EXHIBIT 2.1
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ASSET PURCHASE AGREEMENT
BY AND AMONG
THE SCHWAN FOOD COMPANY
FLOWERS FOODS, INC.
AND
MRS. SMITH'S BAKERIES, LLC
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JANUARY 29, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE 1: DEFINITIONS................................................................................1
ARTICLE 2: PURCHASE AND SALE OF ASSETS...............................................................11
2.1 Assets to be Transferred......................................................................11
2.2 Retained Assets...............................................................................12
ARTICLE 3: LIABILITIES...............................................................................12
3.1 Assumed Liabilities...........................................................................12
ARTICLE 4: PURCHASE PRICE............................................................................13
4.1 Purchase Price................................................................................13
4.2 Purchase Price Adjustment.....................................................................14
4.3 Non-qualified Inventory Payment...............................................................15
4.4 Sysco Market Access Fee.......................................................................15
ARTICLE 5: CLOSING AND DELIVERIES....................................................................15
5.1 Closing.......................................................................................15
5.2 Deliveries by the Parent......................................................................16
5.3 Deliveries by the Purchaser...................................................................17
5.4 Post-Closing Delivery.........................................................................18
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE SELLER...............................18
6.1 Organization and Standing.....................................................................18
6.2 Authority; Conflicts; Compliance with Laws....................................................19
6.3 Regulatory Filings; No Violations.............................................................19
6.4 Inventories...................................................................................20
6.5 No Actions Against Seller.....................................................................20
6.6 Taxes.........................................................................................20
6.7 Property......................................................................................20
6.8 Governmental Permits..........................................................................22
6.9 Intellectual Property.........................................................................22
6.10 Litigation....................................................................................24
6.11 Contracts.....................................................................................24
6.12 Employee Benefits; ERISA......................................................................26
6.13 Compliance with Laws..........................................................................26
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TABLE OF CONTENTS
(continued)
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6.14 Insurance.....................................................................................27
6.15 No Finders or Brokers.........................................................................27
6.16 Absence of Changes............................................................................27
6.17 Labor Matters.................................................................................28
6.18 Environmental Matters.........................................................................29
6.19 Customers.....................................................................................30
6.20 Suppliers.....................................................................................30
6.21 Sales Brokers.................................................................................31
6.22 Interests of Related Persons..................................................................31
6.23 Financial Information.........................................................................31
6.24 Availability of Documents.....................................................................32
6.25 Certain Information...........................................................................32
6.26 Product Standards.............................................................................32
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF PURCHASER...............................................33
7.1 Organization of the Purchaser.................................................................33
7.2 Authority; Conflicts; Compliance with Laws....................................................33
7.3 No Proceeding.................................................................................34
7.4 No Finders or Brokers.........................................................................34
7.5 Financial Ability.............................................................................34
ARTICLE 8: PRE-CLOSING COVENANTS OF THE PARTIES......................................................34
8.1 Access to Information.........................................................................34
8.2 Publicity.....................................................................................35
8.3 Certain Notifications.........................................................................35
8.4 Required Approvals............................................................................35
8.5 HSR Act.......................................................................................36
8.6 Operations Prior to the Closing Date..........................................................37
8.7 Certain Tax Matters...........................................................................38
8.8 Employees.....................................................................................38
8.9 Title Insurance and Surveys...................................................................39
8.10 Trademark and Other Matters...................................................................40
ARTICLE 9: POST-CLOSING COVENANTS OF THE PARTIES.....................................................40
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TABLE OF CONTENTS
(continued)
PAGE
9.1 Post-Closing Consents.........................................................................40
9.2 Removal of Equipment..........................................................................40
9.3 Books and Records.............................................................................41
9.4 Further Assurances............................................................................41
9.5 Post-Closing Payments and Returns.............................................................42
9.6 Performance of Obligations....................................................................42
9.7 Certain Real Estate Matters...................................................................43
ARTICLE 10: CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER TO CLOSE.................................43
10.1 Conditions to Obligations of the Purchaser to Close...........................................43
10.2 Conditions to Obligations of the Parent and the Seller to Close...............................44
10.3 Conditions to Obligations of the Parties to Close.............................................44
ARTICLE 11: TERMINATION...............................................................................44
11.1 Method of Termination.........................................................................44
11.2 Effect of Termination.........................................................................45
ARTICLE 12: INDEMNIFICATION...........................................................................45
12.1 Survival......................................................................................45
12.2 General Indemnification Obligation............................................................45
12.3 Notice and Opportunity to Defend..............................................................46
12.4 Survivability; Limitations....................................................................47
12.5 Exclusive Remedy..............................................................................48
12.6 Exclusion of Certain Damages..................................................................48
ARTICLE 13: GENERAL PROVISIONS........................................................................49
13.1 Confidential Nature of Information............................................................49
13.2 Notices.......................................................................................49
13.3 Successors and Assigns........................................................................50
13.4 Entire Agreement; Amendments..................................................................50
13.5 Interpretation................................................................................50
13.6 Waivers.......................................................................................52
13.7 Expenses......................................................................................52
13.8 Partial Invalidity............................................................................52
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TABLE OF CONTENTS
(continued)
PAGE
13.9 Execution in Counterparts.....................................................................52
13.10 Further Assurances............................................................................52
13.11 Governing Law.................................................................................52
13.12 Specific Performance..........................................................................52
13.13 Jurisdiction..................................................................................53
13.14 Waiver of Jury Trial..........................................................................53
13.15 Time of Essence...............................................................................53
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TABLE OF EXHIBITS
Exhibit A Form of Noncompetition Agreement
Exhibit B Form of Liabilities Undertaking
Exhibit C Form of Brands Trademark Assignment Agreement
Exhibit D Form of Seller Trademark Assignment Agreement
Exhibit E [Intentionally Omitted]
Exhibit F Form of Suwanee Lease Agreement
Exhibit G Form of Suwanee Limited Warranty Deed
Exhibit H Form of Foil Sublease
Exhibit I Co-Packing/Supply Agreement (Spartanburg Doughnut)
Exhibit J Co-Packing/Supply Agreement (London Pie and Crossville Flip-It Cake)
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TABLE OF SCHEDULES
Schedule 1A Maximum Inventory Value and Maximum Qualified Inventory by Fiscal Period
Schedule 1B Suwanee Bread Personal Property
Schedule 1C Promotional SKUs
Schedule 2.1(b) Excluded Contracts
Schedule 2.2 Retained Assets
Schedule 3.1 Excluded Accounts Payable
Schedule 6.1 Organization and Standing
Schedule 6.2 Authority; Conflicts; Compliance with Laws
Schedule 6.3 Regulatory Filings; No Violations
Schedule 6.6 Taxes
Schedule 6.7(a) Real Property
Schedule 6.7(b) Capital Leases
Schedule 6.7(c) Listed Equipment Leases
Schedule 6.7(d) Existing Title Encumbrances
Schedule 6.7(h) Condition of Machinery and Equipment and Other Tangible Assets
Schedule 6.7(i) Fixed Asset Listing
Schedule 6.8 Governmental Permits
Schedule 6.9 Intellectual Property
Schedule 6.10 Litigation
Schedule 6.11(a) Contracts
Schedule 6.11(b) Defaults; Invalidity
Schedule 6.12(a) Compensation and Benefit Plans
Schedule 6.13 Compliance with Laws
Schedule 6.14 Insurance Policies
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TABLE OF SCHEDULES
(CONTINUED)
Schedule 6.15 Finders or Brokers
Schedule 6.16 Absence of Changes
Schedule 6.17(a) Employees
Schedule 6.17(b) Labor Matters
Schedule 6.18 Environmental Matters
Schedule 6.19 Customers
Schedule 6.20 Suppliers
Schedule 6.21 Sales Brokers
Schedule 6.22 Interests of Related Persons
Schedule 6.23 Financial Statements
Schedule 6.23(a)(i)-(iii) Balance Sheets
Schedule 6.23(b)(i)-(iii) Income Statements
Schedule 6.23(d) Prepaid Expenses and Deposits as of December 28, 2002
Schedule 6.25 Units and Sales by SKU; Case Information; Standard Cost by SKU
Schedule 6.26 List of Product Recalls
Schedule 7.4 Finders or Brokers
Schedule 8.6 Operations Prior to Closing Date
Schedule 8.8(a) Permitted Exceptions to Employment Offers
Schedule 8.8(c) Administrative Employees
Schedule 8.8(g) Employees Eligible for Employment by Parent
Schedule 9.2(b) London Pie Line
Schedule 9.2(c) Crossville Flip-It Cake Equipment
Schedule 9.7 Pre-Closing Real Estate Matters
Schedule 10.1(d) Consents Required for Closing
Schedule 10.1(g) Post-Closing Real Estate Matters
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, made this 29th day of January, 2003, is
by and between THE SCHWAN FOOD COMPANY, a Minnesota corporation (the
"PURCHASER"), FLOWERS FOODS, INC., a Georgia corporation (the "PARENT") and MRS.
SMITH'S BAKERIES, LLC, a Georgia limited liability company and wholly-owned
subsidiary of the Parent (the "SELLER").
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into this Agreement
pursuant to which the Parent will cause the Selling Subsidiaries to sell, and
Purchaser will purchase from the Selling Subsidiaries, the Business and its
assets, upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, for and in consideration of the premises and the mutual
promises, agreements, representations, warranties and covenants hereinafter set
forth, and the sum of ten dollars and other good and valuable consideration, the
receipt and sufficiency of which is hereby specifically agreed to and
acknowledged, the parties hereto agree as follows:
ARTICLE 1: DEFINITIONS
"ACCOUNTS PAYABLE" means the accounts payable of the Business as
reflected on its books and records, determined in accordance with GAAP, as of
the Effective Time and not reflecting any discount for early payment (and shall
be deemed to include any payables that would arise on all open orders placed
prior to Closing for finished goods to be manufactured by co-packers or other
third parties upon delivery of such finished goods and any payables that would
arise on all open orders placed prior to Closing for ingredients upon delivery
of such ingredients) excluding any accounts payable solely attributable to the
doughnut line currently operated by Spartanburg and any of the other operations
conducted by the Parent or any other subsidiary of the Parent; provided,
however, Accounts Payable shall exclude any accounts payable other than the
Sysco Accounts Payable described in SECTION 4.4 that Parent notifies Purchaser
that it shall retain.
"ACCOUNTS RECEIVABLE" has the meaning set forth in SECTION 2.2.
"ADMINISTRATIVE EMPLOYEES" has the meaning set forth in SECTION 8.8(C).
"ACTION" means any civil, criminal or administrative actions or suits
or any appeal in respect thereof.
"AFFILIATE" of any Person means any person directly or indirectly
controlling, controlled by, or under common control with, any such Person and
any officer, director or controlling person of such Person.
"AGREEMENT" means this Asset Purchase Agreement.
"ANCILLARY AGREEMENTS" means the Noncompetition Agreement, the Brands
Trademark Assignment Agreement, the Seller Trademark Assignment Agreement, the
Supply Agreements and the Liabilities Undertaking.
"ANTITRUST DIVISION" means the Antitrust Division of the United States
Department of Justice.
"ASSUMED LIABILITIES" has the meaning set forth in SECTION 3.1.
"BANK LIEN" means that lien and security interest in favor of Bankers
Trust Company, as collateral agent for the Parent's senior lenders.
"BANKRUPTCY EXCEPTION" has the meaning set forth in SECTION 6.2(A).
"BASKET" has the meaning set forth in SECTION 12.4(B).
"BRANDS" means Mrs. Smith's Brands, Inc., a South Carolina corporation
and wholly-owned subsidiary of the Seller.
"BRANDS TRADEMARK ASSIGNMENT AGREEMENT" means the Trademark Assignment
Agreement, by and between the Purchaser and Brands, substantially in the form
attached hereto as EXHIBIT C.
"BUSINESS" means the operations currently conducted by (a) the Selling
Subsidiaries with regard to the Flip-It Cake Product and the products
manufactured or produced at, or co-packed for, Spartanburg, Stilwell and the
London Pie Line including, without limitation, researching and developing,
manufacturing, producing, co-packing, packaging, marketing, promoting, storing,
distributing or selling (i) frozen dessert pies, cobblers and cakes; (ii) frozen
pie crusts; (iii) frozen breaded and battered vegetables and bagged frozen
fruit; (iv) prepared frozen quiche mix; (v) the Flip-It Cake Product and (vi)
any other type of food product manufactured, produced or co-packed by
Spartanburg, Stilwell or the London Pie Line; (b) the Parent or any subsidiary
with respect to products using the tradenames covered by the Brands Trademark
Assignment Agreement or the Seller Trademark Assignment Agreement or whose sales
were included in revenues shown in SCHEDULE 6.23(B)(III), whether or not
co-packed by a third party and (c) Foil; provided, however, that the Business
shall not include the business of the Spartanburg Doughnut Equipment or
researching and developing, manufacturing, producing, co-packing, packaging,
marketing, promoting, storing, distributing or selling any type of fresh or
frozen food product not described in clauses (a) or (b), including, without
limitation: (w) any fresh or frozen bread, buns, rolls, muffins, bagels, waffles
or pancakes of any flavor, kind or size; (x) any fresh or frozen snack-cake type
products of any flavor, size or kind, including, without limitation, honey buns,
cinnamon rolls, pastries, bear claws, danish, cookies, crackers and tarts; (y)
single-serving-fruit-filled fried pies; and (z) fresh or frozen doughnuts of any
flavor, kind or size.
"BUSINESS INTELLECTUAL PROPERTY" has the meaning set forth in SECTION
2.1(D).
"CALIFORNIA PROPOSITION 65" has the meaning set forth in SECTION 6.26.
"CAP" has the meaning set forth in SECTION 12.4(C).
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"CAPITAL LEASES" has the meaning set forth in SECTION 6.7(B).
"CLAIMS NOTICE" has the meaning set forth in SECTION 12.3(A).
"CLOSING" means the consummation of the transactions provided for in
this Agreement.
"CLOSING DATE" means the date on which the Closing occurs pursuant to
ARTICLE 5 hereof.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPENSATION AND BENEFIT PLANS" has the meaning set forth in SECTION
6.12(A).
"CONFIDENTIALITY AGREEMENT" means that certain Confidentiality
Agreement, dated March 20, 2002, by and between the Purchaser and the Parent.
"CONTRACTS" has the meaning set forth in SECTION 2.1(B).
"CO-PACKING/SUPPLY AGREEMENT (LONDON PIE AND CROSSVILLE FLIP-IT CAKE)"
means the Co-Packing/Supply Agreement by and among Crossville, London and
Purchaser, substantially in the form attached hereto as EXHIBIT J.
CO-PACKING/SUPPLY AGREEMENT (SPARTANBURG DOUGHNUT)" means the
Co-Packing/Supply Agreement by and between Spartanburg and Purchaser,
substantially in the form attached hereto as EXHIBIT I.
"CROSSVILLE" means Flowers Snack of Crossville, LLC, a Tennessee
limited liability company.
"CROSSVILLE FLIP-IT CAKE EQUIPMENT" has the meaning set forth in
SECTION 9.2(C).
"DAMAGE PROVISO" has the meaning set forth in SECTION 10.1(A).
"DOMAIN NAMES" has the meaning set forth in SECTION 6.9(A).
"EDWARDS" means Edwards Fine Foods, Inc., a Georgia corporation.
"EFFECTIVE TIME" means the close of business on the Closing Date.
"EMPLOYEES" has the meaning set forth in SECTION 6.12(A).
"ENCUMBRANCE" means any lien, claim, charge, security interest,
mortgage, pledge, easement, conditional sale or other title retention agreement,
option, right of first refusal, restriction on transfer, defect in title or
other restrictions of a similar kind.
"ESTIMATED NET PREPAYMENTS AND INVENTORY" has the meaning set forth in
SECTION 4.1(B).
"ENVIRONMENTAL LAW" means any federal, state or local law, rule,
regulation, order, treaty, statute or code which prohibits, regulates or
controls (a) the protection, investigation or restoration of the environment or
natural resources or (b) the handling, use, presence, disposal or
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release of any Hazardous Substance, all as in effect, as the context requires,
on or prior to the Closing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCESS INVENTORY" means the Qualified Inventory whose value,
determined at the lower of standard cost or market using the FIFO Method
(without any provision for reserves), exceeds the Maximum Qualified Inventory,
and all finished goods Inventory that is not Qualified Inventory but that would
otherwise constitute Qualified Inventory except that it exceeds the SKU Quantity
Limit or the Shelf Life Limitation.
"EXISTING TITLE ENCUMBRANCES" means the matters encumbering title to
the Real Property set forth on SCHEDULE 6.7(D).
"EXPIRATION DATE" has the meaning set forth in SECTION 12.4(A).
"FDCA" has the meaning set forth in SECTION 6.26.
"FIFO METHOD" means the first in, first out method as reflected on the
books and records of the Business, determined in accordance with GAAP.
"FINAL NET PREPAYMENTS AND INVENTORY" means the dollar amount that is
the result of subtracting Accounts Payable from Inventory Value plus Prepaid
Expenses and Deposits.
"FINANCIAL STATEMENTS" means the financial statements of the Business
set forth on SCHEDULE 6.23(A) and SCHEDULE 6.23(B).
"FLIP-IT CAKE PRODUCT" means the single-serve, frozen, microwavable
cake with fruit filling that is served upside down, that is manufactured by
Crossville.
"FOIL" means Mrs. Smith's Foil Company, LLC, a Georgia limited
liability company and wholly-owned subsidiary of the Seller.
"FOIL BUSINESS" means the developing, manufacturing, producing,
packaging, marketing, promoting, storing, distributing and selling of aluminum
pie and cobbler plates and trays, and molded plastic trays for pecan spins and
other snack items as such activities are currently conducted by Foil.
"FOIL INVENTORY" means the Inventory of finished goods, work in process
and raw material of Foil which Parent guaranties shall have a value of not less
than $1 million, at the lower of standard cost or market using the FIFO Method
(without any provision for reserves).
"FOIL SUBLEASE" means the Sublease for the portion of Foil's Pottstown,
PA facility containing the foil manufacturing plant and the Feroe warehouse,
substantially in the form attached hereto as EXHIBIT H.
"FREEZER" means the refrigerated warehouse facility of the Seller
located in Suwanee, Georgia.
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"FTC" means the Federal Trade Commission.
"GAAP" means United States generally accepted accounting principles
used by the Business consistently applied.
