Tax Returns using material accounting
methods and other practices that are consistent with
those used by the Acquired Companies in their prior
Tax Returns except as otherwise required by Law.
Notwithstanding the foregoing, Seller may revoke the
election of To-Ricos under Code Section 936, in which
event, Buyer will reasonably cooperate with Seller,
and cause To-Ricos to consent to join in the filing
of any federal, state or local consolidated or
combined Tax Return with Seller and its affiliated
group for the taxable year or period ending on the
Closing Date. Items to be taken into account in any
Tax Return for the short taxable period ending on the
Closing Date will be determined under the
"closing-the-books" method as described in Treasury
Regulation Section 1.1502-76(b)(2)(i) (or any similar
provision of state, local or foreign Law). Seller
will deliver, or cause to be delivered, a draft of
each of the Tax Returns for any of the Acquired
Companies that require the signature of an officer or
employee of Buyer (or one of Buyer's Affiliates) to
Buyer not less than 30 days prior to the due date (as
may be extended) for filing such Tax Returns, and
Buyer will provide Seller with its comments on, and
proposed changes to, such Tax Returns not later than
15 days prior to such due date. If any aspect of such
Tax Returns remains in dispute within 10 days prior
to the due date for filing such Tax Returns, the
matter in dispute will be submitted to a mutually
acceptable,
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nationally-recognized firm of certified public
accountants for resolution. The decision of such
accountant will be final and binding on the parties,
and the fees and expenses of the accountant will be
paid one-half by Buyer and one-half by Seller.
Notwithstanding the foregoing, Buyer shall not be
entitled to object to any Tax Return prepared by
Seller unless the accountant concludes that a
position claimed in the Tax Return does not possess
the level of support required to avoid the
substantial understatement penalty provided for in
Section 6662(d) of the Code.
13.1.2 Buyer will prepare and file, or cause to be prepared
and filed, all of the Acquired Companies' Tax Returns
for all taxable years or periods ending after the
Closing Date, and Buyer will pay, or cause to be
paid, all Taxes shown as due thereon; provided, that
with respect to any Straddle Period, Buyer will be
entitled to indemnification as set forth in Section
13.3.
13.1.3 The parties agree to reasonably cooperate with each
other and each other's Affiliates in the preparation
and filing of Tax Returns of the Acquired Companies
for taxable periods ending on or before the Closing
Date and Straddle Periods. The parties shall be
entitled to utilize the services of the personnel who
would have been responsible for preparing such
returns as they relate to the Acquired Companies,
without charge, to the extent reasonably necessary in
preparing said returns on a timely basis. The parties
shall also provide each other with full access to
applicable and reasonably relevant records to enable
the timely preparation and filing of said returns.
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13.2 Apportionment of Taxes. With respect to any Straddle Period of
the Acquired Companies, Buyer and Seller will, to the extent
permitted by law, elect to treat the Closing Date as the last
day of the taxable year or period of the Acquired Companies
and will apportion any Taxes arising out of or relating to a
Straddle Period to the Pre-Closing Period under the
"closing-the-books" method as described in Treasury Regulation
Section 1.1502-76(b)(2)(i) (or any similar provision of state,
local or foreign Law). In any case where applicable Law does
not permit the Acquired Companies to treat the Closing Date as
the last day of the taxable year or period, any Taxes arising
out of or relating to a Straddle Period will be apportioned to
the Pre-Closing Period based on a closing of the books of that
entity; provided, however, that exemptions, allowances or
deductions (excluding depreciation, amortization and depletion
deductions) that are calculated on an annualized basis will be
apportioned on a daily pro rata basis. Notwithstanding the
foregoing, Taxes imposed with respect to a time period (e.g.,
property taxes) shall be apportioned to the Pre-Closing Period
on a daily pro rata basis.
