ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT (this "Agreement") is made and
entered into as of this 28th day of January, 2003, by and among American Italian
Pasta Company, a Delaware corporation ("Buyer"), PepsiCo Puerto Rico, Inc., a
Delaware corporation ("PPR") and an indirect wholly owned subsidiary of PepsiCo,
Inc., and Golden Grain Company, a California corporation ("Golden Grain") and a
direct wholly owned subsidiary of PPR. PPR and Golden Grain are hereinafter
collectively referred to as "Sellers".
WHEREAS, Sellers have been and are engaged in the business of
manufacturing, marketing and selling dry pasta, macaroni & cheese and marinara
sauces, primarily in the United States, under the trademarks "Mission," "Golden
Grain" and "Golden Grain/Mission" and the production and sale of private label
pasta for one customer and foodservice long pasta for one restaurant chain (the
business described above, and no other business of Sellers, hereinafter referred
to as, the "Business", and the products described above, and no other products
of Sellers, hereinafter collectively referred to as, the "Products").
WHEREAS, Sellers desire to sell and assign to Buyer, and Buyer desires to
purchase and assume from Sellers, certain assets and liabilities arising from
the Business, on the terms and subject to the conditions set forth in this
Agreement.
NOW, THEREFORE, on the basis of the respective representations and
warranties set forth herein, the premises set forth hereinabove, and the
covenants, agreements and indemnities contained herein, the parties hereto agree
as follows:
ARTICLE I
PURCHASE AND SALE OF CERTAIN ASSETS
Section 1.1 Sale of Assets. Sellers hereby agree to sell, assign,
transfer, convey and deliver or cause their appropriate Affiliates (as
hereinafter defined) to sell, assign, transfer, convey and deliver, to Buyer,
and Buyer hereby agrees to purchase and accept from Sellers (or their
appropriate Affiliates) at the Closing (as defined in Section 1.7
hereof), all of Sellers' right, title and interest in and to the assets
described in clauses (a) through (j) below (collectively, the "Acquired
Assets"). For purposes of this Agreement, "Affiliate" shall mean any
Person (as hereinafter defined) who directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with, a
specified Person. The term "control" (including the terms
"controlling", "controlled by" and "under common control
with") means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. "Person"
shall mean an individual, firm, corporation, partnership, limited liability
company, trust, governmental authority or body, association, unincorporated
organization or any other entity.
(a) Equipment. The machinery, equipment and spare parts (other than
Inventory, which is separately referenced in Section 1.1(b)) listed in Schedule
1.1(a) attached hereto (the "Equipment"), but excluding any of the items
described in this paragraph which are disposed of by either Seller in the
ordinary course of business between the date hereof and the Closing Date (as
defined in Section 1.7 hereof);
(b) Inventories. (i) All packaging material inventories which are
owned by Sellers, used exclusively in connection with the Business, and located
at or in-transit to any of the contract manufacturers for the Business (the
"Co-Packers") listed on Schedule 1.1(b)
2
attached hereto, and (ii) all finished goods inventories which are owned by
Sellers, used exclusively in connection with the Business, and located at or
in-transit to any of the storage facilities listed on Schedule 1.1(b) attached
hereto (the "Other Facilities"). The packaging material and finished goods
inventories described in clauses (i) and (ii) above are hereinafter collectively
referred to as the "Inventory";
(c) Books and Records. Subject to Section 1.2, all books and records
of Sellers relating exclusively to the Business or the Acquired Assets,
including, without limitation, customer and supplier lists (including the
business address and shipping address of each), market information, marketing
and sales plans, correspondence and files, but not including any data, files,
correspondence, reports or similar items relating to or concerning the
co-packing agreement between Buyer and Golden Grain or the conduct of the
relationship between them or personal notes, files or correspondence that
contain information about the Business that is no longer relevant to the
operation of the Business (hereinafter, "Books and Records");
(d) Permits. Subject to Section 1.12 hereof, all permits held by
Sellers which relate exclusively to the Business or the Acquired Assets (the
"Permits");
(e) Contracts. Subject to Section 1.12 hereof, all contracts and
commitments relating exclusively to the Business or the Acquired Assets and
listed on Schedule .1(e) hereof (the contracts and commitments described in this
clause (e) are hereinafter referred to as the "Assumed Contracts");
(f) Intellectual Property. (i) All trademarks, trademark applications,
trade names, copyrights, trade secrets, know-how, processes, technology,
formulas, recipes, mixing instructions and product specifications, (ii) all
available trade dress, packaging, artwork and logos, presently, or within three
(3) years prior to Closing, used exclusively in promoting the
3
Products, (iii) the domain names listed on Schedule 1.1(f), together with all
registrations for such domain names and all copyrights in and to the textual,
graphic and other content contained at or on the websites located at such domain
names (collectively, the "Domain Names"), and (iv) other intellectual property
(regardless of whether registered with any governmental authority) and goodwill
associated with each of the foregoing, in each case, only which is owned by the
Sellers and used exclusively in the Business, including the intellectual
property set forth on Schedule 1.1(f) (collectively, the "Intellectual
Property");
(g) UPC Codes. A three (3) year license to use the Sellers' Universal
Product Codes ("UPC Codes") for the Products, as provided in Section 4.5 hereof.
(h) Prepaid Expenses. Subject to Section 1.11 hereof, all prepaid
expenses, deposits and similar items related to the Business or the Acquired
Assets as set forth on Schedule 1.1(h) (collectively, the "Prepaid Expenses");
(i) Intangible Rights. All of Sellers' other rights and property
interests that are exclusively related to the operation of the Business,
including rights arising under warranties to the Equipment, if any; and
(j) Goodwill. All goodwill related exclusively to the Business.
Section 1.2 Excluded Assets. The Acquired Assets shall not include any
assets other than the assets specifically listed or designated in Sections
1.1(a) through 1.1(j) and, without limiting the generality of the foregoing,
shall expressly exclude the following (the "Excluded Assets"):
(a) any and all cash and cash equivalents;
(b) any and all accounts and notes receivable of the Business arising
prior to the Closing Date, including any intercompany receivables;
4
(c) any and all tax refunds, tax, insurance and other claims or rights
to recoveries and similar benefits of the Business, all of Sellers' tax returns
relating to the Business and any notes, worksheets, files or documents relating
thereto, and any legal files or other documents covered by an evidentiary
privilege that are not exclusively related to the Assumed Liabilities (as
defined in Section 1.3 hereof);
(d) any and all rights accruing to Sellers under this Agreement and
the other agreements contemplated hereby;
(e) any and all corporate seals, certificates of incorporation, minute
books, stock books, books of account or other records having to do with the
corporate organization of Sellers or their respective Affiliates;
(f) any and all insurance policies related to the Business and any
claims thereunder by Sellers;
(g) all books, documents, records and files prepared in connection
with or relating to the transactions contemplated by this Agreement, including
bids received from other parties and analyses relating to the Acquired Assets,
the Assumed Liabilities and the Business;
(h) except as specifically provided to the contrary in this Agreement,
any interest in any trademark or trade name owned or used by Sellers or any of
their respective Affiliates including (i) the word "Quaker" and any similar
trade name or trademark, and (ii) corporate symbols (including without
limitation the Quaker man logo of The Quaker Oats Company ("Quaker"), or any
other trade names, trademarks, logos, color schemes, scripts, characters or
other design elements used by Sellers or their Affiliates, whether used in
connection with the Acquired Assets, the Business or otherwise;
5
(i) except for the Acquired Assets, any assets located at, on or in
(a) the corporate headquarters of Quaker, 000 Xxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, or of the Sellers, (b) any customer business center of Sellers, (c) any
sales office of Sellers, (d) Quaker's Barrington research and development
center, 000 Xxxx Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, (e) the manufacturing
facility owned by Golden Grain in Bridgeview, Illinois (the "Bridgeview Plant"),
(f) any other building or facility which is owned or leased by, or is otherwise
used by or for the benefit of, Sellers or any of their respective Affiliates or
(g) any facility of any Co-Packer;
(j) any and all real property and improvements owned by Sellers;
(k) any and all patents and patent applications; and
(l) except as specifically provided to the contrary in this Agreement,
any and all trademarks, trademark applications, copyrights, copyright
applications, trade secrets, know-how, processes, technology, formulas, recipes,
mixing instructions, product specifications and other intellectual property not
used exclusively in the Business, including, but not limited to, any and all
computer software and systems.