"GOVERNMENTAL BODY" means any governmental or political subdivision or
regulatory authority, whether federal, state, local or foreign, or any agency or
instrumentality of any such government or political subdivision or regulatory
authority, or any federal, state, local or foreign court or arbitrator.
"GOVERNMENTAL PERMITS" has the meaning set forth in SECTION 6.8.
"HAZARDOUS SUBSTANCE" means any hazardous substance or hazardous waste
as those terms are defined by any applicable federal law or applicable state
law, or regulation issued pursuant thereto.
"HEADQUARTERS" means the administrative headquarters of the Seller and
the restaurant/thrift store currently operated by the Seller, each located in
Suwanee, Georgia.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in SECTION 12.3(A).
"INDEMNIFYING PARTY" has the meaning set forth in SECTION 12.3(A).
"INDEPENDENT ACCOUNTING FIRM" has the meaning set forth in SECTION
4.2(B). "INITIAL PURCHASE PRICE" has the meaning set forth in SECTION 4.2(A).
"INTELLECTUAL PROPERTY" means all rights in patents, patent
disclosures, patentable subject matter, design rights, trademarks, service
marks, trade dress, logos, trade names and other designators of origin (all
whether registered or not), mask works, uniform resource locators (including
domain names), email addresses, copyrights, and all registrations, applications,
and associated goodwill for each of the foregoing, and all computer software
(whether in object code, source code or other form), computer programs, computer
databases and related documentation and materials, data, documentation, trade
secrets, confidential business information (including ideas, formulas,
compositions, inventions, know-how, product and process specifications,
manufacturing and production processes and techniques, research and development
information, designs, plans, proposals and technical data, financial, marketing
and business data, customer and supplier data, pricing and cost information) and
all other intellectual property rights (in whatever form or medium), whether
arising by operation of law, contract, license or otherwise, and the right to
prosecute past infringements of any such rights.
"INVENTORY" has the meaning set forth in SECTION 2.1(C).
"INVENTORY VALUE" means the lesser of (A) the Maximum Inventory or (B)
the sum of
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(i) the value of Qualified Inventory, including Seller's
Storage and Inbound Freight Cost attributable thereto, at the lower of
standard cost or market using the FIFO Method (without any provision
for reserves), not to exceed the Maximum Qualified Inventory;
(ii) the value of the Raw Materials and Packaging
Inventory useable in the Ordinary Course of Business (excluding
packaging for SKUs no longer in production) at the lower of cost or
market using the FIFO Method (without any provision for reserves), not
to exceed the Maximum Raw Materials and Packaging Inventory;
(iii) the value of the Other Inventory useable and saleable
in the Ordinary Course of Business at the lower of cost or market using
the FIFO Method (without any provision for reserves), not to exceed
$2,500,000;
(iv) 20% of the value of the Excess Inventory at the lower
of standard cost or market using the FIFO Method (without any provision
for reserves); and
(v) the amount actually received by Purchaser upon sale
in secondary markets with respect to Non-qualified Inventory, less
actual costs of sale.
For purposes of this Agreement, standard cost for each product by SKU shall be
as set forth on SCHEDULE 6.25.
"KNOWLEDGE" or "KNOWN" with respect to any Person means the actual
conscious awareness of such Person, and Knowledge or Known as to the Parent
shall mean such conscious awareness of Amos R. McMullian, Jimmy M. Woodward,
George E. Deese, Stephen R. Avera, William A. Strenglis, Jeffrey T. Jackson and
Michael Beaty; Michael Crick but only with regard to matters solely relating to
the plant owned by Spartanburg; Michael Mitchell but only with regard to matters
solely relating to the plant owned by Stilwell; Steve Boyer but only with regard
to matters solely relating to Foil; and Jeff Cole but only with regard to
matters solely relating to the Freezer; provided "conscious awareness" shall be
deemed to include any awareness that would have been obtained through a
reasonable investigation to ascertain the existence of any matter.
"LAW" means any federal, state or local law, rule, regulation, order,
treaty, statute or code, other than any Environmental Law.
"LIABILITIES UNDERTAKING" means the undertaking executed by the
Purchaser, substantially in the form attached hereto as EXHIBIT B.
"LIABILITY" means any debt, liability, commitment or obligation of any
kind, character or nature whatsoever, secured or unsecured, accrued, fixed,
absolute, contingent, and whether due or to become due.
"LIABILITY CLAIM" has the meaning set forth in SECTION 12.3(A).
"LISTED EQUIPMENT LEASES" has the meaning set forth in SECTION 6.7(C).
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"LONDON PIE LINE" has the meaning set forth in SECTION 9.2(B).
"LOSSES" has the meaning set forth in SECTION 12.2.
"MANUFACTURING EMPLOYEES" has the meaning set forth in SECTION 8.8(A).
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
Purchased Assets, business or financial conditions of the Business, except any
such effect resulting from or arising in connection with: (i) changes in general
economic or business conditions; or (ii) this Agreement or the transactions
contemplated hereby or the announcement hereof.
"MATERIAL CONTRACTS" has the meaning set forth in SECTION 6.11.
"MATERIAL CUSTOMERS" has the meaning set forth in SECTION 6.19.
"MATERIAL SUPPLIERS" has the meaning set forth in SECTION 6.20.
"MAXIMUM INVENTORY" means that amount shown on SCHEDULE 1A as the
applicable "Maximum Inventory" for the date on which the Closing occurs.
"MAXIMUM QUALIFIED INVENTORY" means that amount shown on SCHEDULE 1A as
the applicable "Maximum Qualified Inventory" for the date on which the Closing
occurs.
"MAXIMUM RAW MATERIALS AND PACKAGING INVENTORY" means that amount shown
on SCHEDULE 1A as the applicable "Maximum Raw Materials and Packaging Inventory"
for the date on which the Closing occurs.
"MAXIMUM STORAGE AND INBOUND FREIGHT COST" means that amount shown on
SCHEDULE 1A as the applicable "Maximum Storage and Inbound Freight Cost" for the
date on which the Closing occurs.
"NET PREPAYMENTS AND INVENTORY STATEMENT" has the meaning set forth in
SECTION 4.2(A).
"NONCOMPETITION AGREEMENT" means the Noncompetition Agreement, by and
among the Purchaser, the Parent and the Selling Subsidiaries, substantially in
the form attached hereto as EXHIBIT A.
"NON-QUALIFIED INVENTORY" means finished goods Inventory that is
neither Foil Inventory, Qualified Inventory nor Excess Inventory.
"ORDER" means any award, decision, injunction, judgment, decree,
settlement, order, filing, subpoena or verdict (whether temporary, preliminary
or permanent) entered, issued, made or rendered by any Governmental Body.
"ORDINARY COURSE OF BUSINESS" means in the ordinary course of the
Business in a manner consistent with its practice in the current fiscal year.
"ORGANIZATIONAL DOCUMENTS" means, collectively, the Certificate of
Incorporation, Certificate of Organization, Articles of Incorporation, Articles
of Organization, Bylaws and
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Declarations (or comparable governing documents), each as amended to date, of a
party, as applicable.
"OTHER INVENTORY" means the Foil Inventory, and machinery and equipment
spare parts.
"PARENT" has the meaning set forth in the preamble to this Agreement.
"PERMITTED ENCUMBRANCES" means (a) liens for Taxes and other
governmental charges and assessments which are not yet due and payable, (b)
liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the Ordinary Course of Business for
sums not yet due and payable, (c) other liens or imperfections on property which
are not material in amount or do not materially detract from the value of or
materially impair the existing use of the property affected by such lien or
imperfection and (d) the Existing Title Encumbrances, other than those described
on SCHEDULE 10.1(G), and (e) the Suwanee Lease Agreement, all of which are to be
recorded at Closing; provided, however, that Permitted Encumbrances shall not
include liens for borrowed money or liens covering equipment subject to the
Capital Leases.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or Governmental Body.
"PERSONAL PROPERTY" has the meaning set forth in SECTION 2.1(A).
"PREPAID EXPENSES AND DEPOSITS" means the prepaid expenses and deposits
of the Business consistent with those types reflected on its balance sheet at
December 28, 2002, as reflected on its books and records, determined in
accordance with GAAP, as of the Effective Time, excluding any prepaid expenses
and deposits solely attributable to the doughnut line currently operated by
Spartanburg and to any of the other operations conducted by the Parent or any
other subsidiary of the Parent.
"PRODUCT FORMULAS" has the meaning set forth in SECTION 5.4.
"PURCHASED ASSETS" has the meaning set forth in SECTION 2.1.
"PURCHASE PRICE" has the meaning set forth in SECTION 4.1(A).
"PURCHASER" has the meaning set forth in the preamble to this
Agreement.
"QUALIFIED INVENTORY" means all finished goods Inventory (other than
the Foil Inventory) that is usable and saleable in the ordinary course of
business and all open orders placed prior to Closing for finished goods to be
manufactured by co-packers or other third parties, excluding, as to each SKU,
(i) Inventory in excess of the SKU Quantity Limit and (ii) Inventory in excess
of the Shelf Life Limitation.
"RAW MATERIALS AND PACKAGING INVENTORY" means all ingredients and
packaging Inventory and all open orders placed prior to Closing for ingredients
and packaging, excluding any Foil Inventory.
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"REAL PROPERTY" has the meaning set forth in SECTION 2.1(E).
"RETAINED ASSETS" has the meaning set forth in SECTION 2.2.
"RETAINED LIABILITIES" has the meaning set forth in SECTION 3.1.
"SECOND REQUEST" has the meaning set forth in SECTION 11.1.
"SELLER" has the meaning set forth in the preamble to this Agreement.
"SELLER TRADEMARK ASSIGNMENT AGREEMENT" means the Trademark Assignment
Agreement, by and between the Purchaser and Flowers Bakeries Brands, Inc.,
substantially in the form attached hereto as EXHIBIT D.
"SELLING SUBSIDIARIES" means the Seller, Stilwell, Spartanburg, Brands,
Mrs. Smith's Bakeries Sales Support Group, LLC, Mrs. Smith's Bakeries Frozen
Distributors, LLC, Crossville, Foil and Flowers Snack of London, LLC,
collectively.
"SHELF LIFE LIMITATION" means, with respect to each SKU of finished
goods Inventory (other than Foil Inventory) on the Closing Date, the maximum
number of units of such SKU that could be sold during the 12 months following
the Closing Date assuming (i) each unit is sold within 30 days prior to the
expiration of its shelf life and (ii) during each four-week fiscal period
following the Closing Date no more than (A) the number of units sold during the
corresponding four-week fiscal period of Seller in the year ending December 28,
2002 are sold or (B) in the case of any SKU introduced after January 1, 2002,
one-thirteenth (1/13) of the annualized sales of such SKU in the twelve month
period ended prior to and closest to the Closing Date, are sold; provided,
however, that the Shelf Life Limitation shall not apply to the SKUs listed on
SCHEDULE 1C, which constitute promotional SKUs introduced after January 1, 2002,
as to which no sales have been recorded as of the date hereof and which, as of
the Closing have (x) a shelf life of one year or more and (y) not constituted
finished goods for more than 120 days prior thereto.
"SKU" means products of the Business identified by Stock Keeping Unit
numbers and any product identified by a different such number but constituting a
substitute or replacement therefor.
"SKU QUANTITY LIMIT" means, with respect to each SKU of finished goods
Inventory (other than Foil Inventory) on the Closing Date, that number of units
of each such SKU that is equal to the number of units of such SKU sold by the
Seller during the year ended December 28, 2002, or in the case of any SKU
introduced after January 1, 2002, the annualized sales of such SKU in twelve
month period ended prior to and closest to the Closing Date; provided, however,
that the SKU Quantity Limit shall not apply to the SKUs listed on SCHEDULE 1C.
"SPARTANBURG" means Mrs. Smith's Bakery of Spartanburg, LLC, a South
Carolina limited liability company and wholly-owned subsidiary of the Seller.
"SPARTANBURG DOUGHNUT EQUIPMENT" has the meaning set forth in SECTION
9.2(A).
9
"STILWELL" means Mrs. Smith's Bakery of Stilwell, LLC, an Oklahoma
limited liability company and wholly-owned subsidiary of the Seller.
"STORAGE AND INBOUND FREIGHT COST" means all reasonable capitalized
storage and freight costs from plant to storage attributable to the Inventory,
excluding any Foil Inventory.
"SUPPLY AGREEMENTS" means the Co-Packing/Supply Agreement (London Pie
and Crossville Flip-It Cake) and the Co-Packing/Supply Agreement ( Spartanburg
Doughnut).
"SURVEYS" has the meaning set forth in SECTION 8.9.
"SUWANEE BREAD PERSONAL PROPERTY" means bread and rolls inventories
owned by the Parent or any of its affiliates and other personal property and
equipment related exclusively to the Suwanee Bread Plant and listed on SCHEDULE
1B.
"SUWANEE BREAD PLANT" means the bakery facility and the research and
development facility of the Seller located in Suwanee, Georgia.
"SUWANEE LIMITED WARRANTY DEED" means the Limited Warranty Deed,
substantially in the form attached hereto as EXHIBIT G.
"SUWANEE LEASE AGREEMENT" means the Shared Site Lease, substantially in
the form attached hereto as EXHIBIT H.
"SUWANEE REAL PROPERTY" means all of the Real Property described on
SCHEDULE 6.7(A) that is located in Suwanee, Georgia, on which the Freezer, the
Headquarters and the Suwanee Bread Plant are located.
"SYSCO" means Sysco Corporation.
"TAX" means all federal, state, local or foreign income, gross
receipts, windfall or excess profits, severance, property, production, sales,
use, license, excise, franchise, employment, withholding or similar taxes,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties.
"TAX RETURN" means any return, report or similar statement required to
be filed with respect to any Tax (including any attached schedules), including,
without limitation, any information return, claim for refund, amended return and
declaration of estimated Tax.
"THIRD PARTY CLAIM" has the meaning set forth in SECTION 12.3(B).
"TITLE COMPANY" has the meaning set forth in SECTION 5.2(O).
"TITLE POLICIES" has the meaning set forth in SECTION 5.2(O).
"TRADEMARKS" has the meaning set forth in SECTION 6.9(A).
"WARN ACT" means the Worker Adjustment and Retraining Notification Act
of 1988, as amended.
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ARTICLE 2: PURCHASE AND SALE OF ASSETS
2.1 ASSETS TO BE TRANSFERRED. In consideration of the Purchase
Price as set forth in ARTICLE 4, at the Closing, the Purchaser shall purchase
from the Selling Subsidiaries or the Parent, and the Parent shall or shall cause
the Selling Subsidiaries to sell, transfer, assign, convey and deliver to the
Purchaser, the assets, rights and properties set forth below as they exist as of
the Effective Time (collectively, the "PURCHASED ASSETS"):
(a) (i) all fixed and tangible assets, including office
equipment, other machinery and equipment, machinery and equipment parts
that do not constitute machinery and equipment spare parts, computer
equipment, furniture and fixtures, manuals, tractors, trailers and
other motor vehicles related to the Business and all other personal
property owned by the Selling Subsidiaries (except Crossville or
Flowers Snack of London, LLC) as of the Closing Date including (A) all
such items located at the plant owned by Stilwell; (B) all such items
located at the plant owned by Spartanburg, other than the Spartanburg
Doughnut Equipment; (C) all personal property located on the Suwanee
Real Property, regardless of whether used in the Business, other than
the Suwanee Bread Personal Property; (D) all such items located on the
real property that is the subject of the Foil Sublease; and (E) the
computer hardware equipment related to the Business located at a third
party's facilities at Alpharetta, Georgia whether under capital or
operating leases); (ii) the London Pie Line; and (iii) the Crossville
Flip-It Cake Equipment (collectively, the "Personal Property");
(b) all contracts and agreements to the extent relating
to the Purchased Assets or the Business, including, without limitation,
non-competition agreements, commitments, instruments, guarantees, bids,
orders and proposals, purchase orders, operating leases, maintenance
agreements, service agreements, warranties, royalty agreements,
instruments, licenses, franchises, confidentiality agreements, rights
to enforce confidentiality provisions in other agreements (whether or
not such agreements are part of the Purchased Assets) and other
agreements attributable to the Business or the Purchased Assets
(collectively, the "Contracts"); provided, however, that the Contracts
shall not include the contracts set forth on SCHEDULE 2.1(B), which
also identifies any Contract that is to be ratably shared by the
parties after the Closing Date and describes the arrangement for such
sharing;
(c) all raw materials, packaging, supplies, work in
process, machinery and equipment spare parts, finished goods and other
inventories (and shall be deemed to include all open orders placed
prior to Closing for finished goods to be manufactured by co-packers or
other third parties) to the extent related to the Business wherever
located or to the thrift shop (collectively, the "Inventory");
(d) all Intellectual Property owned by, licensed to or
otherwise controlled by each Selling Subsidiary, and all Intellectual
Property owned by, licensed to or otherwise controlled by the Parent,
and in each case, used in, proposed for use in or developed for use in
the conduct of the Business, or any combination of the foregoing
(collectively, the "Business Intellectual Property");
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(e) all of the real property and improvements located
thereon (including, without limitation, all interests and rights
thereto) used in connection with the Business, which is set forth on
SCHEDULE 6.7 (the "Real Property");
(f) except for the corporate minute books and related
stock records of the Selling Subsidiaries, all records owned or
maintained by the Selling Subsidiaries related to the Business,
including, without limitation, all books, records, ledgers, files,
documents, correspondence, lists, including, without limitation,
customer lists (in whatever form or medium), plats, surveys, drawings,
blueprints, photographs, advertising and promotional materials,
studies, reports and other materials (in whatever form or medium);
(g) such rights as the Selling Subsidiaries have to use
their present telephone numbers related to the Business from and after
the Closing Date;
(h) the Governmental Permits, to the extent such permits
are transferable or assignable on the Closing Date;
(i) cash equal to (x) the proceeds from the sale of
tangible personal property that is an asset of the Business (other than
Inventory) after the date of this Agreement and (y) the amount of any
payments received by the Seller prior to the Effective Time related to
any performance by the Purchaser under any Contract after the Effective
Time; and
(j) the Prepaid Expenses and Deposits.