13.3 Indemnification by Seller. Seller will indemnify and hold
harmless the Buyer and the directors, officers, employees and
Affiliates of Buyer ("Buyer Indemnified Persons") for, and
will pay to, or on behalf of, Buyer Indemnified Persons an
amount equal to (a) any Taxes of the Acquired Companies for
the Pre-Closing Period (including, for the avoidance of doubt,
any Taxes of the Acquired Companies resulting from an election
under Section 338(h)(10) of the Code) that have not been paid
prior to the Closing Date, except to the extent accrued as a
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Liability on the Final Closing Balance Sheet, (b) any Taxes
relating to any member of an affiliated group with which any
of the Acquired Companies has filed a Tax Return on a
consolidated, combined or unitary basis for a Pre-Closing
Period, and (c) any Tax deficiency, and all related,
reasonable legal and accounting fees and expenses, each
directly resulting from any breach of Seller's representations
in Section 7.10(d), (e), (f), (g), and (i) or Seller's
covenants contained in this Section 13.
13.4 Indemnification by Buyer. Buyer will pay, or cause to be paid,
on a timely basis, and shall indemnify, defend and hold
harmless Seller and the directors, officers, employees and
Affiliates of Seller ("Seller Indemnified Persons") for: (a)
any Tax deficiency, and all related, reasonable legal and
accounting fees and expenses, each directly resulting from any
breach of Buyer's representations in Section 8.26(d), (e), (g)
and (h) or Buyer's covenants contained in this Section 13, (b)
any Liability for Taxes for Tax periods of the Buyer and the
Acquired Companies beginning, and the portion of the Straddle
Period occurring, after the Closing Date, and (c) any
Liability for Taxes attributable to an extraordinary
transaction (other than the distribution of the Retained
Assets or any deemed asset sale occurring under section
338(h)(10) or any comparable provision of state or local Law)
effected at the direction of Buyer in respect of the Acquired
Companies on or after the Effective Time.
13.5 Indemnification Process. In the event of a third-party claim
for Taxes arising out of or relating to any taxable year or
period of an Acquired Company ending on or before the Closing
Date, the indemnification procedures will be in accordance
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with Section 12.3 and the limitations contained in Sections
12.5.3 through 12.5.6 (inclusive); provided however, that with
respect to any Tax matter involving a Governmental Authority
that does not treat the Acquired Companies as selling their
assets to a newly created corporation on the Closing Date as a
result of the Section 338(h)(10) election, Seller shall not
settle or compromise any third-party claim for Taxes that may
adversely effect Buyer in taxable periods ending after the
Closing Date without Buyer's consent (which shall not be
unreasonably withheld). Any indemnification payments due under
this Section 13 shall be paid within 10 days from the date of
a final determination (as defined in Section 1313(a) of the
Code) of the amount of Tax due.
13.6 Characterization of Indemnity Payments. All amounts paid by
Buyer or Seller, as the case may be, by reason of Section
12.1, 12.2, 13.3 or 13.4 will be treated to the extent
permitted under applicable Law as adjustments to the Purchase
Price for all Tax purposes.
13.7 Transfer Taxes. Notwithstanding any other provision of this
Agreement, all Transfer Taxes will be borne by Seller
regardless of which party is obligated to pay such Tax under
applicable Law. Buyer and Seller will cooperate in timely
making and filing all Tax Returns that may be required to
comply with Law relating to such Taxes.
13.8 Tax Sharing Agreements. Seller will cause the Acquired
Companies to terminate as of the Closing Date any tax sharing,
indemnity or allocation agreement between them and: (i) any
other Affiliate of the Seller; (ii) Renewable
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Environmental Solutions, L.L.C.; or (iii) any partner of
Renewable Environmental Solutions, L.L.C..
13.9 Tax Records. Seller will make available to Buyer such records
as Buyer may require for the preparation of any Tax Return and
such records as Buyer may require for the defense of any
proceeding concerning such Tax Return. Buyer will make
available to Seller such records as Seller may require for the
preparation of any Tax Return and such records as Seller may
require for the defense of any proceeding concerning any such
Tax Return.