Section 1.3 Assumption of Obligations and Liabilities. In partial
consideration of the transfer to Buyer of the Acquired Assets, Buyer shall at
the Closing assume and shall thereafter pay, fulfill, perform and otherwise
discharge, when due, the following obligations and liabilities of Sellers
related to the Business or to the Acquired Assets, whether accrued, absolute,
contingent or otherwise (collectively, the "Assumed Liabilities"):
(a) Assumed Contracts. All liabilities and obligations under the
Assumed Contracts arising on or after the Closing Date, to the extent such
Assumed Contracts are assigned to Buyer on the Closing Date;
6
(b) Permits. All liabilities and obligations under the Permits arising
on or after the Closing Date; and
(c) Trade Deals and Coupons. All liabilities and obligations with
respect to (i) any trade deals related to the Business which have been agreed
upon with the trade but will not be presented until after the Closing Date
(including, without limitation, off-invoice allowances, billback allowances,
in-ad coupons and lump sum allowances), and (ii) any and all coupons related to
the Business which are issued and redeemed on or after the Closing Date
(collectively, "Trade Deals").
Section 1.4 Excluded Liabilities. Except as specifically provided in this
Agreement, Buyer shall not assume, or in any way be liable or responsible for,
any of the liabilities and obligations of Sellers (the "Excluded Liabilities").
Without limiting the generality of the foregoing, the Excluded Liabilities shall
include:
(a) any profit or loss derived by Sellers from the transaction
provided for herein;
(b) any liability or obligation under any contract, agreement,
obligation, commitment or other binding arrangement of Sellers, whether oral or
written, that is not a Trade Deal or an Assumed Contract;
(c) any liability or obligation relating to any indebtedness for
borrowed money, any letter of credit or any guaranty owed or executed by Sellers
or any Affiliates of Sellers to any third party;
(d) any accounts payable or, subject to Section 1.3(c), accrued
expenses of the Business as of the Closing Date or arising from transactions
occurring prior to or on the Closing Date;
7
(e) any liability or obligation for federal, state or local income
taxes of the Business arising from or attributable to the periods prior to or on
the Closing Date;
(f) all liabilities and obligations incurred in, resulting from or
arising out of any lawsuits to the extent related to the Sellers' operation of
the Business prior to or on the Closing Date (the "Lawsuits");
(g) any liability or obligation of a Seller or any Affiliate of a
Seller that relates to any Excluded Asset; and
(h) all obligations in respect of present or former employees or
independent contractors (which, for purposes of this Section, shall not include
any co-packers) of Sellers or any Affiliate of Sellers, including, but not
limited to, (i) claims for severance, unemployment compensation or insurance,
any employee benefits or other compensation or damages by or on behalf of any
present or former employees or independent contractors of Sellers or any
Affiliate of Sellers, or by or on behalf of any governmental authority in
respect of present or former employees or independent contractors of Sellers or
any Affiliate of Sellers; (ii) all liabilities and obligations of Sellers or any
Affiliate of Sellers with respect to present or former employees or independent
contractors of Sellers or any Affiliates of Sellers under any employee benefit
plan; and (iii) all liabilities and obligations with respect to physical, mental
or other health conditions of present or former employees or independent
contractors of Sellers or any Affiliate of Sellers.
Section 1.5 Purchase Price and Other Consideration. The aggregate base cash
purchase price payable by Buyer to Sellers for the Acquired Assets is
$43,000,000 (the "Base Purchase Price") (subject to adjustment as provided in
Sections 1.6 and 1.11) (as adjusted, the "Purchase Price"). The Purchase Price
(as adjusted pursuant to Section 1.6) will be payable to Golden Grain by Buyer
on the Closing Date by wire transfer of immediately available U.S. funds
8
to the account specified on Schedule 1.5. Golden Grain shall have the right to
modify the wire transfer instructions specified in Schedule 1.5 from time to
time prior to Closing by providing Buyer written notice thereof in accordance
with the provisions of Section 8.12 below. All references to "dollars" or "$" in
this Agreement refer to currency of the United States of America.
Section 1.6 Inventory Adjustment. Not less than one business day before the
Closing Date, Sellers shall provide the Buyer with a good-faith estimate of the
value of the Inventory, consistent with the methodology set forth on Schedule
1.6 (such estimate being the "Inventory Value"). Upon the expiration of the term
of the Transition Services Agreement, the Buyer and the Sellers shall follow the
additional procedures set forth on Schedule 1.6.
Section 1.7 The Closing. The closing of the sale and purchase contemplated
hereunder (the "Closing") shall be effective and shall take place on January 31,
2003 at the offices of The Quaker Oats Company, 000 Xxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx, 00000, or as soon thereafter as practicable, but in no event later
than three days after all conditions to each party's obligation to close
hereunder shall have been satisfied or waived. The day on which the Closing
actually takes place is referred to herein as the "Closing Date". The Closing
shall be deemed to have occurred as of 11:59 p.m. on the Closing Date.
Section 1.8 Allocation of the Purchase Price. The Purchase Price shall be
allocated among the Acquired Assets in accordance with the requirements of
Section 1060 of the Internal Revenue Code, as amended (the "Code"). Buyer and
Sellers shall agree on the allocation of the Purchase Price among the Acquired
Assets, in a manner agreeable to each of them, and to make all appropriate tax
filings on a basis consistent with such agreement and with the Code and to use
commercially reasonable efforts to sustain such allocation in any subsequent tax
audit or dispute.
9
Section 1.9 Sellers' Closing Obligations. At the Closing, Sellers shall
deliver to Buyer the following:
(a) Such bills of sale, assignments (including trademark assignments),
and other documents of transfer reasonably required to transfer to Buyer the
interest of the Sellers in the Acquired Assets;
(b) A duly executed counterpart original of the Transition Services
Agreement, which shall provide for, among other things, the continued production
at the Bridgeview Plant of certain products by Sellers or their Affiliates for
Buyer for a period of no more than 90 days, in the form of Exhibit A hereto (the
"Transition Services Agreement");
(c) A duly executed counterpart original of the Interim Trade Name
License Agreement for "The Quaker Oats Company" and "Golden Grain Company" in
the form of Exhibit B hereto (the "Interim Trade Name License Agreement").
(d) The officer's certificates referred to in Section 5.1(c).
(e) The certificates referred to in Section 5.4;
(f) A certificate of good standing for each of the Sellers, dated no
more than ten (10) days prior to the Closing Date;
(g) A duly executed counterpart original of the Termination Agreement,
terminating the Contract Manufacturing Agreement between Golden Grain and Buyer
(the "Termination Agreement");
(h) All available originals of the Assumed Contracts; and
(i) A duly executed counterpart original of the UPC License Agreement
detailed in Section 4.5 in the form attached hereto as Exhibit D (the "UPC
License Agreement").
10
Section 1.10 Buyer's Closing Obligations. At the Closing, Buyer shall
deliver to Sellers the following:
(a) The Purchase Price referred to in Section 1.5 in the manner set
forth therein, as adjusted pursuant to Section 1.6 hereof;
(b) A duly executed assumption of the Assumed Liabilities in the form
attached hereto as Exhibit C;
(c) A duly executed counterpart original of the Transition Services
Agreement;
(d) A duly executed counterpart original of the Interim Trade Name
License Agreement;
(e) The officer's certificate referred to in Section 6.1(c);
(f) The certificate referred to in Section 6.4;
(g) A duly executed counterpart of the Termination Agreement;
(h) A certificate of good standing for Buyer, dated no more than ten
(10) days prior to the Closing Date; and
(i) A duly executed counterpart of the UPC License Agreement.
Section 1.11 Prepaid Expenses. Within thirty (30) days immediately
following the Closing, the parties shall calculate all Prepaid Expenses and
similar items related to the Business to the extent Buyer reasonably is expected
to receive the benefits thereof after the Closing, and Buyer shall reimburse
Sellers within such thirty (30) day period for the unused portion of such
Prepaid Expenses or other items as of the Closing Date.
11
Section 1.12 Nonassignable Assumed Contracts and Permits.
(a) To the extent that any Assumed Contract or Permit is not capable
of being assigned or transferred without the consent or waiver of the other
party thereto or any third party (including a government or governmental unit),
or if such assignment or transfer or attempted assignment or transfer would
constitute a breach thereof or a violation of any law, decree, order, regulation
or other governmental edict, this Agreement shall not constitute an assignment
or transfer thereof, or an attempted assignment or transfer of any such Assumed
Contract or Permit.
(b) Anything in this Agreement to the contrary notwithstanding,
Sellers are not obligated to transfer to Buyer any of their rights and
obligations in and to any of the Assumed Contracts or Permits without first
having obtained all necessary consents and waivers. Prior to the Closing Date,
Sellers and Buyer shall each use their commercially reasonable efforts to obtain
consents to the assignment of those Assumed Contracts and Permits listed in
Schedule 1.12. Prior to and after the Closing Date, Sellers and Buyer shall
cooperate with one another in obtaining any consents and waivers required under
any Assumed Contract or Permit.
Section 1.13 Customer Claims.