2.2 RETAINED ASSETS. Notwithstanding anything in this Agreement to
the contrary, except for the Purchased Assets, the Selling Subsidiaries shall
retain all of their other assets, rights and properties, including, without
limitation, (i) cash, cash equivalents and bank deposits, (ii) accounts
receivable of the Selling Subsidiaries arising on or prior to the Effective Time
(the "ACCOUNTS RECEIVABLE") (iii) any equipment or machinery owned by Crossville
or Flowers Snack of London, LLC except for the Crossville Flip-It Cake Equipment
and the London Pie Line, (iv) the Suwanee Bread Personal Property, (v) the
Spartanburg Donut Equipment and (vi) the assets, rights and properties set forth
on SCHEDULE 2.2 (collectively, the "RETAINED ASSETS"), and the Purchaser shall
in no way be construed to have purchased or acquired (or be obligated to
purchase or acquire) any interest whatsoever in any of the Retained Assets.
ARTICLE 3: LIABILITIES
3.1 ASSUMED LIABILITIES.
(a) At the Closing, the Purchaser will assume the
obligations of the Parent and each Selling Subsidiary thereafter to
accrue under the Contracts after the Effective Time and the Accounts
Payable other than the Contracts listed on SCHEDULE 2.1(B), Accounts
Payable listed on SCHEDULE 3.1 and except for those Contracts to be
signed at Closing and any Contract with an Affiliate of Parent
(collectively, the "Assumed Liabilities"); provided, Assumed
Liabilities shall not include a payment obligation for goods or
services provided to the Parent or any Selling Subsidiary before the
Effective Time except to the extent constituting Accounts Payable or
any guaranties of the Parent or any
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Selling Subsidiary; provided further that "Assumed Liabilities" shall
not include any obligations under any Contract required to be disclosed
in a Schedule to this Agreement that is not so disclosed and shall not
include any damages or other claims related to activities of the Parent
or any Selling Subsidiary prior to the Effective Time. Except for the
Assumed Liabilities, Purchaser will not assume or become liable for any
other Liability (such Liabilities not assumed by the Purchaser are
hereinafter referred to as the "RETAINED Liabilities"). Purchaser shall
not assume or have any Liability for any conduct of the Business prior
to the Effective Time, regardless of whether such matter is disclosed
on any Schedule to this Agreement. Purchaser shall not assume or have
any Liability for any legal fees or expenses of the Parent, the Selling
Subsidiaries or any other party incurred for any reason whatsoever, and
the Purchased Assets shall not be utilized for or reduced by the amount
of any such fees or expenses. Purchaser shall not assume any Liability
for federal, state or local income, sales, use, excise, payroll,
employment or other Taxes, or for wages, salaries or overtime, vacation
pay, holiday pay or other employee benefits, or other employee benefit
plans on, arising out of, or attributable to the Parent or the Selling
Subsidiaries or to the conduct of the Business through the Effective
Time.
(b) All property and ad valorem Taxes, leasehold rentals
and other customarily proratable items relating to the Purchased Assets
payable prior to or subsequent to the Closing Date and relating to a
period of time both prior to and subsequent to the Effective Time will
be prorated as of the Effective Time between the Purchaser and the
Parent. If the actual amount of any such item is not known as of the
Closing Date, the aforesaid proration shall be based on the previous
year's assessment of such item and the parties agree to adjust said
proration and pay any underpayment or reimburse for any overpayment
within 30 days after the actual amount becomes known.
ARTICLE 4: PURCHASE PRICE
4.1 PURCHASE PRICE.
(a) In consideration of (i) the sale, transfer,
conveyance, assignment and delivery of the Purchased Assets, and in
reliance upon the representations and warranties made herein by the
Parent and the Seller and (ii) the covenants of Parent and Seller under
the Noncompetition Agreement, at the Closing, the Purchaser shall pay
or cause to be paid to the Parent by bank wire transfer of immediately
available funds to an account designated in writing by the Parent an
amount in cash equal to (i) the sum of ONE HUNDRED SEVENTY-FIVE MILLION
AND 00/100 DOLLARS ($175,000,000.00); plus (ii) the Estimated Net
Prepayments and Inventory; (the "Initial Purchase Price"), subject to
adjustment pursuant to SECTION 4.2 of this Agreement. The Initial
Purchase Price as adjusted pursuant to SECTION 4.2 of this Agreement is
referred to herein as the "PURCHASE PRICE." Three Million and 00/100
Dollars ($3,000,000.00) of the Purchase Price shall be allocated as
payment for the covenants under the Noncompetition Agreement.
(b) At or prior to the Closing, the Parent shall present
to the Purchaser a good faith estimate of Final Net Prepayments
13
and Inventory (the "Estimated Net Prepayments and Inventory"), which
shall be based upon the books and records of the Parent and the Selling
Subsidiaries at a reasonable time prior to Closing. Such estimate shall
be accompanied by Parent's working papers and calculations reasonably
necessary to support the Parent's calculation of the Estimated Net
Prepayments and Inventory.
4.2 PURCHASE PRICE ADJUSTMENT.
(a) Within 90 days after the Closing Date, the Purchaser
shall deliver to the Parent a net prepayments and inventory statement
along with related working papers and calculations (the "Net
Prepayments and Inventory Statement"), setting forth the Purchaser's
calculation of Final Net Prepayments and Inventory. The Net Prepayments
and Inventory Statement shall be delivered to the Parent in detail
sufficient to allow the Parent to derive the Purchaser's calculation of
Final Net Prepayments and Inventory.
(b) Within 30 days following receipt by the Parent of the
Net Prepayments and Inventory Statement, the Parent shall deliver
written notice to the Purchaser of any dispute it has with respect to
the preparation or content of such statement. In the event that the
Parent does not notify the Purchaser of a dispute with respect to the
Net Prepayments and Inventory Statement within such 30-day period, such
Net Prepayments and Inventory Statement will be final, conclusive and
binding on the parties and shall be deemed the finally determined Final
Net Prepayments and Inventory. In the event of such notification of a
dispute, the Purchaser and the Parent shall negotiate in good faith to
resolve such dispute. If the Purchaser and the Parent fail to resolve
such dispute within 30 days after the Parent advises the Purchaser of
its objections, then the Purchaser and the Parent, jointly, shall
engage a mutually agreed upon independent public accounting firm (the
"INDEPENDENT ACCOUNTING FIRM") to resolve the amount of Final Net
Prepayments and Inventory based upon the definitions contained in this
Agreement. All determinations made by the Independent Accounting Firm
shall be final, conclusive and binding on the parties. The fees and
expenses of the Independent Accounting Firm shall be shared equally by
the Purchaser and the Parent.
(c) For purposes of complying with the terms set forth in
this SECTION 4.2, each party shall cooperate with and make available to
the other party and its representatives all information, records, data
and working papers, and will permit access to its facilities and
personnel, as may be reasonably required in connection with the
preparation and analysis of the Net Prepayments and Inventory Statement
and the resolution of any disputes thereunder.
(d) The Initial Purchase Price will be adjusted upward or
downward by an amount that is the amount by which the Final Net
Prepayments and Inventory (as finally determined pursuant to SECTION
4.2(B)) is greater than or less than the Estimated Net Prepayments and
Inventory. If the Final Net Prepayments and Inventory is less than the
Estimated Net Prepayments and Inventory, the Parent shall pay or cause
to be paid to the Purchaser, by bank wire transfer of immediately
available funds to an account designated in writing by the Purchaser,
an amount in cash equal to the Estimated Net Prepayments and Inventory
less the Final Net Prepayments and Inventory. If the Final Net
Prepayments and Inventory is greater than the Estimated Net Prepayments
and Inventory,
14
the Purchaser shall pay to the Parent by bank wire transfer of
immediately available funds to an account designated in writing by the
Parent, an amount equal to the Final Net Prepayments and Inventory less
the Estimated Net Prepayments and Inventory. Any payments made under
this SECTION 4.2(D) (i) shall accrue interest from the Closing Date at
a rate per annum equal to 5% and shall be made within 5 business days
from the date on which the Final Net Prepayments and Inventory is
finally determined pursuant to SECTION 4.2(B) and (ii) are not subject
to the Basket.
4.3 NON-QUALIFIED INVENTORY PAYMENT. For purposes of SECTION
4.1(B), the Estimated Net Prepayments and Inventory shall not include the
Inventory Value of any Non-qualified Inventory. For purposes of SECTION 4.2, the
Final Net Prepayments and Inventory shall only include the Inventory Value of
Non-qualified Inventory that is disposed of by Purchaser prior to the time the
Final Net Prepayments and Inventory is finally determined. Purchaser shall pay
Parent the Inventory Value of any Non-qualified Inventory that is disposed of
after the Final Net Prepayments and Inventory is finally determined within 30
business days from the date of such disposal.
4.4 SYSCO MARKET ACCESS FEE. As part of the Prepaid Expenses and
Deposits, Purchaser will acquire the remaining prepaid amount of market access
fee under the Sysco letter agreements described on SCHEDULE 6.11(A).
Additionally, as part of the Accounts Payable, Purchaser will assume the
remaining payment obligations under such letter agreements with Sysco, which are
as of the date of this Agreement and will remain $3,000,000 until June 15, 2003.
Such acquisition and assumption will be included in the calculation of the
Estimated Net Prepayments and Inventory and Final Net Prepayments and Inventory.
In the event such letter agreements are terminated and Sysco does not refund in
full to Purchaser the remaining portion of the prepaid market access fee, Parent
and Seller shall pay Purchaser such unrefunded amounts; provided, however, that
Parent and Seller will not pay for any amount that is not refunded due to an
actual breach by Purchaser of its obligations under such letter agreements or
any amount that is not refunded due to Purchaser entering into a new or
substitute arrangement with Sysco. Upon Parent and Seller's payment to
Purchaser, they shall be entitled to pursue all of Purchaser's rights to such
repayment from Sysco, and Purchaser agrees to cooperate and assist Parent and
Seller, as reasonably requested, in their efforts to collect such sums from
Sysco.
ARTICLE 5: CLOSING AND DELIVERIES
5.1 CLOSING. The closing of the transactions contemplated hereby
(the "CLOSING") shall take place at the offices of Jones Day, 3500 SunTrust
Plaza, 303 Peachtree Street, Atlanta, Georgia 30308-3242 on the Thursday
following the later of (i) March 19, 2003, (ii) two weeks after receipt by the
Purchaser of the title commitments and the Surveys referred to in SECTION 8.9 or
(iii) the lapse of seven days after the date that the waiting period under the
HSR Act expires or is terminated or approval from the Antitrust Division or FTC
is obtained, or such other location and date as the Purchaser and the Parent
shall mutually agree in writing (the "CLOSING DATE") and shall be effective as
of the Effective Time. Parent shall deliver to Purchaser cash equal to any
accrued liabilities of Parent related to its obligations for the payment of real
property taxes through the Closing Date.
15
5.2 DELIVERIES BY THE PARENT. At the Closing, the Parent shall
deliver, or shall cause the appropriate Selling Subsidiary to deliver, to the
Purchaser the following items:
(a) such good and sufficient bills of sale, assignments,
special or limited warranty deeds and other good and sufficient
instruments of sale, conveyance, transfer and assignment as shall be
required or as may be appropriate in order to effectively invest in
Purchaser good and marketable title to the Purchased Assets free and
clear of Encumbrances (other than Permitted Encumbrances), including
those necessary to vest the Purchaser with title to the assets that are
leased under the Capital Leases and with respect to computer equipment
at Alpharetta, Georgia, operating leases;
(b) copies of all consents, approvals, acknowledgments
and waivers that have been obtained prior to Closing;
(c) a certificate of a duly authorized officer of each of
the Parent and the Seller certifying to the conditions set forth in
SECTION 10.1(A);
(d) certified copies of resolutions of the board of
directors or the board of managers, as the case may be, of the Parent
and each Selling Subsidiary approving the transactions set forth in
this Agreement;
(e) certified copies of resolutions of the shareholder or
unit-holder, as the case may be, of each Selling Subsidiary approving
the transactions set forth in this Agreement;
(f) certificate of incumbency for the officers of the
Parent and each Selling Subsidiary who are executing this Agreement and
the Ancillary Agreements;
(g) all books of account (excluding minute books and
stock books of the Selling Subsidiaries), contracts, files and other
data and documents pertaining to the Purchased Assets and Business
(which may be delivered at the offices of the Business);
(h) a copy of the Noncompetition Agreement, duly executed
by the Parent and the Seller;
(i) a copy of the Brands Trademark Assignment Agreement,
duly executed by Brands;
(j) a copy of the Seller Trademark Assignment Agreement,
duly executed by Flowers Bakeries Brands, Inc.;
(k) a copy of the Foil Sublease, duly executed by the
lessee of such property;
(l) amendments to the certificate of incorporation or the
certificate of organization, as the case may be, of each direct and
indirect subsidiary of the Parent containing the name "Mrs. Smith's,"
changing its name to a dissimilar name;
(m) appropriate termination statements (or authorizations
to file termination statements) under the Uniform Commercial Code and
other instruments as may be
16
required or reasonably requested by the Purchaser to extinguish all
Encumbrances related to the Purchased Assets (except for Permitted
Encumbrances), including without limitation, the Bank Lien with respect
to the Purchased Assets and the interests of lessors under Capital
Leases;
(n) with respect to each parcel of Real Property, a
standard owner's affidavit as may be reasonably required by Fidelity
National Title Insurance Company (the "Title Company") to issue in
favor of the Purchaser a standard form of ALTA owner's policy of title
insurance (ALTA Form B-1992) with the standard exceptions deleted for
each parcel of Real Property (collectively, the "Title Policies");
(o) a copy of the Suwanee Limited Warranty Deed, duly
executed by the Selling Subsidiary that owns the Suwanee Real Property;
(p) a copy of the Suwanee Lease Agreement, duly executed
by the Seller;
(q) a copy of the Co-Packing/Supply Agreement (Crossville
Flip-It Cake and London Pie), duly executed by Crossville and London;
(r) a copy of the Co-Packing/Supply Agreement
(Spartanburg Doughnut), duly executed by Spartanburg; and
(s) other documents or other evidence of the performance
of all covenants and satisfaction of all conditions required of the
Parent and each Selling Subsidiary by this Agreement, at or prior to
the Closing, as the Purchaser or its counsel may reasonably require.
5.3 DELIVERIES BY THE PURCHASER. At the Closing, the Purchaser
shall deliver to the Parent the following items:
(a) the Initial Purchase Price payable as set forth in
SECTION 4.1;
(b) a copy of the Noncompetition Agreement, duly executed
by the Purchaser;
(c) a copy of the Liabilities Undertaking, duly executed
by the Purchaser;
(d) a copy of the Brands Trademark Assignment Agreement,
duly executed by the Purchaser;
(e) a copy of the Seller Trademark Assignment Agreement,
duly executed by the Purchaser;
(f) a copy of the Foil Sublease, duly executed by
Purchaser; provided, however, that Purchaser shall not be required to
sign or deliver the Foil Sublease if it should determine that there
exist unacceptable environmental problems with respect to the Foil
facilities and in such event delivery of same shall not constitute a
condition precedent to Purchaser's obligation to close.
17
(g) a certificate of a duly authorized officer of the
Purchaser certifying to the conditions set forth in SECTION 10.2(A);
(h) certificate of incumbency of the officer of the
Purchaser who is executing this Agreement and the Ancillary Agreements;
(i) a copy of resolutions of the board of directors of
the Purchaser approving the execution and delivery of this Agreement
and the Ancillary Agreements and the consummation of the transactions
contemplated hereby and thereby, certified by an officer of the
Purchaser; and
(j) a copy of the Suwanee Lease Agreement, duly executed
by Purchaser;
(k) a copy of the Co-Packing/Supply Agreement (Crossville
Flip-It Cake and London Pie), duly executed by Purchaser;
(l) a copy of the Co-Packing/Supply Agreement
(Spartanburg Doughnut), duly executed by Purchaser; and
(m) other evidence of the performance of all the
covenants and satisfaction of all of the conditions required of
Purchaser by this Agreement at or before the Closing as the Parent or
its counsel may reasonably require;
5.4 POST-CLOSING DELIVERY. As soon as is reasonably practicable
following the Closing, Parent shall deliver to Purchaser a copy in written or
electronic form of all formulas, recipes, know how and product and process
specifications for the products of the Business currently manufactured by or for
the Selling Subsidiaries, including, without limitation, all applicable
ingredients, mixing instructions, temperatures for baking and shelf life
("PRODUCT FORMULAS"). Such delivery may be made by Parent by leaving the written
form of each Product Formula where it is currently maintained at the Spartanburg
plant, the Stilwell plant or the Headquarters and by leaving the electronic form
on the computer software and hardware being acquired by Purchaser.
ARTICLE 6: REPRESENTATIONS AND WARRANTIES OF THE
PARENT AND THE SELLER
The Parent and the Seller jointly and severally represent and warrant
to, and for the benefit of, the Purchaser, as of the date of this Agreement and
solely with respect to the Business, as follows:
6.1 ORGANIZATION AND STANDING. Each of the Parent and each Selling
Subsidiary is a limited liability company or corporation duly organized, validly
existing and in good standing under the laws of its state of organization as set
forth on SCHEDULE 6.1. Each Selling Subsidiary is duly qualified or licensed to
do business as a foreign limited liability company or foreign corporation and is
in good standing as a foreign limited liability company or foreign corporation
in each jurisdiction where the properties used in the Business are owned, leased
or operated, or where the Business is conducted, and which requires such
licensing, good standing or qualification, except where such failure to so
license, qualify or be in such good standing, is not
18
reasonably likely to have a Material Adverse Effect. Each of the Parent and each
Selling Subsidiary has full power and authority to carry on the Business as it
is now being conducted. The Parent has made available (or caused to be made
available) to the Purchaser a complete and correct copy of the Parent's and each
Selling Subsidiary's Organizational Documents. The Parent does not have,
directly or through any subsidiary, any operations for the manufacture,
distribution, marketing and sale of frozen desserts other than the Business.
6.2 AUTHORITY; CONFLICTS; COMPLIANCE WITH LAWS.
(a) Each of the Parent and each Selling Subsidiary has
the power and authority and has taken all action necessary in order to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated herein. This Agreement has been duly
authorized, executed and delivered by each of the Parent and the Seller
and constitutes (assuming the valid authorization, execution and
delivery of this Agreement by the Purchaser) the legal, valid and
binding obligation of each of the Parent and the Seller enforceable in
accordance with its terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and other similar laws
of general application relating to or affecting creditors' rights and
to general equity principles (the "BANKRUPTCY EXCEPTION").