13.10 Refunds. Buyer and its Affiliates shall pay to Seller within
ten (10) days of receipt any refund of Taxes: (i) that relate
to a Pre-Closing Period of the Acquired Companies; (ii) that
were paid by Seller or its Affiliates; and (iii) to the extent
that any such refunds were not accrued as an asset on the
Final Closing Balance Sheet.
13.11 Survival. The covenants and agreements of the parties
contained in this Section 13 and the representations and
warranties contained in Section 7.10(d), (e), (f), (g) and (i)
and Section 8.26 (d), (e), (g) and (h) will survive the
Closing and will remain in full force and effect until thirty
(30) days following the expiration of the applicable
underlying statutes of limitations (including extensions) with
respect to any Taxes that would be indemnifiable by Buyer or
Seller under Sections 13.3 and 13.4 of this Agreement.
13.12 Section 338(h)(10) Election. Seller agrees that it will, and
with Buyer's and the Acquired Companies' full cooperation,
prepare and make an election or join in making an election
under Section 338(h)(10) of the Code in order to treat the
sale of the Stock as a sale of all of the assets of the
Acquired Companies for U.S.
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federal Tax purposes and an election under the statutes of
such states as permit an equivalent election. Seller and Buyer
will not make a joint election under the corresponding
provisions of Puerto Rican law. Seller agrees that it will,
and with Buyer's and the Acquired Companies' full cooperation,
take such action to comply with all of the requirements and
conditions of Section 338(h)(10) of the Code and the treasury
regulations thereunder and all other applicable Code sections
and treasury regulations relating thereto, including without
limitation the execution and timely filing of Form 8023
entitled "Elections Under Section 338 for Corporations Making
Qualified Stock Purchases" or any successor form of similar
import, and any forms required to effectuate similar elections
for state tax purposes. The parties agree that the Purchase
Price shall be allocated to the assets of the Acquired
Companies in accordance with Exhibit 13.12 hereto. Each party
covenants to report gain, loss, or cost basis, as the case may
be, in a manner consistent with Exhibit 13.12 for federal and
state Tax purposes. Buyer, the Acquired Companies and Seller
shall promptly notify Seller (and Seller will promptly notify
Buyer) in the event that any Governmental Authority challenges
or threatens to challenge, such allocations. Buyer, the
Acquired Companies, and Seller shall cooperate after the
Closing Date to timely and properly file all applicable
federal and state elections required to be filed under this
Section and to take all such action as is required by Law to
give full effect to the elections for federal, state and local
Tax purposes to the greatest extent permitted by Law. Buyer,
the Acquired Companies and Seller shall fully cooperate in
order to qualify To-Ricos for the application of such election
to To-Ricos.
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13.13 Miscellaneous Tax Provisions. In no event shall any party
hereto pay more than once under different provisions of this
Agreement for the same Tax Liability. Notwithstanding anything
to the contrary herein, if Closing occurs, this Section 13 and
Sections 12.3, and 12.5.3 through 12.5.6 (inclusive) (to the
extent they govern the indemnification process for Taxes)
shall be the sole remedy for any Tax matters under this
Agreement. For the avoidance of doubt, the provisions of
Section 12.5.1 do not apply to this Section 13.