(a) Claim Payment. The parties acknowledge that after the Closing
Buyer may receive claims for or be subject to offsets related to Customer
Charge-Backs (as defined below) and Pre-Closing Coupons (as defined below) and
that Sellers may receive claims from, or be subjected to offsets by customers
that relate to matters for which Buyer is responsible under this Agreement
("Customer Claims") (Customer Charge-Backs, Pre-Closing Coupons and Customer
Claims are all hereinafter referred to as "Post-Closing Claims"). In the event a
party (the "Receiving Party") receives Post-Closing Claims for which the other
party is responsible, it will use its reasonable best efforts to submit such
claims to the other party (the "Paying Party")
12
on a weekly basis, with supporting documentation related to the Post-Closing
Claims ("Submitted Claims"). The Paying Party shall pay the Receiving Party, by
wire transfer, the amount on the weekly settlement following the date on which
it was recognized as a Submitted Claim. As used in this Section 1.13, the term
"Customer Charge-Backs" shall mean all charge-backs, offsets, credits, slotting
allowances, retailer ads, store display allowances and similar matters claimed
by customers of the Business to the extent relating to periods prior to the
Closing (regardless of whether or not in the ordinary course) or relating to
goods sold by either Seller or any Affiliate on or after the Closing Date, and
the term "Pre-Closing Coupons" shall mean the costs to redeem coupons to
purchase Products issued by either of Sellers prior to Closing.
(b) Monthly True-up. A Paying Party may, after the end of each
calendar month, conduct an audit of the books and records of a Receiving Party
to confirm the existence of all Submitted Claims and the accuracy of the
calculation of the Submitted Claims, and a Receiving Party shall provide a
Paying Party and its agents reasonable access to its books and records for this
purpose, upon reasonable request by the Paying Party. In the event a Paying
Party reasonably determines that it overpaid a Submitted Claim, the Receiving
Party shall reimburse the overpayment by wire transfer on the fifth business day
following the receipt by it of written notice of overpayment. If the Receiving
Party disputes any claim of overpayment by the Paying Party, it shall deliver
written notice of such disagreement to the Paying Party. If the Paying Party and
the Receiving Party are unable to agree on the existence or extent of any
overpayment by the Paying Party within five (5) days of the receipt by the
Paying Party of the Receiving Party's notice of disagreement with a claim of
overpayment, representatives of each of
13
the parties having all requisite power shall meet to examine and review all
Submitted Claims and the calculation thereof and to resolve such disagreement.
(c) Time Limit. The provisions of this Section 1.13 shall terminate on
the first anniversary of the Closing Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLERS
As of the date hereof and again as of the Closing Date, Sellers hereby
jointly and severally represent and warrant to Buyer as follows:
Section 2.1 Organization of Sellers. Each of Sellers is a corporation duly
organized, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and in all jurisdictions in which it is
required to be so qualified and in good standing as a result of its operation of
the Business, except where the failure to be so qualified or in good standing
would not have material adverse effect on the Business. Each of Sellers has all
necessary corporate power and authority to own its properties and assets,
including the Acquired Assets, and to carry on the Business as now conducted.
Sellers have full corporate power and authority to enter into and perform this
Agreement and any other agreements contemplated hereby, and to incur and perform
their obligations hereunder and thereunder.
Section 2.2 Authority of Sellers. All necessary corporate actions have been
taken by Sellers to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, and this Agreement has been
duly and validly executed and delivered by Sellers and constitutes a legal,
valid and binding obligation of Sellers enforceable against Sellers in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity. The execution,
delivery and performance of this
14
Agreement and the transactions contemplated hereby do not and will not violate,
conflict with or constitute a breach of (a) any provision of the articles of
incorporation or by-laws of Sellers, or (b) any provision of any order,
arbitration award or judgment to which either Seller is a party or by which
either Seller is bound, or (c) any material law, order, rule or regulation of
any governmental authority having jurisdiction over Sellers or the Acquired
Assets applicable to Sellers with respect to the operation of the Business, or
result in the creation or imposition of any material Lien upon any of the
Acquired Assets.
Section 2.3 Litigation. Except as set forth in Schedule 2.3, (a) there are
no material claims, actions, suits or proceedings pending or, to Sellers'
knowledge, threatened, nor have Sellers received written notice of any
investigations or demands pending or asserted against Sellers with respect to
(i) the Business, (ii) the Acquired Assets, or (iii) the transactions
contemplated hereby, either at law or in equity, by or before any governmental
authority, and (b) there are no material orders, decrees or judgments pending or
in effect against Sellers with respect to (i) the Business, (ii) the Acquired
Assets, or (iii) the transactions contemplated hereby.
Section 2.4 Title to Acquired Assets. Except with respect to Intellectual
Property, as to which no representations or warranties are made in this Section
2.4, Golden Grain has good and valid title to all of the Acquired Assets (other
than that portion of Inventory and Equipment disposed of in the ordinary course
of business between the date hereof and the Closing Date) free and clear of any
liens, charges, pledges, security interests or other encumbrances (collectively,
"Liens"), except for (a) taxes, assessments, governmental charges or levies
which are not yet due and payable, or (b) the non-material claims of landlords,
carriers, contractors, materialmen, repairmen, mechanics and similar persons and
(c) those items set forth in Schedule 2.4 (any of the items described in clauses
(a) through (c) hereof hereinafter referred to as "Permitted Liens").
15
Sellers have the right to assign, transfer and convey to Buyer the Acquired
Assets, free and clear of all Liens other than Permitted Liens, subject only to
such consents and approvals as are required under the Assumed Contracts and set
forth on Schedule 2.11.
Section 2.5 Brokers and Finders. Sellers have not employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this Agreement.
Section 2.6 Contracts.
(a) Contracts. Except as set forth in Schedule 2.6, all Assumed
Contracts were entered into in the ordinary course and are valid and in full
force and effect, except to the extent the enforceability thereof may be limited
by applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws or general principles of equity. Except as set forth on Schedule
2.6, Sellers have the right to assign, transfer and convey to Buyer the Assumed
Contracts, subject to such consents and approvals as are required thereby.
Sellers are not in material default under any Assumed Contracts, and, to
Sellers' knowledge, there does not exist any event that, with notice or lapse of
time, or both, would constitute an event of material default by the Sellers or
result in a right to accelerate by any other party to an Assumed Contract or
would result in a loss of rights of Sellers under any Assumed Contract. To
Sellers' knowledge, except as set forth in Schedule 2.6, no other party is in
material default under any Assumed Contract and to Sellers' knowledge, there
does not exist any event that, with notice or lapse of time, or both, would
constitute an event of material default by any other party to an Assumed
Contract or result in a right to accelerate by the Sellers. Except as set forth
on Schedule 2.6, neither the execution nor the performance of this Agreement
will result in a breach of any Assumed Contract or give any party the right to
terminate any Assumed Contract.
16
(b) Trade Deals. Sellers have not made any commitments for Trade Deals
for any periods after Closing other than such commitments (a) contained in the
Assumed Contracts or (b) consistent with past practices, none of which extend
beyond December 31, 2003.
Section 2.7 Absence of Certain Changes. Except as set forth in Schedule
2.7, with respect to the Business and the Acquired Assets, Sellers have since
December 31, 2001, operated the Business only in the ordinary course consistent
with past practice, and there has not been any condition, circumstance, event,
or occurrence that has resulted in a material adverse effect on the Business or
the Acquired Assets, taken as a whole, or on the Sellers' ability to consummate
the transactions contemplated hereby.
Section 2.8 Compliance with Laws. Except as set forth in Schedule 2.8, as
of the date hereof, Sellers are conducting the Business in material compliance
with all statutes, laws, rules, regulations, ordinances, decrees and orders
applicable to the ownership of the Acquired Assets and the operation of the
Business in effect as of the date hereof (excluding those relating to
environmental matters as to which no representations or warranties are made in
this Agreement), and Sellers have not received any written notice that they are
in noncompliance with any such statutes, laws, rules, regulations, ordinances,
decrees or orders.
Section 2.9 Intellectual Property. Sellers have full right, title and
interest in and to the Intellectual Property, free and clear of all Liens.
Sellers have the right to assign, transfer and convey to Buyer the Intellectual
Property free and clear of all Liens, except Permitted Liens, without the
consent of any third party. Neither of Sellers is a licensor or licensee with
respect to any Intellectual Property or is obligated to make any royalty or
other payment with respect to the Intellectual Property, except as set forth on
Schedule 2.9. Except as set forth on Schedule 2.9, none of the Intellectual
Property is the subject of any pending adverse claim, or to the knowledge
17
of Sellers, any threatened litigation or claim of infringement. Except as set
forth on Schedule 2.9, to the knowledge of Sellers, no third parties are
infringing upon or otherwise acting in a materially adverse manner to any of the
Intellectual Property. To Sellers' knowledge, the Sellers are not infringing
upon or otherwise acting in a materially adverse manner with respect to the
intellectual property rights owned by any other person, and Sellers have not
received any written notice of any claim or action by any Person pending with
respect thereto. Notwithstanding the foregoing, Sellers make no representations
or warranties whatsoever (either in this Section 2.9 or elsewhere in this
Agreement) with respect to any intellectual property other than the Intellectual
Property. The Domain Names have been registered in the names of the Sellers and
are in compliance with all formal legal requirements. No Domain Name has been or
is now involved in any ICANN proceeding or any other dispute, opposition,
invalidation or cancellation proceeding, and to Sellers' knowledge, no such
action is threatened.