(b) For purposes of this representation, assuming SECTION
8.4(B) were not a part of this Agreement and assuming compliance with
the HSR Act and except as set forth on SCHEDULE 6.2, neither the
execution, delivery and performance of this Agreement by the Parent or
the Seller or the consummation of any of the transactions contemplated
hereunder, nor compliance with or fulfillment of the terms, conditions
and provisions hereof, will conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default, an event
of default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under, require any notice or consent
under or result in the creation or imposition of any Encumbrance upon
any of the Purchased Assets under (i) the Organizational Documents of
the Parent or any Selling Subsidiary; (ii) any material agreement,
note, instrument, mortgage, lease, franchise, financial obligation or
contract to which the Parent or any Selling Subsidiary is a party or by
which the Parent or any Selling Subsidiary is bound; (iii) any Order to
which the Parent or any Selling Subsidiary is a party or by which the
Parent, any Selling Subsidiary or any of the Purchased Assets is bound;
(iv) any Law affecting the Parent or any Selling Subsidiary; or (v) any
Governmental Permit.
6.3 REGULATORY FILINGS; NO VIOLATIONS. For purposes of this
representation, assuming SECTION 8.4(B) were not a part of this Agreement, other
than the filings and/or notices necessary to comply with the HSR Act, and except
as set forth on SCHEDULE 6.3, no material notices, declarations, registrations,
reports or other filings are required to be made by the Parent or any Selling
Subsidiary with, nor are any consents, registrations, approvals, permits,
expiration of any applicable waiting periods or authorizations required to be
obtained by the Parent or any Selling Subsidiary from, any Governmental Body, in
connection with the execution or delivery of this Agreement by the Parent or the
Seller, the performance by the Parent and the Seller of their obligations
hereunder or the consummation by the Parent and the Seller of the transactions
contemplated hereby.
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6.4 INVENTORIES. The Inventory consists only of items of a
quantity and quality readily salable or readily usable by the Purchaser in the
Ordinary Course of Business and of sufficient quantity to allow the Purchaser to
continue the Business without interruption.
6.5 NO ACTIONS AGAINST SELLER. There is no Action pending, or, to
the Knowledge of the Parent, threatened against the Parent or any Selling
Subsidiary that questions or challenges the validity of this Agreement or any
action taken or proposed to be taken by the Parent or any Selling Subsidiary
pursuant hereto or in connection with the transactions contemplated hereby.
6.6 TAXES. Except as set forth on SCHEDULE 6.6:
(a) (i) each of the Parent and each Selling Subsidiary
has filed or caused to be filed all Tax Returns related to the Business
required to have been filed by it (taking into account all extensions
of due dates), except such Tax Returns which the failure to file is not
reasonably likely to have a Material Adverse Effect, and all such Tax
Returns are correct and complete in all material respects; (ii) all
material Taxes owed by any of the Parent and each Selling Subsidiary
related to the Business (whether or not shown on any of the Tax Returns
referred to in clause (i)) have been timely paid; (iii) neither the
Parent nor any Selling Subsidiary has waived any statute of limitations
in respect of Taxes related to the Business or agreed to any extension
of time with respect to a Tax assessment or deficiency related to the
Business; (iv) none of the Parent or the Selling Subsidiaries is
currently the beneficiary of any extension of time within which to file
any Tax Return related to the Business; and (v) no security interests
have been imposed on or asserted against any of the Purchased Assets as
a result of or in connection with any failure or alleged failure to pay
any Tax.
(b) All Taxes related to the Business which the Parent or
any Selling Subsidiary is required by Law to withhold or collect have
been duly withheld or collected, in all material respects, and have
been timely paid over, in all material respects, to the proper
authorities to the extent due and payable;
(c) No claim has ever been made with respect to the
Business by an authority in a jurisdiction where any of the Parent or
the Selling Subsidiaries does not file Tax Returns that it is or may be
subject to taxation by that jurisdiction.
(d) There is no material dispute or claim concerning any
Tax liability of any of the Parent and the Selling Subsidiaries related
to the Business either (i) claimed or raised by any authority in
writing or (ii) as to which the Parent or any of the Selling
Subsidiaries has Knowledge.
6.7 PROPERTY.
(a) Other than the Real Property, no real property is
leased (whether as landlord or tenant, and whether or not occupied,
including any leases assigned or leased premises sublet for which any
Selling Subsidiary remains liable), used or occupied by the Business.
SCHEDULE 6.7(A) lists all of the Real Property.
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(b) SCHEDULE 6.7(B) lists all capital leases to which the
Parent or any Selling Subsidiary is a party related to the Business
(the "Capital Leases"), each of which, except as set forth on SCHEDULE
6.7(B), will be paid off at the Closing and with respect to each of
which the Purchaser will receive good and marketable title to the
underlying property at the Closing and shall constitute Purchased
Assets.
(c) SCHEDULE 6.7(C) sets forth all leases of equipment,
other than the Capital Leases, used in the Business and that, when
taken alone or aggregated with similar leases, obligate the lessee to
expend more than $25,000 in any 12-month period (the "Listed Equipment
Leases"). The Parent has delivered to the Purchaser true and complete
copies of the Listed Equipment Leases. No Personal Property is subject
to a lease on which a Selling Subsidiary is lessor.
(d) Except as set forth on SCHEDULE 6.7(D) and except for
the property that is the subject of the Foil Sublease, a Selling
Subsidiary has good and marketable fee simple title to each parcel of
Real Property, free and clear of all Encumbrances other than Permitted
Encumbrances, and no person has the right to use or occupy any Real
Property or any portion thereof.
(e) Each parcel of Real Property has access to public
roads and to electricity, sanitary and storm sewer, potable water,
natural gas and other utilities used in the operation of the Business
at that location. The zoning for each parcel of Real Property permits
the presently existing improvements and the continuation of the
Business presently being conducted thereon as a conforming use. Neither
the Parent nor any Selling Subsidiary is in violation of any applicable
zoning ordinance or other Law relating to the Real Property, and
neither the Parent nor any Selling Subsidiary has received any written
notice of any such violation, or the existence of any condemnation
proceeding with respect to any of the Real Property. The buildings and
other improvements are located within the boundary lines of each parcel
of Real Property and do not encroach over applicable setback lines.
(f) To the Knowledge of the Parent, there are no
improvements made or contemplated to be made by any Governmental Body,
the costs of which are to be assessed as special Taxes or charges
against any of the Real Property and there are no present assessments.
(g) A Selling Subsidiary has good and marketable title to
or a valid leasehold interest in the buildings, machinery, equipment
and other tangible assets and properties used in the Business, located
on Business premises or shown in the balance sheets set forth on
SCHEDULE 6.23(A), free and clear of all Encumbrances, except Permitted
Encumbrances, the Bank Lien and the Capital Leases and except for
properties and assets disposed of in the Ordinary Course of Business
since December 29, 2001.
(h) Except as set forth on SCHEDULE 6.7(H), all of the
buildings, machinery, equipment and other tangible assets and
properties of the Business, taken as a whole, are in good condition and
repair, ordinary wear and tear excepted, and are usable in the Ordinary
Course of Business, and such assets, taken as a whole, are suitable for
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the purposes for which they presently are used and presently are
proposed to be used, are free from defects (patent and latent), and
have been maintained in accordance with normal industry practice. The
Selling Subsidiaries own, or lease under valid leases, all buildings,
machinery, equipment and other tangible assets and properties necessary
for the conduct of the Business as presently conducted and as presently
proposed to be conducted, all of which (except for the Retained Assets)
will be transferred to the Purchaser at the Closing, subject to the
receipt of any necessary approvals and consents.
(i) The fixed asset listing attached as SCHEDULE 6.7(I)
includes all buildings, machinery, equipment and other tangible assets
and properties of the Business as of December 28, 2002, including
equipment held pursuant to Capital Leases, except that the Crossville
Flip-It Cake Equipment is attached to machinery used by Crossville in
activities not included in the Business.
6.8 GOVERNMENTAL PERMITS. The Parent and each Selling Subsidiary
owns, holds or possesses all material licenses, franchises, permits, privileges,
immunities, approvals and other authorizations from a Governmental Body that are
necessary to entitle it to own or lease, operate and use the Purchased Assets
and to carry on and conduct the Business substantially as conducted immediately
prior to the date of this Agreement (collectively, the "GOVERNMENTAL PERMITS").
The Governmental Permits are set forth on SCHEDULE 6.8.
6.9 INTELLECTUAL PROPERTY.
(a) SCHEDULE 6.9 contains a complete listing and accurate
description of all of the following Business Intellectual Property: (i)
trademarks, service marks, trade names, logos, and any other names or
marks used to identify products or services (collectively,
"Trademarks") and registrations of and applications for the
registration of the same; (ii) patent applications (including any
continuations, continuations in part and renewals of any of the
foregoing); (iii) Internet domain names ("Domain Names"); (iv)
registered copyrights and applications for registration of copyrights;
(v) computer software licensed by the Parent or a Selling Subsidiary
from a third Person or owned by the Parent or a Selling Subsidiary
(except for commercially available over-the-counter "shrink wrap"
software and open source software that is used in the conduct of the
Business); and (vi) each product of the Business currently manufactured
by or for the Selling Subsidiaries. The Parent or a Selling Subsidiary
currently owns the pending provisional patent application identified in
SCHEDULE 6.9, which was filed on the date indicated in SCHEDULE 6.9,
and will have the right for a period of twelve (12) months after the
filing date thereof to grant a third party the right to convert such
application into a nonprovisional United States patent application and
the right to file one or more foreign patent application(s). The
Business Intellectual Property comprises all Intellectual Property
necessary to the conduct of the Business. Purchaser has all right,
title and interest in or a valid license to, and the right to use, all
of the Business Intellectual Property, free and clear from any
Encumbrance or any other restrictions except those imposed by Law or by
any Contract by which the Parent or any Selling Subsidiary is granted a
license or authorization to use (which Contracts are identified on
SCHEDULE 6.9 except for commercially available over-the-counter "shrink
wrap" software and open source software that is used in the conduct of
the Business). Except as set forth on SCHEDULE 6.2, the Parent or the
applicable Selling
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Subsidiary has the right to transfer, or to cause the transfer of, the
Business Intellectual Property contemplated by this Agreement. SCHEDULE
6.9 specifically identifies (A) all Business Intellectual Property
which has been licensed to third Persons, and (B) all Contracts (except
for commercially available over-the-counter "shrink wrap" software and
open source software that is used in the conduct of the Business) that
provide for licenses of Business Intellectual Property owned or
licensed by a third Person that are licensed to the Parent or a Selling
Subsidiary, or any combination of the foregoing, and that are used or
held for use by Parent or one or more of the Selling Subsidiaries, or
any combination of the foregoing, in the Business, and, to the extent
there is no written document covering such licensed Business
Intellectual Property, the identity of the licensor and the Business
Intellectual Property licensed by that licensor. Except for the
computer software identified on SCHEDULE 6.9 pursuant to SECTION
6.9(A)(V) and open source software used in the conduct of the Business,
each copy of the computer software which is Business Intellectual
Property and is licensed by the Parent or a Selling Subsidiary from a
third Person is granted pursuant to a valid shrink wrap license
agreement.
(b) With respect to registered Trademarks, SCHEDULE 6.9
lists the registration, application number, registration filing date,
countries in which registered or filed, and expiration dates for
registrations. The registrations specified on SCHEDULE 6.9 are owned by
and issued in the name of Brands or Flowers Bakeries Brands, Inc..
(c) The documentation relating to the Product Formulas is
current, accurate and sufficient in detail and content so as to enable
them to be used without reliance on the knowledge or memory of any
individual. Except as otherwise set forth in SCHEDULE 6.9, the Parent
or a Selling Subsidiary has taken all reasonable precautions to
maintain the secrecy, confidentiality and value of all Business
Intellectual Property consisting of trade secrets in accordance with
procedures customarily used in the industry of the Parent and the
Selling Subsidiaries to protect rights of like importance. Parent has
no Knowledge that any purported trade secret or other proprietary
information is part of the public knowledge or literature, or that any
purported trade secret or other proprietary information has been
improperly divulged or improperly appropriated either for the benefit
of any Person other than the Parent or a Selling Subsidiary or to the
detriment of the Parent or any Selling Subsidiary.
(d) Parent or the applicable Selling Subsidiary has used
reasonable efforts to mark all usages of registered Trademarks with the
correct marking required or desirable to maximize available damages
awards.
(e) The Parent or the applicable Selling Subsidiary has
taken all action necessary and required to protect the Business
Intellectual Property except as set forth in SCHEDULE 6.9 with respect
to the lack of current use of certain Trademarks in certain
jurisdictions.
(f) All licenses to the Parent or a Selling Subsidiary,
or any combination of the foregoing, of Business Intellectual Property
and, except as set forth in SCHEDULE 6.9 with respect to the lack of
current use of certain Trademarks in certain jurisdictions, all
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registered Business Intellectual Property rights are valid and
enforceable and Parent has no Knowledge, and neither Parent nor any
Selling Subsidiary has received notice from any Person asserting, that
any of the same are invalid or not enforceable. Except as specifically
set forth in SCHEDULE 6.9 with respect to the lack of current use of
certain Trademarks in certain jurisdictions, all unregistered
Trademarks listed on SCHEDULE 6.9 are valid and enforceable and Parent
has no Knowledge, and neither Parent nor any Selling Subsidiary has
received notice from any Person asserting, that any of the same are
invalid or not enforceable. Parent has no Knowledge, and neither Parent
nor any Selling Subsidiary has received notice from any Person
asserting, that any of the Business Intellectual Property consisting of
registerable unregistered copyrights is invalid or not enforceable. To
the Knowledge of Parent, the Business Intellectual Property has not
been infringed, misappropriated or violated by other Persons. Except as
may be indicated in SCHEDULE 6.9, no claims or allegations have been
asserted or threatened in writing or, to the Knowledge of Parent,
threatened orally by any Person, that remain unresolved against the
Parent or any Selling Subsidiary to the effect that use by the Parent
or any Selling Subsidiary of any of the Business Intellectual Property
with respect to the Business infringes upon, violates or constitutes a
misappropriation of the intellectual property rights of any third
Person. The use of the Business Intellectual Property by the Parent or
the Selling Subsidiaries does not infringe, constitute a
misappropriation of, or otherwise violate any intellectual property
right of any third Person, except as disclosed on SCHEDULE 6.9. Without
limiting the generality of the foregoing, except as set forth in
SCHEDULE 6.9 with respect to the lack of current use of certain
Trademarks in certain jurisdictions, all registered Business
Intellectual Property rights are in full force and effect and all
actions required to keep such rights pending or in effect or to provide
full available protection, including payment of filing, examination,
annuity, and maintenance fees and filing of renewals, statements of use
or working, affidavits of incontestability and other similar actions,
have been taken. Except as disclosed on SCHEDULE 6.9, neither the
Parent nor any Selling Subsidiary has received any written notice that
any registered Business Intellectual Property right is the subject of
any interference, opposition, cancellation, nullity, re-examination or
other proceeding placing in question the validity or scope of such
rights.
6.10 LITIGATION. Except as set forth on SCHEDULE 6.10, (i) there is
no Action or Order by which the Parent or any Selling Subsidiary or any of the
Purchased Assets is subject or bound, pertaining to the Business, pending, or to
the Knowledge of the Parent, threatened against the Parent or any Selling
Subsidiary or any of the Purchased Assets.
6.11 CONTRACTS.
(a) SCHEDULE 6.11(A) contains (or cross references to
another schedule) a true and complete list of each Contract to which
the Parent or any Selling Subsidiary is party or by which it or any of
its properties or assets are bound, which is related to the Business
and which: (i) is an employment contract; (ii) is an indenture,
mortgage, note, installment obligation, agreement or other instrument
relating to the borrowing of money in excess of $100,000 by the Parent
or any Selling Subsidiary or the guaranty of any obligation for the
borrowing of money in excess of $100,000 by the Parent or any Selling
Subsidiary; (iii) imposes any material Encumbrance; (iv) involves the
receipt or payment by the Parent or
24
any Selling Subsidiary after the date hereof of more than $100,000 per
year (except those terminable by the Parent or a Selling Subsidiary on
notice of 90 days or less without penalty or those for the purchase of
commodities entered into in the Ordinary Course of Business); (v)
provides for a rebate, discount, bonus or commission with respect to
the sale of any product payable or required after Closing (except those
arising in the Ordinary Course of Business and involving an amount less
than $100,000); (vi) creates an agency or consulting agreement or
arrangement or is a sales agency, brokerage (other than food
brokerage), distribution or franchise Contract; (vii) imposes a
confidentiality obligation on the Parent or any Selling Subsidiary with
respect to the Business; (viii) provides for any capital project with
expenditures in excess of $250,000; (ix) obligates any Selling
Subsidiary to pay a promotional incentive in excess of $100,000 per
year; (x) sells or otherwise disposes of any capital assets having a
fair market value in excess of $100,000; (xi) contains nonsolicitation
provisions that would prohibit the solicitation of the employees or
contractors of any other entity; (xii) was not entered into in the
Ordinary Course of Business and involving an amount in excess of
$100,000 per year (xiii) prohibits or limits the ability of the Parent
or any Selling Subsidiary to (A) engage in any line of business, (B)
compete with any Person or (C) carry on or expand the nature or
geographical scope of the Business anywhere in the world; (xiv)
provides for the acquisition or disposition after the date of this
Agreement of any portion of the Business (except for sales of inventory
or other disposition of property or assets in the Ordinary Course of
Business); (xv) relates to product warranties, guaranties, and/or other
similar undertakings with respect to contractual performance regarding
the Business extended by the Parent or any Selling Subsidiary; (xvi)
involves the grant by the Parent or any Selling Subsidiary to any
Person of any right of first refusal to purchase any rights, assets or
property of the Business; (xvii) involves any labor union or other
employee representative of a group of employees relating to wages,
hours and any other conditions of employment; or (xviii) is a contract
to which Parent or any Affiliate of Parent other than Stilwell and
Spartanburg is not a party and hedges the purchase of any ingredients
used in the Business. Contracts set forth on SCHEDULES 6.7(A), 6.7(C),
6.7(D), 6.9, and 6.11 are collectively referred to herein as the
"MATERIAL CONTRACTS").
(b) Except as set forth in SCHEDULE 6.11(B), (i) each
Material Contract is a valid and binding obligation of the Parent and
each respective Selling Subsidiary, as the case may be, and, to the
Knowledge of the Parent, of each of the other parties thereto, and is
enforceable against each party in accordance with its terms, except for
the Bankruptcy Exception, (ii) neither the Parent nor any Selling
Subsidiary is in violation or breach of, or in default under, any
Material Contract and, to the Knowledge of the Parent, no other party
to any Material Contract is in violation or breach thereof, or in
default thereunder, and (iii) to the Knowledge of the Parent, other
than the transactions contemplated by this Agreement and except for or
by reason of violations, breaches or defaults referred to in clause
(ii) above, no event has occurred that, with the passage of time or the
giving of notice, or both, would permit the unilateral modification,
acceleration or termination of any Material Contract.