13.14 Puerto Rican Tax Incentives. The parties will fully cooperate
with each other to maintain (to the extent reasonably possible
under Puerto Rican Law) To-Ricos': (i) Grant of Industrial Tax
Exemption pursuant to the 1987 Puerto Rican Tax Incentives Act
(the "Industrial Grant"); and (ii) Certificate of Exemption
under the Agricultural Incentives Act (1995) ("Agricultural
Certificate") after Closing until such time as To-Ricos can
negotiate a modification of the Industrial Grant, obtain a new
Industrial Grant under the 1998 Puerto Rican Tax Incentives
Act, or ensure the continuation of its Agricultural
Certificate. Provided however, Seller's obligation to
cooperate with Buyer with respect to this matter shall cease
no later than one calendar year following the Closing Date;
provided, further Seller's obligation to so cooperate shall
not (x) include any obligation to start or continue to own or
conduct any entity or business in Puerto Rico or (y) preclude
Seller or any Affiliate of Seller from conducting or changing
any Puerto Rican business operation or activity, including
Molinos de Puerto Rico, Inc.'s activities, in any manner as
Seller or any Affiliate of Seller may determine.
14. MISCELLANEOUS. The following miscellaneous provisions shall
apply to this Agreement:
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14.1 NOTICES. All notices or other communications required or
permitted to be given, pursuant to the terms of this
Agreement, shall be in writing and shall be deemed to be duly
given when received if delivered in person or by telecopy,
telegram or cable and confirmed by mail, or mailed by
registered or certified mail (return receipt requested) or
overnight courier, express mail, postage prepaid, as follows:
If to Seller: ConAgra Foods, Inc.
One ConAgra Drive
Omaha, Nebraska 68102
Attn: Corporate Controller
With a Copy to: McGrath North Mullin & Kratz, PC LLO
First National Tower
1601 Dodge Street, Suite 3700
Omaha, Nebraska 68102
Fax: (402) 341-0216
Attn: Roger W. Wells
If to Buyer: Pilgrim's Pride Corporation
110 South Texas Street
Pittsburg, Texas 75686
Attn: Chief Financial Officer
With a Copy to: Baker & McKenzie
2300 Trammell Crow Center
2001 Ross Avenue
Dallas, Texas 75201
Fax: (214) 978-3099
Attn: Alan G. Harvey
or at such other address as the party to whom notice is to be
given furnishes in writing to the other party in the manner
set forth above.
14.2 AMENDMENTS AND WAIVERS. This Agreement may not be modified or
amended, except by an instrument or instruments in writing,
signed by the party against whom enforcement of any such
modification or amendment is sought. Either Seller or
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Buyer may, by an instrument in writing, waive compliance by
the other party with any term or provision of this Agreement
on the part of such other party to be performed or complied
with. No action taken pursuant to this Agreement, including
any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action
of compliance with any representation, warranty or agreement
contained herein. The waiver by any party hereto of a breach
of any term or provision of this Agreement shall not be
construed as a waiver of any subsequent breach.
14.3 EXPENSES. Except as otherwise provided in this Agreement,
Buyer and Seller shall each pay their own expenses, and those
of their respective Affiliates, in connection with the
preparation and execution of this Agreement and any expenses
specifically payable by them pursuant to this Agreement.
14.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject to Section
13.11 hereof, the representations and warranties and
indemnities related thereto of Seller and Buyer made in or
pursuant to this Agreement shall survive as follows:
representations and warranties, and the indemnities relating
thereto, under Sections 7.16, 7.17 (except with respect to
ERISA matters), 7.18, 8.14, 8.15 (except with respect to ERISA
matters) and 8.16 shall survive the Closing for a period of
four (4) years; representations and warranties, and the
indemnities relating thereto, under Section 7.1, Section 7.3,
Section 7.6, Section 7.7.2, Section 7.17 (with respect to
ERISA matters) and Sections 8.1, 8.4 and 8.15 (with respect to
ERISA matters) shall survive the Closing until expiration of
the applicable statute of limitations; and all other
representations and warranties, and the indemnities relating
thereto, under this
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Agreement shall survive the Closing for a period of twelve
(12) months. Indemnities relating to the breach of any
covenant shall survive until expiration of the applicable
statute of limitations. Notwithstanding the forgoing, it is
specifically understood and agreed that the damages for which
indemnification may be sought need not be incurred or paid by
the Indemnified Party within the forgoing periods, but only
that the claim with respect to which indemnification is sought
be asserted and presented to the Indemnifying Party within
such periods.
14.5 ENTIRE AGREEMENT. This Agreement, the Ancillary Agreements,
the Seller Disclosure Schedule, the Buyer Disclosure Schedule
and the Confidentiality Agreement constitute the entire
agreement among the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and
understandings, oral and written, among the parties hereto
with respect to the subject matter hereof.
14.6 TERMS OF SALE. The parties agree and acknowledge, on behalf of
themselves and their Affiliates, that EXCEPT AS OTHERWISE
SPECIFICALLY SET FORTH IN THIS AGREEMENT, OR THE ANCILLARY
AGREEMENTS, THE STOCK AND THE ACQUIRED COMPANIES ARE BEING
SOLD TO BUYER, AND THE SHARES ARE BEING ISSUED TO SELLER,
WITHOUT ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED,
OTHER THAN THE REPRESENTATIONS AND WARRANTIES EXPRESSLY SET
FORTH IN THIS AGREEMENT AND THE ANCILLARY AGREEMENTS. EXCEPT
FOR CLAIMS MADE IN ACCORDANCE WITH THE SPECIFIC TERMS OF THIS
AGREEMENT OR THE ANCILLARY AGREEMENTS, NO CLAIM SHALL BE MADE
AGAINST EITHER PARTY OR ITS AFFILIATES,
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BY THE OTHER PARTY, IN RESPECT TO ANY REPRESENTATION,
WARRANTY, INDEMNITY, COVENANT OR UNDERTAKING. THE PARTIES
CONFIRM THAT THEY HAVE NOT RELIED ON ANY REPRESENTATION,
WARRANTY, INDEMNITY, COVENANT OR UNDERTAKING OF ANY PERSON
WHICH IS NOT EXPRESSLY CONTAINED IN THIS AGREEMENT OR THE
ANCILLARY AGREEMENTS. FOR THE AVOIDANCE OF DOUBT, SELLER MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, WITH
RESPECT TO ANY TAX ATTRIBUTES OF THE ACQUIRED COMPANIES.
14.7 APPLICABLE LAW. This Agreement and the legal relations among
the parties hereto shall be governed by and construed in
accordance with the laws of the State of Delaware applicable
to contracts made and performed in Delaware (without regard to
conflicts of law doctrines).
14.8 BINDING EFFECT; BENEFITS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their
respective successors and assigns; nothing in this Agreement,
express or implied, is intended to confer on any Person other
than the parties hereto or their respective successors and
assigns, any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
14.9 ASSIGNABILITY. Neither this Agreement nor any of the parties'
rights hereunder shall be assignable by any party hereto
without the prior written consent of the other party hereto.
14.10 EFFECT OF HEADINGS. The headings of the various sections and
subsections herein are inserted merely as a matter of
convenience and for reference and shall not be
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construed as in any manner defining, limiting, or describing
the scope or intent of the particular sections to which they
refer, or as affecting the meaning or construction of the
language in the body of such sections.
14.11 EXHIBITS; DISCLOSURE SCHEDULE. All exhibits and schedules
referred to in this Agreement are incorporated herein by
reference as if fully set forth herein. The disclosure of any
matter in any section of the Seller Disclosure Schedule or the
Buyer Disclosure Schedule shall not be deemed to constitute an
admission by any party or to otherwise imply that any such
matter is material or may have a Company or Buyer Material
Adverse Effect, as the case may be, for purposes of this
Agreement.
14.12 SEVERABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall be
ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable
the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms
or other provisions of this Agreement in any other
jurisdiction.
14.13 CONSTRUCTION AND INTERPRETATION. As used in this Agreement in
respect to Seller and Buyer, "knowledge," "knows" or "known"
means, with respect to the matter in question, if any of the
Executive Officers of Seller or Buyer, as the case may be, has
actual knowledge of such matter. "Executive Officers" of
Seller means those executive officers of Seller and the
Acquired Companies listed on Exhibit 14.13 hereto, and
"Executive Officers" of Buyer means those executive officers
of Buyer listed on Exhibit 14.13 hereto. The language in all
parts of this Agreement shall in all cases be construed as a
whole according to its fair meaning, strictly neither for
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nor against any party hereto, and without implying a
presumption that the terms thereof shall be more strictly
construed against one party by reason of the rule of
construction that a document is to be construed more strictly
against the person who himself drafted same. It is hereby
agreed that representatives of both parties have participated
in the preparation hereof. The word "or" is not exclusive and
the word "including" means "including without limitation."
14.14 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be regarded as an original
and all of which shall constitute one and the same instrument.
14.15 CONSENT TO JURISDICTION. The parties hereto hereby irrevocably
submit to the exclusive jurisdiction of any United States
federal or Delaware state court sitting in Wilmington,
Delaware with respect to any action or proceeding arising out
of or relating to this Agreement and each of the parties
hereto hereby irrevocably agrees that all claims in respect of
such action or proceeding shall be heard and determined in any
such court and irrevocably waives any objection it may now or
hereafter have as to the venue of any such suit, action or
proceeding brought in such court or that such court is an
inconvenient forum. The parties hereto shall cause the
Acquired Companies to be bound by this Section.
14.16 FURTHER ASSURANCES. Each of the parties hereto agrees that,
from and after the Closing, upon the reasonable request of the
other party hereto and without further consideration, such
party will execute and deliver to such other party such
documents and further assurances and will take such other
actions (without cost to such party) as such other party may
reasonably request in order to carry out the
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purpose and intention of this Agreement. Such actions shall
include, without limitation, the transfer or conveyance by
Buyer, the Acquired Companies or their respective Affiliates
and successors of any assets or rights included in the
Retained Assets, the transfer or conveyance by Seller or its
Affiliates and successors of any assets or rights included in
the Business, and Seller's commercially reasonable cooperation
at Buyer's cost in connection with the preparation of any
materials required to be filed by Buyer with the SEC or any
financing Buyer may seek.
14.17 PUBLICITY. The parties hereto agree that they will consult
with each other concerning any proposed press release or
public announcement pertaining to the transactions
contemplated hereby and shall use their best efforts to agree
upon the text of any such press release or the making of such
public announcement. The parties hereto agree that the
issuance of any such press release or announcement shall not
be a violation of the Confidentiality Agreement.
14.18 NOTE REDEMPTION. Notwithstanding the terms of the Subordinated
Promissory Note, during the period that Seller or any of its
Affiliates holds any portion of the Subordinated Promissory
Note, Buyer shall have the right to repurchase all or such
portion of the Subordinated Promissory Note then held by
Seller or its Affiliates by paying to Seller in immediately
available funds an amount equal to the outstanding principal
amount of the portion of the Subordinated Promissory Note to
be repurchased, together with the payment of all interest
accrued on the amount so repurchased through the date such
repurchase occurs, so long as, after such repurchase, unless
Buyer repurchases all of the Subordinated Promissory
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Note then held by Seller or its Affiliates, the outstanding
principal amount of the Subordinated Promissory Note shall
equal or exceed $150,000,000. Buyer shall give Seller at least
fifteen (15) days written notice of its election to exercise
such right. Seller agrees to cause its Affiliates to comply
with the provision of this Section 14.18 and will give Buyer
at least ten (10) days written notice of any proposed transfer
of all or part of the Subordinated Promissory Note.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
SELLER: BUYER:
CONAGRA FOODS, INC., PILGRIM'S PRIDE CORPORATION,
a Delaware corporation a Delaware corporation
By: /s/ DWIGHT GOSLEE By: /s/ LONNIE A. PILGRIM
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Its: Executive Vice President Its: Chairman of the Board
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