Section 2.10 Acquired Assets Used in the Business. Except for Excluded
Assets, the Acquired Assets constitute all of the material assets currently used
in the conduct of the Business with respect to the manufacture of the Products.
Section 2.11 Consents. Except as set forth on Schedule 2.11, the execution,
delivery and performance of this Agreement and the other agreements executed in
connection herewith, and the consummation by Sellers of the transactions
contemplated hereby and thereby do not require any filing with, notice to or
consent, waiver or approval of any third party, including but not limited to,
any governmental authority or entity, other than any disclosure of this
Agreement required by applicable securities laws, regulations and rules.
18
Section 2.12 Permits. There are no material governmental licenses, permits
and certificates held by Sellers exclusively in connection with their ownership
of the Acquired Assets and conduct of the Business (the "Permits").
Section 2.13 Customers. Schedule 2.13 lists the top ten (10) customers of
the Business by revenue and the cumulative sales of the Products to those
customers for the last two (2) fiscal years. Since December 31, 2001, none of
the customers listed on Schedule 2.13 has ceased to do business with Seller, and
no Seller has received any written notice that any customer listed on Schedule
2.13 intends to terminate its business with such Seller, with respect to the
Products.
Section 2.14 Books and Records; Disclosure. The books and records relating
to the Business are correct in all material respects and have been maintained in
accordance with Sellers' ordinary course business practices. The financial
statements of the Business provided to Buyer, and attached as Schedule 2.14
hereto, accurately present in all material respects the results of operations
and financial position of the Business for the periods and at the times
indicated (the "Financial Statements").
Section 2.15 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article II, neither of the
Sellers nor any other Person makes any other express or implied representation
or warranty on behalf of Sellers or their Affiliates. Sellers hereby disclaim
any such representation or warranty, with respect to the execution and delivery
of this Agreement or the consummation of the transactions contemplated hereby or
with respect to the Acquired Assets or the Business, notwithstanding the
delivery or disclosure to Buyer, any of its officers, directors, employees,
agents or representatives of any documentation or other information by or on
behalf of Sellers or their respective Affiliates with respect to any
19
one or more of the foregoing, including, without limitation, any projections or
forecasts made by Sellers or delivered to Buyer by or on behalf of Sellers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
As of the date hereof and again as of the Closing Date, Buyer hereby
represents and warrants to Sellers as follows:
Section 3.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Buyer has full corporate power and authority to
enter into this Agreement and any other agreements contemplated hereby, and to
incur and perform its obligations hereunder and thereunder.
Section 3.2 Authority of Buyer. All necessary corporate action has been
taken by Buyer to authorize the execution, delivery and performance of this
Agreement and the transactions contemplated hereby, and this Agreement has been
duly and validly executed and delivered by Buyer and constitutes a legal, valid
and binding obligation of Buyer, enforceable against Buyer in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, moratorium or similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity. The execution, delivery
and performance of this Agreement and the transactions contemplated hereby do
not and will not violate, conflict with or constitute a material breach of (a)
any provision of the articles of incorporation or bylaws of Buyer, or (b) any
provision of any order, arbitration award or judgment to which Buyer is a party
or by which it is bound, or require Buyer to obtain or file any consents from,
filings with or notices to, any governmental entity or other Person.
Section 3.3 Brokers and Finders. Except for Xxxxxx Xxxxxxx, whose fees and
expenses shall be the responsibility of Buyer, Buyer has not employed any broker
or finder or
20
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
Section 3.4 Litigation. As of the date hereof, there are no claims,
actions, suits or proceedings pending or, to Buyer's knowledge, threatened by or
against Buyer with respect to the transactions contemplated hereby, either at
law or in equity, by or before any governmental authority, and there are no
orders, decrees or judgments pending or in effect against Buyer that are
material with respect to the transactions contemplated hereby.
Section 3.5 Financial Capability. Buyer has now and will have at Closing
sufficient liquid assets on hand to pay the Purchase Price, as adjusted, and to
otherwise consummate the transactions contemplated hereby in accordance with
Article I hereof.
Section 3.6 No Knowledge of Misrepresentations or Omissions. Buyer has no
Buyer Actual Knowledge (as defined in Section 7.1(b)) that any representation or
warranty of Sellers in this Agreement or the Schedules hereto is not true and
correct in all material respects and Buyer has no Buyer Actual Knowledge of any
material errors in, or material omissions from the Schedules to this Agreement.
Section 3.7 No Other Representations and Warranties. Except for the
representations and warranties contained in this Article III, neither the Buyer
nor any other Person or entity makes any other express or implied representation
or warranty on behalf of Buyer or its Affiliates, and Buyer hereby disclaims any
such representation or warranty, with respect to the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby,
notwithstanding the delivery or disclosure to Sellers, any of their officers,
directors, employees, agents or representatives of any documentation or other
information by or on behalf of Buyer or any Affiliate with respect to any one or
more of the foregoing.
21
ARTICLE IV
COVENANTS
Section 4.1 Access; Confidential Information. From the date hereof until
the Closing Date (the "Interim Period"), Sellers shall furnish to Buyer and its
representatives all information relating exclusively to the Business reasonably
requested by Buyer and provide access to the Acquired Assets as Buyer may
reasonably request at such times as shall be mutually agreed upon by the
parties; provided, however, that nothing contained herein shall require Sellers
to furnish to Buyer or provide Buyer with access to (i) any formulas, recipes,
ingredient specifications, process sheets or other process information, mixing
instructions or cost information relating to the Business prior to the Closing,
(ii) any marketing information and/or pricing information which could have an
anti-competitive effect, or (iii) any information that in Sellers' judgment
would result in the disclosure of trade secrets of any third party or violate
Sellers' obligations with respect to confidentiality. Notwithstanding anything
to the contrary in this Section 4.1, during the Interim Period Buyer shall not
contract or communicate with any customers, suppliers or distributors of the
Business without Sellers' prior written consent. Any confidential information
provided to Buyer shall be subject to the terms of that certain letter agreement
dated October 4, 2002 entered into between Pepsi Co, Inc. and Buyer (the
"Confidentiality Agreement"). The provisions of the Confidentiality Agreement
shall survive any termination of this Agreement.
Section 4.2 Conduct of Business. During the Interim Period, the Sellers
shall operate the Business in the ordinary course and shall use their
commercially reasonable efforts to preserve and maintain the relationship of the
Business with its suppliers and customers and to preserve its current level of
sales volume, shelf space and historical operating margins. During the Interim
Period, Sellers shall perform all contracts, obligations and duties of the
Business and
22
shall pay all obligations incurred by them in the operation of the Business
consistent with past practice and in the ordinary course. During the Interim
Period, Sellers shall consult in advance with Buyer on any transaction not in
the ordinary course relating to the Acquired Assets or the Business.
(a) In particular, and without limiting the foregoing, with respect to
the Business, Sellers shall:
(i) continue to conduct marketing, product pricing, promotional
and advertising activities consistent in all material
respects with past practice;
(ii) continue to purchase and maintain inventories in such
quantities and quality as necessary to operate the Business
on a basis consistent in all material respects with past
practice;
(iii)refrain from shipping manufactured pasta ahead of normally
maintained schedules or shipping dates or otherwise
accelerating sales or the amount of Inventory less than 90
days old in a manner not in the ordinary course of business
("Trade Loading"), or knowingly permitting or knowingly
tolerating any brokers or other representatives of Sellers
to engage in Trade Loading;
(iv) use their commercially reasonable efforts to avoid taking
any actions that would render impossible the continuation of
customer service and fulfillment levels consistent in all
material respects with past practice and the maintenance of
shelf space and
23
promotional displays at the levels in existence as of the
date hereof,
(v) continue to operate the Business in material compliance with
all applicable local, state and federal laws and
regulations; and
(vi) notify Buyer within two (2) business days of any written
notice of termination, cancellation or amendment of any
Assumed Contract or any business relationship of Sellers
relating to the Products with any customer described in
Section 2.13.
(b) Further, neither Seller shall, without the express prior written
approval of Buyer:
(i) sell, transfer or dispose of any Acquired Asset (other than
Inventory sold in the ordinary course) or subject any
Acquired Asset to any Lien (other than in the ordinary
course); or
(ii) other than in the ordinary course of business, cancel or
terminate any Assumed Contract, amend or otherwise modify
any of the material terms or provisions or give any consent,
waiver or approval with respect to any Assumed Contract, or
waive any breach of any material terms or provisions of any
Assumed Contract that would materially impair the interests
or rights of Sellers to be transferred to Buyer hereunder.