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6.12 EMPLOYEE BENEFITS; ERISA.
(a) SCHEDULE 6.12(A) contains a list of all existing
bonus, incentive, deferred compensation, pension, retirement,
profit-sharing, thrift, savings, employee stock ownership, stock
bonus, stock purchase, restricted stock, stock option, severance,
welfare and fringe benefit plans, employment or severance agreements
and arrangements in which any current employee of any of the Selling
Subsidiaries (the "Employees") participates or to which any such
Employees are a party (the "Compensation and Benefit Plans"). Copies
of the Compensation and Benefit Plans have been supplied or made
available to the Purchaser.
(b) None of the Purchased Assets are subject to any lien
under SECTION 412(N) of the Code or Section 4068 of ERISA. Neither
Parent or any Selling Subsidiary has any actual unsatisfied
liabilities, or is reasonably expected to incur any liabilities that
could become a liability of the Purchaser with respect to any
Compensation and Benefit Plan, and, with respect to each such plan,
full payment has been made of all amounts that the Parent or any
Selling Subsidiary is required, under the terms of each such plan, to
have paid as contributions to that plan.
6.13 COMPLIANCE WITH LAWS. Except: (i) as set forth in SCHEDULE
6.13; (ii) with respect to any Environmental Law (as to which the only
representations and warranties contained in this Agreement are specifically set
forth in SECTION 6.18); and (iii) for such matters that are not reasonably
likely to prevent, materially burden or materially delay the consummation by
Parent or the Seller of the transactions contemplated by this Agreement:
(a) the Parent and each Selling Subsidiary has been
since December 29, 2001 and is in substantial compliance with each
material Law that is applicable to it or to the conduct or operation
of the Business or the ownership or use of any of the assets utilized
in the Business;
(b) to the Knowledge of the Parent, no investigation or
review by any Governmental Body with respect to the Business or any of
the facilities, operations, agreements or products utilized in the
Business is pending or threatened, nor has any Governmental Body
indicated an intention to conduct any such investigation or review;
(c) during the twelve (12) months preceding the date
hereof, neither the Parent nor any Selling Subsidiary has received any
notice or communication alleging any noncompliance by the Parent or
any Selling Subsidiary with any Law or Governmental Permit or
requirement of approval related to the Business that has not been
cured or otherwise resolved, and neither the Parent nor any Selling
Subsidiary is subject to any unpaid fine or any continuing sanction
for any such noncompliance; and
(d) neither the Parent nor any Selling Subsidiary is in
violation of or in default under, and, to the Knowledge of the Parent,
no event has occurred which, with the lapse of time or the giving of
notice, or both, would result in the violation of or default under,
the terms of any Order or Governmental Permit applicable to the
Business.
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6.14 INSURANCE. Set forth on SCHEDULE 6.14 is a complete list of
all insurance policies which the Parent or any Selling Subsidiary currently
maintains with respect to the Business. Except as set forth on SCHEDULE 6.14,
such policies are in full force and effect and no event has occurred which
would give any insurance carrier a right to terminate any such policy. Except
as set forth in SCHEDULE 6.14, since January 1, 2002, there has not been any
material change in the Parent's or any Selling Subsidiary's relationship with
its insurers regarding such policies or in the premiums payable pursuant to
such policies.
6.15 NO FINDERS OR BROKERS. Except as set forth on SCHEDULE 6.15,
neither the Parent nor any Selling Subsidiary nor any Person acting on its
behalf has paid or become obligated to pay any fee or commission to any broker,
finder or intermediary for or on account of the transactions contemplated by
this Agreement.
6.16 ABSENCE OF CHANGES. Except as set forth on SCHEDULE 6.16,
since December 29, 2001, the Parent and each Selling Subsidiary has conducted
the Business only in, and has not engaged in any transaction other than
according to, the Ordinary Course of Business, and, except as set forth on
SCHEDULE 6.16, there has not been any:
(a) amendment or other change in the Parent's or any
Selling Subsidiary's Organizational Documents;
(b) (i) increase by the Parent or any Selling Subsidiary
in the amount of any bonus, salary or other compensation payable to
any officer or employee engaged in the Business, other than increases
in compensation in the Ordinary Course of Business; (ii) entry into
any employment, termination, severance or similar Contract with any
officer or employee engaged in the Business or the payment of any
severance or termination pay to any such Person, other than as
required by existing contractual obligations; (iii) adoption or
amendment in any material respect of, or material increase or
acceleration in the payments to or benefits under, any Compensation
and Benefit Plan;
(c) (i) sale or lease (except for sales or dispositions
of inventory in the Ordinary Course of Business), alteration, or other
disposition of, or write down (except under accounting practices and
principles applied for amortization and depreciation thereof for the
period beginning December 30, 2001) in excess of $100,000 of the book
value of any asset of the Business, except to the extent replaced by a
comparable asset; (ii) mortgage, pledge or imposition of any
Encumbrance (other than a Permitted Encumbrance) upon any asset of the
Business; or (iii) sale, lease or other disposition of, or
termination, lapse or other expiration of the rights to the use of,
any of the Intellectual Property;
(d) (i) acquisition related to the Business (including
by merger, consolidation or acquisition of stock or assets) by the
Parent or any Selling Subsidiary of any Person or any division thereof
or material portion of the assets thereof; (ii) liquidation,
dissolution or winding up of the Parent or any Selling Subsidiary; or
(iii) organization of any new subsidiary related to the Business;
27
(e) termination of, or receipt of notice of termination
of any Material Contract;
(f) (i) settlement or compromise of any material Action
relating to the Business, other than such Actions in which the amount
paid in settlement or compromise, including the cost to the Parent or
any Selling Subsidiary of complying with any provision of such
settlement or compromise, did not exceed $100,000, in excess of any
amount covered by insurance; or (ii) cancellation, compromise, waiver
or release of any right or claim (or series of related rights or
claims) either involving more than $100,000 or outside the Ordinary
Course of Business;
(g) material change in the valuation methods or
principles used by the Parent or any Selling Subsidiary with regard to
valuation of inventory or accounts payable with respect to the
Business;
(h) with regard to the Business, effectuation of (i) a
"plant closing" (as defined in the WARN Act) affecting any site of
employment or one or more facilities or operating units within any
site of employment or facility of the Business or (ii) a "mass layoff"
(as defined in the WARN Act) affecting any site of employment or one
or more facilities or operating units within any site of employment or
facilities of the Business, except, in either case, after fully
complying with the notice and other requirements of the WARN Act;
(i) Material Adverse Effect or occurrence that is
reasonably likely to have a Material Adverse Effect;
(j) guaranty by the Parent or any Selling Subsidiary of
indebtedness for borrowed money;
(k) casualty loss or damage in excess of $100,000
(whether or not such loss or damage shall have been covered by
insurance) with respect to the Business;
(l) any loan, advance or capital contributions to or
investment in any Person; or
(m) agreement (whether written or oral and express or
implied) by the Parent or any Selling Subsidiary to do any of the
foregoing.
6.17 LABOR MATTERS.
(a) Set forth on SCHEDULE 6.17(A) is a list of all
employees of each of the Selling Subsidiaries, their current salaries
and the respective Selling Subsidiary's salary increase guidelines.
(b) Since January 1, 2002, except as set forth on
SCHEDULE 6.17(B): (a) neither the Parent nor any Selling Subsidiary
has been a party to, or bound by, any collective bargaining agreement
or other labor Contract related to the Business nor is any collective
bargaining agreement or other labor Contract currently being
negotiated that is
28
related to the Business, nor, to the Knowledge of the Parent, are
there any activities or proceedings of any labor union or labor
organization to organize any of the employees engaged in the Business;
(b) there has not been, there is not presently pending or existing,
and, to the Knowledge of the Parent, there is not threatened, any
strike, slowdown, picketing, work stoppage, material labor difficulty,
labor arbitration or other proceeding in respect of the grievance of
any employee, or any application or complaint filed by an employee or
union with the National Labor Relations Board or any comparable
Governmental Body, or any organizational activity or other material
labor dispute against or affecting the Business or its premises, and
no application for certification of a collective bargaining agent is
pending or, to the Knowledge of the Parent, is threatened against or
affecting the Business; and (c) the Business has complied in all
respects with all material Laws relating to employment, equal
employment opportunity, nondiscrimination, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and
similar taxes, occupational safety and health and plant closings.
(c) To the knowledge of the Parent, no executive
employee of the Business and no group of employees of the Business has
any plans to terminate his, her or their employment. To the knowledge
of the Parent, no employee of the Business is subject to any secrecy
or noncompetition agreement or any other agreement or restriction of
any kind that would impede in any way the ability of such employee to
carry out fully all activities of such employee in furtherance of the
Business. The Business has not made any loans (except advances against
accrued salaries or for business travel, lodging or other expenses in
the Ordinary Course of Business) to any employee of the Business.
Solely for purposes of this SECTION 6.17, "KNOWLEDGE" shall mean the
actual conscious awareness (without any requirement of investigation)
of the individuals set forth in the definition of "KNOWLEDGE" in
ARTICLE 1.
(d) To the Knowledge of the Parent, no employee of the
Business is subject to any secrecy or noncompetition agreement or any
other agreement or restriction of any kind that would impede in any
way the ability of such employee to carry out fully all activities of
such employee in furtherance of the Business.
6.18 ENVIRONMENTAL MATTERS. The only representations and
warranties contained in this Agreement with respect to Environmental Laws are
set forth in this SECTION 6.18. Except as set forth on SCHEDULE 6.18: (i) each
Selling Subsidiary is in material compliance with all Environmental Laws
applicable to the Business; (ii) in respect of the Real Property, each Selling
Subsidiary has used, handled and disposed of Hazardous Substances in material
compliance with Environmental Laws and without the occurrence of any material
Liability or responsibility; (iii) no Hazardous Substances have been deposited,
buried, incinerated, released or disposed of at any time on, at, under or to
the Real Property, whether by the Selling Subsidiary or, to the Knowledge of
Parent, any other person or entity, and, to the Knowledge of the Parent, no
threat of a release of Hazardous Substances on, at, under or to any Real
Property exists; (iv) each Selling Subsidiary has obtained and maintains, in
full force and effect, all governmental Permits necessary to conduct its
business and own and operate the Real Property in compliance with all
applicable Environmental Laws, and has filed all reports and notifications
required to be filed under all applicable Environmental Laws; (v) the Real
Property and any improvements thereon
29
contain no asbestos, urea formaldehyde, polychlorinated biphenyls (PCBs) or
pesticides requiring any remediation, abatement or other corrective action
under applicable Environmental Laws; (vi) no aboveground or underground storage
tanks have been located on or under the Real Property and then subsequently
removed or filled, and all such storage tanks that exists on or under the Real
Property have been duly registered with all appropriate governmental entities
and are otherwise in compliance with all applicable Environmental Laws; (vii)
there is no civil, criminal or administrative action, suit, demand, claim,
hearing, notice or demand letter, notice of violation, investigation Known to
Parent, or proceeding pending or, to the Knowledge of Parent, threatened in
writing indicating that a Selling Subsidiary may be in violation of or liable
under any Environmental Law; (viii) none of the Selling Subsidiaries are
subject to any order, decree, injunction or other arrangement applicable to the
Business with any Governmental Body, except for Governmental Permits, nor do
they have any material Liability for any indemnity or other agreement with any
third party, relating to Liability under any Environmental Law applicable to
the Business;(ix) no part of the Real Property is or has been listed on the
United States Environmental Protection Agency National Priorities list of
hazardous Waste Sites, or any other list, schedule, law, inventory or record of
hazardous or solid waste sites maintained by any federal, state of local
agency, and (x) the Parent has made available, or caused to be made available,
to the Purchaser copies of all environmental reports, studies, assessments and
sampling data within the Parent's or the Selling Subsidiaries' custody or
control issued in the prior three (3) years relating to the Business or to the
Real Property.
6.19 CUSTOMERS. SCHEDULE 6.19 sets forth a list of the top 30
customers of the Business for the fiscal years ended December 29, 2001 and
December 28, 2002 ("MATERIAL CUSTOMERS"). Except as set forth on SCHEDULE 6.19:
(a) all Material Customers continue to be customers of
the Business, and none of such Material Customers has reduced
materially its relationship to the Business from the levels achieved
during the twelve-month period ended December 29, 2001, or to the
Knowledge of the Parent, has threatened to do so; and
(b) none of the Selling Subsidiaries is currently
involved in any claim, dispute or controversy with any of its Material
Customers relating to the Business (provided, that to constitute a
claim, dispute or controversy, each party must have Knowledge of the
existence of a claim, dispute or controversy).
6.20 SUPPLIERS. SCHEDULE 6.20 sets forth a list of the top 30
largest suppliers of the Business for the fiscal years ended December 29, 2001
and December 28, 2002 and sets forth opposite the name of each such supplier
the dollar amount of purchases relating to the Business attributable to such
supplier for each such period. Except as set forth on SCHEDULE 6.20:
(a) since December 29, 2001, no Material Supplier has
terminated its relationship with a Selling Subsidiary with respect to
the Business or reduced materially its sales to the Business or, to
the Knowledge of the Parent, has threatened to do so; and
(b) none of the Selling Subsidiaries is involved in any
claim, dispute or controversy with any of its Material Suppliers
(provided, that to constitute a claim,
30
dispute or controversy, each party must have Knowledge of the
existence of a claim, dispute or controversy).
6.21 SALES BROKERS. SCHEDULE 6.21 sets forth the top 30 sales
brokers of the Business by dollar volume of sales for the fiscal years ended
December 30, 2001 and December 28, 2002.
6.22 INTERESTS OF RELATED PERSONS. Except as set forth on SCHEDULE
6.22:
(a) no director or officer of the Parent or any Selling
Subsidiary (i) has any interest in any property, real or personal,
tangible or intangible, of any Selling Subsidiary, (ii) to the
Knowledge of the Parent, has any cause of action or other claim
whatsoever against any Selling Subsidiary or their assets or
properties, (iii) other than in the Ordinary Course of Business, owes
any amount to, or is owed any amount by, any Selling Subsidiary or
(iv) owns, directly or indirectly, any debt, equity or other interest
or investment in any Person (other than the Parent) that has (x) had
business dealings or a material financial interest in any transaction
with any Selling Subsidiary related to the Business (other than
business dealings or transactions conducted in the Ordinary Course of
Business with any Selling Subsidiary at substantially prevailing
market prices and on substantially prevailing market terms), or (y)
engaged in competition with any Selling Subsidiary with respect to the
Business in any market presently served by the Business (except for
ownership of less than one percent (1%) of the outstanding capital
stock of any such competing business that is publicly traded on any
recognized exchange or in the over-the-counter market); and
(b) there are no agreements, indebtedness, arrangements,
understandings, obligations or other rights in effect between any
Selling Subsidiary, on the one hand, and any director or officer of
the Parent or any Selling Subsidiary, on the other hand, other than
employment relationships.
6.23 FINANCIAL INFORMATION.
(a) Set forth on two sheets comprising SCHEDULE 6.23(A)
are:
(i) unaudited consolidated balance sheets of
the Seller and its subsidiaries as of December 28, 2002 and
December 29, 2001 (Column A);
(ii) eliminations necessary to remove all assets
and liabilities not being acquired or assumed pursuant to the
terms of this Agreement (Column B);
(iii) such additional adjustments as, in the
opinion of Parent's management, would reasonably be required
to be made as of such dates to fairly present the financial
position of the Business on a stand-alone basis, together
with footnotes thereto (Column C); and
(iv) unaudited balance sheets of the Business as
of December 28, 2002 and December 29, 2001 (Column D).
(b) Set forth on two sheets comprising SCHEDULE 6.23(B)
are:
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(i) unaudited consolidated income statements of
the Seller and its subsidiaries for the periods ended
December 28, 2002 and December 29, 2001 (Column A);
(ii) eliminations necessary to remove all items
of income and expense relating to businesses not being
acquired pursuant to the terms of this Agreement (Column B);
(iii) such additional adjustments as, in the
opinion of Parent's management, would reasonably be required
to be made as of such dates to fairly present the results of
operations of the Business on a stand-alone basis, together
with footnotes thereto (Column C); and
(iv) unaudited income statements of the Business
for the periods ended December 28, 2002 and December 29, 2001
(Column D).
(c) Except as set forth in the footnotes to Schedules
6.23(a) and 6.23(b), the Financial Statements have been prepared in
accordance with GAAP, as to the balance sheets reflected in Column A
and Column D of Schedule 6.23(a), fairly present the financial
position of the Seller and its subsidiaries and of the Business,
respectively, as of the dates indicated, and, as to the income
statements reflected in Column A and Column D of Schedule 6.23(b),
fairly present the results of operations of the Seller and its
subsidiaries and of the Business, respectively, for the specified
periods then ended, except that the == Financial Statements do not
include notes, and, in the case of such statements presented for the
fiscal year ended December 28, 2002, such statements are subject to
normal year-end adjustments, none of which, if made, would be
material.
(d) Set forth on SCHEDULE 6.23(D) is a list of Prepaid
Expenses and Deposits as of December 28, 2002.
6.24 AVAILABILITY OF DOCUMENTS. The Seller has delivered to the
Purchaser correct and complete copies of the Material Contracts (and in the
case of any Material Contracts not in written form, a written description
THEREOF).
6.25 CERTAIN INFORMATION. SCHEDULE 6.25 lists (i) unit and sales
of the Business by SKU for each of the three fiscal years ended December 30,
2000, December 29, 2001 and December 28, 2002, and (ii) case information of the
Business by SKU, showing average net sales price per case and average COGS per
case for each of the periods set forth in clause (i) immediately above.
6.26 PRODUCT STANDARDS. All products prepared and manufactured by
or for the Business were, at the time of production, and when applicable, at
time of shipment or delivery (and all products on open order as of the Closing
Date manufactured for the business under co-pack agreements which are not
covered by a standard form food product guaranty from the manufacturer
thereof); (i) manufactured in accordance with good manufacturing practices,
including, but not limited to, sanitary operating procedures, allergenic
control programs and safe transportation practices; (ii) not adulterated or
misbranded within the meaning of: (x) the Federal Food, Drug and Cosmetic Act
("FDCA"), as amended, including, but not limited to,
32
compliance with the FDCA food and color additive amendments and the amendments
incorporated by the Nutritional Labeling and Education Act of 1990, or (y) any
applicable state or local law in which the definitions of adulteration and
misbranding are substantially the same as those contained in such Acts at the
time of such shipment or delivery; (iii) not articles which could not, under
the provisions of Section 404 or 505 of the FDCA, be introduced into interstate
commerce; and (iv) not in violation of the requirements imposed by the
California Safe Drinking Water and Toxic Enforcement Act of 1986 ("California
Proposition 65"), and any other state or local laws imposing requirements on
the Business which are substantially the same as California Proposition 65.
Since January 1, 2002, no product distributed or sold by the Business posed a
health threat or would have warranted legal action by any Governmental
Authority so that a product recall should have occurred or did, in fact occur,
except as disclosed on SCHEDULE 6.26.
ARTICLE 7: REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to, and for the benefit of,
the Purchaser and the Seller as follows:
7.1 ORGANIZATION OF THE PURCHASER. The Purchaser is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Minnesota. The Purchaser has the corporate power and corporate
authority to own or lease and operate its assets and to carry on its business
as it is now being conducted.
7.2 AUTHORITY; CONFLICTS; COMPLIANCE WITH LAWS.
(a) The Purchaser has the power and authority and has
taken all action necessary in order to execute, deliver and perform
this Agreement and to consummate the transactions contemplated herein.
This Agreement has been duly authorized, executed and delivered by the
Purchaser and constitutes (assuming the valid authorization, execution
and delivery of this Agreement by each of the Parent and the Seller)
the legal, valid and binding obligation of the Purchaser enforceable
in accordance with its terms, subject to the Bankruptcy Exception.
(b) Assuming compliance with the HSR Act, neither the
execution and delivery of this Agreement by the Purchaser or the
consummation of any of the transactions contemplated hereunder, nor
compliance with or fulfillment of the terms, conditions and provisions
hereof, will conflict with, result in a breach of the terms,
conditions or provisions of, or constitute a default, an event of
default or an event creating rights of acceleration, termination or
cancellation or a loss of rights under (i) the Organizational
Documents of the Purchaser, (ii) any note, instrument, mortgage,
lease, franchise or financial obligation to which the Purchaser is a
party or by which the Purchaser is bound, (iii) any Order to which the
Purchaser is a party or by which the Purchaser is bound or (iv) any
Law affecting the Purchaser.
(c) Other than the filings and/or notices necessary to
comply with the HSR Act, no notices, declarations, registrations,
reports or other filings are required to be made by the Purchaser
with, nor are any consents, registrations, approvals, permits,
expiration of any applicable waiting periods or authorizations
required to be obtained by the
33
Purchaser from, any Person or any Governmental Body, in connection
with the execution or delivery of this Agreement by the Purchaser, the
performance by the Purchaser of its obligations hereunder or the
consummation by the Purchaser of the transactions contemplated hereby.
7.3 NO PROCEEDING. As of the date hereof, there is no Action
pending or, to the Knowledge of the Purchaser, threatened, that questions the
legality or propriety of the transactions contemplated by this Agreement.
7.4 NO FINDERS OR BROKERS. Except as set forth on SCHEDULE 7.4,
neither the Purchaser nor any Person acting on its behalf has paid or become
obligated to pay any fee or commission to any broker, finder or intermediary
for or on account of the transactions contemplated by this Agreement.
7.5 FINANCIAL ABILITY. As of the date hereof and on the Closing
Date, the Purchaser has, and will have, sufficient funds available to pay the
Purchase Price and to satisfy all of its obligations under this Agreement and
each of the Ancillary Agreements and the transactions contemplated hereby and
thereby. The Purchaser's obligations under this Agreement and each Ancillary
Agreement are not subject to any condition regarding the Purchaser's ability to
obtain financing for the consummation of the transactions contemplated hereby
or thereby.
ARTICLE 8: PRE-CLOSING COVENANTS OF THE PARTIES
The respective parties hereto covenant and agree to take the
following actions between the date hereof and the Closing Date set forth
hereinbelow.
8.1 ACCESS TO INFORMATION. Subject to applicable Law and the
Confidentiality Agreement, the officers, employees and authorized
representatives of the Purchaser (including, without limitation, independent
public accountants, financial advisors and attorneys) shall have reasonable
access, during normal business hours and upon reasonable advance notice, to the
offices, properties, employees and business and financial records of the Parent
and each Selling Subsidiary which relate to the Business (including for the
purpose of making Phase I or Phase II environmental assessments), and the
Parent shall furnish (or caused to be furnished) to the Purchaser or its
authorized representatives such additional information concerning the Business
as shall be reasonably requested by the Purchaser; provided, however, that
neither the Parent nor any Selling Subsidiary shall be required to violate any
obligation of confidentiality to which it is subject in discharging its
obligations pursuant to this SECTION 8.1. The Purchaser agrees that such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operations of the Parent or any Selling Subsidiary.
Purchaser shall have the right to have a representative reasonably acceptable
to Parent on the premises of Foil, Spartanburg, Stilwell and the Suwanee Real
Property during normal business hours. Such representative shall be on the
premises for observation purposes only, and will not participate in or
interfere with the operations conducted on the premises and will not give any
instructions or directions to any employee. Such representative shall be
subject to the terms and conditions of the Confidentiality Agreement.
34
8.2 PUBLICITY. No party to this Agreement, nor any of their
respective Affiliates, agents or representatives, shall communicate with any
other Person with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other parties hereto. The
initial press release announcing the transactions contemplated herein shall be
mutually agreed upon among the parties and released jointly, except as may be
required by Law. Thereafter, except for customary press releases and formal
communications by the Parent and each Selling Subsidiary to employees,
shareholders, customers or suppliers (other than with respect to the transition
of employment) and except for the process of making offers of employment and
accepting employment applications pursuant to SECTION 8.9 hereof, the parties
hereto shall consult with each other prior to issuing any press releases or
otherwise making any public or other announcements with respect to the
transactions contemplated hereby and prior to making any filings with any
Governmental Body or with any national securities exchange with respect
thereto, except as may be required by Law.
8.3 CERTAIN NOTIFICATIONS. Each party shall promptly notify the
other of any Action that shall be instituted or threatened against such party
to restrain, prohibit or otherwise challenge the legality of any transaction
contemplated by this Agreement. Each party hereto shall promptly notify the
other of any lawsuit, claim, proceeding or investigation that may be
threatened, brought, asserted or commenced against the Parent, any Selling
Subsidiary or the Purchaser, as the case may be, that would have been required
to be listed in SCHEDULE 6.10 or constitute an exception to SECTION 7.3, as the
case may be, if such lawsuit, claim, proceeding or investigation had arisen
prior to the date hereof. The Parent will promptly notify the Purchaser of any
material adverse change in the Business or the commencement or threat of any
material Action.
8.4 REQUIRED APPROVALS.
(a) Other than with respect to the HSR Act, each party
hereto hereby agrees to cooperate with the other, and use its
commercially reasonable efforts to promptly prepare and file all
necessary documentation, to effect all necessary applications,
notices, petitions, filings and other documents. The Parent hereby
agrees to use its commercially reasonable efforts to obtain as
promptly as practicable all necessary permits, consents, approvals and
authorizations of all Persons and Governmental Bodies, including,
without limitation, the consents, approvals and authorizations set
forth on SCHEDULES 6.2, 6.3 and 10.1(D) that are required for the
consummation of the transactions contemplated herein and to permit all
of the Contracts to be assigned to the Purchaser and otherwise assure
that the Purchaser will be able to operate the Business and enjoy the
benefits of all Contracts as they presently exist. Except with respect
to filings or written materials submitted pursuant to SECTION 8.5,
each party shall have the right to review in advance, and, to the
extent practicable, each will consult the other on, in each case
subject to the Confidentiality Agreement and any applicable Laws
relating to the exchange of information, all the information relating
to the other party that appears in any filing made with, or written
materials submitted to, all third parties and Governmental Bodies in
connection with the transactions contemplated in this Agreement. In
exercising the foregoing right, the Purchaser, the Parent and the
Seller shall act reasonably and as promptly as practicable. The
Purchaser, the Parent and the Seller agree that they will keep the
other apprised of the status of matters relating to completion of the
transactions
35
contemplated hereby, including promptly furnishing the other with
copies of notices or other communications received from all third
parties, including any Governmental Bodies, with respect to the
transactions contemplated hereby. For purposes hereof "commercially
reasonable efforts" means the efforts that a prudent person desirous
of achieving a result would use in similar circumstances to ensure
that such results is achieved as promptly as practicable, but
"commercially reasonable efforts" do not require that a party make any
payment or undertake any continuing obligation (except for obligations
already existing under contracts or agreements being assumed) in order
to obtain any applicable consent, approval or authorization, except as
provided in next sentence or in Section 8.5(a). Notwithstanding the
preceding sentence, for purposes of obtaining consents, approvals and
authorizations (other than from Governmental Bodies or from Sysco),
Parent and Seller shall make payments necessary to obtain such other
consents, approvals or authorizations up to aggregate costs of
$3,000,000 in addition to the pay off amounts of any capital and
operating leases, but they shall not be required to make payments in
excess of such amount.
(b) Notwithstanding anything to the contrary contained
in this Agreement or any Ancillary Agreement, this Agreement shall not
constitute an agreement to assign any of the Contracts if the
attempted assignment thereof, without the consent of the third party
thereto, would constitute a breach thereof or in any way negatively
affect the rights of the Parent, any of the Selling Subsidiaries or
the Purchaser, as the assignee of such Contract, as the case may be,
thereunder; provided, that this SECTION 8.4(B) shall in no way limit
SECTIONS 9.1, ARTICLE 10 or SECTION 12.2.
8.5 HSR ACT.
(a) The Purchaser and the Parent each agree to use
commercially reasonable efforts to prepare and file the Notification
and Report Form required pursuant to the HSR Act with the FTC and the
Antitrust Division by no later than the fifth (5th) business day
following the date hereof. Each such party hereby covenants to request
early termination of the waiting period required by the HSR Act, to
furnish to the other party hereto such necessary or appropriate
information and reasonable assistance as such other party may
reasonably request in connection with its preparation of necessary
filings and submissions pursuant to the HSR Act and to comply with any
requests for additional information issued by the FTC, the Antitrust
Division, as the case may be, as promptly as practicable, including,
without limitation, responses to "second requests." The Purchaser
shall pay the HSR Act filing fee.
(b) Notwithstanding SECTION 8.5(A), nothing in this
Agreement shall require the Purchaser to refrain from purchasing or to
divest a material amount of the Purchased Assets or to divest any of
the Purchaser's other current business operations pursuant to a
condition imposed by the Antitrust Division or the FTC as a
prerequisite to refraining from challenging the transactions
contemplated hereunder. In the event that the Purchaser purchases less
than all of the Purchased Assets in accordance with such a
requirement, or is required by the Antitrust Division or the FTC to
divest a portion of the Purchased Assets, there will be an equitable
adjustment to the Purchase Price. Furthermore, nothing in this
Agreement shall require Purchaser meet any other condition
36
imposed by the Antitrust Division or the FTC in order to obtain
approval such as entering into licensing agreements or co-branding
with third parties.
8.6 OPERATIONS PRIOR TO THE CLOSING DATE.
(a) The Parent shall cause each Selling Subsidiary to
(i) use reasonable efforts to operate and carry on the Business in the
Ordinary Course of Business and (ii) use its reasonable efforts,
consistent with good business practice, to preserve intact the
Business and the goodwill of the suppliers, contractors, employees,
customers and others having business relations with it with respect to
the Business.
(b) Notwithstanding SECTION 8.6(A), except as expressly
contemplated by this Agreement or except with the express written
approval of the Purchaser (which the Purchaser agrees shall not be
unreasonably withheld or delayed), neither the Parent nor any Selling
Subsidiary shall, except as allowed on SCHEDULE 8.6:
(i) other than is required pursuant to a Law,
or otherwise if outside of the control of the Parent or any
Selling Subsidiary, take or allow to occur any action listed
in subparagraph (a) through (m) of SECTION 6.16 or that would
cause any representation or warranty to be untrue at the
Closing;
(ii) enter into any contract, agreement,
undertaking or commitment which would have been a Material
Contract if in effect on the date hereof or amend or modify
any Material Contract other than Contracts with existing
vendors (other than for capital items) or customers in the
Ordinary Course of Business or new vendors or customers so
long as the amount for any one vendor or customer does not
exceed $100,000 in the aggregate; or
(iii) establish, introduce, or manufacture any
product that would constitute a new or promotional SKU.
(c) The Parent will (A) confer on a regular and frequent
basis with representatives of the Purchaser to report operational
matters and the general status of ongoing operations as reasonably
requested by the Purchaser and (B) not take any action that would
render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue at the
Closing.
(d) In addition to the requirements of Section 8.6(a),
Parent and the Selling Subsidiaries shall not use extraordinary
selling efforts in the Business that would have the effect of
accelerating sales of the Business prior to the time reasonably
expected, through offering of discounts, shipment of goods prior to
anticipated shipping dates or otherwise. Notwithstanding the foregoing
and SECTION 8.6(A), Parent and the Selling Subsidiaries may manage
their production of Inventory to allow Qualified Inventory not to
exceed the Maximum Qualified Inventory, the SKU Quantity Limit and the
SKU Life Limitation as of the Closing Date.
37
(e) Parent and the Selling Subsidiaries shall use their
commercially reasonable efforts to secure the execution by Keebler
Company of that certain Supply Agreement with Foil dated as of
November 19, 2002.
8.7 CERTAIN TAX MATTERS.
(a) Any sales, use, transfer, vehicle transfer, stamp,
conveyance, value added or other similar Taxes that may be imposed by
any Governmental Body, and all recording or filing fees, notarial fees
and other similar costs of Closing with respect to the purchase and
sale of the Purchased Assets, or otherwise on account of this
Agreement or the transactions contemplated hereby, shall be shared by
the Parent and the Purchaser as follows: (i) the Parent shall pay all
such Taxes, fees and costs up to an aggregate amount of $62,500; and
(ii) the balance of such Taxes, fees and costs shall be shared equally
by the Parent and the Purchaser.
(b) The Parent and the Purchaser will (i) each provide
the other with such assistance as may reasonably be requested by any
of them in connection with the preparation of any Tax Return, audit or
other examination by any taxing authority or judicial or
administrative proceedings relating to liability for Taxes, (ii) each
retain and provide the other with any records or other information
that may be relevant to such Tax Return, audit or examination,
proceeding or determination, and (iii) each provide the other with any
final determination of any such audit or examination, proceeding or
determination that affects any amount required to be shown on any Tax
Return of the other for any period.
8.8 EMPLOYEES.
(a) Except as set forth on SCHEDULE 8.8(A), the
Purchaser agrees, subject to its normal employment practices, to offer
employment to, as of the Closing Date: (i) all full time regular
employees at the Freezer or that are employed by Stilwell, Spartanburg
or Foil and either actively at work or on vacation on the Closing Date
and (ii) any full time regular employee of Stilwell or Spartanburg who
is on leave of absence, ill or otherwise not actively at work on the
Closing Date once the Purchaser has been notified that such employee
is willing and able to work for the Purchaser (collectively, the
"Manufacturing Employees"), at substantially the same salary and wages
as their current employment with Stilwell or Spartanburg, as the case
may be. The Purchaser shall offer to the Manufacturing Employees
health and welfare benefits that are substantially equivalent to those
benefits offered to other employees of the Purchaser in similar
positions.
(b) The Parent and the Seller agree that following the
execution of this Agreement and continuing after the Closing Date, the
Purchaser shall be allowed to discuss with the Manufacturing Employees
and the Administrative Employees the terms of employment to be offered
by the Purchaser. The Parent and the Seller covenant not to interfere
(and shall cause each Selling Subsidiary not to interfere) with any
such efforts by the Purchaser and to use their commercially reasonable
efforts to assist the Purchaser in employing the Manufacturing
Employees. The Parent shall promptly after the Closing
38
Date pay the cash equivalent of all accrued wages and salaries,
accrued paid time off, sick leave, vacations or similar benefits of
each employee hired by the Purchaser.
(c) The Purchaser, in its sole discretion, may offer
employment to those employees of the Seller set forth on SCHEDULE
8.8(C) (the "Administrative Employees") except for those
Administrative Employees specifically designated as Retained Employees
on such Schedule.
(d) The Purchaser shall take any and all actions
necessary to comply with the WARN Act arising out of the termination,
layoff or discharge of (i) any of the Manufacturing Employees or (ii)
any of the Administrative Employees hired by the Purchaser under
SECTION 8.8(C). The Purchaser hereby acknowledges and agrees that it
shall be solely responsible and liable for any obligations,
liabilities or Actions which may be asserted against or imposed
against the Purchaser and/or the Parent or any of the Selling
Subsidiaries as a result of the WARN Act with respect to (i) the
Manufacturing Employees and (ii) the Administrative Employees hired by
the Purchaser under SECTION 8.8(C).
(e) Nothing in this Agreement shall be construed as
conferring any right, as third party beneficiary or otherwise, on any
Person not a party to this Agreement as to matters described in this
SECTION 8.8.
(f) Prior to the date hereof, the Parent and the
Purchaser have agreed upon a form of announcement to employees of the
Business concerning this Agreement and the transactions contemplated
hereby and a communication plan concerning the method and timing of
the delivery of such announcement. The parties will deliver such
announcement to employees of the Business in accordance with such
communication plan. With respect to all other announcements to
employees, neither the Seller nor Affiliates shall distribute
communications to the Business's employees concerning this Agreement
or the transactions contemplated hereby without doing so in a form of
writing that has been approved in writing in advance by the Purchaser,
which approval shall not be unreasonably withheld or delayed. The
Purchaser shall have the right to be present for any in-person
announcement to employees of the Business.
(g) Except for the employees set forth on SCHEDULE
8.8(G), the Parent agrees, for itself and its Affiliates, not to
employ for a period of one year after the Closing Date, any employee
of the Business to whom the Purchaser has made an offer of employment.