Section 4.3 Preservation of Records. Buyer and Sellers shall preserve and
use reasonable efforts to make available to the other parties hereto, during
regular business hours and upon reasonable notice, for inspection and copying,
all Books and Records (but excluding
24
portions of such materials that contain or reflect information relating to any
other businesses of Sellers) for periods prior to the Closing Date, wherever
located, until the expiration of any applicable statute of limitations or any
extension thereof, for (i) the purposes of preparing tax returns and financial
statements and responding to tax audits, (ii) the purposes of prosecuting or
defending any claim, litigation, proceeding or investigation which arises out of
or relates to the Business, the Acquired Assets or this Agreement, and (iii) any
other reasonable business purpose not detrimental to Sellers or Buyer, as
applicable.
Section 4.4 Machinery and Equipment. Subject to the terms and conditions of
the Transition Services Agreement, Buyer and Sellers shall select a third party
agent to remove from the Bridgeview Plant as soon after the termination of the
Transition Services Agreement as is reasonably practicable, all of the items
comprising Acquired Assets located at such facility, upon reasonable notice to
Sellers and under the supervision of Sellers or a designated agent of Sellers
and using standards for such removal acceptable to the plant managers at the
Bridgeview Plant. Such removal (and the destruction of any Acquired Assets as
directed by Buyer) shall be conducted at Buyer's sole cost and expense.
Section 4.5 UPC Codes. Effective upon the Closing Date, Sellers shall
license the UPC codes set forth on Schedule 4.5 to Buyer on a royalty-free basis
for a period of three (3) years. Buyer shall only use such UPC codes for the
Products to which such codes related prior to the Closing Date.
Section 4.6 Corporate Name. Buyer acknowledges and agrees that Golden Grain
will continue to utilize the corporate name "Golden Grain Company" in the
conduct of its business and affairs after the Closing, and its use thereof shall
not be deemed in any way to violate any of the terms or conditions of this
Agreement.
25
Section 4.7 No Sale Negotiations. Sellers and their representatives and
agents shall not solicit, entertain or engage in any negotiations, discussions
or unsolicited contact with any party other than Buyer, with respect to the
sale, transfer or disposition of any of the Acquired Assets (other than the sale
of Inventory in the ordinary course of business), or any interest, legal,
equitable or beneficial, in the Acquired Assets except to the extent required by
applicable law to fulfill all of the fiduciary duties of the officers and
directors of Sellers or their Affiliates.
Section 4.8 Covenant Not to Compete. (a) Commencing on the Closing and for
two (2) years thereafter, neither Seller nor any Affiliates of Sellers shall
manufacture, market, sell or distribute in the Territory (as defined below) any
products for which the retail package, or selling unit, contains solely dry
pasta in the form of long goods or short goods, that require additional steps
for preparation and that do not contain additional flavorings or seasonings.
Notwithstanding the foregoing, nothing contained herein shall prohibit the
Sellers or any Affiliates of Sellers from manufacturing, marketing, selling or
distributing any long or short dry pasta (including noodles) as an ingredient in
a prepackaged food product or in any selling unit in which such pasta is
combined with any flavorings or seasonings or otherwise packaged and sold in
combination with other ingredients. For purposes of this Section 4.8, the
"Territory" shall mean that the states of Alaska, Oregon, Montana, Nevada,
Washington, Idaho, Utah, Hawaii and that area of Northern California within Del
Norte, Siskiyou, Humboldt and Modoc counties.
(b) Commencing on the Closing and for ten (10) years thereafter,
neither Buyer nor any Affiliates of Buyer shall produce, market, sell or
distribute in the United States, or enter into any agreement with any third
party to market, produce, sell or distribute, any rice or pasta products
containing additional flavorings or seasonings in a prepackaged food unit using
the brand names "Golden Grain", "Golden Grain/Mission" or "Mission" or any name
or trade
26
dress that might be confusingly similar with any of the foregoing names or the
trade dress that was used by Sellers in connection with promoting products under
the foregoing names ("Prohibited Names"); provided, however, that the foregoing
shall not prevent Buyer from producing, marketing, selling or distributing, or
entering into any agreement with any third party to produce, market, sell or
distribute (i) any such products under any name other than a Prohibited Name or
(ii) any Products produced, marketed, sold or distributed by Sellers on the
Closing Date. Buyer shall cause any subsequent purchaser or transferee of the
Business, or any portion thereof, to agree in writing that it will be bound by
the provisions of this Section 4.8(b).
Section 4.9 Other Actions. From the date hereof and through the Closing,
neither Buyer nor either Seller shall intentionally take any action that would,
or that would reasonably be expected to, result in any of the conditions to the
transactions contemplated hereby set forth in Articles V and VI hereof not being
satisfied, or in the satisfaction thereof being delayed.
Section 4.10 Subsequent Contracts. From the date hereof and through the
Closing, Sellers shall use their commercially reasonable efforts to (i) include
in any agreements entered into by them relating in any way to the Acquired
Assets or the Products ("Subsequent Contracts") a provision permitting the
assignment of any such Subsequent Contract to Buyer and (ii) ensure that no
Subsequent Contract contains any provision that would limit in any way the
rights, title and interest of such Seller in the Acquired Assets.
Section 4.11 Existing Agreement. Effective upon the Closing, Buyer and
Sellers shall terminate the Co-Pack Agreement dated March 12, 1999 between Buyer
and Golden Grain, pursuant to the terms of a mutually agreed upon Termination
Agreement.
27
Section 4.12 Marketing Materials. Sellers shall deliver to Buyer, upon
Closing, all available marketing materials that are owned by the Sellers and
that are presently used or within three (3) years prior to Closing were used,
exclusively in promoting the Products.
ARTICLE V
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, any of which may be waived in whole or in part by Buyer:
Section 5.1 Accuracy of Representations and Warranties; Performance of
Agreements; Certificates.
(a) The representations and warranties of Sellers contained in this
Agreement shall be true and correct, at and as of the Closing Date, except for
changes permitted or contemplated by this Agreement and except to the extent
that any representation or warranty is expressly made as of a specified date, in
which case such representation or warranty shall be true and correct, only as of
such date.
(b) Sellers shall have performed and complied in all material respects
with all of the agreements, covenants and conditions required by this Agreement
to be performed or complied with by them prior to or at the Closing Date.
(c) Each of Sellers shall have delivered to Buyer a certificate of its
President or any Vice President dated the Closing Date and certifying the
fulfillment of the conditions set forth in this Section 5.1.
(d) No material adverse change shall have occurred in the Acquired
Assets or the operations of the Business.
28
(e) Sellers shall have delivered the Estimated Closing Date Quantity
and the Estimated Packaging Material Quantity and the cost for each, in
accordance with Schedule 1.6.
(f) Sellers shall have delivered to Buyer all consents, waivers and
approvals listed on Schedule 2.11.
(g) Sellers shall have delivered to Buyer a guaranty by PepsiCo, Inc.
for the obligations of Sellers pursuant to this Agreement, in the form set forth
as Exhibit E hereto.
Section 5.2 No Proceeding. No preliminary or permanent injunction, decree
or other order shall have been issued by any court of competent jurisdiction, or
by any governmental or regulatory body, which prevents the consummation of the
transactions contemplated in this Agreement; provided, however, that in the case
of an injunction, decree or other order, each of the parties shall have used its
commercially reasonable efforts to prevent the entry of any such injunction,
decree or other order, and to appeal as promptly as possible any such
injunction, decree or other order.
Section 5.3 Closing Deliveries. Sellers shall have tendered delivery to
Buyer of all deliveries to be made to them pursuant to Section 1.9.
Section 5.4 Officer's Certificate. Each of PPR and Golden Grain shall have
delivered to Buyer a certificate of its Vice President certifying its
certificate of incorporation and by-laws, in each case as amended or restated.
ARTICLE VI
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in whole or in part by Sellers:
29
Section 6.1 Accuracy of Representations and Warranties; Performance of
Agreements; Certificates.
(a) The representations and warranties of Buyer contained in this
Agreement shall be true and correct, at and as of the Closing Date, except for
changes permitted or contemplated by this Agreement and except to the extent
that any representation or warranty is expressly made as of a specified date, in
which case such representation or warranty shall be true and correct, only as of
such date.
(b) Buyer shall have performed and complied in all material respects
with all of its agreements, covenants and conditions required by this Agreement
to be performed or complied with by it prior to or at the Closing Date
(c) Buyer shall have delivered to Sellers a certificate of its
President or any Vice President dated the Closing Date and certifying the
fulfillment of the conditions set forth in this Section 6.1.
Section 6.2 No Proceeding. No preliminary or permanent injunction or other
order shall have been issued by any court of competent jurisdiction, or by any
governmental or regulatory body, nor shall any statute, rule, regulation or
executive order have been promulgated or enacted by any governmental authority,
which prevents the consummation of the transactions contemplated in this
Agreement; provided, however, that in the case of an injunction, decree
or other order, each of the parties shall have used its commercially reasonable
efforts to prevent the entry of any such injunction, decree or other order and
to appeal as promptly as possible any such injunction, decree or other order.
Section 6.3 Closing Deliveries. Buyer shall have tendered delivery
to Sellers of all deliveries to be made to it pursuant to Section 1.10.
30
Section 6.4 Secretary's Certificate. Buyer shall have delivered to
Sellers a certificate of Buyer's Secretary or Assistant Secretary certifying the
certificate of incorporation and by-laws of Buyer, in each case as amended or
restated.
ARTICLE VII
INDEMNIFICATION
Section 7.1 Survival of Representations and Warranties and Obligations.
(a) The representations and warranties of Sellers in Article II and of
Buyer in Article III and all other obligations of the parties hereunder shall
survive the Closing and, except for the Surviving Obligations (as hereinafter
defined), which shall continue in effect in accordance with their respective
terms, shall expire on the first anniversary of the Closing Date, and
thereafter, except as provided in the next succeeding sentence, no claim may be
brought arising under or in connection with this Agreement (including all
schedules, amendments and supplements hereto and thereto) or any of the
transactions contemplated hereby, except for a breach by a party of its
obligations under any of the Surviving Obligations. If written notice of a
specific claim (stating in reasonable detail the nature of, and factual and
legal basis for, any such claim for indemnification, and the provisions of this
Agreement upon which such claim for indemnification is made) has been given by a
party prior to the first anniversary of the Closing Date, then the relevant
representation, warranty or other obligation shall survive as to such claim
until the claim has been finally resolved.
(b) Notwithstanding the foregoing, if Buyer has Buyer Actual Knowledge
(as defined below) that any representation or warranty made by Sellers is
incorrect in any material respect as of the Closing, Buyer shall have no remedy
or recourse with respect thereto. By signing this Agreement, the Buyer
acknowledges that it does not have any Buyer Actual Knowledge that any
representation or warranty made by the Sellers is incorrect in any material
31
respect as of the date hereof. If Buyer does not have any Buyer Actual Knowledge
as of the date hereof that any representation or warranty made by Sellers is
incorrect in any material respect as of the date hereof, but prior to the
Closing, Buyer obtains Buyer Actual Knowledge that a representation or warranty
made by Sellers was incorrect as of the date hereof or will be incorrect as of
the Closing, including, without limitation, any such Buyer Actual Knowledge
resulting from a supplement or amendment to any Schedule to this Agreement by
Sellers in accordance with Section 8.17(b), Buyer shall have as its sole
remedy hereunder the option (i) to terminate this Agreement (upon providing ten
(10) business days' written notice to Sellers, during which period Sellers may
cure (or, if not curable within ten (10) business days, commence the cure of)
such misrepresentation or breach of warranty) or (ii) to proceed with the
Closing and, upon the Closing, notwithstanding Section 8.3 below, Buyer shall be
conclusively deemed to have waived all claims hereunder relating to such
misrepresentation or breach of warranty. For the purposes of this Section,
"Buyer Actual Knowledge" shall be defined as the actual knowledge of Xxxxx
Xxxxxx, Xxx Xxxxx and Xxxxxxx Xxxxx of information that would lead a reasonable
person to conclude, without further investigation, that a specific
representation or warranty of the Sellers is incorrect. If Sellers have Seller
Actual Knowledge (as defined below) that any representation or warranty made by
Buyer is incorrect as of the Closing, Sellers shall have no remedy or recourse
with respect thereto. By signing this Agreement, Sellers acknowledge that
neither has any Seller Actual Knowledge that any representation or warranty made
by the Buyer is incorrect as of the date hereof. If Sellers do not have any
Seller Actual Knowledge as of the date hereof that any representation or
warranty made by Buyer is incorrect as of the date hereof, but prior to the
Closing, Sellers obtain the knowledge that a representation or warranty made by
Buyer was incorrect as of the date hereof or will be incorrect as of the
32
Closing, Sellers shall have as their sole remedy hereunder the option (i) to
terminate this Agreement (upon providing ten (10) business days' written notice
to Buyer, during which period Buyer may cure (or, if not curable within ten (10)
business days, commence the cure of) such misrepresentation or breach of
warranty) or (ii) to proceed with the Closing and, upon the Closing,
notwithstanding Section 8.3 below, Sellers shall be conclusively deemed to have
waived all claims hereunder relating to such misrepresentation or breach of
warranty. For the purposes of this Section, "Seller Actual Knowledge" shall be
defined as the actual knowledge of the persons listed on Schedule 8.15, of
information that would lead a reasonable person to conclude, without further
investigation, that a specific representation or warranty of the Buyer is
incorrect.
(c) For purposes of this Agreement, the term "Surviving Obligations"
shall refer to the obligations contained in Sections 1.6, 1.8, 1.11, 4.1, 4.3,
4.4, 4.5, 4.8, 7.2(c), 7.2(d), 7.3(c), 7.3(d), 7.5, 7.6, 7.7, 7.8, 7.9, 7.10,
7.11 and Article VIII of this Agreement, the covenants and agreements contained
in the other agreements contemplated hereby, including, but not limited to, the
Transition Services Agreement, and the remaining provisions of Article VII of
this Agreement, insofar as they relate to any of the foregoing.
Section 7.2 Indemnification by Sellers. Except as otherwise limited by this
Article VII, Buyer and its officers, directors, employees, agents, successors
and assigns (the "Buyer Indemnified Parties") shall be indemnified and held
harmless by Sellers from any and all liabilities, losses, damages, claims, costs
and expenses, interest, awards, judgments and penalties (including reasonable
legal costs and expenses) actually suffered or incurred by them (hereinafter a
"Buyer Loss"), arising out of or resulting from:
33
(a) the breach of any representation or warranty by Sellers contained
in Article II;
(b) the breach of any covenant or agreement by Sellers contained
herein or in any document delivered hereunder at the Closing;
(c) the failure of Sellers to pay or otherwise discharge the Excluded
Liabilities; or
(d) the use, operation, ownership or control by Sellers of the
Acquired Assets or the operation of the Business by Sellers prior to the Closing
Date, except to the extent that any Buyer Loss resulting therefrom constitutes a
breach of either Seller's representations and warranties in Article II.
Section 7.3 Indemnification by Buyer. Except as otherwise limited by this
Article VII, Sellers and their respective Affiliates, officers, directors,
employees, agents, successors and assigns (the "Seller Indemnified Parties")
shall be indemnified and held harmless by Buyer from any and all liabilities,
losses, damages, claims, costs and expenses, interest, awards, judgments and
penalties (including reasonable legal costs and expenses) actually suffered or
incurred by them (hereinafter a "Sellers' Loss"), arising out of or resulting
from:
(a) the breach of any representation or warranty by Buyer contained in
Article III;
(b) the breach of any covenant or agreement by Buyer contained herein
or in any document delivered hereunder at the Closing;
(c) the failure of Buyer to pay or otherwise discharge the Assumed
Liabilities; or
34
(d) the use, operation, ownership or control of any of the Acquired
Assets or the operation of the Business on or after the Closing Date.
Section 7.4 Indemnification Procedures.
(a) For the purposes of Article VII, the term "Indemnitee" shall refer
to the person indemnified, or entitled, or claiming to be entitled, to be
indemnified, pursuant to the provisions of Section 7.2 or 7.3, as the case may
be; the term "Indemnitor" shall refer to the person having the obligation to
indemnify pursuant to such provisions; and "Losses" shall refer to "Sellers
Losses" or "Buyer Losses", as the case may be.
(b) An Indemnitee shall give written notice (a "Notice of Claim") to
the Indemnitor within fifteen (15) business days after the Indemnitee has
knowledge of any claim (including a Third Party Claim, as hereinafter defined)
which an Indemnitee has determined has given or could give rise to a right of
indemnification under this Agreement. No failure to give such Notice of Claim
shall affect the indemnification obligations of the Indemnitor hereunder, except
to the extent the Indemnitor can demonstrate that such failure materially
prejudiced such Indemnitor's ability to successfully defend the matter giving
rise to the claim. The Notice of Claim shall state the nature of the claim, the
amount of the Loss, if known, and the method of computation thereof, all with
reasonable particularity and shall contain a reference to the provisions of this
Agreement in respect of which such right of indemnification is claimed or
arises.