8.9 TITLE INSURANCE AND SURVEYS. In preparation for the Closing,
the Parent will use its commercially reasonable efforts to: (i) cause the Title
Company to deliver to the Purchaser, as soon as practicable and in any event
prior to February 14, 2003, commitments to issue Title Policies for each parcel
of Real Property (other than property subject to the Foil Sublease as to which
the applicable date shall be February 28, 2003), in amounts equal to the value
of such parcels of Real Property, as mutually agreed upon by the Parent and the
Purchaser, insuring marketable fee title in the Purchaser as of the Closing
Date, subject to the Permitted Encumbrances, and (ii) deliver to the Purchaser
as soon as practicable and in any event prior to February 14, 2003 (other than
property subject to the Foil Sublease as to which the applicable
39
date shall be February 28, 2003), a current survey with respect to each parcel
of Real Property as to which a Title Policy is to be procured pursuant to this
SECTION 8.9, certified to the Parent, the Seller and the Purchaser, and
prepared by a licensed surveyor and conforming to current ALTA Minimum Detail
Requirements for Land Title Surveys disclosing such matters customarily shown
on such surveys (collectively, the "SURVEYS"). The Survey of the Suwanee Real
Property shall depict a metes and bounds legal description for the Suwanee
Bread Plant, separate from the Freezer and the Headquarters, to be used in the
Suwanee Lease Agreement. The Parent reserves the right to cause the Title
Company to issue a title commitment for a title policy insuring the real
property interest in the Suwanee Bread Plant reserved by Seller at Closing
pursuant to the Suwanee Lease Agreement. The Parent shall pay the cost of the
Title Policies and the Surveys. The Purchaser shall reimburse the Parent for
one-half the cost of the Title Policies and the Surveys at the Closing. The
Purchaser shall be solely responsible for obtaining at its sole cost and
expense, in the event the Purchaser elects to do so, any extended coverage with
respect to the Title Policies or any endorsements to the Title Policies.
8.10 TRADEMARK AND OTHER MATTERS. As soon as practicable and until
Closing, Seller will file and diligently prosecute an application for the
trademark "Flip It" with the United States Patent and Trademark Office and
will, at Closing, assign to Purchaser all rights to prosecute same and Seller
shall have no further obligation with respect thereto.
ARTICLE 9: POST-CLOSING COVENANTS OF THE PARTIES
The respective parties hereto covenant and agree to take the
following actions following the Closing Date set forth herein below.
9.1 POST-CLOSING CONSENTS. If any material consents or approvals
are not obtained prior to Closing, the Parent and the Selling Subsidiaries will
use their commercially reasonable efforts to obtain such consents and approvals
in a timely manner following the Closing. In the event such consents and
approvals cannot be obtained with respect to any Contract, the Parent and the
Selling Subsidiaries will cooperate with the Purchaser to procure a reasonable
arrangement designed to both (a) provide the Purchaser the benefits under any
such Contract and (b) cause the Purchaser to bear all costs and obligations of
or under any such Contract arising or incurred from and after the Closing;
provided that this SECTION 9.1 shall in no way limit ARTICLE 10 or SECTION
12.2.
9.2 REMOVAL OF EQUIPMENT.
(a) Spartanburg Doughnut Equipment. Within two weeks
following the complete removal of the London Pie Line, the Seller, at
its sole cost and expense, shall hire professional riggers to begin
the removal of the doughnut line and related equipment set forth on
SCHEDULE 2.2 (collectively, the "SPARTANBURG DOUGHNUT EQUIPMENT") from
the Spartanburg plant. The Purchaser hereby agrees to provide
reasonable access to the Spartanburg plant for a period of 30 calendar
days in order to permit the Seller to remove the Spartanburg Doughnut
Equipment. The Parent and the Seller shall jointly and severally
indemnify, defend and hold harmless the Purchaser and its officers,
directors, employees, agents and Affiliates from and against any and
all losses, liabilities, claims, damages, penalties, fines, judgments,
awards, settlements, Taxes, costs, fees, expenses
40
(including but not limited to reasonable attorneys' fees) and
disbursements actually sustained by any of such Persons resulting from
the actions or inactions of such professional rigger or the failure to
pay in full such professional rigger.
(b) London Pie Line. Within the earlier to occur of (i)
December 31, 2003 or (ii) 270 days following the Closing Date, the
Purchaser, at its sole cost and expense, shall hire professional
riggers to remove the pie line and related equipment set forth on
SCHEDULE 9.2(B) (collectively, the "LONDON PIE LINE") from Flowers
Snack of London, LLC's London, Kentucky plant. During such 90-day
period, the Seller hereby agrees to provide reasonable access to the
London, Kentucky plant for a period of not more than 14 business days
in order to permit the Purchaser to remove the London Pie Line. The
Purchaser shall indemnify, defend and hold harmless the Parent and
Seller and their officers, directors, managers, employees, agents and
Affiliates from and against any and all losses, liabilities, claims,
damages, penalties, fines, judgments, awards, settlements, Taxes,
costs, fees, expenses (including but not limited to reasonable
attorneys' fees) and disbursements actually sustained by any of such
Persons resulting from the actions or inactions of such professional
rigger or the failure to pay in full such professional rigger.
(c) Crossville Flip-It Cake Equipment. Within the
earlier to occur of (i) December 31, 2003 or (ii) 270 days following
the Closing Date, the Purchaser, at its sole cost and expense, shall
hire professional riggers to remove the equipment that is unique to
the production of the Flip-It Cake Product as set forth on SCHEDULE
9.2(C) (collectively, the "CROSSVILLE FLIP-IT CAKE EQUIPMENT") from
Crossville's Crossville, Tennessee plant. During such 90-day period,
the Seller hereby agrees to provide reasonable access to the
Crossville, Tennessee plant for a period of not more than 14 business
days in order to permit the Purchaser to remove the Crossville Flip-It
Cake Equipment. The Purchaser shall indemnify, defend and hold
harmless the Parent and Seller and their officers, directors,
managers, employees, agents and Affiliates from and against any and
all losses, liabilities, claims, damages, penalties, fines, judgments,
awards, settlements, Taxes, costs, fees, expenses (including but not
limited to reasonable attorneys' fees) and disbursements actually
sustained by any of such Persons resulting from the actions or
inactions of such professional rigger or the failure to pay in full
such professional rigger.
9.3 BOOKS AND RECORDS. The Purchaser agrees to retain all books,
records, electronic data and other documents pertaining to the Business in
existence on the Closing Date for a period of four (4) years (or until all Tax
Returns and Tax audits are final or such longer period of the applicable
statutes of limitation relating to claims relative to such matters or such
longer period as is required by Law) after the Closing and to make the same
available after the Closing Date for inspection and copying by the Parent or
the Parent's agents, upon reasonable request and upon reasonable notice.
9.4 FURTHER ASSURANCES. At any time and from time to time after
the Closing Date, the parties hereto agree to (a) furnish upon request to each
other such further assurances, information, documents, instruments of transfer
or assignment, files and books and records as reasonably requested, (b)
promptly execute, acknowledge and deliver any such further assurances,
information, documents, instruments of transfer or assignment, files and books
and records as may be reasonably requested, and (c) do all such further acts
and things all as such
41
other party may reasonably request for the purpose of carrying out the intent
of this Agreement and the Ancillary Agreements.
9.5 POST-CLOSING PAYMENTS AND RETURNS.
(a) In the event that any customer of the Business
becomes entitled to receive any volume discount after the Closing Date
based upon purchases made both before and after the Closing Date, the
amount of such discount shall be prorated between the Parent and the
Purchaser based upon the ratio of the volume of such purchases made
before and the volume made after the Closing Date, respectively. The
Purchaser shall deliver to the Parent a written statement setting
forth in reasonable detail any amounts due to the Purchaser pursuant
to this SECTION 9.5(A) on a monthly basis. Any amounts due from the
Parent pursuant to this SECTION 9.5(A) shall be paid by the Parent to
the Purchaser within seven days after receipt by the Parent of such
written statement.
(b) In the event that goods delivered to customers of
the Business before the Closing Date are returned by any such customer
after the Closing Date, the amount of such goods shall be charged
against the appropriate Accounts Receivable on a dollar for dollar
basis. As to any returned goods that with the finished goods Inventory
on the Closing Date would have been within the Maximum Qualified
Inventory if such goods had been returned on the Closing Date, the
Purchaser shall purchase such returned goods from the Parent and pay
the Parent for such goods at the lower of standard cost or market
using the FIFO Method (without any provision for reserves) minus a 20%
restocking fee on a monthly basis. As to any such goods that with the
finished goods Inventory on the Closing Date would have been Excess
Inventory if such goods had been returned on the Closing Date, the
Purchaser shall purchase such returned goods at 20% of the lower of
standard cost or market using the FIFO Method (without any provision
for reserves) on a monthly basis. As to any such goods that are
Non-qualified Inventory if such goods had been returned on the Closing
Date, the Purchaser shall use its commercially reasonable efforts to
dispose of such returned goods in the secondary market and shall remit
the proceeds thereof to Parent, less reasonable costs of disposition,
on a monthly basis.
9.6 PERFORMANCE OF OBLIGATIONS.
(a) After the Closing Date, each of the Parent and the
Selling Subsidiaries will honor customer discounts, coupons and
similar retail customer promotions issued by the Business prior to the
Closing Date.
(b) Parent and its Affiliates shall immediately cease
using the name "Mrs. Smith's" and variations thereof except as
contemplated hereby, to comply with Parent's disclosure obligations or
otherwise to meet any requirement of Law.
(c) Purchaser hereby grants to each of the Parent and
its Affiliates a non-exclusive, non-transferable, royalty-free right
and license to use the Trademarks for the sole purpose of depleting
the existing packaging inventory of the Retained Assets that use the
Trademarks; provided, that such license shall automatically terminate
on the date that is one year from the Closing.
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(d) Each of the Parent and its Affiliates hereby grants
to Purchaser a non-exclusive, non-transferable, royalty-free right and
license to use the corporate name of Parent for the sole purpose of
depleting the existing packaging inventory of the Business that use
such name and for use on signage, letterhead, telephone listings,
brochures and similar promotional materials, manuals and similar uses;
provided, that such license shall automatically terminate on the date
that is one year from the Closing.
9.7 CERTAIN REAL ESTATE MATTERS. After the Closing Date, the
Parent will promptly initiate and use its commercially reasonable efforts to
accomplish the actions set forth on SCHEDULE 9.7.
ARTICLE 10: CONDITIONS PRECEDENT TO OBLIGATIONS
OF PURCHASER TO CLOSE
10.1 CONDITIONS TO OBLIGATIONS OF THE PURCHASER TO CLOSE. The
obligations of the Purchaser to consummate the transactions shall be subject to
the satisfaction or waiver on or prior to the Closing Date of the following
conditions:
(a) Representations, Warranties and Agreements. Each of
the representations and warranties of the Parent and the Seller
contained in this Agreement shall be true and correct as of the date
of this Agreement and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of
such date, except that the representations and warranties set forth in
SECTION 6.23 need only be true as of the dates specified therein, and
each of the covenants and agreements of the Seller to be performed on
or prior to the Closing Date shall have been duly performed; provided,
however, that notwithstanding the failure of such representations and
warranties to be true and correct, and such covenants and agreements
to be performed, the condition provided in this SECTION 10.1(A) shall
be deemed satisfied unless (i) the aggregate actual Losses that could
reasonably be expected to result to the Purchaser for breach of such
representation and warranties in excess of the Basket and for breach
of such covenants and agreements would exceed five percent (5%) of the
Purchase Price or (ii) the aggregate actual Losses that could
reasonably be expected to result to the Purchaser for breach of such
covenants and agreements would exceed two and five tenths percent
(2.5%) of the Purchase Price, if the Closing were to be effected (the
"DAMAGE PROVISO"). Whether or not the amount of the Damage Proviso has
been exceeded, if the Closing occurs, any claim for post-Closing
indemnification that may be asserted by the Purchaser relative to the
failure of such representations or warranties to be true and correct
and such covenants and agreements to be performed shall be determined
in accordance with the provisions of ARTICLE 12 hereto regarding
indemnification.
(b) Delivery of Documents. The Parent shall have
delivered or caused to be delivered to the Purchaser all of the
documents required by SECTION 5.2.
(c) All authorizations, consents and approvals (all of
which shall be in full force and effect) of Governmental Bodies
required by Law to be received in connection with the transactions
contemplated by this Agreement or necessary, in the reasonable
43
opinion of the Purchaser, for the continued operation of the Business
in the manner in which it is currently being operated shall have been
received.
(d) The Seller shall have obtained each consent,
approval, permission or similar action set forth on SCHEDULE 10.1(D)
so as to assure that the transactions contemplated hereby will not
conflict with, result in any breach of any of the provisions of,
constitute a default (or any event which would, with the passage of
time or the giving of notice or both, constitute a default) under,
result in a violation of, result in the termination, amendment,
suspension, modification, abandonment or acceleration of payment (or
any right to terminate), require a consent or result in the creation
of any Encumbrance upon the Business or any of the assets of the
Business under any Material Contract.
(e) Sysco or its Affiliates shall have provided to
Purchaser reasonable assurances with respect to continuation of
Sysco's status as a customer of the Business.
(f) The Purchaser shall have received the Surveys and
the commitments from the Title Company to the issue the Title Policies
as described in SECTION 8.9.
(g) The actions pertaining to the real estate described
on SCHEDULE 10.1(G) shall have occurred.
10.2 CONDITIONS TO OBLIGATIONS OF THE PARENT AND THE SELLER TO
CLOSE.
(a) Representations, Warranties and Agreements. Each of
the representations and warranties of the Purchaser contained in this
Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as
of such date, except that such representations and warranties made as
of a specific date need only be true as of such specified date, and
each of the covenants and agreements of the Purchaser to be performed
on or prior to the Closing Date shall have been duly performed in all
material respects.
(b) Delivery of Documents. The Purchaser shall have
delivered or caused to be delivered to the Parent and the Seller all
of the documents required by SECTION 5.3.
10.3 CONDITIONS TO OBLIGATIONS OF THE PARTIES TO CLOSE. The
respective obligations of the Parent and the Seller, on the one hand, and the
Purchaser, on the other hand, to consummate the transactions contemplated by
this Agreement shall be subject to (i) the expiration or termination of the
waiting period applicable to the transactions contemplated hereby under the HSR
Act; and (ii) the fact that there shall not be any injunction issued by any
Governmental Body that enjoins the consummation of the transactions
contemplated by this Agreement.
ARTICLE 11: TERMINATION
11.1 METHOD OF TERMINATION. This Agreement constitutes the binding
and irrevocable agreement of the parties to consummate the transactions
contemplated hereby and this Agreement may be terminated prior to the Closing
only as follows:
44
(a) by mutual written consent of the Purchaser and the
Parent;
(b) by the Parent by written notice to the Purchaser
delivered after 180 days from the date hereof if the Closing shall not
have been consummated on or prior to such date; or
(c) by the Purchaser by written notice to the Parent
delivered after 180 days from the date hereof if the Closing shall not
have been consummated on or prior to such date.
11.2 EFFECT OF TERMINATION.
(a) The right of termination under SECTION 11.1(A)
hereof is in addition to any other rights the Purchaser or the Parent
may have under this Agreement or otherwise, and the exercise of a
right of termination shall not be an election of remedies and shall
not preclude an action for breach of this Agreement. In the event of a
termination of this Agreement pursuant to SECTION 11.1 hereof, each
party shall pay the expenses incurred by it in connection with the
Agreement and, except as set forth in SECTION 13.7(B), no party shall
have any liability or obligation to any other party to this Agreement
under or in connection with this Agreement; provided, however, that
nothing in this Agreement will relieve any party from liability for
any breach of this Agreement prior to such termination; provided
further, however, that if this Agreement is terminated by a party
because of the breach of this Agreement by the other party or because
one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other party's
failure to comply in all material respects with its obligations under
this Agreement, the terminating party's rights to pursue all legal
remedies will survive such termination unimpaired.
(b) Notwithstanding any termination of this Agreement,
the obligations of the parties with respect to SECTION 8.2
(Publicity), SECTION 13.7 (Expenses), SECTION 13.11 (Governing Law)
and as set forth in the Confidentiality Agreement shall survive.
ARTICLE 12: INDEMNIFICATION
12.1 SURVIVAL. Subject to the limitations and other provisions of
this Agreement, all of the representations, warranties, covenants and
agreements of the parties hereto shall survive the Closing and shall remain in
full force and effect except to the extent the Parent and the Seller on the one
hand, or the Purchaser, on the other hand, waives any such representation,
warranty, covenant or agreement in writing at or prior to Closing.
12.2 GENERAL INDEMNIFICATION OBLIGATION. The Parent and the Seller
shall jointly and severally indemnify, hold harmless and defend the Purchaser
and its officers, directors, employees, agents and Affiliates from and against
any and all losses, liabilities, claims, damages, penalties, fines, judgments,
awards, settlements, Taxes, costs, fees, expenses (including but not limited to
reasonable attorneys' fees) and disbursements (collectively "LOSSES") actually
sustained by any of such Persons resulting from (a) any inaccuracies in or any
breach of any representation, warranty, covenant or agreement of the Parent and
the Seller contained in this Agreement (including any Schedule attached hereto)
or any certificate, affidavit or instrument
45
delivered pursuant hereto including but not limited to any certificate,
affidavit or instrument delivered pursuant to SECTION 5.2; (b) the Retained
Liabilities; (c) Environmental Laws to the extent relating to matters existing
or actions taken prior to the Closing; (d) Taxes (excluding sales, use,
transfer, vehicle transfer, stamp, conveyance, value added or other similar
Taxes that may be imposed by any Governmental Body in connection with the
transactions contemplated by this Agreement, which shall not constitute a Loss
but shall be treated as set forth in SECTION 8.7(A)); (e) the failure of the
Purchaser to receive good and marketable title to all of the Purchased Assets,
including equipment underlying the Capital Leases; (f) the failure of the
Parent and the Seller to obtain any material consent, approval, acknowledgement
or waiver; (g) the use and sale by the Purchaser of the Inventory; (h) the
failure of the Parent or the Selling Subsidiaries to comply with bulk sales
laws, except to the extent constituting an Assumed Liability; (i) the continued
use or possession of the Purchased Assets in the manner they are used on the
Closing Date by virtue of U.S. Patent Nos. 5,308,633 or 5,244,347; (j) the
failure, if any, to obtain good and sufficient title to U.S. Trademark No.