(c) The obligations and liabilities of an Indemnitor under this
Article VII with respect to Losses arising from claims of any third party that
are subject to the indemnification provisions provided for in this Article VII
("Third Party Claims") shall be governed by and contingent upon the following
additional terms and conditions: At the time the Indemnitee gives
35
a Notice of Claim to the Indemnitor of the Third Party Claim, it shall advise
the Indemnitor that the Indemnitor shall be permitted, at its option, to assume
and control the defense of such Third Party Claim at its expense and through
counsel of its choice if it gives prompt notice of its intention to do so to the
Indemnitee after receiving the Notice of Claim. In the event the Indemnitor
exercises its right to undertake the defense against any such Third Party Claim
as provided above, the Indemnitee shall cooperate with the Indemnitor in such
defense and make available to the Indemnitor all such witnesses, pertinent
records, materials and information in its possession or under its control
relating thereto as are reasonably required by the Indenmitor, at the reasonable
expense of the Indemnitor, and the Indemnitee may participate by its own counsel
and at its own expense in defense of such Third Party Claim. Similarly, in the
event the Indemnitee is, directly or indirectly, conducting the defense of any
such Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in
such defense and make available to it all such witnesses, records, materials and
information in its possession or under its control relating thereto as are
reasonably required by the Indemnitee at the reasonable expense of the
Indemnitor, and the Indemnitor may participate by its own counsel and at its own
expense in the defense of such Third Party Claim. Except for the settlement of a
Third Party Claim which involves the payment of money only, with respect to
which Indemnitor has agreed to indemnify Indemnitee, subject to the Aggregate
Limits (as defined in Section 7.5 hereof), if applicable, and which fully and
unconditionally releases the Indemnitee, no Third Party Claim may be settled by
the Indemnitor without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld or delayed. No Third Party Claim may be
settled by the Indemnitee without the written consent of the Indemnitor, which
consent shall not be unreasonably withheld or delayed.
36
Section 7.5 Limits on Indemnification. Notwithstanding the foregoing
provisions of Section 7.2 and Section 7.3, (a) Sellers shall not have any
liability to Buyer for any Buyer Losses unless and until the aggregate amount of
all Buyer Losses incurred exceeds $1,000,000 (the "Basket"), in which event only
the amount in excess of $1,000,000 shall be recoverable; (b) Seller shall not be
required to indemnify Buyer for Buyer Losses which in the aggregate exceed fifty
percent (50%) of the Purchase Price (the "Cap"); (c) the limitations set forth
in subsection (a) of this sentence shall not apply with respect to claims
arising out of or relating to Section 8.14; (d) neither subsections (a) nor (b)
of this sentence shall apply with respect to claims arising out of or related to
Section 7.2(b), Section 7.2(c), Section 7.2(d), Section 2.4 (as to title only)
or Section 2.9 (as to title only), or in the event either Seller is determined
to have acted fraudulently; (e) Buyer shall not be entitled to indemnification
for claims hereunder with respect to losses which, on an individual basis, do
not exceed $10,000 ("De Minimis Losses"), and De Minimis Losses shall not be
counted toward the Cap or the Basket; provided, however, that, subject to the
Basket and the Cap, Buyer shall be entitled to recover the full amount of any
indemnifiable losses that do not constitute De Minimis Losses; and (f) in the
event that either Seller is conducting any defense against a Third Party Claim
for which Buyer has sought indemnification hereunder, expenses incurred by such
Seller in connection therewith, including legal costs and expenses, shall
constitute Buyer Losses for purposes of the Cap, to the extent that such Buyer
Losses are subject to the Cap.
Section 7.6 Exclusive Remedy. From and after the Closing, except as
otherwise provided in the Transition Services Agreement and except with respect
to Sections 1.6, 4.5 and 4.8, none of the parties hereto shall be liable or
responsible in any manner whatsoever to any other party, whether for
indemnification or otherwise, except for indemnity as expressly
37
provided in this Article VII, which provides the exclusive remedy and cause of
action of the parties hereto with respect to any matter arising out of or in
connection with this Agreement or any Schedule or Exhibit hereto or any
certificate delivered in connection herewith. After the Closing, Buyer shall not
be entitled to a rescission of the sale of the Acquired Assets. Buyer hereby
waives, releases and agrees not to make any claim or bring any contribution,
cost recovery or other action against Sellers or any of Sellers' successors or
assigns or any controlling person or other Affiliate of Sellers, under CERCLA,
common law, or any similar federal, state or local law or regulation now
existing or hereafter enacted. Buyer releases Sellers from any and all
environmental losses and environmental expenses arising in connection with the
Business. Buyer acknowledges that it is acquiring the Acquired Assets on an "AS
IS, WHERE IS" basis and, except for those representations and warranties
expressly set "forth in this Agreement, without any representation, warranty or
guarantee, express or implied, as to merchantability, fitness for a particular
purpose or otherwise as to the condition, size, extent, quantity, type or value
of such property.
Section 7.7 Characterization of Indemnification Payments. All payments paid
by Buyer or Sellers, as the case may be, under this Article VII shall be treated
as adjustments to the Purchase Price for all tax purposes.
Section 7.8 Computation of Losses, Disputes. The amount of any Losses for
which indemnification is provided under this Article VII shall be reduced by (a)
any related tax benefits if and when actually realized or received (but only
after taking into account any tax benefits (including, without limitation, any
net operating losses or other deductions and any carryovers or carrybacks) to
which the Indemnitees would be entitled without regard to such item), except to
the extent such recovery has already been taken into account in determining the
amount of
38
any such Losses, and (b) any insurance recovery if and when actually realized or
received, in each case in respect of such Losses. Any such recovery shall be
promptly repaid by the Indemnitee to the Indemnitor following the time at which
such recovery is realized or received pursuant to the previous sentence, minus
all reasonably allocable costs, charges and expenses incurred by Indemnitee in
obtaining such recovery. Notwithstanding the foregoing, if (x) the amount of
Losses for which the Indemnitor is obligated to indemnify the Indemnitee is
reduced by any tax benefit or insurance recovery in accordance with the
provisions of this Section, and (y) the Indemnitee subsequently is required to
repay the amount of any such tax benefit or insurance recovery or such tax
benefit or insurance recovery is disallowed, then the obligation of the
Indemnitor to indemnify with respect to such amounts shall be reinstated
immediately and such amounts shall be paid promptly to the Indemnitee in
accordance with the provisions of this Agreement.
Section 7.9 No Consequential Damages. The obligations of Sellers in respect
of a claim for indemnification under this Agreement shall not include any
special, exemplary or consequential damages, including business interruption or
lost profits, or any punitive damages except in instances in which a party is
determined to have acted fraudulently.
Section 7.10 Mitigation. Each of the parties agrees to take commercially
reasonable steps to mitigate their respective Losses upon and after becoming
aware of any event which could reasonably be expected to give rise to any Losses
that are indemnifiable hereunder.
Section 7.11 Subrogation. Upon making any indemnification payment, the
Indemnitor will, to the extent of such payment, be subrogated to all rights of
the Indemnitee against any third party in respect to the Loss to which the
payment relates. Without limiting the generality of any
39
other provision hereof, each such Indemnitor and Indemnitee will duly execute
upon request all instruments reasonably necessary to evidence and perfect the
above-described subrogation rights.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Termination of Agreement.
(a) This Agreement may be terminated at any time prior to the Closing:
(i) by mutual written consent of Buyer and Sellers;
(ii) by either Buyer or Sellers, if the Closing shall not have
occurred by February 15, 2003; provided however, that
the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose failure
to perform any obligation under this Agreement has been the
cause of, or resulted in, the failure of the Closing to
occur on or before such date;
(iii)by Buyer if any of the conditions set forth in Article V
shall have become incapable of fulfillment, and shall not
have been waived by Buyer;
(iv) by Sellers if any of the conditions set forth in Article VI
shall become incapable of fulfillment, and shall not have
been waived by Sellers; or
(v) by either Buyer or Sellers, as provided in Section 7.1(b).
(b) Upon termination of this Agreement under Section 8.1, written
notice thereof shall be given to the other parties and this Agreement shall
terminate without further action by any of the parties. If this Agreement is
terminated as provided herein, no party shall have any liability or further
obligation to any other party to this Agreement, except to the extent
40
(a) that the termination is the result of a willful and material breach by the
party of a representation, warranty, or covenant contained in this Agreement, in
which case the non-breaching party may pursue any legal or equitable remedies to
which it may be entitled, or (b) provided in Section 8.1 (c), 8.1 (d) or 8.2.
(c) If the conditions to Closing set forth in Article VI have been
satisfied (or, in the case of conditions that by their terms are to be satisfied
at Closing, are reasonably likely to be satisfied at Closing) and Buyer defaults
in its obligation to complete the transactions contemplated hereby, then upon
written demand of Sellers, Buyer shall pay Sellers $5,000,000 by wire transfer
of immediately available funds within two business days after receipt of
Sellers' demand.
(d) If the conditions to Closing set forth in Article V have been
satisfied (or, in the case of conditions that by their terms are to be satisfied
at Closing, are reasonably likely to be satisfied at Closing) and Sellers
default in their obligation to complete the transactions contemplated hereby,
then upon written demand of Buyer, Sellers shall pay Buyer $5,000,000 by wire
transfer of immediately available funds within two business days after receipt
of Buyer's demand.
Section 8.2 Expenses. Except as otherwise specifically provided in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
Section 8.3 Waiver. The accuracy of any representation or warranty, the
performance of any covenant or agreement or the fulfillment of any condition of
this Agreement by Buyer on
41
the one hand or Sellers on the other, may be expressly waived in writing by
Buyer or Sellers, as appropriate. Any waiver hereunder shall be effective only
in the specific instance and for the purpose for which given. No failure or
delay on the part of Buyer or Sellers in exercising any right, power or
privilege under this Agreement shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege.
Section 8.4 Consents. Whenever this Agreement requires a permit or consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in Section 8.3.
Section 8.5 Assignment; Parties in Interest. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit of, and shall
be enforceable by, the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations herein shall be assigned, including by operation of law or
otherwise, by any party hereto without the prior written consent of the other
parties; provided, however, that Buyer may assign this Agreement and/or the
rights, interests or obligations herein to an Affiliate of Buyer without the
prior written consent of either Seller. No assignment of this Agreement by Buyer
shall in any way limit or eliminate Buyer's obligations or liabilities
hereunder.
Section 8.6 Further Assurances. Each of the parties hereto agrees that,
from and after the Closing, upon the reasonable request of any other party
hereto and without further consideration, such party will execute and deliver to
such other party such documents and further assurances and will take such other
actions (without cost to such party) as such other party may reasonably request
in order to carry out the purpose and intention of this Agreement. Buyer
42
further agrees to cooperate with Sellers' efforts to prosecute or defend
lawsuits, arbitrations, settlement conferences and other procedures which have
been or in the future are filed or entered into by or against Sellers in
connection with the Business, including but not limited to, the Lawsuits, at the
cost and expense of the Sellers. In connection with the preceding sentence,
Buyer shall, at the cost and expense of the Sellers (i) make available to
Sellers from time to time upon Sellers' reasonable request access to such
premises, equipment, books, records and other documents of the Business as may
be relevant with respect to any such proceedings and (ii) make employees of the
Business available to Sellers in connection with any such proceedings. Section
8.7 Entire Agreement. This Agreement, the Exhibits and Schedules, the
Confidentiality Agreement and the other agreements and writings referred to
herein or delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof. This
Agreement and the Confidentiality Agreement supersede all prior agreements
relating to the transactions contemplated hereunder.
Section 8.8 Amendment. This Agreement may be amended or modified in whole
or in part only by a duly authorized written agreement that refers to this
Agreement and is signed by the parties hereto or by their duly appointed
representatives or successors.
Section 8.9 Limitations on Rights of Third Parties. Except to the extent
provided in Sections 7.2 and 7.3, nothing expressed or implied in this Agreement
is intended or shall be construed to confer upon or give any Person other than
Buyer and Sellers any rights or remedies under or by reason of this Agreement or
any transaction contemplated hereby.
Section 8.10 Captions and Gender. The captions in this Agreement are
inserted for convenience of reference only and shall not be considered a part of
or affect the construction or interpretation of any provision of this Agreement.
Words used herein, regardless of the number
43
and gender specifically used, shall be deemed and construed to include any other
number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context requires.
Section 8.11 Counterparts; Facsimile Signatures. This Agreement may be
executed in counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce or account for more than
one such counterpart. A facsimile copy of a signature hereto shall be fully
effective as if an original.
Section 8.12 Notices. All notices, claims, certificates, requests, demands
and other communications hereunder shall be in writing and shall be deemed to
have been duly given on the date of delivery if personally delivered (including
by overnight courier) or telecopied or on the date of receipt indicated on the
return receipt if delivered or mailed (registered or certified mail, postage
prepaid, return receipt requested) as follows:
a. If to PPR or Golden Grain:
PepsiCo Puerto Rico, Inc.
c/o The Quaker Oats Company
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: General Counsel
With a copy to:
Xxxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxx X. Xxxxxxxxx
b. If to Buyer:
American Italian Pasta Company
0000 X. Xxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: President and Chief Financial Officer
44
With a copy to:
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Telecopy Number: (000) 000-0000
Attention: Xxxxx X. Xxx
or to such other address as the Person to whom notice is to be given may have
previously furnished to the other parties in writing in the manner set forth
above.
Section 8.13 Governing Law and Jurisdiction. This Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Illinois without regard to its provisions concerning conflicts or
choice of law.
Section 8.14 Transfer Taxes. All excise, sales, value added, use,
registration, stamp, transfer and similar taxes, levies, charges and fees
incurred in connection with this Agreement and the transactions contemplated
hereby shall be paid by Sellers, whether imposed by law on Sellers or Buyer.
Buyer and Sellers shall cooperate in providing one another with appropriate
resale exemption certificates and other appropriate tax documentation.
Section 8.15 Knowledge of Sellers. As used in this Agreement, "knowledge of
Sellers", to "Sellers' knowledge" or words of similar import shall mean the
actual knowledge as of the date of this Agreement of those persons listed in
Schedule 8.15.
Section 8.16 Public Announcements. Neither Buyer, Sellers nor their
respective Affiliates shall, without the written approval of the other parties
hereto (which approval shall not be unreasonably withheld), make any press
release or other public announcement concerning the transactions contemplated by
this Agreement, except as and to the extent that any such Person shall be so
obligated by law, in which case the other parties to this Agreement shall be
advised and the parties shall use their commercially reasonable efforts to cause
a mutually agreeable release or announcement to be issued; provided, however,
that the foregoing shall not preclude
45
communications or disclosures necessary to implement the provisions of this
Agreement or to comply with applicable accounting and disclosure obligations of
any governmental entity or the rules of any stock exchange.
Section 8.17 Schedules.
(a) All of the Schedules and Exhibits referred to in this Agreement
are attached hereto and made a part of this Agreement. Any item disclosed in the
Schedules or in any of the Exhibits attached hereto, under any specific Section
or Schedule number hereof, shall be deemed to have been disclosed by Sellers for
all purposes of this Agreement in response to every Section of this Agreement.
The parties agree that (i) if it is reasonably apparent from the disclosure that
such disclosure should be applicable to another Section or Schedule, such
disclosure shall be deemed to have been made with respect to such other Section
or Schedule, and (ii) the mere inclusion of an item in the Schedules and/or
Exhibits to this Agreement shall not be deemed an admission by Sellers that such
item represents a material exception or fact, event or circumstance or that such
item would result in a material adverse effect with respect to the Business.
(b) Sellers may, from time to time prior to or at the Closing, by
notice in accordance with this Agreement, supplement or amend any Schedule to
this Agreement to include any matters (i) which, if existing or occurring before
or at the date of this Agreement, would have caused any representation or
warranty of Sellers to be untrue or incorrect if not set forth or described in
the Schedules, and (ii) hereafter arising prior to the Closing Date which, if
existing or occurring before or at the date of this Agreement, would have been
required to be set forth or described in the Schedules, it being hereby agreed
and understood that in each case any such amendment or supplement to any
Schedule shall not operate to cure any prior breach by
46
Sellers of any representation or warranty to which such amended or supplemented
Schedule relates.
Section 8.18 Severability. Nothing contained in this Agreement shall be
construed as requiring the commission of any act contrary to law. Wherever there
is any conflict between any provision of this Agreement and any statute, law,
ordinance or regulation contrary to which the parties have no legal right to
contract, the latter shall prevail, but in such event, the provisions of this
Agreement thus affected shall be curtailed, but limited only to the extent
necessary to bring such provisions within the requirement of such law. In the
event that any part, section, paragraph or clause of this Agreement shall be
held to be indefinite, invalid or otherwise unenforceable, the balance of this
Agreement shall continue in full force and effect unless the severance of the
portion thus held unenforceable would unreasonably frustrate the commercial
purposes of this Agreement.
Section 8.19 "Material Adverse Effect". As used in this Agreement,
"material adverse effect" shall exclude (i) any change or effect due to general
economic or industry-wide conditions, (ii) any continuation of an adverse trend
disclosed to Buyer on or prior to the date hereof, and (iii) any condition
described in the Schedules to this Agreement.
Section 8.20 No Strict Construction. The language used in this Agreement
shall be deemed to be the language chosen by the parties hereto to express their
mutual intent, and no rule of strict construction shall be applied against any
party.
[Signatures appear on the following page.]
47
[Signature page for Asset Purchase and Sale Agreement.]
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the respective duly authorized officers of Sellers and Buyer as of the date
first above written.
PEPSICO PUERTO RICO, INC.
By: /s/ Xxxxxx Xxxxx
--------------------------------------
Title: Vice President & Secretary
GOLDEN GRAIN COMPANY
By: /s/ Xxxx XxXxxxx
--------------------------------------
Title: Vice-President
AMERICAN ITALIAN PASTA COMPANY
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Title: Executive Vice President - Operations
& Corporate Development