653,166; (k) any infringement resulting from the use of the name "flip it"; or
(l) the failure to obtain licenses for branded product ingredients. The
Purchaser shall indemnify, hold harmless and defend the Parent and the Seller
and its respective officers, directors, employees, agents and Affiliates from
and against any and all Losses actually sustained by any of such Persons
resulting from (a) any inaccuracies in or any breach of any representation,
warranty, covenant or agreement of the Purchaser contained in this Agreement
(including any Schedule attached hereto) or any certificate, affidavit or
instrument delivered pursuant hereto; (b) any of the Assumed Liabilities; and
(c) any Liability resulting from the operation of the Business by the Purchaser
after the Effective Time.
12.3 NOTICE AND OPPORTUNITY TO DEFEND.
(a) Notice of Asserted Liability. As soon as is
reasonably practicable after the Parent or the Seller, on the one
hand, or the Purchaser, on the other hand, becomes aware of any claim
that it has or they have under SECTION 12.2 hereof that may result in
a Loss (a "LIABILITY CLAIM"), such party (the "INDEMNIFIED PARTY")
shall give notice thereof (a "CLAIMS NOTICE") to the other party (the
"INDEMNIFYING PARTY"). A Claims Notice shall describe the Liability
Claim in reasonable detail, and shall indicate the amount (estimated,
if necessary and to the extent feasible) of the Loss that has been or
may be suffered by the Indemnified Party. No delay in or failure to
give a Claims Notice by the Indemnified Party to the Indemnifying
Party pursuant to this SECTION 12.3(A) shall adversely affect any of
the other rights or remedies which the Indemnified Party has under
this Agreement, or alter or relieve the Indemnifying Party of its
obligation to indemnify the Indemnified Party to the extent that such
delay or failure has not prejudiced the Indemnifying Party.
(b) Opportunity to Defend. The Indemnifying Party shall
have the right, exercisable by written notice to the Indemnified Party
within 30 days of receipt of a Claims Notice from the Indemnified
Party of the commencement or assertion of any Liability Claim by a
third party (a "THIRD PARTY CLAIM") in respect of which indemnity may
be sought hereunder, to assume and conduct the defense of such Third
Party Claim in accordance with the terms set forth in this Agreement
with counsel selected by the Indemnifying Party and reasonably
satisfactory to the Indemnified Party. If the Indemnifying Party does
not assume the defense of a Third Party Claim in accordance
46
with this SECTION 12.3(B), the Indemnified Party may continue to
defend the Third Party Claim. If the Indemnifying Party has assumed
the defense of a Third Party Claim as provided in this SECTION
12.3(B), the Indemnifying Party will not be liable for any legal
expenses subsequently incurred by the Indemnified Party in connection
with the defense thereof. The Indemnifying Party or the Indemnified
Party, as the case may be, has the right to participate in (but not
control), at its own expense, the defense of any Third Party Claim
that the other is defending as provided in this Agreement. The
Indemnifying Party, if it shall have assumed the defense of any Third
Party Claim as provided in this Agreement, shall not, without the
prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld), consent to a settlement of, or the
entry of any judgment arising from, any such Third Party Claim which
(i) does not include as an unconditional term thereof the giving by
the claimant or the plaintiff to the Indemnified Party a complete
release from all liability in respect of such Third Party Claim, or
(ii) grants any injunctive or equitable relief. The Indemnified Party
shall not settle any Third Party Claim, without the prior written
consent of the Indemnifying Party, which consent shall not be
unreasonably withheld.
12.4 SURVIVABILITY; LIMITATIONS.
(a) The representations and warranties of the Parent and
the Seller contained in this Agreement or in any Ancillary Agreement
shall survive for a period of 18 months following the Closing Date
(the "Expiration Date") following which date no Liability Claim may be
brought thereon; provided, however, that (i) the Expiration Date for
any Liability Claim relating to a breach or violation of the
representations and warranties set forth in SECTION 6.6 (Taxes) shall
be the expiration of the applicable statute of limitations; and (ii)
any Liability Claim pending on any Expiration Date for which a Claims
Notice has been given in accordance with SECTION 12.3(A) on or before
such Expiration Date may continue to be asserted and indemnified
against until finally resolved.
(b) Notwithstanding anything to the contrary contained
in this ARTICLE 12, neither the Parent nor the Seller shall have any
liability under SECTION 12.2 in respect of (i) inaccuracies in or any
breach of any representation or warranty contained in ARTICLE 6 or
(ii) any Third Party Claims relating to the operation of the Business
prior to the Closing Date made after the Closing Date, until the
aggregate amount of all Losses sustained by the Purchaser exceeds
$1,250,000 (the "Basket"), in which case the Parent and the Seller
shall be jointly and severally liable only for any Losses exceeding
the Basket, subject to the Cap set forth in SECTION 12.3(C) hereof;
provided, however, that, this SECTION 12.4(B) shall not apply to, and
the Parent and the Seller shall be jointly and severally liable (i)
for any and all Losses of the Purchaser under SECTION 12.2(C) and
SECTION 12.2(D); (ii) in respect of any inaccuracies in or breach of
the representations and warranties contained in SECTIONS 6.7(D) and
6.7(G).
(c) Notwithstanding anything to the contrary contained
in this ARTICLE 12, the maximum amount of liability for which the
Parent and the Seller shall be obligated to indemnify the Purchaser
pursuant to SECTION 12.2 of this Agreement shall not exceed the sum of
$70,000,000 in the aggregate (the "Cap") and no Liability Claim shall
be made for any additional indemnification once the Cap has been
reached; provided, however, that
47
this SECTION 12.4(C) shall not apply to, and the Parent and the Seller
shall be jointly and severally liable for, any and all Losses of the
Purchaser under SECTION 12.2(C) and SECTION 12.2(D) and in respect of
any inaccuracies in or breach of the representations and warranties
contained in SECTIONS 6.7(D) and 6.7(G).
(d) Any party seeking indemnification for any damages
for which it is entitled to seek indemnification under this ARTICLE 12
shall use its commercially reasonable efforts to mitigate its damages
in connection with such indemnity claim.
(e) The Purchaser shall not be entitled to
indemnification under SECTION 12.2 to the extent (i) any Loss is
covered by insurance proceeds received by the Purchaser provided,
however, that this clause (i) shall not apply if it conflicts with
Purchaser's obligation to cooperate with its insurers and, provided
further, that this clause (i) does not constitute any waiver of
subrogation; (ii) the Purchaser receives indemnification payments from
a third party for a Loss; or (iii) any Loss arises out of the
termination of any employee of the Purchaser after the Closing Date,
except where such termination is due to actions, omissions or facts
existing prior to Closing. The amount of any recovery by the Purchaser
pursuant to SECTION 12.2 shall be net of the present value (computed
at the time that any such indemnification recovery is made using a
discount rate of six percent (6%) per annum) of any income Tax
benefits inuring to the Purchaser as the result of the state of facts
which entitle the Purchaser to such recovery under SECTION 12.2 and of
any income tax burdens to which the Purchaser will be subject as a
result of such recovery (taking into account the timing differences in
the realization of any such benefits), with such benefits calculated
using the then-effective consolidated federal income tax rate of the
Purchaser. The Purchaser hereby acknowledges and agrees that the
payment of any indemnification amounts to the Purchaser pursuant to
this ARTICLE 12 shall be deemed to be an equivalent reduction in the
Purchase Price to be appropriately allocated among the Purchased
Assets in accordance with SECTION 4.3.
12.5 EXCLUSIVE REMEDY. Following the Closing, the sole and
exclusive remedy, other than with respect to claims involving intentional
misrepresentation or fraud and the covenants set forth in ARTICLE 9, for the
Parent and the Seller or the Purchaser for any claim (whether such claim is
framed in tort, contract or otherwise) arising out of any inaccuracy in or any
breach of any covenant, representation or warranty shall be a claim by the
Parent and the Seller or the Purchaser for indemnification pursuant to this
ARTICLE 12. Prior to or in connection with the Closing, and with regard to the
covenants set forth in ARTICLE 9, the parties will have available to them all
remedies available under Law, including specific performance or other equitable
remedies.
12.6 EXCLUSION OF CERTAIN DAMAGES. Notwithstanding any other
provision herein to the contrary, no party shall have any liability under this
Agreement, for exemplary or punitive damages as a result of a breach of this
Agreement; provided an Indemnified Party shall have the right to recover
exemplary or punitive damages imposed on it pursuant to a Third Party Claim.
48
ARTICLE 13: GENERAL PROVISIONS
13.1 CONFIDENTIAL NATURE OF INFORMATION. Purchaser agrees that all
documents, materials and other information which it shall have obtained
regarding the Parent or any Selling Subsidiary during the course of the
negotiations leading to the consummation of the transactions contemplated
hereby (whether obtained before or after the date of this Agreement), the
investigation provided for herein and the preparation of this Agreement and the
Ancillary Agreements shall be held in confidence pursuant to the terms of the
Confidentiality Agreement.
13.2 NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given when delivered in person or when dispatched by electronic facsimile
transfer (if confirmed in writing by mail simultaneously dispatched) or one
business day after having been dispatched by a nationally recognized overnight
courier service to the appropriate party at the address or facsimile number
specified below:
If to the Purchaser, to:
The Schwan Food Company
115 West College Drive
Marshall, MN 56258
Attention: Brian Sattler, Esq.
Facsimile No.: (507) 537-8405
with a copy to:
Dorsey & Whitney LLP
50 South Sixth Street
Suite 1500
Minneapolis, MN 55402-1498
Attention: William B. Payne, Esq.
Facsimile No.: (612) 340-8738
If to the Parent or the Seller, to:
Flowers Foods, Inc.
1919 Flowers Circle
US Highway 19 South
Thomasville, Georgia 31757
Attention: Stephen R. Avera, Esq.
Facsimile No.: (229) 225-5426
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with a copy, to:
Jones Day
3500 SunTrust Plaza
303 Peachtree Street, N.E.
Atlanta, Georgia 30308-3242
Attention: Lizanne Thomas, Esq.
Facsimile No.: (404) 581-8330
Any party hereto may change its address of facsimile number for the
purposes of this SECTION 13.2 by giving notice as provided herein.
13.3 SUCCESSORS AND ASSIGNS. The rights of either party under this
Agreement shall not be assignable by such party hereto prior to the Closing
without the written consent of the other party, except that the Purchaser may
assign its right to close under this Agreement and to enter into the agreements
to be delivered upon Closing to one or several subsidiaries of the Purchaser,
so long as it remains responsible for the performance of all of its obligations
under this Agreement. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their successors and permitted assigns.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any Person, other than the parties and successors and
assigns permitted by this SECTION 13.3, any right, remedy or claim under or by
reason of this Agreement.
13.4 ENTIRE AGREEMENT; AMENDMENTS. This Agreement and the
Schedules referred to herein, the Ancillary Agreements and the Confidentiality
Agreement contain the entire understanding of the parties hereto with regard to
the subject matter contained herein or therein, and supersede all other prior
agreements, understandings or letters of intent between or among any of the
parties hereto. This Agreement shall not be amended, modified or supplemented
except by a written instrument signed by an authorized representative of each
of the parties hereto.
13.5 INTERPRETATION.
(a) Articles, titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this
Agreement.
(b) The Schedules referred to herein shall be construed
with and as an integral part of this Agreement to the same extent as
if they were set forth verbatim herein. The Schedules correspond to
the applicable sections of this Agreement. A Schedule relates only to
the representations and warranties in the related section of this
Agreement to which it corresponds and not to any other representation
or warranty in this Agreement. In the event of any inconsistency
between the statement in this Agreement and statements in a Schedule,
the statements in this Agreement shall control and the statements in a
Schedule shall be disregarded.
50
(c) Neither the specification of any dollar amount in
any representation or warranty contained in this Agreement nor the
inclusion of any specific item in any Schedule hereto is intended to
imply that such amount, or higher or lower amounts, or the item so
included or other items, are or are not material, and no party shall
use the fact of the setting forth of any such amount or the inclusion
of any such item in any dispute or controversy between the parties as
to whether any obligation, item or matter not described herein or
included in any Schedule is or is not material for purposes of this
Agreement.
(d) Unless this Agreement specifically provides
otherwise, neither the specification of any item or matter in any
representation or warranty contained in this Agreement nor the
inclusion of any specific item in any Schedule hereto is intended to
imply that such item or matter, or other items or matters, are or are
not in the Ordinary Course of Business, and no party shall use the
fact of the setting forth or the inclusion of any such item or matter
in any dispute or controversy between the parties as to whether any
obligation, item or matter not described herein or included in any
Schedule is or is not in the Ordinary Course of Business for purposes
of this Agreement.
(e) The Seller may, from time to time prior to or at the
Closing, by notice in accordance with the terms of this Agreement,
supplement, amend or create any Schedule, in order to add information
or correct previously supplied information. No such amendment shall be
evidence, in and of itself, that the representations and warranties in
the corresponding section were not true and correct in all material
respects as of the date of this Agreement. It is specifically agreed
that such Schedules may be amended to add immaterial, as well as
material, items thereto. However, any such supplement, amendment or
addition shall not be effective to cure or correct any breach of any
representation, warranty or covenant which would have existed if
Seller had not made such supplement, amendment or addition, and all
references to any Schedule hereto which is supplemented or amended as
provided in this SECTION 13.5 shall for all purposes be deemed to be a
reference to such Schedule as originally delivered.
(f) The parties intend that each representation,
warranty and agreement contained in this Agreement will have
independent significance. If any party has breached any
representation, warranty or agreement in any respect, the fact that
there exists another representation, warranty or agreement relating to
the same subject matter (regardless of the relative levels of
specificity) that the party has not breached will not detract from or
mitigate the fact that the party is in breach of the first
representation, warranty or agreement. Any reference to any federal,
state, local or foreign Law shall be deemed also to refer to all rules
and regulations promulgated thereunder, unless the context requires
otherwise. The word "including" shall mean "including, without
limitation." The use of the masculine, feminine or neuter gender or
the singular or plural form of words will not limit any provisions of
this Agreement. A statement that an item is listed, disclosed or
described means that such item is correctly listed, disclosed or
described, and a statement that a copy of an item has been delivered
means a true and correct copy of such item has been delivered. Any
accounting term used in this Agreement and not defined shall have the
meaning accorded to it under GAAP.
51
(g) Delivery of documents at the Closing shall not imply
that the deliveries vary the terms of this Agreement.
13.6 WAIVERS. Any term or provision of this Agreement may be
waived, or the time for its performance may be extended, by the party or
parties entitled to the benefit thereof. Any such waiver shall be validly and
sufficiently authorized for the purposes of this Agreement if, as to any party,
it is authorized in writing by an authorized representative of such party. The
failure of any party hereto to enforce at any time any provision of this
Agreement shall not be construed to be a waiver of such provision, nor in any
way to affect the validity of this Agreement or any part hereof or the right of
any party thereafter to enforce each and every such provision. No waiver of any
breach of this Agreement shall be held to constitute a waiver of any other or
subsequent breach.
13.7 EXPENSES. Except as otherwise specifically set forth in this
Agreement, each party hereto will pay all costs and expenses incident to its
negotiation and preparation of this Agreement and to its performance and
compliance with all agreements and conditions contained herein on its part to
be performed or complied with, including, without limitation, the fees,
expenses and disbursements of its counsel and independent public accountants.
13.8 PARTIAL INVALIDITY. Wherever possible, each provision hereof
shall be interpreted in such manner as to be effective and valid under
applicable law, but in case any one or more of the provisions contained herein
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such provision shall be ineffective to the extent, but only to the
extent, of such invalidity, illegality or unenforceability without invalidating
the remainder of such invalid, illegal or unenforceable provision or provisions
or any other provisions hereof, unless such a construction would be
unreasonable.
13.9 EXECUTION IN COUNTERPARTS. This Agreement may be executed in
two or more counterparts, each of which shall be considered an original
instrument, but all of which shall be considered one and the same agreement,
and shall become binding when one or more counterparts have been signed by each
of the parties hereto and delivered to the Seller and the Purchaser.
13.10 FURTHER ASSURANCES. On and after the Closing Date each party
hereto shall take such other actions and execute such other documents and
instruments of conveyance and transfer as may be reasonably requested by the
other party hereto from time to time to effectuate or consummate the
transactions contemplated by this Agreement and the Ancillary Agreements.
13.11 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws (as opposed to the conflicts of
law provisions) of the State of Delaware.
13.12 SPECIFIC PERFORMANCE. Each of the parties acknowledges and
agrees that the subject matter of this Agreement, including the business,
assets and properties of the Business, is unique, that the other parties would
be damaged irreparably in the event any of the provisions of this Agreement are
not performed in accordance with their specific terms or otherwise are
breached, and that the remedies at law would not be adequate to compensate such
other parties
52
not in default or in breach. Accordingly, each of the parties agrees that the
other parties shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically this
Agreement and the terms and provisions of this Agreement in addition to any
other remedy to which they may be entitled, at law or in equity. The parties
waive any defense that a remedy at law is adequate and any requirement to post
bond or provide similar security in connection with actions instituted for
injunctive relief or specific performance of this Agreement.
13.13 JURISDICTION. Subject to the procedures governing purchase
price adjustment in ARTICLE 4, each of the parties submits to the exclusive
jurisdiction of any state or federal court sitting in Wilmington, Delaware, in
any Action arising out of or relating to this Agreement and agrees that all
claims in respect of the Action may be heard and determined in any such court.
Each party also agrees not to bring any Action arising out of or relating to
this Agreement in any other court. Each of the parties waives any defense of
inconvenient forum to the maintenance of any Action so brought and waives any
bond, surety or other security that might be required of any other party with
respect thereto.
13.14 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT
ANY CONTROVERSY THAT MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT. EACH PARTY
CERTIFIES AND ACKNOWLEDGES THAT (I) NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER,
(II) IT UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF SUCH WAIVER, (III)
IT MAKES SUCH WAIVER VOLUNTARILY AND (IV) IT HAS BEEN INDUCED TO ENTER INTO
THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVER AND CERTIFICATIONS IN
THIS SECTION.
13.15 TIME OF ESSENCE. With regard to all dates and time periods
set forth or referred to in this Agreement, time is of the essence.
[SIGNATURES ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the day and year first above written.
FLOWERS FOODS, INC.
By: /s/ Jimmy M. Woodward
--------------------------------------
Name: Jimmy M. Woodward
Title: Senior Vice President & CFO
MRS. SMITH'S BAKERIES, LLC
By: /s/ Stephen R. Avera
--------------------------------------
Name: Stephen R. Avera
Title: Secretary and General Counsel
THE SCHWAN FOOD COMPANY
By: /s/ M. Lenny Pippin
--------------------------------------
Name:
Title: