Document/Exhibit Description Pages Size
1: 8-K Current Report 8 33K
2: EX-2.1 Plan of Acquisition, Reorganization, Arrangement, 96 433K
Liquidation or Succession
3: EX-2.2 Plan of Acquisition, Reorganization, Arrangement, 17 62K
Liquidation or Succession
EX-2.1 — Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
Exhibit Table of Contents
EXHIBIT 2.1
AMENDED AND RESTATED ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
GENERAL MILLS, INC.,
THE PILLSBURY COMPANY
AND
INTERNATIONAL MULTIFOODS CORPORATION
DATED AS OF OCTOBER 24, 2001
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS.....................................................................................................2
1.1 Certain Definitions...........................................................................2
ARTICLE 2
PURCHASE AND SALE OF ASSETS, OTHER ASSETS AND TOLEDO PLANT ASSETS; ASSUMPTION OF LIABILITIES...................17
2.1 Purchase and Sale of Assets, Other Assets and Toledo Plant Assets............................17
2.2 Allocation of Purchase Price.................................................................17
2.3 Assets.......................................................................................18
2.4 Excluded Assets..............................................................................20
2.5 Assumption of Liabilities....................................................................20
2.6 Excluded Liabilities.........................................................................22
2.7 Intentionally Blank..........................................................................24
2.8 Intentionally Blank..........................................................................25
2.9 Closing Inventory Statement..................................................................25
2.10 Conversion Date Inventory....................................................................26
2.11 Contract Performance.........................................................................28
2.12 Nonassignability of Contracts................................................................29
2.13 Dividable Contracts..........................................................................30
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER..................................................................32
3.1 Seller's Authority; No Conflicts; Governmental Consents......................................32
3.2 Title to Tangible Assets.....................................................................33
3.3 Intellectual Property........................................................................34
3.4 Actions and Proceedings......................................................................35
3.5 Contracts....................................................................................36
3.6 Compliance with Applicable Laws..............................................................37
3.7 Brokers......................................................................................37
3.8 Inventory....................................................................................37
3.9 Recent Events................................................................................38
3.10 Liabilities..................................................................................38
3.11 Financial Information........................................................................38
3.12 Labor Matters................................................................................39
3.13 Suppliers and Customers......................................................................39
3.14 Universal Product Codes......................................................................39
3.15 Recalls......................................................................................39
3.16 Affiliate Transactions and Shared Services...................................................40
3.17 Equipment....................................................................................40
3.18 Trade Programs; Prepayments..................................................................40
3.19 Toledo Plant.................................................................................40
3.20 Warranties...................................................................................44
3.21 Slotting Allowances..........................................................................44
3.22 Windmill.....................................................................................45
3.23 No Other Representations or Warranties.......................................................45
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER........................................................................45
4.1 Authority; No Conflicts; Governmental Consents...............................................45
4.2 Actions and Proceedings......................................................................46
4.3 Availability of Funds........................................................................46
4.4 Brokers......................................................................................46
4.5 Qualified Plan Status........................................................................47
ARTICLE 5
COVENANTS OF EACH SELLER.......................................................................................47
5.1 Access.......................................................................................47
5.2 Ordinary Conduct of the Business.............................................................48
5.3 Delivery.....................................................................................49
5.4 Accounts Receivable..........................................................................50
5.5 Payments.....................................................................................50
5.6 Confidential Information.....................................................................50
5.7 Notices......................................................................................51
5.8 Employees....................................................................................51
5.9 Conversion of Toledo Plant...................................................................52
5.10 Non-Use of Name..............................................................................53
5.11 Non-Interference.............................................................................53
5.12 Financial Statements.........................................................................53
5.13 No Shopping..................................................................................54
ARTICLE 6
COVENANTS OF BUYER.............................................................................................54
6.1 Confidentiality..............................................................................54
6.2 Accounts Receivable..........................................................................55
6.3 Employees....................................................................................55
ARTICLE 7
MUTUAL COVENANTS OF THE PARTIES................................................................................58
7.1 Cooperation and Transition Services..........................................................58
7.2 Publicity....................................................................................59
7.3 Tax Matters..................................................................................60
7.4 Access to Information........................................................................62
7.5 Bulk Sales Waiver............................................................................62
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7.6 Expenses.....................................................................................63
7.7 Further Assurances...........................................................................63
7.8 Collateral Agreements........................................................................63
7.9 Shared Services..............................................................................63
7.10 Employee Welfare Benefits....................................................................63
7.11 Toledo Defined Benefit Plan Transfer of Assets and Liabilities...............................64
7.12 Other Businesses.............................................................................65
7.13 Other Businesses' Inventory..................................................................66
7.14 Manufacturer Codes...........................................................................67
7.15 Co-Packing; Marketing........................................................................67
7.16 Escrow Fund..................................................................................68
7.17 Due Diligence Out............................................................................69
ARTICLE 8
CLOSING........................................................................................................69
8.1 Closing......................................................................................69
8.2 Buyer's Conditions to Closing................................................................71
8.3 Sellers' Conditions to Closing...............................................................72
8.4 Toledo Plant Closing.........................................................................73
ARTICLE 9
INDEMNIFICATION................................................................................................75
9.1 Survival.....................................................................................75
9.2 Indemnification by Sellers...................................................................75
9.3 Indemnification by Buyer.....................................................................77
9.4 Exclusive Remedy.............................................................................78
9.5 Losses Net of Insurance......................................................................78
9.6 Procedures Relating to Indemnification.......................................................78
9.7 Indemnification Amounts......................................................................80
ARTICLE 10
TERMINATION....................................................................................................81
10.1 Bases for Termination........................................................................81
10.2 Notice of Termination; Return of Documents; Continuing Confidentiality Obligation............81
10.3 Effect of Termination........................................................................82
ARTICLE 11
GENERAL PROVISIONS.............................................................................................82
11.1 Assignment; Successors and Assigns...........................................................82
11.2 Risk of Loss.................................................................................82
11.3 No Third-Party Beneficiaries.................................................................83
11.4 Amendments...................................................................................83
11.5 Waiver of Compliance.........................................................................83
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11.6 Notices......................................................................................84
11.7 Interpretation...............................................................................85
11.8 Counterparts.................................................................................85
11.9 Severability.................................................................................85
11.10 Governing Law................................................................................85
11.11 Actions and Proceedings......................................................................86
11.11 Exhibits and Schedules.......................................................................86
11.12 Specific Performance.........................................................................86
11.13 Entire Agreement.............................................................................86
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EXHIBITS
Exhibit A-1 Retail Trademark License Agreement
Exhibit A-2 Foodservice Trademark License Agreement
Exhibit B-1 Omnibus Patent Assignment
Exhibit B-2(A) Pillsbury Omnibus Trademark Assignment
Exhibit B-2(B) General Mills Omnibus Trademark Assignment
Exhibit B-2(C) Pet Inc. Omnibus Trademark Assignment
Exhibit B-2(D) Guinness Omnibus Trademark Assignment
Exhibit C Transition Services Agreement
Exhibit D Co-Pack Agreement
Exhibit E-1 Retail Patent and Technology License Agreement
Exhibit E-2 Foodservice Patent and Technology License Agreement
Exhibit F Toledo Plant Lease Term Sheet
Exhibit G Martha White Trademark License Agreement
Exhibit H Hungry Jack Trademark License Agreement
Exhibit I Grant Back Patent and Technology License Agreement
Exhibit J Conversion Plan Agreement
Exhibit K-1 General Mills Retail Trademark License Agreement Guaranty
Exhibit K-2 General Mills Foodservice Trademark License Guaranty
Exhibit L Form of Diageo Debt Guarantee Agreement
SCHEDULES
Schedule 1.1(a)(i) Products
Schedule 1.1(a)(ii) Other Products
Schedule 1.1(b) General Mills' Knowledge
Schedule 1.1(c) Pillsbury's Knowledge
Schedule 1.1(d) Toledo Plant
Schedule 1.1(e) Windmill Intellectual Property
Schedule 1.1(f) (i) Excluded Toledo Assets Exceptions
Schedule 1.1(f) (ii) Excluded Toledo Assets
Schedule 1.1(g) Toledo Plant Permits
Schedule 1.1(h) Puerto Rico Verbal Distributorship Agreements
Schedule 2.2 Fair Market Value of the Stock
Schedule 2.3(c)(i) Registered Trademarks and Patents and Universal Product Codes
Schedule 2.3(c)(ii) Other Intellectual Property
Schedule 2.3(f)(i) Assigned Contracts
Schedule 2.3(f)(ii) Toledo Plant Assigned Contracts
Schedule 2.3(g) Equipment
Schedule 2.4 Excluded Assets
Schedule 2.5(e) Trade Promotions
Schedule 2.5(g) Customer Deductions
Schedule 2.9(a) Inventory Standards
Schedule 2.13(i) Dividable Contracts
Schedule 2.13(ii) Toledo Plant Dividable Contracts
Schedule 3.3(a) Intellectual Property
Schedule 3.3(b) Intellectual Property Litigation and Third-Party Rights
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Schedule 3.4 Litigation
Schedule 3.5 Contracts
Schedule 3.6 Compliance with Applicable Laws
Schedule 3.9 Recent Events
Schedule 3.11 Financial Information
Schedule 3.12 Labor Matters
Schedule 3.13 Suppliers and Customers
Schedule 3.15 Recalls
Schedule 3.16 Affiliate Transactions
Schedule 3.17 Exceptions to Equipment Representation
Schedule 3.18 Trade Coupons, Programs, Prepayments
Schedule 3.19(b)(i) Toledo Plant Permitted Liens
Schedule 3.19(b)(iv) Toledo Plant Rail Agreements and Defaults
Schedule 3.19(b)(vi) Toledo Plant Zoning Exceptions
Schedule 3.19(b)(viii) Toledo Plant Environmental Condition Reports
Schedule 3.19(b)(xiv) Toledo Plant Reliance on other Facilities
Schedule 3.19(b)(xviii) Toledo Plant Material Proceedings
Schedule 3.19(b)(xx) Toledo Plant Wells
Schedule 3.20 Warranties
Schedule 4.1(b) Buyer Conflicts
Schedule 5.8(a)(i) Toledo Employees
Schedule 5.8(a)(ii) Closing Date Employees
Schedule 5.8(e) Defined Contribution Plans
Schedule 5.8(f) Defined Benefit Plans
Schedule 5.10 Non-Use
Schedule 8.1(a) Wire Instructions
Schedule 8.2(j) Third Party Consents
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THIS AMENDED AND RESTATED ASSET PURCHASE AND SALE AGREEMENT (this
"Agreement"), dated as of October 24, 2001, is by and among General Mills, Inc.,
a Delaware corporation ("General Mills"), The Pillsbury Company, a Delaware
corporation ("Pillsbury" and, together with General Mills, the "Sellers" and
each, a "Seller"), and International Multifoods Corporation, a Delaware
corporation ("Buyer").
W I T N E S S E T H:
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WHEREAS, Pillsbury, a subsidiary of Diageo plc ("Diageo"), is engaged
in, among other businesses, the business of manufacturing, marketing, selling
and distributing (1) dessert and baking mix products and flour products through
retail channels primarily under the brand names Pillsbury (along with the
Barrelhead logo and the Doughboy character and marks) and Martha White (the
"Pillsbury Dessert and Baking Mix Retail Business"), (2) potato products, dry
breakfast mix products and syrup products through retail channels primarily
under the brand name Hungry Jack (the "Hungry Jack Business" and, along with the
Pillsbury Dessert and Baking Mix Retail Business, the "Pillsbury Retail
Business"), (3) non-custom dry mix foodservice products in boxes of seven pounds
and less and non-custom frosting products in packages of eleven pounds and less
primarily under the brand name Pillsbury (along with the Barrelhead logo and the
Doughboy character and marks) (the "Pillsbury Foodservice Business") and (4)
condensed milk and dry creamer in the United States through retail and
foodservice channels under the brand name Pet Milk (the "Pet Milk Business");
WHEREAS, General Mills is engaged in, among other businesses, the
business of manufacturing, marketing, selling and distributing (1) flour
products in the United States through retail and foodservice channels under the
brand name Robin Hood (the "Robin Hood Business"), (2) flavored rice and pasta
side dish products in the United States through retail and foodservice channels
under the brand name Farmhouse Foods (the "Farmhouse Business"), (3) flour
products in the United States through retail channels under the brand name La
Pina (the "La Pina Business"), (4) flour products in the United States through
retail channels under the brand name Red Band (the "Red Band Business"), and (5)
flour products in the United States through retail channels under the brand name
Softasilk Flour (the "Softasilk Business");
WHEREAS, General Mills, Diageo and Pillsbury have entered into an
Agreement and Plan of Merger (the "Merger Agreement"), dated as of July 16,
2000, as may be amended from time to time, by and among General Mills, General
Mills North American Businesses, Inc. ("Merger Sub"), Diageo and Pillsbury,
pursuant to which General Mills will acquire certain food businesses of Diageo
through (i) the merger (the "Merger") of Merger Sub with and into Pillsbury,
with Pillsbury surviving as a wholly owned subsidiary of General Mills, and (ii)
the purchase by certain subsidiaries of General Mills of the stock of Diageo
subsidiaries (and the equity interests owned by Diageo subsidiaries in other
related entities) that conduct certain non-United States food business of Diageo
(the "Subsidiary Purchases" and, collectively with the Merger, the
"Acquisition");
WHEREAS, in connection with and subject to obtaining regulatory
approvals of the Acquisition under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended (the "HSR Act"), General Mills and Diageo are entering
into this Agreement providing for, among
other things, the sale of certain assets in accordance with, and in the
manner contemplated by, this Agreement;
WHEREAS, Sellers desire to sell, transfer and assign to Buyer, and
Buyer desires to purchase from Sellers, all of Sellers' right, title and
interest in and to certain assets of the Business (as defined herein) and the
Other Businesses (as defined herein), and Buyer is willing to assume certain
liabilities of the Business and the Other Businesses, all as more specifically
provided herein;
WHEREAS, by entering into this Agreement, neither Sellers nor Diageo
nor any of them concede or acknowledge that the Merger would tend to restrain
competition in any relevant market or otherwise contravene any provision of any
antitrust or competition law of any jurisdiction;
WHEREAS, Sellers and Buyer entered into an Asset Purchase and Sale
Agreement, dated as of February 4, 2001, as amended by the First Amendment to
the Asset Purchase and Sale Agreement, dated as of April 26, 2001, and as
further amended by the Second Amendment to the Asset Purchase and Sale
Agreement, dated July 30, 2001 and by the Third Amendment to the Asset Purchase
and Sale Agreement, dated September 28, 2001 (the "Original Asset Purchase
Agreement"), for the purposes stated therein; and
WHEREAS, Sellers and Buyer now desire to amend and restate the Original
Asset Purchase Agreement in its entirety to reflect modifications to the
Original Asset Purchase Agreement that Sellers and Buyer have agreed to make and
other matters set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties, intending to be legally bound, hereby amend and restate the Original
Asset Purchase Agreement in its entirety as follows in accordance with Section
11.3 of the Original Asset Purchase Agreement:
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS. For all purposes of this Agreement, except as
expressly provided or unless the context otherwise requires, the following
definitions shall apply:
"Accrued Paid Time Off" shall have the meaning assigned thereto in
Section 2.5(j).
"Acquisition" shall have the meaning assigned thereto in the recitals.
"Acquisition Proposal" shall have the meaning assigned thereto in
Section 5.13.
"Adjustment Payment" shall have the meaning assigned thereto in Section
2.9(e).
"Affiliate" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with, such
other Person at any time during
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the period for which the determination of affiliation is being made. For
purposes of this definition, the term "control" (including the correlative
meanings of the terms "controlled by" and "under common control with"), as
used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of management
policies of such Person, whether through the ownership of voting securities
or by contract or otherwise.
"Agreement" shall have the meaning assigned thereto in the preamble.
"Allocation" shall have the meaning assigned thereto in Section 2.2(a).
"Assets" shall have the meaning assigned thereto in Section 2.3.
"Assigned Contracts" shall have the meaning assigned thereto in Section
2.3(f).
"Assigned Patents" shall have the meaning assigned thereto in Section
2.3(c).
"Assigned Trademarks" shall have the meaning assigned thereto in
Section 2.3(c).
"Assumed Liabilities" shall have the meaning assigned thereto in
Section 2.5.
"Basket" shall have the meaning assigned thereto in Section 9.7.
"Books and Records" shall have the meaning assigned thereto in Section
2.3(d).
"Business" shall mean the manufacture, marketing, sale and distribution
of the Products in the Territory.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banks in New York or Minnesota are authorized or obligated by Law
or executive order to close.
"Business Employees" shall mean Closing Date Employees and Toledo
Employees.
"Buyer" shall have the meaning assigned thereto in the preamble.
"Buyer DC Plan" shall have the meaning assigned thereto in Section
6.3(g)(ii).
"Buyer's Conversion Date Objection" shall have the meaning assigned
thereto in Section 2.10(b).
"Buyer's Objection" shall have the meaning assigned thereto in Section
2.9(b).
"Buyer's Other Business Objection" shall have the meaning assigned
thereto in Section 7.13(b).
"Closing" shall have the meaning assigned thereto in Section 8.1.
"Closing Date" shall have the meaning assigned thereto in Section 8.1.
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"Closing Date Employees" shall mean (i) employees of Pillsbury or its
Subsidiaries who primarily provide services to the Business at the Minneapolis
headquarters and are listed on SCHEDULE 5.8(a)(ii), and (ii) field sales
employees of Sellers or their Subsidiaries who are listed on SCHEDULE
5.8(a)(ii), in each case to the extent the employment of such employees is not
terminated prior to the Closing Date. To the extent any new employees are hired
for the Business at the Minneapolis headquarters between the date of the
Original Asset Purchase Agreement and the Closing Date, Sellers shall make
additions to SCHEDULE 5.8(a)(ii) to reflect such employees.
"Closing Date Interest Rate" shall mean the rate per annum equal to the
prime commercial lending rate quoted as of the Closing Date by Morgan Guaranty
Trust Company of New York.
"Closing Inventory Statement" shall have the meaning assigned thereto
in Section 2.9(a).
"COBRA" shall mean Section 601 ET SEQ. of ERISA and Section 4980B of
the Code and any similar applicable state laws.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
the Treasury Regulations promulgated thereunder.
"Collateral Agreements" shall have the meaning assigned thereto in
Section 7.8.
"Confidential Information" shall have the meaning assigned thereto in
Section 5.6.
"Confidentiality Agreement" shall have the meaning assigned thereto in
Section 6.1.
"Contracts" shall mean the contracts and agreements set forth on
SCHEDULE 3.5 hereto, each, a "Contract."
"Controlling Party" shall have the meaning assigned thereto in Section
9.6(c).
"Conversion Date" shall mean the date on which the conversion of the
Toledo Plant is certified as complete pursuant to the Conversion Plan Agreement
(as defined herein).
"Conversion Date Interest Rate" shall mean the rate per annum equal to
the prime commercial lending rate quoted as of the Conversion Date by Morgan
Guaranty Trust Company of New York.
"Conversion Date Inventory" shall have the meaning assigned thereto in
Section 2.10(a).
"Conversion Date Inventory Statement" shall have the meaning assigned
thereto in Section 2.10(a).
"Conversion Date Payment" shall have the meaning assigned thereto in
Section 2.10(e).
"Conversion Plan" shall have the meaning assigned thereto in the
Conversion Plan Agreement.
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"Conversion Plan Agreement" shall mean the plan for, among other
things, the conversion of the Toledo Plant, to be entered into and effective at
Closing, in the form attached hereto as EXHIBIT J.
"Converted Portion" shall have the meaning assigned thereto in Section
5.9.
"Co-Pack Agreement" shall mean the agreement, to be entered into at
Closing, in the form attached hereto as EXHIBIT D, pursuant to which General
Mills shall provide (or cause to be provided) certain co-pack services to Buyer
for a period from the Closing through the Conversion Date.
"CPA Firm" shall have the meaning assigned thereto in Section 2.9(c).
"DB Transfer" shall have the meaning assigned thereto in Section 7.11.
"Deferred Amount" shall have the meaning assigned thereto in Section
8.4(b).
"Diageo" shall have the meaning assigned thereto in the recitals.
"Diageo Debt Guarantee Agreement" shall mean the non-recourse guarantee
agreement, pursuant to which Diageo shall guarantee up to $200,000,000 of
Buyer's new long-term debt to be issued by Buyer to finance its purchase of the
Assets, Toledo Plant Assets and Other Assets pursuant hereto, which guarantee
shall remain in place until the earlier of (a) eight years from the date of
issue or (b) the date on which Buyer's credit rating from any nationally
recognized rating agency is the same or higher than that of Diageo, all in
accordance with the terms of such guarantee agreement, which agreement is to be
entered into at Closing in substantially the form attached hereto as EXHIBIT L,
with such changes as are reasonably acceptable to Diageo and the parties
thereto. The Diageo Debt Guarantee Agreement shall provide that Diageo shall not
directly or indirectly influence the business decisions of Buyer and that
Diageo's role shall be strictly limited to performing whatever acts as may be
necessary to provide the debt guarantee contemplated by this paragraph.
"Dividable Contracts" shall mean the contracts and agreements referred
to in SCHEDULE 2.13(i) and other contracts, if any, that are material to the
Business and that do not relate to the services and arrangements that are
referenced in or will otherwise be addressed by this Agreement or any of the
Collateral Agreements, including the Transition Services Agreement (as defined
herein), the Conversion Plan Agreement and the Co-Pack Agreement.
"Due Diligence Out Notice" shall have the meaning assigned thereto in
Section 7.17.
"Environmental Disclosure" shall have the meaning assigned thereto in
Section 3.19(b)(viii).
"Environmental Law" shall mean any Law that relates to or otherwise
imposes liability, obligations or standards with respect to pollution or the
protection of the environment or human health.
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"Equipment" shall have the meaning assigned thereto in Section 2.3(g)
and shall also include, without additional charge to Buyer, such other
equipment, if any, as is reasonably necessary to complete the conversion of the
Toledo Plant in accordance with the standards and specifications set forth in
the Conversion Plan.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"Escrow Agreement" shall have the meaning assigned thereto in Section
7.16.
"Escrow Fund" shall have the meaning assigned thereto in Section 7.16.
"Excluded Assets" shall have the meaning assigned thereto in Section
2.4.
"Excluded Environmental Liabilities" shall have the meaning assigned
thereto in Section 2.6(q).
"Excluded Liabilities" shall have the meaning assigned thereto in
Section 2.6.
"Excluded Taxes" shall mean (1) any Taxes attributable to the Business,
the Assets, or of Windmill (other than Property Taxes attributable to the
Equipment and Taxes attributable to the Toledo Plant), for any Pre-Closing Tax
Periods (including any Tax liability of Windmill for such period arising as a
result of the application of Treasury Regulation section 1.1502-6 or any similar
provision of any applicable state or local Tax Law or attributable to settlement
of intercompany indebtedness of Windmill to Sellers), (2) (A) any Taxes of
Sellers that are not attributable to the Business, the Assets, each Other
Business (as defined herein), the Special Inventory, the Other Assets, Windmill,
or any other assets, property, franchise, service or business to be, directly or
indirectly, acquired by, or provided to, Buyer or any of its Affiliates under
this Agreement or any of the Collateral Agreements, and (B) any Taxes of Sellers
attributable to any assets, property, franchise or business (other than the
Assets, the Business, each Other Business, the Special Inventory, the Other
Assets, Windmill, or any other assets, property, franchise, service or business
to be, directly or indirectly, acquired by, or provided to, Buyer or any of its
Affiliates under this Agreement or any of the Collateral Agreements), (3) any
Property Taxes of Sellers that are not attributable to the Equipment or the
Toledo Plant, (4) any Taxes attributable to the Conversion Date Inventory or
Property Taxes attributable to the Equipment, in each case, for any Tax period
(or portion thereof) ending on or before the Conversion Date, (5) any Taxes
attributable to each Other Business, the Other Business Inventory or the Other
Assets for any Tax period (or portion thereof) ending on or before the Closing
Date and (6) any Taxes attributable to the Toledo Plant for any Tax period (or
portion thereof) ending on or before the Toledo Plant Closing Date; PROVIDED,
HOWEVER, that Excluded Taxes shall not include, and Sellers shall not be
responsible for, (A) any Taxes which are passed through to Buyer or any of its
Affiliates (or for which Buyer or any of its Affiliates are otherwise
responsible) under the Co-Pack Agreement or any of the Collateral Agreements or
any lease or any similar agreement between or among Buyer, any of the Sellers or
any of their respective Affiliates, (B) any Taxes attributable to actions, other
than in the ordinary course of business, taken by Buyer on the Closing Date
after the Closing to the extent such actions cause the amount of Taxes for the
Pre-Closing Tax Period to exceed the amount of Taxes that would otherwise be
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payable for such Pre-Closing Tax Period in the absence of such actions by Buyer
and (C) Transfer Taxes (except as provided in Section 7.3). For purposes of this
Agreement, in the case of any Straddle Period with respect to Taxes attributable
to the Business, the Assets, each Other Business, the Special Inventory or the
Other Assets, or of Windmill, the portion of such Taxes that shall be allocable
to the portion of the Tax period ending on the Relevant Date (or in the case of
Property Taxes attributable to the Equipment, ending on the Conversion Date)
shall (i) in the case of income Taxes and other Taxes based on or related to
receipts, be computed as if such Tax period ended as of the close of business on
the Relevant Date, (ii) in the case of Taxes (other than Property Taxes
attributable to the Equipment, income Taxes and Taxes based on or related to
receipts), be equal to the amount of such Taxes for the entire Straddle Period
multiplied by a fraction, the numerator of which is the number of calendar days
in the Straddle Period up to and including the Relevant Date and the denominator
of which is the number of calendar days in the entire Straddle Period, and (iii)
in the case of Property Taxes attributable to the Equipment, be equal to the
amount of such Property Taxes for the entire Straddle Period that are
attributable to the Equipment multiplied by a fraction, the numerator of which
is the number of calendar days in the Straddle Period up to and including the
Conversion Date and the denominator of which is the number of calendar days in
the entire Straddle Period. Clause (ii) of the preceding sentence shall be
applied with respect to Taxes of Windmill, if any, for such Tax period relating
to capital (including net worth or long-term debt) or intangibles by reference
to the level of such items on the Closing Date.
"Excluded Toledo Assets" shall mean, collectively: (i) any and all
equipment, furniture and other personal property located in or used at the
Toledo Plant to the extent primarily used for cereal processing, production,
packaging and material handling, other than (x) the items described in SCHEDULE
1.1(f)(i), (y) boilers, HVAC equipment and similar equipment (including
maintenance equipment) which is part of the basic building systems of the Toledo
Plant (or which is used to maintain such basic building systems) and which would
typically be included in the sale of a vacant plant sold without operating
equipment, and (z) equipment used for maintenance of the grounds of the Toledo
Plant; and (ii) the other items described in SCHEDULE 1.1(f)(ii). Such Schedules
shall be subject to correction following a complete inventory of the Toledo
Plant to add assets that should be, or to delete assets that should not be,
Excluded Toledo Assets consistent with the intent of the parties hereunder.
"Expiration Date" shall have the meaning assigned thereto in Section
9.1.
"Farmhouse Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights and a case
packer for rice, in each case exclusively related to the Farmhouse Business.
"Farmhouse Business" shall have the meaning assigned thereto in the
recitals.
"Farmhouse Inventory" shall mean all dedicated raw materials, finished
goods inventory and packaging held by General Mills or its Subsidiaries for use
of the Farmhouse Business on the Closing Date.
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"Farmhouse Products" shall mean the products manufactured in the
Territory and sold in the Territory and listed or described on SCHEDULE
1.1(a)(ii) hereto, each a "Farmhouse Product."
"Final Closing Inventory Statement" shall have the meaning assigned
thereto in Section 2.9(d).
"Final Conversion Date Inventory Statement" shall have the meaning
assigned thereto in Section 2.10(d).
"Final Other Business Inventory Statement" shall have the meaning
assigned thereto in Section 7.13(d).
"Financial Statements" shall have the meaning assigned thereto in
Section 3.11.
"Financing Commitment" shall have the meaning assigned thereto in
Section 4.3.
"Food, Drug and Cosmetics Act" shall mean the Federal Food, Drug and
Cosmetics Act, as amended, and the rules and regulations promulgated thereunder.
"Foodservice Patent and Technology License Agreement" shall mean that
agreement providing for the use of certain patents, "know-how" and trade
secrets, as more fully set forth therein, to be entered into at Closing, in the
form attached hereto as EXHIBIT E-2.
"Foodservice Trademark License Agreement" shall have the meaning
assigned thereto in the definition of Trademark License Agreements.
"Formulations" shall mean (i) the formulations and recipes for each
Product (including those that are not in use as of the Closing Date but are
contained within the Pillsbury REX database for the Products) and any Other
Product, as applicable, and (ii) all formulations and recipes in process as of
the date of the Original Asset Purchase Agreement, the date of this Agreement or
the Closing Date under research and development projects related to the Business
or any Other Business.
"FTC" shall mean the U.S. Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in the
United States, consistently applied.
"General Mills" shall have the meaning assigned thereto in the
preamble.
"General Mills Guaranty" shall mean, collectively, the Guaranty in the
form attached hereto as EXHIBIT K-1, to be made by General Mills, dated as of
the Closing Date, with respect to Pillsbury's obligations under the Retail
Trademark License Agreement, for the benefit of Buyer, and the Guaranty in the
form attached hereto as EXHIBIT K-2, to be made by General Mills, dated as of
the Closing Date, with respect to Pillsbury's obligations under the Foodservice
Trademark License Agreement, for the benefit of Buyer.
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"General Mills Operations" shall mean General Mills Operations, Inc., a
Delaware corporation and a wholly owned Subsidiary of General Mills.
"General Mills Toledo Plan" shall have the meaning assigned thereto in
Section 3.6(b).
"Governmental Entity" shall mean any federal, state, political
subdivision or other governmental agency, court or instrumentality, foreign or
domestic.
"Grant Back Patent and Technology License Agreement" shall mean the
agreement providing for the license to General Mills to use certain patents,
Formulations, Processing Instructions and Specifications assigned to Buyer
pursuant to the provisions of Section 2.3(c), on the terms set forth therein, to
be entered into at Closing, in the form attached hereto as EXHIBIT I.
"Hazardous Materials" shall mean any hazardous or toxic substances,
materials or waste or other substances, materials or waste that are regulated
under any Environmental Law, including without limitation petroleum and
derivatives therefrom or synthetic substitutes therefor, asbestos or
asbestos-containing materials, radioactive materials, urea formaldehyde foam
insulation, and dielectric fluid containing levels of polychlorinated biphenyls.
"HSR Act" shall have the meaning assigned thereto in the recitals.
"Hungry Jack Business" shall have the meaning assigned thereto in the
recitals.
"Hungry Jack Trademark License Agreement" shall mean the agreement
providing for the license to General Mills to use the "Hungry Jack" trademark on
the terms set forth therein, to be entered into at Closing, in the form attached
hereto as EXHIBIT H.
"Intellectual Property" shall have the meaning assigned thereto in
Section 2.3(c).
"Inventory" shall have the meaning assigned thereto in Section 2.3(a).
"Inventory Standards" shall have the meaning assigned thereto in
Section 2.9(a).
"IRS" shall mean the Internal Revenue Service.
"La Pina Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights and special
packaging equipment for packaging and selling of cloth packages, in each case
exclusively related to the La Pina Business.
"La Pina Business" shall have the meaning assigned thereto in the
recitals.
"La Pina Inventory" shall mean all dedicated finished goods inventory
and packaging held by General Mills or its Subsidiaries for use of the La Pina
Business on the Closing Date.
"La Pina Products" shall mean the products manufactured in the
Territory or Canada and sold in the Territory and listed or described on
SCHEDULE 1.1(a)(ii) hereto, each a "La Pina Product."
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"Law(s)" shall have the meaning assigned thereto in Section 3.6(a).
"Lemelson Patents" shall mean all patents owned or claimed by Lemelson
Medical, Education & Research Foundation, Limited Partnership.
"Licensed Trademarks and Patents" shall mean those trademarks, patents,
patent applications, trade secrets, "know-how" and other rights licensed to
Buyer under the Trademark License Agreements, the Retail Patent and Technology
License Agreement and the Foodservice Patent and Technology License Agreement.
"Liens" shall have the meaning assigned thereto in Section 3.2.
"Loss" shall have the meaning assigned thereto in Section 9.2.
"Martel Plant" shall mean the facility located at 4136 Main Street,
Martel, Ohio, and all improvements, facilities and fixtures located thereon,
owned by Pillsbury and located in Martel, Ohio (it being understood that Buyer
will have no rights in any thereof except as expressly set forth herein or in
the Collateral Agreements).
"Martha White Trademark License Agreement" shall mean the agreement
providing for the license to General Mills to use the "Martha White" trademark
on the terms set forth therein, to be entered into at Closing, in the form
attached hereto as EXHIBIT G.
"Material Adverse Effect" shall mean a material adverse effect on the
financial condition of the Business or the operation or results of operation of
the Business taken as a whole, which solely for purposes of determining any
Material Adverse Effect with respect to the Toledo Plant shall treat the Toledo
Plant as being part of the Business.
"Materiality Qualifiers" shall have the meaning assigned thereto in
Section 9.7.
"Merger" shall have the meaning assigned thereto in the recitals.
"Merger Agreement" shall have the meaning assigned thereto in the
recitals.
"Merger Sub" shall have the meaning assigned thereto in the recitals.
"Multifoods Plan" shall have the meaning assigned thereto in Section
4.5.
"Non-Controlling Party" shall have the meaning assigned thereto in
Section 9.6(c).
"Non-Converted Portion" shall have the meaning assigned thereto in
Section 5.9.
"Omnibus Patent Assignment" shall mean the assignment instrument
pursuant to which Sellers (or Subsidiaries of Sellers) assign, transfer and
convey to Buyer all right, title and interest in and to the Assigned Patents (as
such term is defined in Section 2.3(c) hereof), along with certain related
rights, to be entered into at Closing, in the form attached hereto as EXHIBIT
B-1.
"Omnibus Trademark Assignment" shall mean, collectively, the Pillsbury
Omnibus Trademark Assignment, General Mills Omnibus Trademark Assignment, Pet
Inc. Omnibus
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Trademark Assignment and Guinness Omnibus Trademark Assignment instruments
pursuant to which Sellers (or Subsidiaries of Sellers), as applicable,
assign, transfer and convey to Buyer all right, title and interest in and to
the Assigned Trademarks (as such term is defined in Section 2.3(c) hereof),
along with the accompanying goodwill associated therewith and certain related
rights, to be entered into at Closing, in the forms attached hereto as
EXHIBIT B-2(A), EXHIBIT B-2(B), EXHIBIT B-2(C) and EXHIBIT B-2(D),
respectively.
"Original Asset Purchase Agreement" shall have the meaning assigned
thereto in the recitals.
"Other Assets" shall mean, individually or collectively, as applicable,
the Pet Milk Assets, the Robin Hood Assets, the Farmhouse Assets, the Softasilk
Assets, the Red Band Assets and/or the La Pina Assets.
"Other Business" shall mean, as applicable, the Pet Milk Business, the
Robin Hood Business, the Farmhouse Business, the Softasilk Business, the Red
Band Business or the La Pina Business (all of which, collectively, shall mean
the "Other Businesses").
"Other Business Inventory" shall mean, individually or collectively, as
applicable, the Pet Milk Inventory, the Robin Hood Inventory, the Farmhouse
Inventory, the Softasilk Inventory, the Red Band Inventory and/or the La Pina
Inventory.
"Other Business Inventory Statement" shall have the meaning assigned
thereto in Section 7.13(a).
"Other Business Payment" shall have the meaning assigned thereto in
Section 7.13(e).
"Other Products" shall mean, individually or collectively, as
applicable, the Pet Milk Products, the Robin Hood Products, the Farmhouse
Products, the Softasilk Products, the Red Band Products and/or the La Pina
Products.
"Permitted Liens" shall have the meaning assigned thereto in Section
3.2.
"Person" shall mean an individual, corporation, partnership, limited
liability company, association, trust or unincorporated organization, a
government or any agency or political subdivision thereof or any other entity or
organization.
"Pet Milk Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights, in each
case exclusively related to the Pet Milk Business.
"Pet Milk Business" shall have the meaning assigned thereto in the
recitals.
"Pet Milk Inventory" shall mean all dedicated raw materials, finished
goods inventory and packaging held by or on behalf of a Seller or its
Subsidiaries for use of the Pet Milk Business on the Closing Date.
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"Pet Milk Products" shall mean the products manufactured in the
Territory and sold in the Territory and listed or described on SCHEDULE
1.1(a)(ii) hereto, each a "Pet Milk Product."
"Pillsbury" shall have the meaning assigned thereto in the preamble.
"Pillsbury Dessert and Baking Mix Retail Business" shall have the
meaning assigned thereto in the recitals.
"Pillsbury Foodservice Business" shall have the meaning assigned
thereto in the recitals.
"Pillsbury Retail Business" shall have the meaning assigned thereto in
the recitals.
"Pre-Closing Tax Period" shall mean any Tax period (or portion thereof)
ending on or before the Closing Date.
"Processing Instructions" shall mean (i) the processing instructions
(including manufacturing methodologies and engineering data and designs), trade
secrets and know-how for each Product (including those that are not in use as of
the Closing Date but are contained within the Pillsbury REX database for the
Products) and any Other Product, as applicable, and (ii) all processing
instructions (including manufacturing methodologies and engineering data and
designs), trade secrets and know-how in process as of the date of the Original
Asset Purchase Agreement, the date of this Agreement or the Closing Date under
research and development projects related to the Business or any Other Business.
"Products" shall mean the products manufactured in the Territory or
Canada and sold in the Territory and listed or described on SCHEDULE 1.1(a)(i)
hereto, each a "Product."
"Property Taxes" shall mean personal property taxes and real property
taxes attributable to the Toledo Plant.
"PTO" means the U.S. Patent and Trademark Office.
"Puerto Rico Distributorship Agreements" shall mean (i) the
Distributorship Agreement by and between Pillsbury and B. Fernandez & Hnos.,
Inc., dated January 1, 1963, as amended, (ii) the oral distributorship agreement
by and between Pillsbury and E. Nunez, Inc., as described on SCHEDULE 1.1(h) and
(iii) the oral distributorship agreement by and between Pillsbury and Ballester
& Hnos., as described on SCHEDULE 1.1(h).
"Purchase Orders" shall have the meaning assigned thereto in Section
2.3(b).
"Purchase Price" shall have the meaning assigned thereto in Section
2.1.
"Red Band Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights, in each
case exclusively related to the Red Band Business.
"Red Band Business" shall have the meaning assigned thereto in the
recitals.
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"Red Band Inventory" shall mean all dedicated finished goods inventory
and packaging held by General Mills or its Subsidiaries for use of the Red Band
Business on the Closing Date.
"Red Band Products" shall mean the products manufactured in the
Territory or Canada and sold in the Territory and listed or described on
SCHEDULE 1.1(a)(ii) hereto, each a "Red Band Product."
"Relevant Date" shall mean the Closing Date, except that (a) in the
case of the Conversion Date Inventory and Property Taxes on the Equipment,
"Relevant Date" shall mean the Conversion Date, and (b) in the case of the
Toledo Plant, "Relevant Date" shall mean the Toledo Plant Closing Date.
"Research Resources Patent" means patent Re 36335, which patent is
claimed by Research Resources, Inc.
"Retail Patent and Technology License Agreement" shall mean that
agreement providing for the use of certain patents, "know-how" and trade
secrets, as more fully set forth therein, to be entered into at Closing, in the
form attached hereto as EXHIBIT E-1.
"Retail Trademark License Agreement" shall have the meaning assigned
thereto in the definition of Trademark License Agreements.
"Return" shall mean any return, statement, report or form, including in
each case any amendments thereto, required to be filed with any Taxing Authority
by or with respect to Taxes or any claim for refund.
"Revised Allocation" shall have the meaning assigned thereto in Section
2.2(b).
"Robin Hood Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights, in each
case exclusively related to the Robin Hood Business.
"Robin Hood Business" shall have the meaning assigned thereto in the
recitals.
"Robin Hood Inventory" shall mean all dedicated finished goods
inventory and packaging held by General Mills for use of the Robin Hood Business
on the Closing Date.
"Robin Hood Products" shall mean the products manufactured in the
Territory or Canada and sold in the Territory and listed or described on
SCHEDULE 1.1(a)(ii) hereto, each a "Robin Hood Product."
"Seller's Knowledge" shall mean, as to General Mills, the actual
knowledge of the individuals listed on SCHEDULE 1.1(b) and, as to Pillsbury, the
actual knowledge of the individuals listed on SCHEDULE 1.1(c).
"Seller(s)" shall have the meaning assigned thereto in the preamble.
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"Softasilk Assets" shall mean Intellectual Property to the extent
specified in Section 2.3(c) and customer lists, packaging supplier lists and
price lists, universal product codes, package designs and copyrights, in each
case exclusively related to the Softasilk Business.
"Softasilk Business" shall have the meaning assigned thereto in the
recitals.
"Softasilk Inventory" shall mean all dedicated finished goods inventory
and packaging held by General Mills or its Subsidiaries for use of the Softasilk
Business on the Closing Date.
"Softasilk Products" shall mean the products manufactured in the
Territory or Canada and sold in the Territory and listed or described on
SCHEDULE 1.1(a)(ii) hereto, each a "Softasilk Product."
"Special Inventory" shall mean the Conversion Date Inventory and the
Other Business Inventory.
"Specifications" shall mean (i) the raw materials, manufacturing,
packaging, labeling and quality assurance specifications for each Product
(including those that are not in use as of the Closing Date but are contained
within the Pillsbury REX database for the Products) and any Other Product, as
applicable, and (ii) all raw materials, manufacturing, packaging, labeling and
quality assurance specifications in process as of the date of the Original Asset
Purchase Agreement, the date of this Agreement or the Closing Date under
research and development projects related to the Business or any Other Business.
"Stock" shall mean all of the issued and outstanding shares of Series A
Common Stock and Series B Common Stock, in each case, par value $0.01 per share,
of Windmill.
"Straddle Period" shall mean (1) in the case of Taxes attributable to
the Conversion Date Inventory or any Property Taxes attributable to the
Equipment, any complete Tax period that includes but does not end on the
Conversion Date, (2) in the case of Taxes of Windmill, any complete Tax period
of Windmill that includes but does not end on the Closing Date, (3) in the case
of each Other Business, the Other Business Inventory, or the Other Assets, any
complete Tax period that includes but does not end on the Closing Date, (4) in
the case of Taxes attributable to the Toledo Plant, any complete Tax period that
includes but does not end on the Toledo Plant Closing Date and (5) otherwise,
any complete Tax period that includes but does not end on the Closing Date.
"Subsidiary" shall mean, when used with respect to any Person, any
corporation, partnership, limited liability company, or other organization,
whether incorporated or unincorporated, of which such Person owns or controls,
directly or indirectly, 50% or more of the voting power of the outstanding
equity securities (or equivalent voting interests) or has the power to appoint
50% or more of the members of the board of directors or other governing body.
"Subsidiary Purchases" shall have the meaning assigned thereto in the
recitals.
"Tax" shall mean all income, profits, franchise, gross receipts,
capital, net worth, sales, use, withholding, turnover, value added, ad valorem,
registration, general business, employment, social security, disability,
occupation, real property, personal property (tangible and intangible),
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stamp, transfer (including real property transfer or gains), conveyance,
severance, production, excise and other taxes, withholdings, duties, levies,
imposts, license and registration fees and other similar charges and assessments
(including any and all fines, penalties and additions attributable to or
otherwise imposed on or with respect to any such taxes, charges, fees, levies or
other assessments, and interest thereon and any liability arising pursuant to
the application of Treasury Regulation section 1.1502-6 or any similar provision
of any applicable state or local Tax Law) imposed by or on behalf of any
Governmental Entity.
"Tax Claim" shall have the meaning assigned thereto in Section 9.6(c).
"Taxing Authority" shall mean any governmental or regulatory authority,
body or instrumentality exercising any authority to impose, regulate or
administer the imposition of Taxes.
"Tennessee Plant" shall mean the facility located at 200 Butler Drive,
Murfreesboro, Tennessee, and all improvements, facilities and fixtures located
thereon, owned by Pillsbury and located in Murfreesboro, Tennessee (it being
understood that Buyer will have no rights in any thereof except as expressly set
forth herein or in the Collateral Agreements).
"Territory" shall mean the United States of America, including its
territories, possessions, commonwealths (including Puerto Rico), trusteeships,
and retail outlets in non-domestic United States government installations and
facilities, PROVIDED that to the extent that Buyer sells (directly or
indirectly) to U.S.-based retailers (including mass merchandisers and club store
customers) who at Closing or thereafter have stores in Mexico or Canada, Buyer
may grant to such retailers the nonexclusive right to ship Branded Products (as
defined in the Trademark License Agreements) to such stores and to sell such
Branded Products in such stores located in Mexico and Canada. To the extent that
Buyer grants such rights to such retailers, Buyer also shall have the
nonexclusive right to ship Branded Products directly or indirectly to such
stores.
"Third-Party Claim" shall have the meaning assigned thereto in Section
9.6(a).
"Third-Party Co-Packer" shall have the meaning assigned thereto in
Section 7.15(a).
"Third-Party Co-Pack Agreement" shall have the meaning assigned thereto
in Section 7.15(a).
"Title Commitment" shall have the meaning assigned thereto in Section
5.9.
"Toledo Employees" shall mean employees of General Mills or its
Subsidiaries at the Toledo Plant who would primarily provide services to the
Business if the Business were conducted on the date of the Original Asset
Purchase Agreement at the Toledo Plant, which employees are listed on SCHEDULE
5.8(a)(i), to the extent the employment of such employees is not terminated
prior to the Conversion Date. The Toledo Employees consist solely of the Toledo
Salaried Employees and the Toledo Wage Employees. To the extent any new
employees are hired for the Toledo Plant prior to the Conversion Date who would
have been listed on SCHEDULE 5.8(a)(i) had such employee been employed at the
Toledo Plant on the date of the Original Asset Purchase Agreement, Sellers shall
make additions to SCHEDULE 5.8(a)(i) to reflect such employees.
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"Toledo Plant" shall mean the real property and facility located at
1250 Laskey Road, Toledo, Ohio, as more particularly described in SCHEDULE
1.1(d) hereto, and all improvements, facilities and fixtures located thereon,
including the items described in clauses (x), (y) and (z) of clause (i) of the
definition of Excluded Toledo Assets and any equipment, furniture and other
personal property located in or used at the Toledo Plant or to the extent used
for the maintenance of the grounds of the Toledo Plant as of the date hereof,
other than the Excluded Toledo Assets.
"Toledo Plant Assets" shall have the meaning assigned thereto in
Section 2.1.
"Toledo Plant Assigned Contracts" shall mean the contracts set forth on
SCHEDULE 2.3(f)(ii).
"Toledo Plant Closing" shall have the meaning assigned thereto in
Section 8.4(a).
"Toledo Plant Closing Date" shall have the meaning assigned thereto in
Section 8.4(a).
"Toledo Plant Dividable Contracts" shall mean the contracts set forth
on SCHEDULE 2.13(ii).
"Toledo Plant Lease Term Sheet" shall mean the term sheet attached
hereto as EXHIBIT F.
"Toledo Plant Permits" shall mean the permits set forth on SCHEDULE
1.1(g).
"Toledo Plant Purchase Price" shall have the meaning assigned thereto
in Section 2.1.
"Toledo Salaried Employees" shall mean those Toledo Employees so
identified on SCHEDULE 5.8(a)(i).
"Toledo Wage Employees" shall mean those Toledo Employees so identified
on SCHEDULE 5.8(a)(i).
"Trademark License Agreements" shall mean, collectively, a retail
trademark license agreement (the "Retail Trademark License Agreement") and a
foodservice trademark license agreement (the "Foodservice Trademark License
Agreement"), each providing for the license to use certain trademarks in the
Territory, to be entered into at Closing, in the forms attached hereto as
EXHIBIT A-1 and EXHIBIT A-2, respectively.
"Transfer Taxes" shall have the meaning assigned thereto in Section
7.3(a).
"Transition Services Agreement" shall mean the agreement, to be entered
into at Closing, in the form attached hereto as EXHIBIT C, pursuant to which
General Mills shall provide (or cause to be provided) certain transition
services to Buyer for the periods set forth therein.
"Treasury Regulation" shall mean the U.S. treasury regulations pursuant
to the Code.
"Trustee" shall mean Ed D. Snouwaert, PE Division Leader, Sebesta
Blomberg & Associates, Inc., or any replacement trustee appointed pursuant to
the Conversion Plan Agreement.
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"Unwanted Other Business" shall have the meaning assigned thereto in
Section 7.17.
"Wanted Other Business" shall have the meaning assigned thereto in
Section 7.17.
"Warehouse Space" shall have the meaning assigned thereto in Section
8.4(d).
"WARN Act" shall mean the Worker Adjustment and Retraining Notification
Act, as amended, and the rules and regulations promulgated thereunder.
"Welfare Benefits" shall have the meaning assigned thereto in Section
7.10.
"Windmill" shall mean Windmill Holdings Corp., a California
corporation, and a direct wholly owned subsidiary of Pillsbury.
"Windmill Intellectual Property" shall mean, subject to the Martha
White Trademark License Agreement, all the intellectual property held, directly
or indirectly, by Windmill, including that referred to in SCHEDULE 1.1(e).
ARTICLE 2
PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES
2.1 PURCHASE AND SALE OF ASSETS, OTHER ASSETS AND TOLEDO PLANT ASSETS.
Upon the terms and subject to the conditions of this Agreement, including the
provisions of Section 7.12(a), on the Closing Date or the Toledo Plant Closing
Date, as applicable pursuant to Sections 8.1 and 8.4, Sellers will sell, convey,
transfer and assign, or cause to be sold, conveyed, transferred and assigned, to
Buyer, and Buyer will purchase, (i) the Assets (as defined in Section 2.3) and
the Other Assets other than the Toledo Plant, the Toledo Plant Permits, the
Toledo Plant Assigned Contracts, and the portions of the Toledo Plant Dividable
Contracts to be transferred to Buyer pursuant to Section 2.13(c), for an
aggregate cash purchase price of three hundred four million five hundred
eighty-nine thousand United States Dollars ($304,589,000), as adjusted pursuant
to Section 5.8(c) and, to the extent applicable, Section 2.9(e) (the "Purchase
Price") and (ii) all of Sellers' and General Mills Operations' right, title and
interest in and to the Toledo Plant, the Toledo Plant Permits, the Toledo Plant
Assigned Contracts, and the portions of the Toledo Plant Dividable Contracts to
be transferred to Buyer pursuant to Section 2.13(c) (collectively, the "Toledo
Plant Assets") for an aggregate cash purchase price of eleven million five
hundred thousand United States Dollars ($11,500,000) (the "Toledo Plant Purchase
Price"), as adjusted pursuant to Section 8.4, in each case payable as set forth
in Article 8.
2.2 ALLOCATION OF PURCHASE PRICE.
(a) Within one hundred eighty (180) days after the
Closing, Buyer shall obtain and pay for an appraisal of the fair market values
of the Assets (exclusive of the Stock and the Toledo Plant Assets) and the Other
Assets (to the extent not included in Assets) from a nationally recognized
appraisal firm for purposes of allocating the purchase price for the Assets
(exclusive of the Toledo Plant Assets and reduced by such amount set forth on
SCHEDULE 2.2) and the Other
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Assets among the Assets (exclusive of the Stock and the Toledo Plant Assets)
and the Other Assets, and shall prepare an allocation (the "Allocation")
based on such appraisal and consistent with the provisions of Section 1060 of
the Code and the Treasury Regulations thereunder. Neither Buyer nor Sellers,
nor any of their respective Affiliates, shall take any position on any Return
or audit inconsistent with such Allocation unless required to do so by
applicable Law. Sellers and Buyer shall each provide to the other for review
a copy of its report with respect to this transaction pursuant to Section
1060 of the Code at least ten (10) Business Days prior to its submission to
the IRS. Such reports shall be consistent with the Allocation.
Notwithstanding the foregoing or Section 2.2(b), Buyer and Sellers agree that
the fair market value of the Stock is the amount set forth on SCHEDULE 2.2
and that neither Buyer nor Sellers nor any of their respective Affiliates
shall take any position on any Return or audit inconsistent with such
agreement, unless required to do so by a "determination" within the meaning
of Section 1313 of the Code.
(b) Within one hundred eighty (180) days after the Toledo
Plant Closing, Buyer shall obtain and pay for an appraisal of the fair market
value of the Toledo Plant from a nationally recognized appraisal firm. Buyer
shall provide this Toledo Plant appraisal to the nationally recognized appraisal
firm that performed the appraisal of the other Assets and the Other Assets. The
Allocation prepared pursuant to Section 2.2(a) shall be revised (the "Revised
Allocation") by Buyer consistent with the provisions of Section 1060 of the Code
and the Treasury Regulations thereunder to provide for an allocation of a
portion of the purchase price to the Toledo Plant Assets; PROVIDED, HOWEVER,
that the only revision to the amounts allocated pursuant to Section 2.2(a) shall
be a reduction in the amount allocated to goodwill to the extent such revision
is required because the Toledo Plant appraisal provides that the fair market
value of the Toledo Plant Assets exceeds the Toledo Plant Purchase Price.
Neither Buyer nor Sellers, nor any of their Affiliates, shall take any position
in any Return filed after the Toledo Plant Closing or audit after the Toledo
Plant Closing inconsistent with the Revised Allocation unless required to do so
by applicable Law. Buyer and Sellers shall each prepare and file with the income
tax Return for the taxable period that includes the Toledo Plant Closing Date a
supplemental asset acquisition statement on Form 8594 consistent with the
Revised Allocation. Sellers and Buyer shall each provide to the other a copy of
its Form 8594 at least ten (10) Business Days prior to its submission to the
IRS.
2.3 ASSETS. The capitalized term "Assets" shall mean all right, title
and interest of each Seller in and to the following enumerated assets:
(a) except as otherwise expressly provided herein, all
inventory of the Business that (i) are finished goods held for sale by such
Seller or any of its Affiliates in the ordinary course of operating the Business
as of the Closing Date, or (ii) are finished goods, raw materials, packaging,
work-in-process or other inventory held by third parties under co-pack
agreements for producing Products for sale by the Business and to which
Pillsbury or its Affiliates holds title as of the Closing Date (collectively,
the "Inventory");
(b) all commitments and orders (subject to the terms and
conditions of such commitments and orders) made by the Business for the purchase
of Products from such Seller and its Affiliates for Products that have not been
shipped as of the Closing Date and under
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purchase orders by such Seller and its Affiliates made on behalf of the
Business (collectively, the "Purchase Orders");
(c) (i) the trademarks, trade names, logos, trade dress
and service marks listed on SCHEDULE 2.3(c)(i) and SCHEDULE 2.3(c)(ii) for the
products and/or services and territories set forth on SCHEDULE 2.3(c)(i) and
SCHEDULE 2.3(c)(ii) (subject, in the case of the trademark "Hungry Jack," to the
Hungry Jack Trademark License Agreement), together with the goodwill,
applications, registrations, renewals and other rights associated therewith, and
remedies against infringements, violations and dilutions thereof (the "Assigned
Trademarks"), (ii) the patents listed on SCHEDULE 2.3(c)(i) together with all
reissues associated therewith, and all remedies against infringement and
pre-issuance royalties thereof, subject to the Grant Back Patent and Technology
License Agreement (the "Assigned Patents"), (iii) registered copyrights and
applications therefor listed on SCHEDULE 2.3(c)(i), (iv) the domain names, URLs
and web sites listed on SCHEDULE 2.3(c)(i) and SCHEDULE 2.3(c)(ii), (v) all
Formulations, Specifications and Processing Instructions of the Pillsbury Retail
Business and the Pet Milk Business, and remedies against infringements or
violations thereof, subject to the Grant Back Patent and Technology License
Agreement, (vi) except as provided in the Retail Patent and Technology License
Agreement and the Foodservice Patent and Technology License Agreement, all
Formulations of the Pillsbury Foodservice Business, and remedies against
infringements or violations thereof, subject to the Grant Back Patent and
Technology License Agreement, (vii) except as provided in the Trademark License
Agreements, the Hungry Jack Trademark License Agreement, the Martha White
Trademark License Agreement, the Retail Patent and Technology License Agreement,
and the Foodservice Patent and Technology License Agreement, all package
designs, unregistered copyrights, universal product codes and 1-800 telephone
numbers for customer use, in each case that are exclusively related to the
Business, and remedies against infringements or violations thereof, and (viii)
the rights of Buyer provided in the Trademark License Agreements, the Retail
Patent and Technology License Agreement, and the Foodservice Patent and
Technology License Agreement (collectively, the "Intellectual Property");
(d) all existing product literature, advertising
materials, promotional materials, studies, ledgers, files (including customer
files) and reports (including test reports), manufacturing and engineering
drawings, process controls, material standards and other books and records
(except each Seller's corporate records) in each case related to the Business,
including all customer lists and customer data and databases (including
correspondence and records of 1-800 quality calls), supplier lists and supplier
data (including correspondence), price lists, records relating to the
Intellectual Property, accounting records and records of past sales and
inventory data in each case related to the Business (collectively, the "Books
and Records"), except that a Seller may retain copies of such Books and Records
to the extent relating to Intellectual Property with respect to which a Seller
has any rights (including licensing rights) after Closing (but only so long as
such Seller retains such rights), to the extent a Seller is required by Law to
retain the same or to the extent such information is necessary for Seller to
prepare Tax Returns, financial statements or other legally required filings;
(e) all governmental licenses, permits, approvals,
registrations and similar rights issued to Sellers or either of them related to
the Business to the extent their transfer is permitted by Law and the Toledo
Plant Permits;
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(f) the contracts listed on SCHEDULE 2.3(f)(i), as well
as the contracts and agreements not listed on SCHEDULE 2.3(f)(i) but
nevertheless primarily related to the Business (such contracts and agreements,
together with the contracts listed on SCHEDULE 2.3(f)(i), the "Assigned
Contracts") and the Toledo Plant Assigned Contracts but excluding from the
Assigned Contracts any contract or agreement that is an Excluded Asset;
(g) the equipment listed on SCHEDULE 2.3(g) (the
"Equipment"), which Schedule also sets forth the location of such Equipment;
(h) each warranty or guaranty primarily related to the
Assets made or issued by any manufacturer, grower, supplier or other predecessor
transferor of any of the Assets, to the extent that such assignment is not
prohibited by the terms of such warranty or guaranty;
(i) the Stock;
(j) the Toledo Plant;
(k) the portions of the Dividable Contracts and the Toledo
Plant Dividable Contracts that are being transferred to Buyer pursuant to the
terms herein; and
(l) all other assets related to the Business, except as
otherwise provided in Section 2.4.
2.4 EXCLUDED ASSETS. The Assets shall expressly exclude (1) except
for the Toledo Plant, (a) all real property, improvements and fixtures,
including the Tennessee Plant and the Martel Plant, together with any
manufacturing, warehouse, research and development, office, distribution and
other facilities owned, leased or subleased or otherwise used or occupied by
either Seller, and (b) any equipment, fixtures, furnishings, machinery, vehicles
and other real or personal property used in the operation of the Business (other
than pursuant to Section 2.3(g), the Conversion Plan Agreement or as otherwise
expressly included in the definition of "Assets" set forth in Section 2.3); (2)
subject to the Trademark License Agreements and Omnibus Trademark Assignment,
any trademarks, trade names and trade designations previously or currently used
by either Seller in its businesses, and, subject to the Retail Patent and
Technology License Agreement, the Foodservice Patent and Technology License
Agreement and the Omnibus Patent Assignment, any patents, trade secrets,
technology or "know-how" previously or currently used by either Seller in its
businesses, in each case unless listed or described in Section 2.3 (including
the Schedules thereto); (3) all accounts receivable, cash and cash equivalents
relating to Products shipped on or prior to the Closing Date and Other Products
shipped on or prior to the Closing Date; (4) the Excluded Toledo Assets; (5) all
assets described on SCHEDULE 2.4; and (6) the assets of Sellers not related to
the Business, except for the Toledo Plant Assets (collectively, the "Excluded
Assets").
2.5 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer shall assume on the Closing Date (or, in the
case of Section 2.5(d), the Toledo Plant Closing Date, as applicable) and shall
pay, perform and discharge when due the following obligations, liabilities and
commitments of each Seller (collectively, the "Assumed Liabilities"):
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(a) all obligations, liabilities and commitments of each
Seller in respect of any and all Products shipped by Buyer or in respect of the
operation of the Business at any time after the Closing Date except where such
Products constituted finished products as of the Closing Date and such
liabilities, obligations or commitments of Sellers constituted product
liabilities or recall liabilities, unless (and to the extent that) the
liabilities, obligations or commitments were caused by Buyer's negligence in the
storage or transportation of such Products after the Closing or Buyer's failure
after the Closing to employ quality control standards of at least the standards
employed by Sellers prior to the Closing;
(b) except as otherwise expressly provided in Section
7.12, all liabilities and obligations for manufacturer's coupons relating to
Products, which coupons are received by the clearinghouse for reimbursement for
all periods beginning sixty (60) days after the Closing Date, regardless of when
such coupons were issued;
(c) all obligations, liabilities and commitments of each
Seller and its Affiliates to the extent accruing, in accordance with the terms
thereof, after the Closing Date, under Purchase Orders;
(d) all liabilities, obligations and commitments of each
Seller and its Affiliates to the extent accruing, in accordance with the terms
thereof, after the Closing Date, under the Assigned Contracts; and all
liabilities, obligations and commitments of each Seller and its Affiliates to
the extent accruing, in accordance with the terms thereof, after the Toledo
Plant Closing Date, under the Toledo Plant Assigned Contracts; and all
liabilities, obligations and commitments of each Seller and its Affiliates under
the Dividable Contracts with respect to any portions thereof transferred to
Buyer, to the extent accruing in accordance with the terms thereof, after the
date of transfer to Buyer, under such portions, and all liabilities, obligations
and commitments of each Seller and its Affiliates under the Toledo Plant
Dividable Contracts with respect to any portions thereof transferred to Buyer,
to the extent accruing in accordance with the terms thereof, after the date of
transfer to Buyer, under such portions;
(e) all liabilities and obligations for trade promotions
arising from (i) trade promotion activities or events primarily related to the
Business that are committed to after the Closing Date and occur at any time
following the Closing Date or (ii) trade promotion activities or events
primarily related to the Business that occur following the Closing Date and that
were committed to before the Closing Date, except to the extent any such single
activity or promotion was not disclosed, on SCHEDULE 2.5(e) or otherwise, to
Buyer by Sellers and the liability and obligation per customer buying group
related to such activity or promotion exceeds $100,000 unless such activity or
promotion was committed to by Sellers in the ordinary course consistent with
past practice;
(f) all refund and replacement obligations relating to
Products shipped prior to Closing and returned after the date that is thirty
(30) days after the Closing Date and for retail unsaleables in all periods
beginning thirty (30) days after the Closing Date;
(g) all liabilities and obligations for customer
deductions (which shall not include liabilities and obligations for coupons,
trade promotions or refund and replacement obligations or retail unsaleables,
which are addressed by paragraphs (b), (e) and (f) of this
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Section 2.5) attributable to invoices with respect to Products shipped after
the Closing Date; PROVIDED that, for those customer deductions relating to
Products for which it cannot be specifically determined whether the sale was
after the Closing Date, Sellers and Buyer shall be responsible for
liabilities and obligations for such customer deductions in accordance with
the prorated percentages for the applicable time periods set forth in
SCHEDULE 2.5(g);
(h) all liabilities for Taxes attributable to the
Business, the Assets, any Other Business, the Special Inventory or any Other
Assets (provided that Buyer shall not assume liability for any Excluded Taxes);
(i) all liabilities, obligations and commitments of each
Seller for Inventory ordered by each Seller in the ordinary course of business
prior to the Closing Date and delivered to Buyer after the Closing Date,
PROVIDED that such Inventory has not been included in the Closing Inventory
Statement or the Conversion Date Inventory Statement and been given effect in
any adjustment to the Purchase Price or credit under the Co-Pack Agreement under
Section 2.9 or resulted in a Conversion Date Payment pursuant to Section 2.10;
and
(j) liabilities for vacation and paid time off for
Business Employees employed by Buyer to the extent accrued by Sellers to the
date of hire by Buyer ("Accrued Paid Time Off"), PROVIDED that Buyer is
reimbursed or credited by Sellers pursuant to Section 5.8(c) for such Accrued
Paid Time Off.
Without limiting any rights provided to Buyer in Article 9, Buyer's obligations
under this Section 2.5 shall not be subject to offset or reduction by reason of
any actual or alleged breach of any representation, warranty or covenant
contained in this Agreement or any document delivered in connection herewith or
any right or alleged right to indemnification hereunder arising from such actual
or alleged breach.
2.6 EXCLUDED LIABILITIES. Notwithstanding any other provision of
this Agreement, Buyer shall not assume, or in any way be liable for (except
to the extent provided in clause (vi) of Section 9.3) the payment,
performance or discharge of, any liabilities, obligations or commitments of
Sellers or any of their Affiliates that do not constitute Assumed
Liabilities, whether or not related to the Business or any Other Business and
of whatever kind and nature, whether primary or secondary, direct or
indirect, absolute or contingent, known or unknown, or accrued or unaccrued
(collectively, the "Excluded Liabilities"). Except for the Assumed
Liabilities and except to the extent provided in clause (vi) of Section 9.3,
Sellers shall be solely liable for (i) all liabilities, obligations or
commitments of Sellers or any of their Affiliates resulting from or arising
from the ownership or condition of the Assets and the Other Assets (other
than the Toledo Plant Assets) on or prior to Closing, the operation of the
Business or Other Businesses on or prior to Closing, and incidents,
occurrences or events relating to the Business or the Assets (other than the
Toledo Plant Assets) to the extent occurring or in existence on or prior to
Closing, whether or not reflected in the books and records of Sellers, or on
the Closing Date to the extent not occurring or in existence as a result of
any act or omission by Buyer and (ii) all liabilities, obligations or
commitments of Sellers or any of their Affiliates resulting from or arising
from the ownership or condition of the Toledo Plant Assets on or prior to the
Toledo Plant Closing, and incidents, occurrences or events relating to the
Toledo Plant Assets, either to the extent occurring or in existence on or
prior to the Toledo Plant Closing,
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whether or not reflected in the books and records of Sellers, or on the
Toledo Plant Closing Date to the extent not occurring or in existence as a
result of any act or omission by Buyer. Without limiting the generality of
the immediately preceding sentences, Buyer shall not assume any of the
following liabilities or obligations:
(a) the accounts payable relating to the Business accrued
on or prior to the Closing Date or relating to any Other Business accrued on or
prior to the Closing Date;
(b) any product or recall liability relating to Products
or Other Products shipped by Sellers;
(c) any liabilities, obligations or commitments for
manufacturer's coupons issued prior to, or by either Seller on, the Closing Date
and relating to Products, which coupons are received by the clearinghouse for
reimbursement prior to the date that is sixty (60) days after the Closing Date;
(d) any refund or replacement obligations relating to
Products shipped on or prior to the Closing Date and returned prior to the date
that is thirty (30) days after the Closing Date or relating to Other Products
shipped on or prior to the Closing Date;
(e) except as otherwise expressly provided in Section
2.5, all obligations relating to Products shipped on or prior to the Closing
Date or, except as otherwise expressly provided in Sections 7.12 and 7.13, all
obligations relating to Other Products shipped on or prior to the Closing Date;
(f) any liabilities for Excluded Taxes;
(g) any liabilities or obligations arising out of or
relating to the Excluded Assets;
(h) any debts, liabilities, obligations or commitments,
whenever arising, to the extent not related to the Business or any Other
Business and to the extent not otherwise related to the Assets;
(i) any liabilities, obligations or commitments
(including obligations in default) of Sellers and their Affiliates, to the
extent accrued in accordance with the terms thereof on or prior to the Closing
Date, under any contract or agreement (including Assigned Contracts and Purchase
Orders and, on or prior to the Toledo Plant Closing Date, under any Toledo Plant
Assigned Contract); and all liabilities, obligations and commitments of each
Seller and its Affiliates under the Dividable Contracts or the Toledo Plant
Dividable Contracts (A) with respect to any portions thereof not transferred to
Buyer and (B) with respect to portions thereof transferred to Buyer, to the
extent accruing in accordance with the terms thereof, prior to or on the date of
transfer to Buyer, under such portion; and any liability, obligation or
commitment with respect to the Puerto Rico Distributorship Agreements that
arises under Puerto Rico's local "law 75" or otherwise as a result of the
termination or other action by Sellers (X) prior to or on the date of transfer
of portions thereof to Buyer with respect to such Puerto Rico Distributorship
Agreements or (Y) after the date of such transfer with respect to any portions
of such Puerto Rico Distributorship Agreements not transferred to Buyer;
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(j) any indebtedness of Sellers for money borrowed or
purchase money indebtedness;
(k) any liability, obligation or commitment of Sellers
for costs and expenses incurred in connection with the preparation and execution
of this Agreement and the Collateral Agreements or the consummation of the
transactions contemplated hereby and thereby;
(l) any liability, obligation or commitment of, or
undertaken by, Sellers pursuant to this Agreement or any other Collateral
Agreement;
(m) except as otherwise provided in this Agreement, any
liability, obligation or commitment to employees of Sellers (including any
liability for wages, salaries, bonuses, benefits or severance or under the WARN
Act) based upon their employment by either Seller prior to the Closing Date (in
the case of Closing Date Employees) or prior to the Conversion Date (in the case
of Toledo Employees), including with respect to employment termination in
connection with the consummation of this Agreement or the Conversion Plan
Agreement, other than Accrued Paid Time Off for Business Employees employed by
Buyer to the extent Buyer is reimbursed or credited by Sellers hereunder for
such Accrued Paid Time Off;
(n) except as otherwise expressly provided herein or in
any Collateral Agreement, any liability or obligation of Sellers arising from
any cause of action, litigation, suit, arbitration, proceeding or investigation
to the extent based upon any action or omission or alleged action or omission
occurring prior to the Closing, including any infringement or alleged
infringement of intellectual property rights of other Persons or any violation
or alleged violation of any Law (including those relating to protection of the
environment and food and drug regulation), in each case, to the extent such
action or omission or alleged action or omission occurs prior to the Closing;
(o) except as otherwise expressly provided herein or in
any Collateral Agreement, any liability or obligation of Sellers with respect to
the Tennessee Plant or the Martel Plant, including those relating to or arising
from any pre-Closing or post-Closing operations of such plants or any
pre-Closing operation of the Equipment or any shutdown or conversion of such
plants or the removal of Equipment therefrom;
(p) except as otherwise expressly provided herein or in
any Collateral Agreement, any liability, obligation or commitment relating to
the Toledo Plant arising prior to or on the Toledo Plant Closing Date (except to
the extent arising from Buyer's operation of the Toledo Plant on the Toledo
Plant Closing Date), including those relating to or arising from any operations
of, or the shutdown or conversion of, the Toledo Plant prior to or on the Toledo
Plant Closing Date (except to the extent arising from Buyer's operations of, or
shutdown or conversion of, the Toledo Plant on the Toledo Plant Closing Date);
and
(q) any liability, obligation or commitment in respect of
any Hazardous Materials located in, on or under the Toledo Plant at any time on
or prior to the Toledo Plant Closing Date, regardless of whether the release
thereof has then occurred or thereafter occurs (the "Excluded Environmental
Liabilities").
2.7 INTENTIONALLY BLANK. Section 2.7 is intentionally blank.
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2.8 INTENTIONALLY BLANK. Section 2.8 is intentionally blank.
2.9 CLOSING INVENTORY STATEMENT.
(a) The target inventory of Sellers for purposes of this
Agreement is $51,500,000. Within thirty (30) days following the Closing Date,
Sellers shall prepare and deliver to Buyer a statement (the "Closing Inventory
Statement") setting forth the type and value, as of the Closing Date, of the
Inventory transferred to Buyer on the Closing Date pursuant to Sections 2.1 and
2.3(a), which statement shall be derived from a physical taking of such
Inventory as of the Closing Date and shall be prepared in a manner consistent
with the standards (the "Inventory Standards") set forth on SCHEDULE 2.9(a).
Buyer and its representatives shall have such opportunity as Buyer reasonably
deems appropriate to observe the taking and reconciliation of such Inventory
(which may begin prior to the Closing Date) in connection with the preparation
of the Closing Inventory Statement. Buyer shall provide Sellers and their
accountants full access to the books and records, to any other information,
including working papers of its accountants, and to any employees of Buyer, in
each case as may be reasonably necessary for Sellers to prepare the Closing
Inventory Statement, to respond to the Buyer's Objection (as defined herein) and
to prepare materials for presentation to the CPA Firm (as defined herein) in
connection with the matters contemplated by Section 2.9(c).
(b) Buyer shall, within thirty (30) days after the
delivery by Sellers of the Closing Inventory Statement, complete its review
thereof. After delivery of the Closing Inventory Statement, Sellers shall
provide Buyer and its accountants full access to all books and records, to any
other information, including working papers of its accountants, and to any
employees of Seller, in each case used in the preparation of the Closing
Inventory Statement or as may otherwise be reasonably necessary for Buyer to
prepare the Buyer's Objection and to prepare materials for presentation to the
CPA Firm in connection with the matters contemplated by Section 2.9(c). The
Closing Inventory Statement shall be binding and conclusive upon, and deemed
accepted by, Buyer unless Buyer shall have notified Sellers in writing within
thirty (30) days after delivery of the Closing Inventory Statement of any
objection thereto (the "Buyer's Objection"). The Buyer's Objection shall set
forth a description of the basis of the Buyer's Objection and the adjustments to
the value of Inventory reflected on the Closing Inventory Statement that Buyer
believes should be made. Any items not disputed during the foregoing thirty (30)
day period shall be deemed to have been accepted by Buyer.
(c) If Sellers and Buyer are unable to resolve all of
their disputes with respect to the Closing Inventory Statement within thirty
(30) days following Sellers' receipt of the Buyer's Objection to such Closing
Inventory Statement pursuant to Section 2.9(b), they shall refer their remaining
differences to Ernst & Young or, if such firm declines to act or at such time
has a significant ongoing relationship with either Seller, Buyer or any of their
respective Affiliates, an internationally recognized firm of independent public
accountants as to which Sellers and Buyer mutually agree (the "CPA Firm") for
decision, which decision shall be made consistent with the Inventory Standards
within forty-five (45) days and shall be final and binding on the parties,
PROVIDED that the CPA Firm's determination as to any item set forth in Buyer's
Objection shall not be more beneficial to Sellers than the determination of that
item by Sellers in the Closing Inventory Statement or more beneficial to Buyer
than the determination of that item in Buyer's Objection. Any expenses relating
to the engagement of the CPA Firm shall be shared
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equally by Sellers, on one hand, and Buyer, on the other hand. Sellers and
Buyer shall each bear the fees of their respective auditors incurred in
connection with the determination and review of the Closing Inventory
Statement.
(d) The Closing Inventory Statement shall become final
and binding on the parties upon the earliest of (i) if no Buyer's Objection has
been given, the expiration of the period within which Buyer must make its
objection pursuant to Section 2.9(b) hereof, (ii) agreement in writing by
Sellers and Buyer that the Closing Inventory Statement, together with any
modifications thereto agreed to by Sellers and Buyer, shall be final and binding
and (iii) the date on which the CPA Firm shall issue its written determination
with respect to any dispute relating to such Closing Inventory Statement. The
Closing Inventory Statement, as submitted by Sellers if no timely Buyer's
Objection has been given or as adjusted pursuant to any agreement between the
parties or as determined pursuant to the decision of the CPA Firm, when final
and binding on all parties, is herein referred to as the "Final Closing
Inventory Statement."
(e) Within ten (10) Business Days following issuance of
the Final Closing Inventory Statement, the net adjustment payment payable
pursuant to this Section 2.9(e) (the "Adjustment Payment") and interest thereon
shall be paid by wire transfer of immediately available funds to a bank account
or bank accounts designated in writing by Sellers or Buyer, as the case may be;
PROVIDED, HOWEVER, that if the Adjustment Payment shall be payable by Sellers to
Buyer, in lieu of payment, Sellers may elect to credit the Adjustment Payment
against the initial payments required to be made by Buyer under the Co-Pack
Agreement; and PROVIDED, FURTHER, that if the Adjustment Payment shall be
payable by Buyer to Sellers, in lieu of payment, Buyer may elect to add such
payment to the payments due to Seller under the Co-Pack Agreement as if an
amount of Inventory equal to the Adjustment Payment were sold pursuant to the
Co-Pack Agreement. The Adjustment Payment shall be the difference, if any,
between (x) the value of Inventory, as reflected on the Final Closing Inventory
Statement, minus (y) $51,500,000. The Adjustment Payment shall be payable by
Buyer to Sellers, if positive, and by Sellers (who shall be jointly and
severally so obligated) to Buyer, if negative. The Adjustment Payment shall bear
interest from the Closing Date to the date of payment at the Closing Date
Interest Rate, which interest shall be calculated on the basis of a 365-day year
and the actual number of days elapsed and such interest shall be paid on the
same date and in the same manner as such Adjustment Payment, PROVIDED that such
interest shall not be imposed on Sellers if they elect to credit the Adjustment
Payment against the Co-Pack Agreement and shall not be imposed on Buyer if it
elects to add the Adjustment Payment to the Payments due under the Co-Pack
Agreement.
2.10 CONVERSION DATE INVENTORY.
(a) On the Conversion Date, General Mills shall sell,
convey, transfer and assign to Buyer, or cause its Affiliates to sell, convey,
transfer and assign to Buyer, all inventory (including raw materials, packaging
and work-in-process) held by General Mills for use of the Business (the
"Conversion Date Inventory"). Within thirty (30) days following the Conversion
Date, General Mills, on behalf of Sellers, shall prepare and deliver to Buyer a
statement setting forth the type and value of such Conversion Date Inventory, as
of the Conversion Date, to be transferred and assigned to Buyer on the
Conversion Date, which statement shall be derived from
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a physical taking of such Conversion Date Inventory as of the Conversion Date
and shall be prepared in a manner consistent with the Inventory Standards
(the "Conversion Date Inventory Statement"). Buyer and its representatives
shall have such opportunity as Buyer reasonably deems appropriate to observe
the taking and reconciliation of such Conversion Date Inventory (which may
begin prior to the Conversion Date) in connection with the preparation of the
Conversion Date Inventory Statement. Buyer shall provide General Mills and
its accountants full access to the books and records, to any other
information, including work papers of its accountants, and to any employees
of Buyer, in each case as may be reasonably necessary for General Mills to
prepare the Conversion Date Inventory Statement, to respond to the Buyer's
Conversion Date Objection (as defined herein) and to prepare materials for
presentation to the CPA Firm in connection with the matters contemplated by
Section 2.10(c).
(b) Buyer shall, within thirty (30) days after the
delivery by General Mills of the Conversion Date Inventory Statement, complete
its review thereof. After delivery of the Conversion Date Inventory Statement,
General Mills shall maintain and provide Buyer and its accountants full access
to all books and records, to any other information, including working papers of
its accountants, and to any employees of Sellers, in each case used in the
preparation of the Conversion Date Inventory Statement or as may otherwise be
reasonably necessary for Buyer to prepare the Buyer's Conversion Date Objection
and to prepare materials for presentation to the CPA Firm in connection with the
matters contemplated by Section 2.10(c). The Conversion Date Inventory Statement
shall be binding and conclusive upon, and deemed accepted by, Buyer unless Buyer
shall have notified General Mills in writing within thirty (30) days after
delivery of the Conversion Date Inventory Statement of any objection thereto
(the "Buyer's Conversion Date Objection"). The Buyer's Conversion Date Objection
shall set forth a description of the basis of the Buyer's Conversion Date
Objection and the adjustments to the value of such Conversion Date Inventory
reflected on the Conversion Date Inventory Statement that Buyer believes should
be made. Any items not disputed during the foregoing thirty (30) day period
shall be deemed to have been accepted by Buyer.
(c) If General Mills and Buyer are unable to resolve all
of their disputes with respect to the Conversion Date Inventory Statement within
thirty (30) days following General Mills' receipt of the Buyer's Conversion Date
Objection to such Conversion Date Inventory Statement pursuant to Section
2.10(b), they shall refer their remaining differences to the CPA Firm for
decision, which decision shall be made consistent with the Inventory Standards
within forty-five (45) days and shall be final and binding on the parties,
PROVIDED that the CPA Firm's determination as to any item set forth in Buyer's
Conversion Date Objection shall not be more beneficial to General Mills than the
determination of that item by General Mills in the Conversion Date Inventory
Statement or more beneficial to Buyer than the determination of that item in
Buyer's Conversion Date Objection. Any expenses relating to the engagement of
the CPA Firm shall be shared equally by General Mills, on the one hand, and
Buyer, on the other hand. General Mills and Buyer shall each bear the fees of
their respective auditors incurred in connection with the determination and
review of the Conversion Date Inventory Statement.
(d) The Conversion Date Inventory Statement shall become
final and binding on the parties upon the earliest of (i) if no Buyer's
Conversion Date Objection has been given, the expiration of the period within
which Buyer must make its objection pursuant to Section 2.10(b) hereof, (ii)
agreement in writing by General Mills and Buyer that the Conversion Date
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Inventory Statement, together with any modifications thereto agreed to by
General Mills and Buyer, shall be final and binding and (iii) the date on which
the CPA Firm shall issue its written determination with respect to any dispute
relating to such Conversion Date Inventory Statement. The Conversion Date
Inventory Statement, as submitted by General Mills if no timely Buyer's
Conversion Date Objection has been given or as adjusted pursuant to any
agreement between the parties or as determined pursuant to the decision of the
CPA Firm, when final and binding on all parties, is herein referred to as the
"Final Conversion Date Inventory Statement."
(e) Within ten (10) Business Days following issuance of
the Final Conversion Date Inventory Statement, the payment payable pursuant to
this Section 2.10(e) (the "Conversion Date Payment") and interest thereon shall
be paid by Buyer to General Mills by wire transfer of immediately available
funds to a bank account or bank accounts designated in writing by General Mills.
The Conversion Date Payment shall be equal to the value of the Conversion Date
Inventory as reflected on the Final Conversion Date Inventory Statement. The
Conversion Date Payment shall bear interest from the Conversion Date to the date
of payment at the Conversion Date Interest Rate, which interest shall be
calculated on the basis of a 365-day year and the actual number of days elapsed
and such interest shall be paid on the same date and in the same manner as such
Conversion Date Payment.
2.11 CONTRACT PERFORMANCE. With respect to any Assigned Contracts
providing for payments based upon performance over a time period that
includes but does not end on the Closing Date, such payments shall be
prorated as between Sellers, on the one hand, and Buyer, on the other hand,
based on the number of days in such period occurring on or prior to the
Closing Date and the number of days occurring after the Closing Date;
PROVIDED, HOWEVER, that in the event that performance under any such Assigned
Contracts is to be effected disproportionately over the period including but
not ending on the Closing Date, payments with respect to such Assigned
Contracts shall be prorated as between Sellers, on the one hand, and Buyer,
on the other hand, based on the expected portion of performance to be
effected by Sellers, on the one hand, and Buyer, on the other hand; PROVIDED,
FURTHER, HOWEVER, that Sellers shall be responsible for any payments for
performance required to be performed as of the Closing with respect to which
Sellers shall have underperformed as of Closing. The provisions of this
Section 2.11 shall apply equally to any Toledo Plant Assigned Contracts
providing for payments based upon performance over a time period that
includes but does not end on the Toledo Plant Closing Date except that, to
the extent applied to Toledo Plant Assigned Contracts, references in this
Section 2.11 to the Assigned Contracts, Closing Date and Closing shall
instead be deemed references to the Toledo Plant Assigned Contracts, Toledo
Plant Closing Date and Toledo Plant Closing, respectively. The provisions of
this Section 2.11 shall apply equally to the portions of the Dividable
Contracts transferred to Buyer that provide for payments based upon
performance over a time period that includes but does not end on the date of
transfer of such portions to Buyer except that, to the extent applied to such
portions of such Dividable Contracts, references in this Section 2.11 to the
Assigned Contracts, Closing Date and Closing shall be deemed references to
such portions of such Dividable Contracts, the date of transfer of such
portions to Buyer and the time of transfer of such portions to Buyer,
respectively. The provisions of this Section 2.11 shall apply equally to the
portions of the Toledo Plant Dividable Contracts transferred to Buyer that
provide for payments based upon performance over a time period that includes
but does not end on the date of transfer of such portions to Buyer except
that, to the extent applied to such portions of such Toledo Plant Dividable
Contracts, references in this Section 2.11 to the
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Assigned Contracts, Closing Date and Closing shall be deemed references to
such portions of such Toledo Plant Dividable Contracts, the date of transfer
of such portions to Buyer and the time of transfer of such portions to Buyer,
respectively.
2.12 NONASSIGNABILITY OF CONTRACTS.
(a) Notwithstanding anything to the contrary contained in
this Agreement, to the extent that the sale, assignment, transfer, conveyance or
delivery to Buyer of any Assigned Contract or any claim or right or any benefit
arising thereunder or resulting therefrom is prohibited by applicable Law or
would require any governmental or third-party authorizations, approvals,
consents or waivers, and such authorizations, approvals, consents or waivers
shall not have been obtained prior to the Closing, the Closing shall (subject to
the satisfaction or waiver of the conditions set forth in Article 8, if
applicable) proceed without the sale, assignment, sublease, transfer, conveyance
or delivery of such Assigned Contract and this Agreement shall not constitute a
sale, assignment, sublease, transfer, conveyance or delivery of such Assigned
Contract or an attempt thereof. In the event that the Closing proceeds without
the transfer, sublease or assignment of such Assigned Contract, then following
the Closing, the parties shall use their reasonable best efforts, and cooperate
with each other, to obtain promptly such authorizations, approvals, consents or
waivers; PROVIDED, HOWEVER, that neither Sellers nor Buyer shall be required to
pay any consideration for any such authorization, approval, consent or waiver.
Pending such authorization, approval, consent or waiver, the parties shall
cooperate with each other in any mutually agreeable, reasonable and lawful
arrangements (to the extent any such arrangements are feasible) designed to
provide to Buyer the benefits of such Assigned Contract and to Sellers the
benefits that they would have obtained had the Assigned Contract been conveyed
to Buyer at the Closing. To the extent that Buyer is provided the benefits
pursuant to this Section 2.12(a) of any Assigned Contract, Buyer shall perform
for the benefit of the other Persons that are parties thereto the obligations of
Sellers thereunder and any related liabilities that, but for the lack of an
authorization, approval, consent or waiver to assign such liabilities to Buyer,
would be Assumed Liabilities. Once authorization, approval, consent or waiver
for the sale, assignment, sublease, transfer, conveyance or delivery of any such
Assigned Contract not sold, assigned, subleased, transferred, conveyed or
delivered at the Closing is obtained, Sellers shall assign, transfer, convey and
deliver such Assigned Contract to Buyer at no additional cost to Buyer. To the
extent that any such Assigned Contract cannot be transferred following the
Closing pursuant to this Section 2.12(a), then Buyer and Sellers shall cooperate
reasonably in an effort to find and enter into mutually agreeable arrangements
(including subleasing, sublicensing or subcontracting), if feasible, to provide
the parties the economic (taking into account Tax costs and benefits) and
operational equivalent, to the extent permitted, of obtaining such
authorization, approval, consent or waiver and the performance by Buyer of the
obligations thereunder. Sellers shall hold in trust for and pay to Buyer
promptly upon receipt thereof, all income, proceeds and other monies received by
Sellers in respect of Buyer's performance of any such Assigned Contract (net of
any Taxes and any other costs imposed upon Sellers) in connection with the
arrangements under this Section 2.12(a). Nothing stated in this Section 2.12
shall modify in any respect the conditions set forth in Article 8.
(b) If any such Assigned Contract is sold, assigned,
transferred, conveyed to Buyer at or after the Closing, Buyer shall use its
reasonable best efforts thereafter to assist (including providing to Sellers
access to any applicable information and records) in the transfer
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to Sellers of such portion, if any, of any such Assigned Contract or of the
benefits thereof, that does not relate to the Business on terms that, taken as a
whole, for all such transfers are not materially less advantageous to Sellers
than would exist if such transferred portions were stand alone contracts. Upon
any such transfer, Sellers shall assume any liabilities and obligations related
to the transferred portion of such Assigned Contract.
(c) To the extent the transfer to Sellers of such portion
of any such Assigned Contract that does not relate to the Business pursuant to
Section 2.12(b) is prohibited by applicable Law or would require any
governmental or third-party authorizations, approvals, consents or waivers, the
parties shall use their reasonable best efforts, and cooperate with each other,
to obtain promptly such authorizations, approvals, consents or waivers;
PROVIDED, HOWEVER, that neither Sellers nor Buyer shall be required to pay any
consideration for any such authorization, approval, consent or waiver. Pending
such authorization, approval, consent or waiver, the parties shall cooperate
with each other in any mutually agreeable, reasonable and lawful arrangements
(to the extent any such arrangements are feasible) designed to provide to
Sellers the benefits of such portion of any such Assigned Contract that does not
relate to the Business. To the extent that Sellers are provided the benefits
pursuant to this Section 2.12(c) of any portion of any such Assigned Contract,
Sellers shall perform for the benefit of the other Persons that are parties
thereto the obligations of Buyer thereunder and any related liabilities that,
but for the lack of an authorization, approval, consent or waiver to assign such
liabilities to Sellers, would have become liabilities of Sellers by virtue of
the transfer of such portion of such Assigned Contract. Once authorization,
approval, consent or waiver for the transfer of any such portion of any such
Assigned Contract is obtained, Buyer shall transfer such portion of any such
Assigned Contract to Sellers at no additional cost to Sellers. To the extent
that any such portion of any such Assigned Contract cannot be transferred
pursuant to this Section 2.12(c) to Sellers, Buyer and Sellers shall cooperate
reasonably in an effort to find and enter into mutually agreeable arrangements
(including subleasing, sublicensing or subcontracting), if feasible, to provide
the parties the economic (taking into account Tax costs and benefits) and
operational equivalent, to the extent permitted, of obtaining such
authorization, approval, consent or waiver and the performance by Sellers of the
obligations thereunder. Buyer shall hold in trust for and pay to Sellers
promptly upon receipt thereof, all income, proceeds and other monies received by
Buyer in respect of Sellers' performance of any such portion of any such
Assigned Contract (net of any Taxes and any other costs imposed upon Buyer) in
connection with the arrangements under this Section 2.12(c).
(d) The provisions of this Section 2.12 shall apply
equally to the Toledo Plant Assigned Contracts except that, to the extent
applied to Toledo Plant Assigned Contracts, references in this Section 2.12 to
the Assigned Contracts, Closing Date, Closing and Business shall instead be
deemed references to the Toledo Plant Assigned Contracts, Toledo Plant Closing
Date, Toledo Plant Closing and Toledo Plant, respectively.
2.13 DIVIDABLE CONTRACTS.
(a) Sellers shall use their reasonable best efforts to
assist in the transfer to Buyer of such portion of each Dividable Contract or
the benefits thereof that relates to the Business on terms that, taken as a
whole, for all such transfers are not materially less advantageous to Buyer than
would exist if such transferred portions were stand alone contracts.
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Upon such transfer, Buyer shall assume any liabilities and obligations
related to the transferred portion of such Dividable Contract. Reasonable
best efforts shall include a written reasoned recommendation in favor of such
transfer to the customer or supplier that is the other party to such
Dividable Contract, the provision to Buyer of all information and records
available to Sellers relating to customers or suppliers, as the case may be,
with respect to such portion of such Dividable Contract, the provision to
Buyer of available customer or supplier contact data and information on the
customer or supplier decision maker(s) with respect to such portion of such
Dividable Contract and, if Buyer so requests in accordance with reasonable
commercial practice, the organization of joint visits with Buyer and Sellers
to such customers or suppliers, subject, in each case, to any applicable
confidentiality agreements or obligations of Sellers or any of their
Affiliates.
(b) Notwithstanding anything to the contrary contained in
this Agreement, to the extent that the transfer to Buyer of the portion of any
Dividable Contract that relates to the Business or any claim or right or any
benefit arising thereunder or resulting therefrom, is prohibited by applicable
Law or would require any governmental or third-party authorizations, approvals,
consents or waivers, and such authorizations, approvals, consents or waivers
shall not have been obtained prior to the Closing, the Closing shall (subject to
the satisfaction or waiver of the conditions set forth in Article 8) proceed
without the transfer of any such portion of any such Dividable Contract and this
Agreement shall not constitute a transfer of such portion of any such Dividable
Contract or an attempt thereof. In the event that the Closing proceeds without
the transfer of any such portion of any such Dividable Contract, then following
the Closing, the parties shall use their reasonable best efforts, and cooperate
with each other, to obtain promptly such authorizations, approvals, consents or
waivers; PROVIDED, HOWEVER, that neither Sellers nor Buyer shall be required to
pay any consideration for any such authorization, approval, consent or waiver.
Pending such authorization, approval, consent or waiver, the parties shall
cooperate with each other in any mutually agreeable, reasonable and lawful
arrangements (to the extent any such arrangements are feasible) designed to
provide to Buyer the benefits of such portion of any such Dividable Contract,
with respect to the portion of such Dividable Contract applicable to the
Business, and to Sellers the benefits that they would have obtained had such
portion of such Dividable Contract been transferred to Buyer at the Closing. To
the extent that Buyer is provided the benefits pursuant to this Section 2.13 of
any portion of any such Dividable Contract, Buyer shall perform for the benefit
of the other Persons that are parties thereto the obligations of Sellers
thereunder and any related liabilities that, but for the lack of an
authorization, approval, consent or waiver to assign such liabilities to Buyer,
would have become liabilities of Buyer by virtue of the transfer of such portion
of such Dividable Contract. Once authorization, approval, consent or waiver for
the transfer of any such portion of any such Dividable Contract not transferred
at the Closing is obtained, Sellers shall transfer such portion of any such
Dividable Contract to Buyer at no additional cost to Buyer. To the extent that
any such portion of any such Dividable Contract cannot be transferred following
the Closing pursuant to this Section 2.13, then Buyer and Sellers shall
cooperate reasonably in an effort to find and enter into mutually agreeable
arrangements (including subleasing, sublicensing or subcontracting), if
feasible, to provide the parties the economic (taking into account Tax costs and
benefits) and operational equivalent, to the extent permitted, of obtaining such
authorization, approval, consent or waiver and the performance by Buyer of the
obligations thereunder. Sellers shall hold in trust for and pay to Buyer
promptly upon receipt thereof, all income, proceeds and other monies received by
Sellers in respect of Buyer's performance of any such portion of any
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such Dividable Contract (net of any Taxes and any other costs imposed upon
Sellers) in connection with the arrangements under this Section 2.13. Nothing
stated in this Section 2.13 shall modify in any respect the conditions set
forth in Article 8.
(c) The provisions of this Section 2.13 shall apply
equally to the Toledo Plant Dividable Contracts except that, to the extent
applied to Toledo Plant Dividable Contracts, references in this Section 2.13 to
the Dividable Contracts, Closing Date, Closing and Business shall instead be
deemed references to the Toledo Plant Dividable Contracts, Toledo Plant Closing
Date, Toledo Plant Closing and Toledo Plant, respectively.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF EACH SELLER
Each Seller, severally, for itself hereby represents and warrants to Buyer as
follows:
3.1 SELLER'S AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Such Seller is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware, and such
Seller further represents and warrants that Windmill is a corporation duly
organized, validly existing and in good standing under the laws of California.
Such Seller (and, to the extent applicable, each of such Seller's Subsidiaries)
has all requisite corporate power and authority to enter into this Agreement and
the Collateral Agreements, as applicable, to consummate the transactions
contemplated hereby and thereby, to own the Assets or the Other Assets owned by
it and to carry on the portion of the Business and each Other Business presently
conducted by it, and such Seller further represents and warrants that Windmill
has all requisite corporate power and authority to own the assets owned by
Windmill. Each Seller (or Seller's applicable Subsidiaries) is duly qualified or
licensed to do business and is in good standing in each jurisdiction in which
Assets or Other Assets owned by it or the Business and each Other Business
otherwise conducted by it (and such Seller further represents and warrants that
Windmill is duly qualified or licensed to do business and is in good standing in
each jurisdiction in which its ownership of assets or conduct of business) would
legally require such qualification or license, except where the failure to be so
qualified or licensed or in good standing, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse Effect. All
corporate acts and other proceedings required to be taken by such Seller (or
Seller's applicable Subsidiaries) to authorize the execution, delivery and
performance of this Agreement and the Collateral Agreements and the consummation
of the transactions contemplated hereby and thereby have been (or, in the case
of the applicable Subsidiaries, will be) duly and properly taken. This Agreement
has been (and the Collateral Agreements, as applicable, when required hereunder
to be executed and delivered will be) duly executed and delivered by such Seller
(or Seller's applicable Subsidiaries) and, assuming the due execution hereof
(and thereof) by Buyer, this Agreement constitutes (and each of the Collateral
Agreements, as applicable, when executed and delivered, will constitute) the
valid and binding obligation of such Seller (or Seller's applicable
Subsidiaries) enforceable against such Seller (or Seller's applicable
Subsidiaries) in accordance with its terms, except as enforcement hereof or
thereof may be limited by applicable bankruptcy, insolvency or other similar
Laws affecting creditors' rights generally and by general equitable principles.
Such Seller further represents and
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warrants that such Seller has delivered to Buyer true and correct copies of
the charter, bylaws, minutes of all shareholder, board of director and
committee meetings and written actions in lieu thereof, and stock records of
Windmill, together with a list of all current directors and officers thereof.
(b) The execution, delivery and performance by such
Seller (or Seller's applicable Subsidiaries) of this Agreement and the
Collateral Agreements, as applicable, will not (i) violate or conflict with any
provision of such Seller's (or such Subsidiary's) certificate of incorporation
or bylaws; (ii) violate or conflict with any provision of, or be an event that
is (or with the passage of time will result in) a violation of, or require any
notice, consent or increase in payments under, or result in the acceleration,
termination, modification or cancellation of or entitle any party to accelerate,
terminate, modify or cancel (whether after the giving of notice or lapse of time
or both) any obligation under, or result in the imposition of any lien upon or
the creation of a security interest in any of the Assets or the Other Assets
pursuant to, any Assigned Contract, Toledo Plant Assigned Contract, Purchase
Order, Lien, lease, agreement, instrument, order, arbitration award, judgment,
injunction, order or decree or any governmental approval, license or permit to
which such Seller (or Seller's applicable Subsidiaries) is a party or to or by
which it or any Assets or Other Assets owned by it is subject or bound; or (iii)
violate or conflict with any statute, rule or regulation of any Governmental
Entity applicable to such Seller or any of its properties or assets or any other
material restriction of any kind or character to which such Seller (or Seller's
applicable Subsidiaries) or any Assets or Other Assets owned by it is subject,
except, in the case of clauses (ii) and (iii), (A) for violations,
accelerations, terminations, modifications, cancellations, notices, consents,
impositions, conflicts, restrictions or breaches that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect or
prohibit or materially impair the ability of such Seller (or Seller's applicable
Subsidiaries) to consummate the transactions hereunder, or (B) compliance with
and filings under the HSR Act, unless an exemption under the HSR Act and its
regulations applies.
3.2 TITLE TO TANGIBLE ASSETS. Except with respect to the Toledo Plant
as set forth in Section 3.19, such Seller (or Seller's applicable Subsidiaries)
has good and marketable title to the tangible Assets and Other Assets purported
to be owned by such Seller (or Seller's applicable Subsidiaries), free and clear
of all mortgages, liens, security interests or encumbrances of any nature
whatsoever ("Liens"), except inchoate mechanics', carriers', workmen's,
repairmen's or other like Liens that are not delinquent arising or incurred in
the ordinary course of business or liens for Taxes that are not due and payable
or that are due but not delinquent (collectively, the "Permitted Liens"). All of
the Stock is validly issued, fully paid and nonassessable and was not issued in
violation of any preemptive rights. There is a total of 8,000 shares of Series A
Common Stock and Series B Common Stock of Windmill outstanding, constituting the
only outstanding capital stock of Windmill. No options, warrants or other rights
to purchase capital stock of Windmill or of any securities convertible into or
exchangeable for capital stock of Windmill, and no securities convertible for or
exchangeable into capital stock of Windmill, are outstanding. There are no
outstanding rights to purchase outstanding stock of Windmill other than this
Agreement and such Seller (and any applicable Subsidiary of Seller) has not
granted any voting rights with respect to the Stock. As of the Closing Date, all
of the Stock shall be owned, directly or indirectly, by such Seller (or Seller's
applicable Subsidiaries), free and clear of any Liens except Permitted Liens.
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3.3 INTELLECTUAL PROPERTY.
(a) Except as disclosed on SCHEDULE 3.3(a), such Seller
(or Seller's applicable Subsidiaries), directly or indirectly, is the registered
owner of the Assigned Trademarks, Assigned Patents, other Intellectual Property
and Licensed Trademarks and Patents and Windmill Intellectual Property that are
purported to be owned by such Seller (or Seller's applicable Subsidiaries), and
has good and marketable title to such Assigned Trademarks, Assigned Patents,
other Intellectual Property and Licensed Trademarks and Patents and Windmill
Intellectual Property. Except as disclosed on SCHEDULE 3.3(a), the Licensed
Trademarks and Patents and Intellectual Property and Windmill Intellectual
Property purported to be owned by such Seller (or Seller's applicable
Subsidiaries) are free and clear of all material restrictions, security
interests, court orders, injunctions, decrees, writs or other Liens, whether by
written agreement or otherwise. Except as disclosed on SCHEDULE 3.3(a), no
Person other than such Seller (or Seller's applicable Subsidiaries) owns or has
been granted any material right in the Intellectual Property and Windmill
Intellectual Property purported to be owned by such Seller (or Seller's
applicable Subsidiaries) or, to the extent it would interfere with Sellers'
license thereof to Buyer under the Trademark License Agreements, the Retail
Patent and Technology License Agreement or the Foodservice Patent and Technology
License Agreement or adversely affect the value of such license, the Licensed
Trademarks and Patents. Except as to infirmities arising from non-use as
disclosed on SCHEDULE 3.3(a), all Assigned Trademarks, Assigned Patents, other
Intellectual Property and Licensed Trademarks and Patents and Windmill
Intellectual Property purported to be owned by such Seller (or Seller's
applicable Subsidiaries) are subsisting and such Seller (or Seller's applicable
Subsidiary) has taken all action reasonably necessary to maintain and protect
the Intellectual Property and the Licensed Trademarks and Patents and Windmill
Intellectual Property purported to be owned by such Seller (or Seller's
applicable Subsidiaries). Except as disclosed on SCHEDULE 3.3(a), the
"Pillsbury," "Hungry Jack," "Martha White" and "Doughboy" trademarks, and the
"Barrelhead" logo, and trade secrets included within the Intellectual Property
and Windmill Intellectual Property, in each case purported to be owned by such
Seller (or Seller's applicable Subsidiaries), are valid, and all other Assigned
Trademarks, Assigned Patents, other Intellectual Property and Licensed
Trademarks and Patents and Windmill Intellectual Property purported to be owned
by such Seller (or Seller's applicable Subsidiaries) are, to such Seller's
Knowledge, valid. Except as disclosed on SCHEDULE 3.3(a), there are no actions
that must be taken within one hundred fifty (150) days after the date hereof,
including the payment of any registration, maintenance, annuity, or renewal fees
or the filing of any responses to PTO actions, in order to register, maintain or
renew any of the Assigned Trademarks, Assigned Patents or Windmill Intellectual
Property. Except as disclosed on SCHEDULE 3.3(a), the use of the "Pillsbury,"
"Hungry Jack," "Martha White" and "Doughboy" trademarks, and the "Barrelhead"
logo, and trade secrets included within the Intellectual Property, in each case
purported to be owned by such Seller (or Seller's applicable Subsidiaries), and,
to such Seller's Knowledge, the use of all other Intellectual Property and the
Licensed Trademarks and Patents and Windmill Intellectual Property, in each case
purported to be owned by such Seller (or Seller's applicable Subsidiaries), in
the Business and each Other Business and the conduct of the Business and each
Other Business as presently conducted by such Seller do not infringe on or
violate the rights of any other party in a manner that would have a Material
Adverse Effect. Except as disclosed on SCHEDULE 3.3(a), such Seller has not
received any written claim or notice alleging any such infringement or violation
during the past 24 months (including any written claim that such Seller must
license or refrain from using the intellectual property
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rights of any third party) nor, to such Seller's Knowledge, is there any
threatened claim or any reasonable basis for any such claim. Except as set forth
on SCHEDULE 3.3(a), the Assigned Trademarks, Assigned Patents, other
Intellectual Property and Licensed Trademarks and Patents and Windmill
Intellectual Property are all of the intellectual property used in the Business
as it is currently conducted by Sellers, subject to any limits on Territory or
distribution channels contemplated by the Trademark License Agreements, the
Retail Patent and Technology License Agreement and the Foodservice Patent and
Technology License Agreement, and subject to the Martha White Trademark License
Agreement, the Hungry Jack Trademark License Agreement and the Grant Back Patent
and Technology License Agreement; PROVIDED, HOWEVER, that any intellectual
property provided to Buyer pursuant to the Transition Services Agreement or
Co-Pack Agreement is being provided to Buyer only for the applicable term of the
Transition Services Agreement or Co-Pack Agreement, as the case may be.
(b) Except as specified on SCHEDULE 3.3(b), there is no
litigation or proceeding (judicial or administrative) pending, or, to such
Seller's Knowledge, threatened by or against such Seller or any of its
applicable Subsidiaries challenging the registration, grant, validity,
enforceability or use of the Intellectual Property or Windmill Intellectual
Property, or, to the extent it would in any way interfere with such Seller's or
any of its applicable Subsidiaries' license of the Licensed Trademarks and
Patents to Buyer under the Trademark License Agreements, the Retail Patent and
Technology License Agreement or the Foodservice Patent and Technology License
Agreement or adversely affect the value of the license thereof to Buyer,
challenging the registration, grant, validity, enforceability or use of the
Licensed Trademarks and Patents; and no litigation or proceeding is otherwise
pending by or against such Seller or any of its applicable Subsidiaries alleging
infringement or violation with respect to the use, or challenging the validity
or enforceability, of any of the Intellectual Property or Windmill Intellectual
Property or, to the extent it would interfere with such Seller's or any of its
applicable Subsidiaries' license thereof to Buyer or adversely affect the value
of that license, the Licensed Trademarks and Patents, or with regard to the
infringement of or violation by the Business or each Other Business of any
rights of third parties, nor, to such Seller's Knowledge, is there any such
litigation or proceeding threatened or any reasonable basis for any such
litigation or proceeding. To such Seller's Knowledge, no Person is infringing
upon or violating the Intellectual Property or Windmill Intellectual Property or
infringing upon or violating the Licensed Trademarks and Patents in a manner
that would adversely affect the value of the license to Buyer of the Licensed
Trademarks and Patents. Except in connection with co-manufacturing or other
agreements relating to the manufacture of the Products, and except as specified
on SCHEDULE 3.3(b), no Person has been granted any license or other right or
interest by such Seller to any of the Intellectual Property or Windmill
Intellectual Property or to the Licensed Trademarks and Patents that would be
materially inconsistent with or in any way materially interfere with or impair
Buyer's use thereof or the transactions contemplated by this Agreement and no
Person has been granted any license to or other right or interest by such Seller
or any of its applicable Subsidiaries in any Assigned Trademarks, Assigned
Patents or Windmill Intellectual Property.
3.4 ACTIONS AND PROCEEDINGS. Except as set forth on SCHEDULE 3.4, there
are no (a) outstanding judgments, orders, writs, injunctions or decrees of any
court, other Governmental Entity or arbitration tribunal relating to the
Business, each Other Business, the Assets, the Other Assets, any Product or any
Other Product that has had or would reasonably be expected to have a
-35-
Material Adverse Effect, or to prohibit or materially impair the ability of
such Seller to consummate the transactions hereunder or (b) actions, suits,
claims or legal, administrative or arbitration proceedings or investigations
pending or, to such Seller's Knowledge, threatened against such Seller (or
its applicable Subsidiaries) which relate to the Business, each Other
Business, the Assets, the Other Assets, any Product or any Other Product or
which seek any injunctive relief that would reasonably be expected to have a
Material Adverse Effect or prohibit or materially impair the ability of such
Seller to consummate the transactions hereunder. To such Seller's Knowledge,
there are no investigations by any Governmental Entity pending or threatened
which relate to the Business, each Other Business, the Assets, the Other
Assets, any Product or any Other Product.
3.5 CONTRACTS. Such Seller has delivered to Buyer current and complete
copies of the documents constituting all Contracts to which such Seller (or its
applicable Subsidiaries) is subject (and summaries of oral Contracts). Except
for such Contracts, there are no contracts or agreements (written or verbal)
exclusively or primarily relating to the Business or relating to the Toledo
Plant: (a) involving annual payments in excess of $100,000, (b) with a term in
excess of one year, (c) that constitute a joint venture or partnership, (d)
which are terminable by, or result in materially increased payments or
obligations to, the other party upon assignment to Buyer, (e) that are a lease
or sublease of any real property or material personal property, (f) with any
officer, director or employee of such Seller or any Affiliate of such Seller,
(g) that are a private label, supply, co-pack, broker, advertising, promotional
or marketing agreement, (h) that are requirements contracts, sole source
contracts or otherwise provide for exclusivity, (i) that grant a license by or
to Seller (or its applicable Subsidiaries), (j) with any Governmental Entity or
contractor or subcontractor to a Governmental Entity, (k) that are otherwise
material to the Business and entered into not in the ordinary course and (l)
that are otherwise material to the Toledo Plant. Except as otherwise specified
on SCHEDULE 3.5, each Contract and each Purchase Order, whether or not
constituting a Contract, is a valid and binding obligation of such Seller (or
its applicable Subsidiaries), to the extent such Seller (or its applicable
Subsidiaries) is a party thereto, and, to such Seller's Knowledge, of each other
party thereto in accordance with its respective terms, subject to bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and similar Laws
of general applicability relating to or affecting creditors' rights and to
general equity principles. Such Seller or one of its Subsidiaries has performed
all obligations required to be performed by it to date under such Contracts or
Purchase Orders, and neither such Seller or any of its Subsidiaries, nor, to
such Seller's Knowledge, any other party to such Contracts or Purchase Orders is
(with or without the lapse of time or the giving of notice, or both) in breach
or default thereunder, except for failures to perform or breaches and defaults
that, individually or in the aggregate, would not reasonably be expected to have
a Material Adverse Effect or prohibit or materially impair the ability of such
Seller to consummate the transactions hereunder. Except as set forth in SCHEDULE
3.5, neither such Seller nor any of its applicable Subsidiaries is prohibited or
limited by any contract or other agreement from using, manufacturing, producing,
packaging or selling the Inventory, Conversion Date Inventory or any Product and
is restricted by agreement or otherwise as to competition with respect to the
Business, including as to the geographical area in which it may sell Inventory,
Conversion Date Inventory or Products or the type of products relating to the
Business that it may sell, except for restrictions that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect,
nor is such Seller or any of its applicable Subsidiaries subject to any such
agreement with respect to any Other Business, Other Business Inventory or Other
Products
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that would be binding on Buyer as a result of the transactions contemplated
hereby, except for restrictions that, individually or in the aggregate, would
not reasonably be expected to have a Material Adverse Effect.
3.6 COMPLIANCE WITH APPLICABLE LAWS.
(a) Except as disclosed on SCHEDULE 3.6, since January 1,
1999, the Business has been conducted in compliance with all applicable
statutes, laws, ordinances, rules, orders and regulations of all Governmental
Entities (including the Food, Drug and Cosmetics Act and those relating to
environmental protection and occupational safety and health) (collectively,
"Laws" and individually a "Law"), except for any such noncompliance as would
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect or prohibit or materially impair the ability of such Seller to
consummate the transactions hereunder. Except as set forth in SCHEDULE 3.6, all
governmental approvals, permits and licenses required to conduct the Business
have been obtained and are in full force and effect and are being complied with
in all respects except for such failures to have approvals, permits and licenses
or such non-compliance which, individually or in the aggregate, would not have a
Material Adverse Effect.
(b) The Internal Revenue Service has issued a favorable
determination letter with respect to the Retirement Plan of General Mills, Inc.
and the Bakery, Confectionary, Tobacco and Grain Millers (BCTGM) (the "General
Mills Toledo Plan") and the related trust that has not been revoked, and to such
Seller's Knowledge, there are no existing circumstances, and no events have
occurred, that could adversely affect the qualified status of the plan or the
related trust under Section 401(a) of the Code.
3.7 BROKERS. There is no broker or other Person who would have any
valid claim against Buyer for a finder's fee or broker's fee or commission in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding or action by or on behalf of such Seller.
Such Seller shall be solely responsible for all fees and expenses of Greenhill &
Co. LLC and any other broker, finder or other Person engaged by or on behalf of
it or otherwise claiming through it in connection with the transactions
contemplated by this Agreement.
3.8 INVENTORY. At the Closing or the Conversion Date, as applicable,
the Inventory, the Other Business Inventory and the Conversion Date Inventory,
respectively, will (a) be current, non-obsolete, neither damaged nor defective,
saleable in the ordinary course and merchantable and fit for the purpose for
which it was procured or manufactured, and (B) meet applicable manufacturing
specifications and be suitable for use in the Business or each Other Business,
as applicable. Without limiting the foregoing, at such dates, none of the
Inventory, the Other Business Inventory or the Conversion Date Inventory will be
defective, infested, adulterated or otherwise misbranded (within the meaning of
the Food, Drug and Cosmetics Act or within the meaning of any other applicable
food and drug Law), improperly packed or stored or physically damaged, bear
product expiration code dates on or prior to the Closing Date or the Conversion
Date, as applicable, or on or prior to the date such Inventory, Other Business
Inventory or Conversion Date Inventory is expected to be sold or used in the
ordinary course of business or constitute articles which may not, under the
provisions of the Food, Drug and Cosmetics Act, be introduced into interstate
commerce. At the Closing, the Inventory will be at
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levels sufficient for Buyer to conduct the Business in the ordinary course
consistent with past practice, taking into account the arrangements under
this Agreement and the Collateral Agreements, including the Co-Pack
Agreement. Since January 1, 1999, such Seller has purchased Inventory in the
ordinary course and in all material respects consistent with such Seller's
past practices.
3.9 RECENT EVENTS. Except as disclosed in SCHEDULE 3.9, from June 30,
2000 to the date hereof, such Seller (and each applicable Subsidiary of Seller)
has conducted the Business conducted by it in the ordinary and usual course and
has not, with respect to the Business, the Toledo Plant or each Other Business:
(a) sold, assigned, pledged, granted a security interest in, or otherwise
transferred or disposed of any of the assets used in the Business or each Other
Business that, but for any disposition, would constitute Assets or Other Assets,
other than sales in the ordinary course of business of finished goods inventory,
dispositions of equipment that is obsolete and Permitted Liens; (b) terminated
or materially amended any contract or agreement that is material to the
Business, taken as a whole; (c) suffered any material damage, destruction or
other casualty loss (whether or not covered by insurance), and there has been no
other condition, circumstance, event or occurrence which would be reasonably
likely to have a Material Adverse Effect; (d) made any change in its accounting
methods or principles applicable to the Business; (e) made any material change
in its practices with respect to the manner and timing of payment of trade
payables relating to the Business or the collection of receivables relating to
the Business; (f) entered into any agreement or arrangement relating to the
Business or the Toledo Plant, other than with respect to the Excluded Assets,
with any Affiliate of such Seller; (g) made any material change in the selling,
pricing, advertising or promotional practices of the Business inconsistent with
prior practice; (h) increased or decreased in any material respects the total
number of Business Employees or increased the compensation, bonuses or benefits
payable or to become payable to the Business Employees except for such increases
in the ordinary course of business consistent with past practice; (i) sold,
assigned, pledged, granted a security interest in, or otherwise transferred or
disposed of any of the Windmill Intellectual Property or assets that, but for
such disposition, would constitute Windmill Intellectual Property; or (j)
entered into any agreement to do any of the foregoing.
3.10 LIABILITIES. To such Seller's Knowledge, such Seller has no
liabilities with respect to which Buyer will become liable hereunder, except for
the Assumed Liabilities.
3.11 FINANCIAL INFORMATION. SCHEDULE 3.11 sets forth (1) the unaudited
combined statements of net assets of the Pillsbury Foodservice Business and the
Pillsbury Retail Business as of each of June 30, 2000 and 2001, (2) the
unaudited combined statements of net assets to be sold hereunder of the
Pillsbury Foodservice Business and the Pillsbury Retail Business and certain
assets to be sold hereunder by General Mills as of June 30, 2001, (3) the
unaudited statements of direct earnings before interest and taxes of each of the
Pillsbury Foodservice Business and the Pillsbury Retail Business for the six
months ended June 30, 2001, (4) the unaudited statements of direct earnings
before interest and taxes of each of the Pillsbury Foodservice Business and the
Pillsbury Retail Business for the three and twelve months ended March 31, 2001,
and (5) the unaudited combined statements of direct earnings before interest and
taxes of the Pillsbury Foodservice Business and the Pillsbury Retail Business
for the fiscal years ended June 30, 1999, 2000 and 2001 (the "Financial
Statements"). The Financial Statements referred to in clause (1) above fairly
present in all material respects the dedicated manufacturing
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assets used in the Pillsbury Foodservice Business and the Pillsbury Retail
Business as of their dates. The Financial Statements (other than those
referred to in clause (1) above) fairly present in all material respects the
net assets to be transferred to Buyer pursuant to Section 8.1 hereof (except
those that are part of any Other Business) as of their dates and the results
of operations of such portions of the Business for the periods set forth
therein (subject, in the case of interim financial statements, to normal
year-end adjustments that will not be material in amount or effect). The
Financial Statements have been prepared in accordance with GAAP consistently
applied during the periods involved. The Financial Statements do not include
any direct product contribution attributable to sales of products (except
products that have been discontinued) that are not Products hereunder or to
sales of Products outside of the Territory, retail channels (in the case of
the Pillsbury Retail Business) or foodservice channels (in the case of the
Pillsbury Foodservice Business).
3.12 LABOR MATTERS. SCHEDULE 3.12 hereto sets forth, as of the date
hereof, all agreements by such Seller with labor unions or associations
representing Business Employees. As of the date hereof, no strike, walkout or
other work stoppage or unionizing effort by or respecting the Business Employees
of such Seller is pending or, to such Seller's Knowledge, threatened. Except as
disclosed on SCHEDULE 3.12, such Seller is not involved in or, to such Seller's
Knowledge, threatened with any labor dispute, arbitration, unfair labor practice
claim, lawsuit or administrative proceeding relating to labor matters involving
Business Employees of such Seller that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect or prohibit
or materially impair the ability of such Seller to consummate the transactions
hereunder.
3.13 SUPPLIERS AND CUSTOMERS. Except as disclosed in SCHEDULE 3.13, to
such Seller's Knowledge, none of the ten largest suppliers or customers of the
Business (by dollar volume) for the two most recent fiscal years, and no other
material supplier or customer of the portion of the Business conducted by such
Seller during such time period, has cancelled, or otherwise modified in any
manner which is materially adverse to such Seller, its business or relationship
with such Seller with respect to the Business or notified such Seller of any
intent to cancel or materially reduce its business with the Business or
otherwise materially change its relationship with the Business. Such Seller has
delivered to Buyer true, correct and complete copies of reports prepared by
Nielsen reflecting such Seller's percent of all nationwide commodity volume for
all general retail stores and mass merchandisers selling over $2 million per
year by product by month for the last two fiscal years and will deliver such
reports for each month end prior to Closing.
3.14 UNIVERSAL PRODUCT CODES. SCHEDULE 2.3(c)(i) and SCHEDULE
2.3(c)(ii) contain universal product codes of such Seller currently used in the
Business or each Other Business. Such Seller is not using any such ten-digit
universal product code, taken as a whole, in any other business other than the
Business or each Other Business; PROVIDED, HOWEVER, that to the extent such
Seller is using any such ten-digit universal product code, taken as a whole, in
any other business other than the Business or each Other Business, then such
Seller will cease such usage within 90 days after the Closing.
3.15 RECALLS. Except as disclosed on SCHEDULE 3.15, since January 1,
1999, no products related to the Business or any Other Business conducted by
such Seller have been
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recalled voluntarily or involuntarily or have been "adulterated" or "misbranded"
within the meaning of the Food, Drug and Cosmetics Act, and no recall of any of
such products is currently being considered by such Seller or, to such Seller's
Knowledge, has been requested, ordered or threatened by any Governmental Entity
or other authority or consumer group, and, to such Seller's Knowledge, there is
no reasonable basis therefor.
3.16 AFFILIATE TRANSACTIONS AND SHARED SERVICES. Except as disclosed in
SCHEDULE 3.16 and except with respect to services and arrangements that are
referenced in or will otherwise be addressed by this Agreement or any of the
Collateral Agreements, including the Transition Services Agreement, the
Conversion Plan Agreement and the Co-Pack Agreement, (i) no Affiliate of such
Seller or officer or director of either such Seller or any Affiliate of such
Seller provides or causes to be provided to the Business or the Toledo Plant any
material assets, services or facilities or owns any Assets and (ii) the Business
does not provide or cause to be provided to any such Affiliate, officer or
director any material assets, services or facilities. Except as disclosed in
SCHEDULE 3.16 and except with respect to services and arrangements that are
referenced in or will otherwise be addressed by this Agreement or any of the
Collateral Agreements, including the Transition Services Agreement, the
Conversion Plan Agreement and the Co-Pack Agreement, the Business does not share
any material facilities or equipment with any other businesses of such Seller or
any Affiliate of such Seller and neither such Seller nor any Affiliate of such
Seller purchases material assets or services for, or provides material products
or services from, both the Business and any other business conducted by such
Seller or any Affiliate of such Seller pursuant to any contract, agreement or
otherwise.
3.17 EQUIPMENT. Except as disclosed in SCHEDULE 3.17 and except for
equipment with respect to each Other Business, the Equipment, together with any
equipment to be provided to Buyer pursuant to the Conversion Plan Agreement,
constitutes all of the equipment necessary to convert raw materials into
Products currently manufactured at the Tennessee Plant and the Martel Plant in
the manner in which the Business is currently conducted and as contemplated
under the Conversion Plan Agreement. The Equipment is in good condition and
repair (ordinary wear and tear excepted), and none of the Equipment contains any
Hazardous Material.
3.18 TRADE PROGRAMS; PREPAYMENTS. Except as set forth in SCHEDULE 3.18,
since January 1, 1999, such Seller has not, other than in the ordinary course
consistent with past practices, instituted or agreed to institute, or been
affected by, any coupon redemption, trade allowance, billback, award, discount
or other promotional incentive, rebate, volume guaranty, non-employee
performance bonus or other program with respect to the Business for which such
Seller has any actual or contingent unpaid liability. Except as disclosed on
SCHEDULE 3.18, neither such Seller nor any of its applicable Subsidiaries has
received any prepayments under any Contract, Purchase Order or other contract or
agreement relating to the Business with respect to Products or services to be
shipped or performed after the Closing.
3.19 TOLEDO PLANT. (a) To General Mills' knowledge (i) since January 1,
1999, the Toledo Plant, and the business conducted thereat, has not received any
form of governmental assistance from the State of Ohio or any political
subdivision thereof, and there are no development or other agreements in place
with the State of Ohio or any political subdivision thereof, that would subject
the owner of the Toledo Plant to minimum Taxes or limit such owner's ability to
protest Taxes, or subject such owner to affirmative action, living wage or other
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requirements or restrictions that Buyer would not be subject to but for such
assistance or agreements and (ii) there is no circumstance or condition that
would reasonably be expected to prevent the timely conversion of the Toledo
Plant, including any required governmental permits, authorizations or zoning
waivers.
(b) Except for matters which would not have a Material
Adverse Effect, as of the date hereof and as of the Toledo Plant Closing Date
(and in all instances, however, except as provided in Conversion Plan), in
addition to and without limiting the generality of the other representations and
warranties in this Article 3:
(i) General Mills Operations has good and
marketable title to the Toledo Plant in fee
simple (with respect to the real property
included in the Toledo Plant), free and
clear of all agreements, covenants,
restrictions, reservations, leases,
occupancy agreements, easements,
encumbrances and Liens, except Permitted
Liens and those matters listed in SCHEDULE
3.19(b)(i), none of which adversely affect
marketability of title or adversely affect,
or would if the holder of the rights
identified in such matters were to exercise
such rights, adversely affect the operation
of the Toledo Plant. None of the easements
identified in SCHEDULE 3.19(b)(i) are
located under or across any of the buildings
or structures comprising the Toledo Plant if
such location or the exercise of any rights
of the holder of such easements could
adversely affect the operation of the Toledo
Plant;
(ii) General Mills has not received any notice,
nor is it aware (as defined below), of any
pending action to take by condemnation all
or any portion of the Toledo Plant, nor has
General Mills agreed or committed to
dedicate any part of the Toledo Plant;
(iii) the Toledo Plant has access to and from
adjoining streets, roads and highways
sufficient for its current use, and, to the
best of General Mills' knowledge (as defined
below), there is no pending or threatened
action which would impair such access;
(iv) the Toledo Plant is served by rail pursuant
to the agreements listed in SCHEDULE
3.19(b)(iv) and all such agreements are in
full force and effect, free of material
default by General Mills and, to the best of
General Mills' knowledge, the other parties
thereto, without any modification, in each
case except as indicated in SCHEDULE
3.19(b)(iv);
(v) to the best of General Mills' knowledge, the
Toledo Plant is not in material violation of
any applicable Law, nor is there a pending
or, to the best of General Mills' knowledge,
threatened investigation regarding a
possible material violation of any
applicable Law by the Toledo Plant;
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(vi) the Toledo Plant is zoned to permit the
processing, manufacturing, packaging,
storage, warehousing and distribution of
food and food products, including the
storage of raw material intended for use in
the food processing and manufacturing
conducted at the Toledo Plant and for other
uses incidental thereto and the Toledo Plant
constitutes a legally conforming use and
structure, under the applicable zoning code,
without any variance or conditional or
special permit, except as may be listed in
SCHEDULE 3.19(vi);
(vii) there is no litigation and no other
proceedings are pending or, to the best of
General Mills' knowledge, threatened
relating to the Toledo Plant or its use;
(viii) to the best of General Mills' knowledge,
except as may be specifically disclosed in
the reports and other documents listed in
SCHEDULE 3.19(b)(viii) that such Hazardous
Materials are in violation of an
Environmental Law (collectively, the
"Environmental Disclosure"), no Hazardous
Materials are located on, in, or about the
Toledo Plant in violation of any
Environmental Law;
(ix) to the best of General Mills' knowledge,
except as may be specifically disclosed in
the Environmental Disclosure that a release
is in violation of an Environmental Law, at
no time prior to the date hereof has there
been a release (as defined in "CERCLA", as
amended) of any Hazardous Materials in, on,
or about the Toledo Plant in violation of
any Environmental Law;
(x) except as may be specifically disclosed in
the Environmental Disclosure that such
storage, manufacture, disposal, handling,
transportation or use is in violation of an
Environmental Law, General Mills has not
used, or permitted to be used, the Toledo
Plant for the storage, manufacture,
disposal, handling, transportation or use of
any Hazardous Materials in violation of any
Environmental Law nor, to the best of
General Mills' knowledge, has the Toledo
Plant ever been used for the storage,
manufacture, disposal, handling,
transportation or use of any Hazardous
Materials in violation of any Environmental
Law;
(xi) there are no reports, studies or other
investigations in respect of the
environmental condition of the Toledo Plant
which were ordered by, or which are in the
possession or control of General Mills or
any affiliate or corporate predecessor,
except those included in the Environmental
Disclosure;
(xii) there are no leases or other agreements or
licenses for or other rights of occupancy or
use of any portion of the Toledo Plant,
other
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than the Permitted Liens or the matters
listed in SCHEDULE 3.19(b)(i);
(xiii) General Mills has not received and is not
otherwise aware of any notice or claim which
is still in effect from any governmental
authority (A) to the effect that a
certificate, permit, license or approval
which is necessary to permit the lawful use
and operation of the Toledo Plant in the
manner contemplated by the Conversion Plan
has not yet been obtained or is not in full
force and effect or (B) threatening a
revocation, modification or cancellation of
any of the permits, approvals, licenses or
certificates which are necessary for the
lawful use and operation of the Toledo Plant
in the manner contemplated by the Conversion
Plan;
(xiv) except as set forth in SCHEDULE
3.19(b)(xiv), (A) the Toledo Plant does not
rely on any facilities (other than the
facilities of public utility and water
companies) located on any property not
included in the Toledo Plant to fulfill any
municipal or governmental zoning, land use,
environmental or similar governmental or
municipal requirement or for the furnishing
to the Toledo Plant of any essential
building systems or utilities, including,
but not limited to, electrical, plumbing,
mechanical and heating, ventilating and air
conditioning systems, and (B) except for
rights of public utilities and governmental
authorities pursuant to recorded easements
included in the Permitted Liens or listed in
SCHEDULE 3.19(b)(i), no land, building or
other improvement not included in the Toledo
Plant relies on any part of the Toledo Plant
to fulfill any zoning, land use,
environmental or similar governmental or
municipal requirement or for the furnishing
to such building or improvement of any
essential building systems or utilities;
(xv) all sewer, water and public utility services
that may serve the Toledo Plant either enter
the Toledo Plant through adjoining public
streets or, if they pass through adjoining
private land, do so in accordance with
valid, public or private easements or
agreements which inure to the benefit of the
owner of the Toledo Plant, the utility or
the public and all of said services are
installed and operating;
(xvi) General Mills has not received and is
otherwise not aware of any notice or claim
which is still in effect that there is a
violation of any restriction, condition or
agreement contained in any instrument
affecting the Toledo Plant or of any
violation of any requirement of the Board of
Fire Underwriters or General Mills'
insurance carriers;
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(xvii) no portion of the Toledo Plant has suffered
any material damage by fire or other
casualty which has not heretofore been
completely repaired and restored in
accordance with all applicable Laws;
(xviii) except as set forth in SCHEDULE
3.19(b)(xviii), there are no material
administrative and court proceedings
currently pending for the contest of or for
refunds of real estate taxes and assessments
in respect of the Toledo Plant, or any
portion thereof, or to reduce the assessed
valuation of the Toledo Plant or any portion
thereof;
(xix) to the best of General Mills' knowledge, the
Toledo Plant is not located within any
special flood hazard area under the National
Flood Insurance Program;
(xx) to the best of General Mills' knowledge,
except as set forth in SCHEDULE 3.19(b)(xx),
(A) there are no wells, private septic or
sewerage facilities, or underground storage
tanks located in, on or about the Toledo
Plant and (B) no water for heating,
ventilating, air conditioning, fire
protection, drinking, lavatory or other uses
with respect to the Toledo Plant is obtained
from private water wells and not from a
municipality or other governmental or
quasi-governmental authority.
References in this Section 3.19 to General Mills' knowledge or
awareness shall mean (a) the actual knowledge of the individuals listed on
SCHEDULE 1.1(b) or (b) the knowledge of (i) Robert P. Walton, Director Corporate
Real Estate and Senior Counsel of General Mills and any successor, if any, (ii)
General Mills Operations' general manager for the Toledo Plant, and (iii)
General Mills Operations' director of environmental affairs, each after
reasonable inquiry.
3.20 WARRANTIES. Except as set forth in SCHEDULE 3.20, such Seller has
not provided any form of express warranty to any customer with respect to any of
the Products or Other Products since January 1, 1999.
3.21 SLOTTING ALLOWANCES. Since January 1, 1999, such Seller has not
paid any additional slotting allowances (generally defined in the grocery
industry as lump sum payments made by manufacturers to retailers in connection
with product introductions), or made payments pursuant to the Pillsbury
Introductory Merchandising Funds Policy, for placement of seasonal cake mix and
ready-to-spread frosting products packaged and sold for retail placement of
limited duration (I.E., products packaged and sold in connection with holidays).
To such Seller's Knowledge, no customers have notified Seller of plans to change
their policies with respect to slotting allowances. To such Seller's Knowledge,
the transactions contemplated hereby will not result in any new or increased
charges for slotting allowances for the Products after the Closing Date or for
Other Products after the Closing Date. Subject to Section 7.14, Buyer shall be
permitted to use such Seller's existing universal product codes following the
Closing with respect to all Products, and following the Closing Date, with
respect to all Other Products.
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3.22 WINDMILL. Windmill has no employees, Subsidiaries or investments
in any other Person. Windmill owns no material assets other than the Windmill
Intellectual Property and conducts no business that is unrelated to the Windmill
Intellectual Property. For purposes of this Article 3 only, all assets of
Windmill shall be deemed to constitute Assets, notwithstanding that the Stock,
and not the assets of Windmill, will be transferred directly to Buyer at
Closing. As of the Closing Date, Windmill will have no material liabilities, no
indebtedness for borrowed money and no purchase money indebtedness and will not
be a party to any agreements or contracts of any nature.
3.23 NO OTHER REPRESENTATIONS OR WARRANTIES. Except for the
representations and warranties contained in this Agreement (including the
Schedules and Exhibits hereto), neither such Seller nor any of its agents,
Affiliates or representatives, nor any other Person, makes or shall be deemed to
make any representation or warranty to Buyer, express or implied, at law or in
equity, on behalf of such Seller, and such Seller hereby disclaims any such
representation or warranty whether by such Seller or any of its or the Business'
respective officers, directors, employees, agents or representatives or any
other Person, with respect to the Business or the execution and delivery of any
of this Agreement or the transactions contemplated hereby, notwithstanding the
delivery or disclosure to Buyer or any of its officers, directors, employees,
agents or representatives or any other Person of any documentation or other
information by such Seller or any of their or the Business' respective officers,
directors, employees, agents or representatives or any other Person with respect
to any one or more of the foregoing. Buyer hereby acknowledges and agrees that,
except to the extent specifically set forth in this Agreement (including the
Schedules and Exhibits hereto), Buyer is purchasing the Assets and Other Assets
on an "as is, where is" basis. Without limiting the generality of the foregoing,
such Seller makes no representation or warranty regarding any assets other than
the Assets and the Other Assets and any liabilities other than the Assumed
Liabilities, and none shall be implied at law or in equity.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Sellers as follows:
4.1 AUTHORITY; NO CONFLICTS; GOVERNMENTAL CONSENTS.
(a) Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware. Buyer has
all requisite corporate power and authority to enter into this Agreement and the
Collateral Agreements and to consummate the transactions contemplated hereby and
thereby. All corporate acts and other proceedings required to be taken by Buyer
to authorize the execution, delivery and performance of this Agreement and the
Collateral Agreements and the consummation of the transactions contemplated
hereby and thereby have been duly and properly taken. This Agreement has been
(and the Collateral Agreements when required hereunder to be executed and
delivered will be) duly executed and delivered by Buyer and, assuming the due
execution hereof (and thereof) by the other parties thereto, this Agreement
constitutes (and each of the Collateral Agreements, when executed and delivered,
will constitute) the valid and binding obligation of Buyer, enforceable against
Buyer
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in accordance with its terms, except as enforcement hereof or thereof may be
limited by applicable bankruptcy, insolvency or other similar Laws affecting
creditors' rights generally and by general equitable principles.
(b) The execution, delivery and performance by Buyer of
this Agreement and the Collateral Agreements will not (i) violate or conflict
with any provision of the certificate of incorporation or by-laws of Buyer; (ii)
except as disclosed in SCHEDULE 4.1(b), violate, conflict with any provision of,
or be an event that is (or with the passage of time will result in) a violation
of, or result in the acceleration of or entitle any party to accelerate (whether
after the giving of notice or lapse of time or both) any obligation under, or
result in the imposition of any lien upon or the creation of a security interest
in any of Buyer's assets or properties pursuant to, any mortgage, Lien, lease,
agreement, instrument, order, arbitration award, judgment, injunction or decree
to which Buyer is a party or by which Buyer is bound; or (iii) violate or
conflict with any statute, rule or regulation of any Governmental Entity
applicable to Buyer or any of its properties or assets or any other material
restriction of any kind or character to which Buyer is subject, except, in the
case of clauses (ii) and (iii), (A) for violations, accelerations, impositions,
conflicts, restrictions or breaches that, individually or in the aggregate,
would not reasonably be expected to have a material adverse effect on the
financial condition of Buyer or the ability of Buyer to consummate the
transactions hereunder, or (B) compliance with and filings under the HSR Act,
unless an exemption under the HSR Act and its regulations applies.
4.2 ACTIONS AND PROCEEDINGS. There are no (a) outstanding judgments,
orders, writs, injunctions or decrees of any court, other Governmental Entity or
arbitration tribunal against Buyer that would reasonably be expected to have a
material adverse effect on the financial condition of Buyer or the ability of
Buyer to consummate the transactions contemplated hereby; or (b) actions, suits
or claims or legal, administrative or arbitration proceedings or investigations
pending or, to the knowledge of Buyer, threatened against Buyer, that would
reasonably be expected to have a material adverse effect on the financial
condition of Buyer or prohibit or materially impair the ability of Buyer to
consummate the transactions contemplated hereunder.
4.3 AVAILABILITY OF FUNDS. Buyer has delivered to Sellers commitment
letters from Canadian Imperial Bank of Commerce and CIBC World Markets Corp. for
the aggregate amount of $650 million (the "Financing Commitment"), which amount
is sufficient to enable Buyer to consummate the transactions contemplated by
this Agreement. Buyer, based on conditions that are now prevailing and that have
been brought to Buyer's attention, knows of no circumstance or condition that
would prevent the availability at the Closing and the Toledo Plant Closing and
the 180th day after the Toledo Plant Closing of the requisite financing to
consummate the transactions contemplated by this Agreement.
4.4 BROKERS. There is no broker or other Person who would have any
valid claim against Sellers for a finder's fee or broker's fee or commission in
connection with this Agreement or the transactions contemplated hereby as a
result of any agreement, understanding or action by or on behalf of Buyer. Buyer
shall be solely responsible for all fees and expenses of U.S. Bancorp Piper
Jaffray Inc. and any other broker, finder or other Person engaged by or on
behalf of it or otherwise claiming through it in connection with the
transactions contemplated by this Agreement.
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4.5 QUALIFIED PLAN STATUS. The Internal Revenue Service has issued a
favorable determination letter with respect to the Retirement Plan of
International Multifoods Corporation for Specified Union-Represented Employees
(the "Multifoods Plan") and the related trust that has not been revoked, and
Buyer knows of no existing circumstances, and no events have occurred, that
could adversely affect the qualified status of the plan or the related trust
under Section 401(a) of the Code.
ARTICLE 5
COVENANTS OF EACH SELLER
Each Seller, severally, for itself, covenants and agrees as follows:
5.1 ACCESS. From the date of this Agreement and through the Closing or,
in the case of access to the Tennessee Plant and the Toledo Plant, through the
Toledo Plant Closing, such Seller will grant to, or cause to be granted to,
Buyer and its representatives, employees, counsel, accountants and prospective
lenders reasonable access, during normal business hours and upon reasonable
notice, to the personnel, properties, books and records of such Seller relating
primarily to the Business and the Assets and the transition of the Business and
Other Businesses and the Assets and the Other Assets to Buyer; PROVIDED that (u)
partitions will be erected between the dough and mix operations of the Tennessee
Plant to protect confidentiality of sensitive information, (v) access to the
Tennessee Plant shall generally be under the control and supervision of the
Trustee and the Third-Party Co-Packer (as defined herein), (w) such access does
not unreasonably interfere with the normal operations of such Seller or the
Business or the Other Businesses or with the implementation of the Conversion
Plan, (x) Buyer complies with any policies of the Business and Other Businesses
with respect to plant visits (including accompaniment by an escort designated by
Sellers), (y) except to the extent provided in or necessary to the development
or implementation of the Conversion Plan (and then only with at least two
Business Days' prior written notice to Sellers), in no event shall Buyer or its
representatives, employees, counsel, accountants or prospective lenders be
permitted access to the portions of the Toledo Plant used for the production,
processing, packaging, material handling or warehousing of cereal and (z) Buyer
and its representatives, employees, counsel, accountants and prospective lenders
shall not damage the Toledo Plant or conduct any investigation or testing
thereon without the prior written consent of the Sellers (which shall not be
unreasonably withheld or delayed), and Buyer shall repair, or cause to be
repaired, any material damage to the Toledo Plant caused by Buyer or its
representatives, employees, counsel, accountants or prospective lenders; and
PROVIDED FURTHER that Sellers hereby release and remise Buyer and all such
parties of and from any liability and the obligation pursuant to this sentence
to repair the Toledo Plant to the extent coverable by fire and extended coverage
insurance. All requests for access through the Closing or the Toledo Plant
Closing, as applicable, shall be directed to the Trustee or its designee.
Following the Closing, or the Toledo Plant Closing, as applicable, Buyer shall
have similar reasonable access, for legitimate business purposes (including the
preparation of financial statements and Tax returns), to the books and records
relating to the Business, the Other Businesses or the Toledo Plant that are
retained by such Seller, but each Seller may excise from such books and records
made available to Buyer any information that does not relate to the Business,
the Other Businesses or the Toledo Plant.
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5.2 ORDINARY CONDUCT OF THE BUSINESS. Except as expressly contemplated
by the terms of this Agreement or the Conversion Plan Agreement, from the date
of the Original Asset Purchase Agreement to the Closing, or the Toledo Plant
Closing, as applicable, such Seller will cause the portion of the Business owned
by such Seller or any Subsidiary of such Seller to be conducted in the ordinary
and usual course and use reasonable best efforts to preserve the properties,
business and relationships of the Business (including the Toledo Plant) with
suppliers and customers of the Business (including the Toledo Plant). Except as
provided in this Agreement or the Conversion Plan Agreement and without limiting
the foregoing, such Seller shall not, and shall not permit any Subsidiary of
such Seller to, without the prior written consent of Buyer:
(a) sell, assign or otherwise transfer or dispose of or
abandon any of the assets used in the Business or each Other Business that, but
for any disposition, would constitute Assets or Other Assets (except for sales
of finished goods inventory), or any assets that, but for any disposition, would
constitute Windmill Intellectual Property, or, through the Toledo Plant Closing
Date, any assets that, but for any disposition, would constitute the Toledo
Plant or any portion thereof;
(b) (i) pledge or grant any security interest in any of
the Assets or Other Assets, or any of the Windmill Intellectual Property, in
connection with the borrowing of money or for the deferred purchase of any
property, or otherwise permit the imposition of a Lien on any of the Assets or
Other Assets, or any of the Windmill Intellectual Property, other than Permitted
Liens and (ii) through the Toledo Plant Closing Date, pledge or grant any
security interest in any of the Toledo Plant, in connection with the borrowing
of money or for the deferred purchase of any property, or otherwise permit the
imposition of a Lien on any of the Toledo Plant, other than Permitted Liens and
other than Liens which will be removed prior to the Toledo Plant Closing;
(c) make any material changes in any coupon programs,
trade promotion activities, discount, rebate, incentive, volume guaranty,
non-employee performance policies or programs or similar programs, policies or
activities related to the Business, institute any new coupon programs, trade
promotion activities or discount, rebate, incentive, volume guaranty,
non-employee performance policies or programs or similar programs, policies or
activities pertaining to the Business, or otherwise make any material change in
the selling, pricing, advertising or promotional practices of the Business, in
each case, inconsistent with prior practice;
(d) make any material change in its practices with respect to
the manner and timing of payment of trade payables relating to the Business;
(e) make any material change in its practices with respect to
the collection of receivables relating to the Business;
(f) (i) enter into any contracts or agreements relating
to the Business except in the ordinary course of business consistent with past
practice or any lease of any real property applicable to the Business; terminate
or materially amend any Contract; or enter into any agreement or arrangement
relating to the Business, other than with respect to the Excluded Assets, with
any Affiliate of such Seller; and (ii) through the Toledo Plant Closing Date,
enter
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into any contracts or agreements relating to the Toledo Plant, except in the
ordinary course of business consistent with past practice (and provided that
any such contracts or agreements entered into after the date hereof relating
to the Toledo Plant shall be terminable by Sellers or their Affiliates
without penalty upon thirty (30) days' prior notice), or any lease of any
real property applicable to the Toledo Plant; terminate or materially amend
any Toledo Plant Assigned Contract; or enter into any agreement or
arrangement relating to the Toledo Plant, other than with respect to the
Excluded Assets or Excluded Toledo Assets, with any Affiliate of such Seller;
(g) except as disclosed in SCHEDULE 3.9, increase in any
manner the compensation, bonuses or benefits payable or to become payable by
such Seller to any of the Business Employees other than in the ordinary course
of business consistent with past practice or enter into any employment or
severance agreement with or grant any severance or termination pay to any
Business Employee other than in accordance with existing policies;
(h) enter into agreements or arrangements for purchases
of Inventory not in the ordinary course or materially inconsistent with Seller's
past practices;
(i) make any material change in its accounting methods
or principles applicable to the Business, except as required by GAAP or
applicable Law;
(j) make any material changes in any, or institute any
new, coupon programs or trade promotion activities related to any Other
Business;
(k) make any new (or change any current) Tax election
that is specific and unique to Windmill with respect to Taxes affecting Windmill
(PROVIDED that nothing in this Section 5.2(k) shall prevent Sellers from making
(or changing) any Tax election generally applicable to members of a
consolidated, combined or unitary group of which Windmill is a member);
(l) agree or commit to do any of the foregoing; or
(m) subject to the provisions of Section 11.2 below, fail
to maintain or repair the Toledo Plant or fail to replace any equipment or other
components of the Toledo Plant, in each case in accordance with Sellers' past
practices (except to the extent the Conversion Plan requires otherwise).
5.3 DELIVERY. Notwithstanding anything contained in this Agreement to
the contrary, at the Closing such Seller (a) shall transfer to Buyer, and shall
cause its applicable Subsidiaries to transfer to Buyer, in each case subject to
any rights provided in any Collateral Agreement, the Formulations,
Specifications and Processing Instructions of the Pillsbury Retail Business and
the Pet Milk Business, and except as provided in the Retail Patent and
Technology License Agreement and the Foodservice Patent and Technology License
Agreement, shall transfer to Buyer all Formulations of the Pillsbury Foodservice
Business, and shall cause its applicable Subsidiaries to transfer to Buyer, in
each case subject to the Grant Back Patent and Technology License Agreement, (b)
will license to Buyer, pursuant to the Retail Patent and Technology License
Agreement and the Foodservice Patent and Technology License Agreement, the
Formulations, Specifications and Processing Instructions of the Pillsbury
Foodservice Business
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and each Other Business (in each case, to the extent not constituting Assets)
(other than the Pet Milk Business) and (c) shall deliver to Buyer printed
copies of all recipes that have been developed for products of the Pillsbury
Retail Business or Pillsbury Foodservice Business and that are in the
possession of either Seller or any of such Seller's subsidiaries as of the
date of Closing.
5.4 ACCOUNTS RECEIVABLE. Such Seller shall promptly forward or cause
to be forwarded to Buyer any and all proceeds from accounts receivable
relating to the Products that are received by such Seller or its Subsidiaries
after the Closing Date with respect to receivables that arose from sales made
after the Closing Date and relating to the Other Products that arose from
sales by Buyer after the Closing Date.
5.5 PAYMENTS. In the event that this Agreement is terminated for any
reason other than as a result of any breach or failure to perform a covenant
or other agreement hereof by Buyer, then the Sellers shall pay Buyer an
amount equal to the actual documented out-of-pocket fees and expenses
incurred by Buyer in connection with this Agreement and the transactions
contemplated hereby (including commitment fees and expense reimbursement
obligations incurred by Buyer in connection with the Financing Commitment and
the proposed financing described therein) up to, in the event of termination
of this Agreement prior to Closing, a maximum of $7,000,000. Any such amounts
shall be shared equally by General Mills, on the one hand, and Pillsbury, on
the other hand.
5.6 CONFIDENTIAL INFORMATION. Except as otherwise provided herein or
in the Collateral Agreements, and except with respect to confidential
information relating to cereal processing, production, packaging and material
handling at the Toledo Plant, after the Closing Date, such Seller (i) shall,
and shall cause its Subsidiaries to, keep secret and retain in strictest
confidence, and shall not, and shall cause its Subsidiaries not to, use for
the benefit of others, and (ii) shall, and shall cause its Subsidiaries to,
use reasonable best efforts to not use for the benefit of such Seller or its
Subsidiaries, in each case, all confidential information to the extent
relating to the Business or the Toledo Plant (or provided to it by Buyer
pursuant to the Collateral Agreements), except to the extent of the rights
retained by such Seller or its Subsidiaries pursuant to other provisions of
this Agreement and the Collateral Agreements and except that such Seller and
its Subsidiaries shall be permitted to use such confidential information for
the benefit of such Seller or its Subsidiaries in connection with other
businesses currently conducted by such Seller or its Subsidiaries in which
such confidential information is presently used (the "Confidential
Information"), including Formulations, Specifications and Processing
Instructions, "know-how" (including manufacturing methodologies, engineering
data and designs, historic and in-progress research and development), trade
secrets, customer lists, details of client or consultant contracts and other
Assigned Contracts, Toledo Plant Assigned Contracts and Purchase Orders,
pricing policies, marketing plans or strategies, product development
techniques or plans, business acquisition plans, designs and design projects,
inventions and research projects, in each case to the extent relating to the
Business, the Assets or the Assumed Liabilities, and shall not disclose such
Confidential Information to anyone outside of Buyer except with Buyer's
express written consent. After the Closing Date, such Seller shall also use
all reasonable best efforts to keep secret and retain in strictest confidence
all trade secrets and other applicable information provided to it by Buyer
and its Affiliates as provided in the Collateral Agreements, and shall not
use for the benefit of others, and shall not disclose, such information to
anyone
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outside of Buyer except with Buyer's express written consent. The parties
agree that Sellers and their Subsidiaries shall be deemed in compliance with
this Section 5.6 so long as they treat such Confidential Information in
accordance with the applicable policies and procedures for the maintenance of
their own confidential and proprietary information of the same type as in
effect on the date of the Original Asset Purchase Agreement.
5.7 NOTICES. Subject to Section 7.1, such Seller will give all
notices to third parties, and will use its reasonable best efforts to obtain
any required third-party consents that Buyer reasonably may request in
connection with the transactions contemplated by this Agreement; PROVIDED
that neither Seller shall be obligated to incur any expenses (other than
incidental expenses) with respect to such notices and efforts.
5.8 EMPLOYEES.
(a) OFFERS OF EMPLOYMENT. Such Seller shall permit
Buyer to make offers of employment to the Closing Date Employees, effective
as of the Closing Date, and, except as otherwise provided in this Section
5.8(a), to make offers of employment to the Toledo Employees, effective as of
the Conversion Date. Such Seller will take such steps as are reasonably
necessary to facilitate such offers of employment and the transition of
Business Employees who accept employment with Buyer, including providing
Buyer with reasonable access to Business Employees employed by such Seller or
its Affiliates for purposes of interviewing, offering employment, completing
pre-employment documents, explaining Buyer's employment-related rules and
benefits and other similar purposes. Closing Date Employees who accept offers
of employment from Buyer shall become employees of Buyer as of the Closing
Date. Toledo Employees who accept offers of employment from Buyer shall
become employees of Buyer as of the Conversion Date. Such Seller shall not
interfere with Business Employees' accepting employment with Buyer or seek to
induce any Business Employee to decline employment with Buyer.
(b) CONDUCT PRIOR TO CONVERSION DATE. Between the
Closing Date and the Conversion Date, General Mills will use commercially
reasonable efforts to maintain the services and goodwill of Toledo Employees,
including continuing to employ such Toledo Employees, without layoffs or
reductions in compensation or benefits (other than any reductions applicable
to the similarly situated employees of Buyer), PROVIDED that nothing herein
shall limit the right of General Mills to terminate Toledo Employees for
performance reasons or for cause in the ordinary course of business
consistent with past practice.
(c) ACCRUED PAID TIME OFF. At the Conversion Date,
General Mills will provide Buyer with a schedule of Accrued Paid Time Off for
Toledo Employees who become employed by Buyer as of such date and will wire
transfer the dollar value of such Accrued Paid Time Off to the bank account
designated by Buyer. At the Closing Date, General Mills will provide Buyer
with a schedule of Accrued Paid Time Off for Closing Date Employees who
become employed by Buyer as of such date and will provide for a credit
against the Purchase Price payable by Buyer equal to the dollar value of such
Accrued Paid Time Off.
(d) NO-HIRE PERIOD. Such Seller agrees that for a
two-year period after the Closing Date, with respect to Closing Date
Employees, and the Conversion Date, with respect to
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Toledo Employees, neither such Seller nor any of its Affiliates shall hire
any Business Employee who has become an employee of Buyer or any of its
Affiliates. Notwithstanding the foregoing, the no-hire provision of this
Section 5.8 shall not apply to any employee of Buyer who is involuntarily
terminated or laid off by Buyer or any of its Affiliates.
(e) DEFINED CONTRIBUTION PLANS. Such Seller agrees
that effective as of the Conversion Date, all Toledo Employees who become
employed by Buyer as of such date shall be fully vested in their account
balances in the General Mills VIP 401(k) Plan, and effective as of the
Closing Date, all Closing Date Employees who become employed by Buyer as of
such date shall be fully vested in their account balances in the defined
contribution plan(s) listed on SCHEDULE 5.8(e).
(f) DEFINED BENEFIT PLANS. Such Seller agrees that
effective as of the Conversion Date, all Toledo Employees who become employed
by Buyer as of such date shall be fully vested in their accrued benefits in
the defined benefit plan(s) listed on SCHEDULE 5.8(f), and effective as of
the Closing Date, all Closing Date Employees who become employed by Buyer as
of such date shall be fully vested in their accrued benefits in the defined
benefit plan(s) listed on SCHEDULE 5.8(f).
(g) COBRA. Such Seller understands that Sellers will
be responsible, to the extent applicable, for satisfying obligations under
COBRA, to provide continuation coverage to or with respect to any Business
Employee (employed by such Seller) in accordance with Law with respect to any
"qualifying event" that occurs before such employee becomes an employee of
Buyer.
(h) FLEXIBLE SPENDING PLANS. Such Seller understands
that Sellers shall maintain in effect any flexible spending plans in which
Business Employees maintain accounts until the close of the calendar year in
which such Business Employees are hired by Buyer. Each Business Employee
shall continue to seek reimbursement under the flexible spending plan of
Pillsbury or General Mills, as applicable, throughout the close of the
calendar year in which the Business Employee is hired by Buyer.
5.9 CONVERSION OF TOLEDO PLANT. Each Seller agrees to convert, at its
sole responsibility and expense, the dry-mix production portions of the Toledo
Plant described in the Conversion Plan Agreement (the "Converted Portion") in
accordance with the conversion plans and specifications set forth in the
Conversion Plan Agreement. Regarding the portions of the Toledo Plant that are
not included in the Converted Portion (the "Non-Converted Portion"), prior to
the Toledo Plant Closing Date (or, if General Mills shall provide Buyer notice
of its election to enter into a lease pursuant to Section 8.4(d) hereof, then
prior to the expiration of the term of such lease as designated in such notice
from General Mills with respect to the leased premises), each Seller shall, at
its sole cost and expense: (A) remove all of the Excluded Toledo Assets
therefrom, (B) repair any material damage caused by the removal of the Excluded
Toledo Assets, and (C) leave such portion of the Toledo Plant in reasonably good
condition and in compliance with all applicable Laws, all in accordance with the
terms of the Conversion Plan. Without limiting the foregoing, each Seller, at
its sole cost and expense, shall be responsible for transferring to the Toledo
Plant any Equipment purchased pursuant hereto by Buyer and for installing and
making operational such Equipment in accordance with the Conversion Plan
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Agreement. The parties agree that, while title to the Equipment will pass to
Buyer at the Closing Date, each Seller shall continue to insure in accordance
with its standard practices all Equipment that remains in such Seller's
possession until the Conversion Date as if such Seller continued to own the
Equipment. Subject to Section 2(b) of the Co-Pack Agreement, Sellers jointly
and severally agree to indemnify and hold Buyer harmless from any loss,
damage or destruction to such Equipment prior to the Conversion Date. Each
Seller further agrees to consult with Buyer regarding the conversion and to
take such steps as Buyer may reasonably request to implement the Conversion
Plan in accordance with its terms. Sellers have delivered to Buyer a title
insurance commitment in respect of the Toledo Plant (issued by Chicago Title
Insurance Company, bearing NBU # 100109451 and having an effective date of
February 7, 2001) (the "Title Commitment"). At least ten (10) days prior to
the Closing, Sellers shall deliver to Buyer an updated title report in
respect of the Toledo Plant and a survey of the Toledo Plant.
5.10 NON-USE OF NAME. From and after the Closing, neither Seller
shall use or permit any Affiliate of such Seller to use the brand names set
forth on SCHEDULE 5.10 or any derivative form thereof, in any business
conducted by either Seller or any of its Affiliates, except pursuant to the
Martha White Trademark License Agreement or the Hungry Jack Trademark License
Agreement; PROVIDED, HOWEVER, that with respect to the brand names "Robin
Hood," "Pet Milk," "Farmhouse," "La Pina," "Red Band," and "Softasilk," such
Seller and its Affiliates may use such brand name or any derivative form
thereof with respect to inventory with respect to each Other Business
necessary for General Mills to fill purchase orders as set forth more fully
in Section 7.13(a).
5.11 NON-INTERFERENCE. Except as otherwise expressly contemplated by
this Agreement or the Collateral Agreements, prior to the Closing, neither
Seller will take, and each Seller will use its reasonable best efforts to
cause its Subsidiaries not to take, any action that is intended to discourage
any customer, supplier or other business associate of such Seller (or any of
its applicable Subsidiaries) with respect to the Business from maintaining
substantially the same business relationships with Buyer with respect to the
Business after the Closing as it maintained with such Seller (or any of its
applicable Subsidiaries) prior to the Closing. With respect to each Business
Employee hired by Buyer, following such date of hire, such Seller will not
enforce any right under any confidentiality or other similar agreement
between such Seller and any Business Employee with respect to such employee's
ability to use, on behalf of Buyer, any know-how related to the Business or
to the Converted Portion of the Toledo Plant such employee gained while
employed by such Seller.
5.12 FINANCIAL STATEMENTS. From and after the date hereof, Sellers
shall provide to Buyer, at such times as Buyer shall reasonably request, such
additional financial statements related to the Pillsbury Retail Business and the
Pillsbury Foodservice Business and the Other Businesses and the assets to be
sold hereunder by General Mills as Buyer shall reasonably request in connection
with Buyer's efforts to obtain, or comply with its obligations pursuant to, the
financing contemplated by the Financing Commitment or in order for Buyer to
comply with disclosure requirements under federal securities Laws. Pillsbury, to
the extent such statements relate to Pillsbury, and General Mills, to the extent
such statements relate to General Mills, represent and warrant to Buyer that all
financial statements delivered to Buyer pursuant to this Section 5.12 shall (i)
to the extent such financial statements are statements of net assets that
reflect the historical operations of the Pillsbury Foodservice Business and the
Pillsbury Retail
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Business or any Other Business, fairly present in all material respects the
dedicated manufacturing assets used in the Pillsbury Foodservice Business and
the Pillsbury Retail Business or such Other Business as of their dates, (ii)
except to the extent clause (i) above applies, fairly present in all material
respects the net assets to be transferred to Buyer pursuant to Section 8.1
hereof as of their dates and the results of operations of such portions of
the Business or Other Businesses, as the case may be, for the periods set
forth therein (subject, in the case of interim financial statements, to
normal year-end adjustments that will not be material in amount or effect),
(iii) have been prepared in accordance with GAAP consistently applied during
the periods involved, and (iv) not include any direct product contribution
attributable to sales of products (except products that have been
discontinued) that are not Products hereunder or to sales of Products outside
of the Territory, retail channels (in the case of the Pillsbury Retail
Business) or foodservice channels (in the case of the Pillsbury Foodservice
Business). Notwithstanding anything to the contrary in this Section 5.12, the
parties hereto agree that (A) financial statements related to Other
Businesses and the assets related thereto currently are unaudited and not
prepared in accordance with GAAP and (B) to the extent Buyer reasonably
requests, pursuant to this Section 5.12, any financial statements related to
Other Businesses and the assets related thereto, such statements shall be (1)
unaudited (except to the extent required in order for Buyer to comply with
disclosure requirements under federal securities Laws) and (2) if Buyer
requests, prepared in accordance with GAAP, and (C) Buyer shall provide
Sellers with written notice at least two weeks (or four weeks if such
statements are required to be audited in order for Buyer to comply with
disclosure requirements under federal securities Laws) prior to the date
Buyer requests that Sellers deliver such statements.
5.13 NO SHOPPING. Prior to the Closing or any termination of this
Agreement in accordance with Article 10, neither Seller will, and each Seller
will cause its Affiliates not to, directly or indirectly, solicit, encourage,
facilitate, participate or engage in (including by way of furnishing any
nonpublic information concerning the business, properties, assets or books or
records of the Business or providing access to facilities at which Products
are produced), any Acquisition Proposal (as defined below). Each Seller
agrees to notify Buyer promptly if any Acquisition Proposal is received by
such Seller or any Affiliate of such Seller (including the identity of the
Person making such Acquisition Proposal and the terms of the Acquisition
Proposal). As used in this Agreement, "Acquisition Proposal" shall mean any
proposal (or inquiry relating to a possible proposal) received by such Seller
or any Affiliate of such Seller from a Person, other than Buyer or an
Affiliate of Buyer, for the acquisition, directly or indirectly, of a
substantial portion of the Business or the Assets (other than for the
acquisition of finished goods Inventory in the ordinary course of business of
such Seller consistent with past practice) or any portion of the Toledo Plant.
ARTICLE 6
COVENANTS OF BUYER
6.1 CONFIDENTIALITY. Buyer acknowledges that all information provided
to it by either Seller and its Affiliates, agents and representatives is subject
to the terms of a confidentiality agreement between Buyer and Pillsbury (the
"Confidentiality Agreement"), the terms of which are incorporated herein by
reference. Effective upon, and only upon, the Closing, or the Toledo
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Plant Closing, with respect to information that relates to the Toledo Plant,
the Confidentiality Agreement will terminate only with respect to information
provided to Buyer or its Affiliates to the extent related to the Business or
each Other Business, the Assets, the Other Assets and the Assumed
Liabilities; and Buyer acknowledges that any and all information provided to
it by either Seller concerning either Seller (other than information to the
extent primarily related to the Business or each Other Business, the Assets,
the Other Assets and the Assumed Liabilities) shall remain subject to the
terms and conditions of the Confidentiality Agreement after the date of the
Closing. After the Closing Date, Buyer shall also use all reasonable best
efforts to keep secret and retain in strictest confidence all trade secrets
and other applicable information provided to it by either Seller and its
Affiliates as provided in the Collateral Agreements, and shall not use for
the benefit of others, and shall not disclose, such information to anyone
outside of Sellers except with Sellers' express written consent. The parties
agree that Buyer shall be deemed in compliance with this Section 6.1 so long
as it treats such Confidential Information in accordance with the applicable
policies and procedures for the maintenance of its own confidential and
proprietary information of the same type as in effect on the date of the
Original Asset Purchase Agreement.
6.2 ACCOUNTS RECEIVABLE. Buyer shall promptly forward or cause to be
forwarded to General Mills any and all proceeds from accounts receivable
relating to the Products sold on or prior to the Closing Date that are
received by Buyer after the Closing Date and that were outstanding as of the
Closing Date. Buyer shall promptly forward or cause to be forwarded to
General Mills any and all proceeds from accounts receivable relating to each
Other Product sold on or prior to the Closing Date that are received by Buyer
after the Closing Date and that were outstanding as of the Closing Date or
relating to Other Products sold after the Closing Date in connection with
purchase orders with respect to each Other Business existing as of the
Closing Date, which purchase orders were filled by Sellers.
6.3 EMPLOYEES.
(a) OFFERS OF EMPLOYMENT TO CLOSING DATE EMPLOYEES.
Buyer shall offer employment, as of the Closing Date, to each Closing Date
Employee to whom Buyer wishes to offer employment, and will take such steps
as are reasonably necessary to facilitate the transition of each Closing Date
Employee who accepts employment with Buyer.
(b) OFFERS OF EMPLOYMENT TO TOLEDO EMPLOYEES. Buyer
shall offer employment, as of the Conversion Date, to each Toledo Employee to
whom Buyer wishes to offer employment, and will take such steps as are
reasonably necessary to facilitate the transition of each Toledo Employee who
accepts employment with Buyer.
(c) COLLECTIVE BARGAINING AGREEMENTS. Buyer agrees to
negotiate in good faith to provide Toledo Wage Employees (who are employed by
Buyer) with a collective bargaining or other labor agreement, effective as of
the Conversion Date, or as soon as reasonably practicable thereafter, that
contains terms and conditions no less favorable, in the aggregate, than those
applicable to such Toledo Wage Employees immediately prior to their
employment by Buyer pursuant to the agreements set forth at SCHEDULE 3.12. If
a collective bargaining agreement or other labor agreement described in the
immediately preceding sentence is not effective on the Conversion Date, the
initial terms and conditions of employment
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established by Buyer shall be no less favorable, in the aggregate, than those
applicable to the Toledo Wage Employees immediately prior to their employment
by Buyer pursuant to the agreements set forth at SCHEDULE 3.12.
(d) CREDITING OF SERVICE FOR CLOSING DATE EMPLOYEES.
From and after the Closing Date, Buyer shall treat all service by Closing
Date Employees with Sellers and their respective predecessors prior to the
Closing Date for all purposes (including determination of seniority) as
service with Buyer (except for purposes of benefit accrual under defined
benefit pension plans or to the extent such treatment would result in
duplicative accrual on or after the Closing Date of benefits for the same
period of service), and, with respect to any medical or dental plan in which
the Closing Date Employees participate after the Closing Date, Buyer shall
waive or cause to be waived any pre-existing condition exclusions and
actively-at-work requirements (PROVIDED, HOWEVER, that no such waiver shall
apply to a pre-existing condition of any Closing Date Employee who was, as of
the Closing Date, excluded from participation in a comparable employee
benefit plan of either Seller due to a pre-existing condition), and shall
provide that any covered expenses incurred on or before the Closing Date
during the plan year of the applicable Seller plan in which the Closing Date
occurs by a Closing Date Employee or a Closing Date Employee's covered
dependent shall be taken into account after the Closing Date for purposes of
satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions, as well as such employee's annual benefit limits, if any (until
the first anniversary of the commencement of the plan year of the applicable
Seller plan in which the Closing Date occurs), in each case to the same
extent that such expenses are taken into account with respect to similarly
situated employees of Buyer and subsidiaries of Buyer.
(e) CREDITING OF SERVICE FOR TOLEDO EMPLOYEES. Except
(with respect solely to Toledo Wage Employees) to the extent otherwise agreed
by the union representing the Toledo Wage Employees, consistent with
applicable Law, from and after the Conversion Date, Buyer shall treat all
service by Toledo Wage Employees and Toledo Salaried Employees with Sellers
and their respective predecessors prior to the Conversion Date for all
purposes (including determination of seniority) as service with Buyer
(except, with respect solely to the Toledo Salaried Employees, for purposes
of benefit accrual under defined benefit pension plans or to the extent such
treatment would result in duplicative accrual on or after the Conversion Date
of benefits for the same period of service), and, with respect to any medical
or dental plan in which the Toledo Employees participate after the Conversion
Date, Buyer shall waive or cause to be waived any pre-existing condition
exclusions and actively-at-work requirements (PROVIDED, HOWEVER, that no such
waiver shall apply to a pre-existing condition of any Toledo Employee who
was, as of the Conversion Date, excluded from participation in a comparable
employee benefit plan of either Seller due to a pre-existing condition), and
shall provide that any covered expenses incurred on or before the Conversion
Date during the plan year of the applicable Seller plan in which the
Conversion Date occurs by a Toledo Employee or a Toledo Employee's covered
dependent shall be taken into account after the Conversion Date for purposes
of satisfying applicable deductible, coinsurance and maximum out-of-pocket
provisions, as well as such employee's annual benefit limits, if any (until
the first anniversary of the commencement of the plan year of the applicable
Seller plan in which the Conversion Date occurs), to the same extent that
such expenses are taken into account for the benefit of similarly situated
employees of Buyer and subsidiaries of Buyer.
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(f) LIABILITY IN RESPECT OF OFFERS OF EMPLOYMENT.
Buyer shall be liable for and shall indemnify Seller for any claims made by
Business Employees in connection with any actions taken by Buyer pursuant to
the first sentence of Section 5.8(a) that (i) relate to claims of unlawful
interviewing or information gathering practices with respect to Business
Employees, or unlawful discrimination with respect to the Business Employees
offered employment (or denied offers of employment) with Buyer, or (ii)
result in any liability under the WARN Act (unless such WARN Act liability
arises solely as a result of Buyer's failure to extend any offer of
employment to 50 or more Toledo Employees).
(g) DEFINED CONTRIBUTION PLANS.
(i) Except (with respect solely to Toledo Wage
Employees) to the extent otherwise agreed by
the union representing the Toledo Wage
Employees consistent with applicable Law, as
of the Conversion Date, Buyer shall have
established or designated a defined
contribution plan for the benefit of Toledo
Wage Employees and Toledo Salaried Employees
who become employed by Buyer as of the
Conversion Date or thereafter, and Buyer
shall take all necessary action, if any, to
qualify such plan under the applicable
provisions of the Code, and to make any and
all filings and submissions to the
appropriate Governmental Entities required
to be made by it in connection with such
establishment or designation. As soon as
practicable following the Closing Date,
Buyer shall establish or designate a defined
contribution plan for the benefit of the
Closing Date Employees who become employed
by Buyer as of the Closing Date or
thereafter, and Buyer shall take all
necessary action, if any, to qualify such
plan under the applicable provisions of the
Code, and to make any and all filings and
submissions to the appropriate Governmental
Entities required to be made by it in
connection with such establishment or
designation.
(ii) Except (with respect solely to Toledo Wage
Employees) to the extent otherwise agreed by
the union representing the Toledo Wage
Employees consistent with applicable Law,
Buyer shall cause the appropriate defined
contribution plan described in Section
6.3(g)(i) (the "Buyer DC Plan") to accept,
as of the Closing Date (for Closing Date
Employees) and as of the Conversion Date
(for Toledo Employees), all direct or
indirect rollovers by Closing Date Employees
employed by Buyer as of the Closing Date and
all direct or indirect rollovers by Toledo
Employees employed by Buyer as of the
Conversion Date, of such employees' eligible
rollover distributions from Sellers' defined
contribution plans; PROVIDED, that such
employees have elected to make such
rollovers and meet all requirements of
Sellers and the Code with respect to such
rollovers. In the event that a Business
Employee with an outstanding loan from a
Seller defined contribution plan elects a
direct rollover (within the meaning of
Section 401(a)(31) of the Code) of his or
her eligible rollover distribution to the
Buyer DC Plan, the portion of the Business
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Employee's eligible rollover distribution
represented by the outstanding loan shall be
rolled over to the Buyer DC Plan; PROVIDED,
HOWEVER, that in the event that Buyer does
not offer the Buyer DC Plan to the Toledo
Wage Employees it employs after the
Conversion Date, Buyer shall enable any
Toledo Wage Employee in its employ to make
payments with respect to any outstanding
loan such employee retains under a Seller
defined contribution plan through the use of
regular payroll deductions that would be
transferred to the appropriate Seller. Buyer
and each Seller shall each bear their own
expenses in connection with such rollovers.
(h) DEFINED BENEFIT PLANS. As of the Conversion Date,
Buyer shall have established or designated a defined benefit plan for the
benefit of Toledo Salaried Employees who become employed by Buyer as of the
Conversion Date or thereafter, and Buyer shall take all necessary action, if
any, to qualify such plan under the applicable provisions of the Code, and to
make any and all filings and submissions to the appropriate Governmental
Entities required to be made by it in connection with such establishment or
designation. As soon as practicable following the Closing Date, Buyer shall
establish or designate a defined benefit plan for the benefit of the Closing
Date Employees who become employed by Buyer as of the Closing Date or
thereafter, and Buyer shall take all necessary action, if any, to qualify
such plan under the applicable provisions of the Code, and to make any and
all filings and submissions to the appropriate Governmental Entities required
to be made by it in connection with such establishment or designation.
(i) ACCRUED PAID TIME OFF. Buyer shall use any funds
wire transferred to it in respect of Accrued Paid Time Off for Toledo
Employees pursuant to Section 5.8(c) to cover expenses relating to Accrued
Paid Time Off for Toledo Employees who become employed by Buyer as of the
Conversion Date. Buyer shall use any credit against the Purchase Price
provided to Buyer in respect of Accrued Paid Time Off for Closing Date
Employees pursuant to Section 5.8(c) to cover expenses relating to Accrued
Paid Time Off for Closing Date Employees who become employed by Buyer as of
the Closing Date.
ARTICLE 7
MUTUAL COVENANTS OF THE PARTIES
Each Seller and Buyer covenants and agrees as follows:
7.1 COOPERATION AND TRANSITION SERVICES.
(a) (i) As more fully described in Section 7.1(a)(ii), each
of the parties will give any notices to, make any filings with, and use its
respective reasonable best efforts to obtain any authorizations, consents and
approvals of Government Entities in connection with the transactions
contemplated by this Agreement.
(ii) The parties hereto will assist and cooperate with one
another to effect promptly all necessary filings and to obtain all necessary
permits, consents, approvals,
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orders and authorizations of, or any exemptions by, all third parties and
Governmental Entities necessary to consummate the purchase and sale of the
Assets, the Other Assets and the Toledo Plant Assets and the other
transactions contemplated by this Agreement and the Collateral Agreements.
Each of the Sellers and Buyer, including each of its affiliates, shall as
promptly as practicable use its reasonable best efforts to prepare and
furnish all necessary information and documentation (including furnishing all
information requested by any Governmental Entities, including information
that may be required by the HSR Act) and otherwise to do whatever is
necessary, proper or advisable to assist and cooperate with each other in
obtaining necessary consents, approvals or orders of all Governmental
Entities necessary to consummate the purchase and sale of the Assets, the
Other Assets and the Toledo Plant Assets and the other transactions
contemplated by this Agreement and the Collateral Agreements. Each of the
Sellers and Buyer shall keep the other apprised of the status of any
inquiries made of it by the FTC or any other Governmental Entities, including
their respective staffs, with respect to this Agreement (or any part hereof)
and the transactions contemplated by this Agreement and the Collateral
Agreements and, to the extent possible, communicate with each other in
advance of any communications or correspondence with the FTC. Without
limiting the generality of the undertakings pursuant to this Section
7.1(a)(ii), each of the Sellers and Buyer agrees to assist and cooperate with
the other party if the other party contests and resists any action seeking to
have imposed any order, decree, judgment, injunction, ruling or other order
(whether temporary, preliminary or permanent) that would materially delay,
restrain, enjoin or otherwise prohibit consummation of the transactions
contemplated by this Agreement and the Collateral Agreements.
(b) In addition to the specific obligations created by
the Collateral Agreements, to the extent consistent with applicable Law,
Buyer and Sellers shall reasonably cooperate with each other and shall cause
their officers, employees, agents and representatives to reasonably cooperate
with each other for the periods contemplated by the Co-Pack Agreement and the
Transition Services Agreement to ensure the orderly transition of the
Business, the Assets and the Assumed Liabilities to Buyer, to minimize the
disruption to the respective businesses of the parties hereto (including the
parties' relationships with customers and suppliers) resulting from the
transactions contemplated hereby and, in connection with Buyer's efforts to
obtain the financing contemplated by the Financing Commitment, to reasonably
cooperate with each other, and to cause their officers, employees, agents and
representatives to reasonably cooperate with each other, and to make
disclosures required by Law related thereto. Except as otherwise provided in
this Agreement, Buyer, on the one hand, and Sellers, on the other hand, shall
reimburse the other for reasonable out-of-pocket costs and expenses incurred
at the request of the other party in assisting the other pursuant to this
Section 7.1(b).
7.2 PUBLICITY. Sellers and Buyer agree that, from the date of the
Original Asset Purchase Agreement through the Closing Date, no public release or
announcement concerning the transactions contemplated hereby shall be issued by
a party without the prior written consent of the other parties (which consent
shall not be unreasonably withheld), except as such release or announcement may
be required by Law or any United States or foreign securities exchange, in which
case advance notice and an opportunity to comment on the proposed release or
other announcement shall be given to the other party, to the extent reasonably
practicable. Sellers and Buyer agree to keep the terms of this Agreement and the
Collateral Agreements confidential, except to the extent required by applicable
Law and except that the parties may disclose such
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terms to their respective accountants and other representatives as necessary in
connection with the ordinary conduct of their respective businesses (so long as
such Persons agree to keep the terms of this Agreement and the Collateral
Agreements confidential) and to the FTC and other antitrust regulatory agencies.
7.3 TAX MATTERS.
(a) TRANSFER TAXES. Sellers shall pay transfer Taxes
imposed as a result of the sale and transfer of the Toledo Plant (but only such
transfer Taxes to the extent based on a fair market value of the Toledo Plant
equal to or less than the Toledo Plant Purchase Price), as contemplated hereby,
and Buyer shall pay all other sales, use, value-added, business, goods and
services, transfer, documentary, conveyancing or similar Taxes or expenses and
all recording fees that may be imposed as a result of the sale and transfer of
the Assets, the Other Assets, the Toledo Plant Assets (including any transfer
Taxes to the extent based on a fair market value of the Toledo Plant in excess
of the Toledo Plant Purchase Price) or the Special Inventory, or any other
assets, property, franchise, service or business to be, directly or indirectly,
acquired by, or provided to, Buyer or any of its Affiliates under this Agreement
or any of the Collateral Agreements (including any stamp duty or other Tax
chargeable in respect of any instrument transferring property and any Taxes
(other than income Taxes) payable in connection with the sale and transfer of
the Intellectual Property), together with any and all penalties, interest and
additions to Tax with respect thereto ("Transfer Taxes"), and Sellers and Buyer
shall cooperate in timely making all filings, returns, reports and forms as may
be required to comply with the provisions of such Tax Laws.
(b) COOPERATION. Buyer and Sellers shall, and shall cause
their respective subsidiaries and Affiliates to, cooperate with respect to Tax
matters. Buyer and Sellers shall provide one another with such information as is
reasonably requested in order to enable the requesting party to complete and
file all Returns which it may be required to file with respect to the Business,
the Assets, each Other Business, the Special Inventory, the Other Assets, and
Windmill or to respond to audits, inquiries or other proceedings by any Taxing
Authority and otherwise to satisfy Tax requirements. Such cooperation shall
further include (i) provision of powers of attorney to Sellers (or their
designees) relating to Tax matters to satisfy Sellers' obligations under Section
7.3 and Article 9 of this Agreement, (ii) promptly forwarding copies of
appropriate notices, forms or other communications received from or sent to any
Taxing Authority, and (iii) promptly providing reasonably requested copies of
all relevant Returns together with accompanying schedules and related
workpapers, documents relating to rulings, audits or other determinations by any
Taxing Authority and records concerning the ownership and tax basis of property,
in each case only to the extent such materials relate to the Business, the
Assets, each Other Business, the Special Inventory, the Other Assets, or
Windmill.
(c) FILING RESPONSIBILITY. Sellers shall prepare and file
or shall cause Windmill, as the case may be, to prepare and file, (i) all
Returns with respect to Taxes attributable to the Assets, the Business, each
Other Business, the Special Inventory or the Other Assets, or of Windmill,
required to be filed (taking into account extensions therefor) prior to the
Closing Date and (ii) all Returns in respect of any Transfer Taxes owing as a
result of the sale and transfer of the Toledo Plant as contemplated hereby.
Sellers shall prepare and file, or shall cause to be prepared and filed, any
consolidated, combined or unitary Return that includes
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Sellers or any of their Affiliates (and any Return that relates in whole or
in part to Taxes (or Tax items) described in clause (2) or (3) of the
definition of Excluded Taxes). To the extent that any such Tax Returns filed
by Sellers after the Closing Date pertain to Windmill, they shall be prepared
in accordance with past practice (unless contrary position is required by
Law). Buyer shall file or cause to be filed all Returns attributable to the
Assets, the Business, each Other Business, the Special Inventory or the Other
Assets, or of Windmill, for which Sellers do not have filing responsibility
pursuant to this Section 7.3(c); PROVIDED, HOWEVER, that in the case of any
Returns required to be filed after the Closing Date for which Buyer has
filing responsibility pursuant to this Section 7.3(c) and for which Sellers
could have liability under this Agreement (including any Return for Property
Taxes attributable to the Equipment for any Tax period or portion thereof
ending on or prior to the Conversion Date and any Straddle Period Tax Return
of Windmill, in each case, for which Buyer has filing responsibility pursuant
to this Section 7.3(c)), Buyer (i) shall prepare all such Returns in
accordance with past practice (unless contrary position is required by Law),
(ii) shall provide Sellers with a draft of Buyer's proposed Return at least
30 days prior to the due date (including extensions) for Sellers' review, and
(iii) shall revise such Return prior to filing (and file the Return as so
revised) to reflect any good faith comments of Sellers given to Buyer within
15 days of Sellers' receipt of the draft Return (PROVIDED, HOWEVER, that to
the extent that Buyer does not agree with Sellers' comments, the parties
shall endeavor in good faith to resolve such disagreement and, failing that,
a neutral CPA firm mutually selected by Sellers and Buyer shall resolve the
disagreement prior to the due date, including extensions, and the Return
shall be filed in the manner determined by such CPA firm). Buyer shall
discharge all Tax liabilities shown on Returns that Buyer is required to file
pursuant to this Section 7.3(c); PROVIDED, HOWEVER, that no later than one
(1) Business Day prior to the filing of any such Return, the Sellers shall
pay to the Buyer an amount equal to the amount of Taxes shown due on such
Return for which Sellers are responsible with respect to such Return less any
estimated Taxes paid for such Taxes prior to the Closing Date.
(d) TIMING DIFFERENCES. If as the result of any
adjustment to an Excluded Tax made in an audit or other Tax proceeding, the
Sellers are required to make an additional Tax payment (either directly to a
Taxing Authority or as an indemnity payment under Section 9.2 of this
Agreement), or suffer a reduction in any refund or credit, and, due to such Tax
payment (or reduction in refund or credit, or adjustment giving rise to such
payment or reduction in such refund or credit), the Buyer or Windmill or any of
their Affiliates obtains a Tax benefit, the Buyer shall pay to the Sellers an
amount equal to the actual Tax benefit so derived. The amount of any such Tax
benefit shall be equal to the amount of the actual reduction in Taxes (or
increase in refund or credit) reflected on any Return of the Buyer or Windmill
or any of their Affiliates (net of any resulting increases in Taxes borne by
Buyer on any such other filed Return) for such period (or any earlier period) as
compared to the amount that would have been reflected on such Return in the
absence of the additional Tax payment by (or reduction in refund or credit of)
Sellers. Any adjustment not resulting in a Tax benefit to the period to which it
relates or any earlier period shall be carried forward to succeeding taxable
years until used to the extent permitted by Law. All payments to Sellers
pursuant to this Section 7.3(d) shall be made within 15 days after the filing of
the applicable Return for the period in which the Tax benefit is realized by
Buyer or Windmill and shall be accompanied by supporting calculations in a form
reasonably acceptable to the Sellers documenting the Tax benefit to which the
payment relates. If the Buyer or Windmill makes a payment to Sellers pursuant to
this Section 7.3(d) and the actual Tax benefit (or portion thereof) is
eventually not realized (or another Tax benefit of Buyer is not
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utilized because of the prior use of a Tax benefit for which payment has been
made under this Section 7.3(d)), the Buyer shall promptly notify the Sellers
(with documents reasonably acceptable to Sellers supporting the loss of Tax
benefit) and, upon receipt of such notice, the Sellers shall promptly refund
such payment (or allocable portion thereof) to the Buyer or Windmill
(PROVIDED that in no case shall Sellers, in respect of any payment a refund
of which is sought under this sentence, be required to refund an amount in
excess of such payment previously received by Sellers from Buyer).
(e) REFUNDS. (i) Sellers shall be entitled to any refunds
or credits of or against any Excluded Taxes (plus any interest received with
respect thereto) and Buyer shall file, or cause to be filed, any claims for such
refunds or credits reasonably requested by Sellers; (ii) except to the extent
set forth in Section 7.3(d) or 7.3(e)(i) above, Buyer shall be entitled to any
refunds or credits of Taxes attributable to the Business, the Assets, each Other
Business, the Special Inventory, the Other Assets, or of Windmill (plus any
interest received with respect thereto); (iii) Buyer shall promptly forward to
Sellers or reimburse Sellers for any refund or credits due Sellers (pursuant to
the terms of this Article 7) after receipt thereof, and Sellers shall promptly
forward to Buyer or reimburse Buyer for any refunds or credits due Buyer
(pursuant to the terms of this Article 7) after receipt thereof; (iv) refunds or
credits for a Straddle Period shall be allocated in the manner set forth in the
definition of "Excluded Taxes"; (v) the Buyer and Windmill shall prepare and
timely file an irrevocable election under Treasury Regulation section
1.1502-21(b)(3)(ii)(B) for Buyer's consolidated group to relinquish all
consolidated net operating losses allocable to Windmill for that portion of the
loss carryback period during which Windmill was a member of a Seller's
consolidated group; and (vi) Buyer shall not elect to carry back any item of
loss, deduction or credit of Buyer, Windmill or any of their Affiliates which
arises in any Tax period or portion thereof ending after the Closing Date into
any Tax period or portion thereof ending on or before the Closing Date.
(f) TAX-SHARING AGREEMENTS. Any tax-sharing agreement or
similar arrangement between Sellers, on the one hand, and Windmill, on the other
hand, shall be terminated with respect to Windmill prior to the Closing.
7.4 ACCESS TO INFORMATION. After the Closing, or with respect to
information relating to the Toledo Plant, after the Toledo Plant Closing, upon
reasonable notice, and subject to Sections 5.6 and 6.1, Buyer and Sellers agree
to furnish or cause to be furnished to each other and their representatives,
employees, counsel and accountants access, during normal business hours, to such
information (including records pertinent to the Business, the Pet Milk Business
and the Toledo Plant) and assistance relating to the Business, the Pet Milk
Business and the Toledo Plant as are reasonably necessary for financial
reporting and accounting matters or verifying such party's obligations
hereunder, the preparation and filing of any Tax returns, reports or forms or
the defense of any Tax Claim or assessment or other claim; PROVIDED, HOWEVER,
that such access and assistance do not unreasonably disrupt the normal
operations of Buyer or Sellers.
7.5 BULK SALES WAIVER. Buyer and Sellers hereby waive compliance with
the terms and conditions of any applicable bulk sales Law or similar Laws that
may be applicable to the sale or transfer of the Assets or the Other Assets.
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7.6 EXPENSES. Except as contemplated by that certain letter agreement
dated December 17, 2000 by and among Sellers and Buyer, or as otherwise
expressly provided herein, all costs and expenses incurred in connection with
this Agreement and the transactions contemplated hereby will be paid by the
party incurring such costs and expenses, whether or not the transactions
contemplated hereby are consummated, except that Sellers shall pay the cost of
obtaining a survey of the Toledo Plant site and customary title insurance, with
commercially reasonable and customary endorsements, with respect to title of the
Toledo Plant.
7.7 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, each of the parties hereto will use all reasonable best efforts to
take, or cause to be taken, all action, and to do, or cause to be done, all
things necessary, proper or advisable under applicable Laws to satisfy all
conditions to, and to consummate, the transactions contemplated by this
Agreement and the Collateral Agreements and to carry out the purposes hereof,
including causing any Subsidiaries of such party to execute the Collateral
Agreements, as applicable, and to carry out the purposes thereof; PROVIDED that
notwithstanding anything to the contrary stated in this Agreement, no party
hereto shall be required to pay any consideration for any third-party consent or
waiver. Buyer agrees to use its reasonable best efforts to satisfy, or cause to
be satisfied, all conditions set forth in the Financing Commitment and to
consummate the financing thereunder.
7.8 COLLATERAL AGREEMENTS. At the Closing or the Toledo Plant Closing,
as applicable, each Seller, as applicable, and Buyer shall execute and deliver
(i) the Trademark License Agreements, (ii) the Omnibus Patent Assignment, (iii)
the Pillsbury Omnibus Trademark Assignment, the General Mills Omnibus Trademark
Assignment, the Pet, Inc. Omnibus Trademark Assignment, and the Guinness Omnibus
Trademark Assignment, (iv) the Retail Patent and Technology License Agreement,
(v) the Foodservice Patent and Technology License Agreement, (vi) the Transition
Services Agreement, (vii) the Co-Pack Agreement, (viii) a limited warranty deed
for the real property portions of the Toledo Plant, (ix) the Martha White
Trademark License Agreement and the Hungry Jack Trademark License Agreement and
the Grant Back Patent and Technology License Agreement, (x) the Conversion Plan
Agreement, and (xi) the General Mills Guaranty (collectively, the "Collateral
Agreements").
7.9 SHARED SERVICES. Buyer and Sellers shall cooperate reasonably with
respect to the services and arrangements contemplated by the Transition Services
Agreement, the Co-Pack Agreement and the other Collateral Agreements and other
shared services and arrangements with the intent of ensuring that, as of the
Closing Date, and taking into account all such services and arrangements
together with the purchase and sale of the Assets hereunder, Buyer will have the
ability to continue to operate the Business on terms that are not, taken as a
whole, materially less advantageous to Buyer than the terms on which the
Business was conducted as of the date of the Original Asset Purchase Agreement.
7.10 EMPLOYEE WELFARE BENEFITS. Sellers shall be solely responsible
for: (a) claims for the type of benefits described in Section 3(1) of ERISA
(whether or not covered by ERISA) ("Welfare Benefits") and for workers'
compensation, in each case that are incurred by or with respect to any Business
Employee prior to the date such employee becomes employed by the Buyer,
PROVIDED, in the case of a disability or workers' compensation claim, the Buyer
shall have the right to enforce this provision against the Sellers only with
respect to such a claim that is actually filed on or before (x) with respect to
Closing Date Employees, the first anniversary of
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the Closing Date, and (y) with respect to Toledo Employees, the first
anniversary of the Conversion Date (or, in the case of a claim for a
disability benefits under the General Mills Toledo Plan, the date of the DB
Transfer); (b) claims relating to COBRA Coverage attributable to "qualifying
events" with respect to any Business Employee and his or her beneficiaries
and dependents that occur before the date such Business Employee becomes
employed by Buyer; and (c) claims for Welfare Benefits and for workers'
compensation, in each case that are incurred by or with respect to any
Business Employee who does not become employed by Buyer, whether incurred
before, on or after the Closing Date (in the case of the Closing Date
Employees) or the Conversion Date (in the case of the Toledo Employees).
Buyer shall be solely responsible for: (a) claims for Welfare Benefits and
for workers' compensation, in each case that are incurred by or with respect
to Business Employees from and after the date they become employees of Buyer;
and (b) claims relating to COBRA Coverage attributable to "qualifying events"
with respect to Business Employees who become employees of Buyer, and their
beneficiaries and dependents, that occur after such employees become
employees of Buyer. For purposes of the foregoing, a disability or workers'
compensation claim shall be considered incurred at the time the injury or
condition giving rise to the claim occurs, and a medical/dental claim shall
be considered incurred when the services are rendered or the supplies are
provided, and not when the condition arose; PROVIDED that claims relating to
a hospital confinement that begins before the date a Business Employee
becomes employed by Buyer shall be deemed to have occurred before such
employee became employed by Buyer.
7.11 TOLEDO DEFINED BENEFIT PLAN TRANSFER OF ASSETS AND LIABILITIES.
With respect to Toledo Wage Employees who become employees of Buyer as of the
Conversion Date, General Mills shall cause a transfer of assets and liabilities
(the "DB Transfer") to be made from the trust under the General Mills Toledo
Plan to the trust under the Multifoods Plan, as soon as reasonably practicable
after the Conversion Date and following the later of (a) the earlier of delivery
to General Mills of a favorable determination letter from the Internal Revenue
Service, or an opinion of counsel or indemnity, reasonably satisfactory to
General Mills relating to the qualified status of the Multifoods Plan (as
amended to the date of transfer), or (b) the delivery to Buyer of a favorable
determination letter from the Internal Revenue Service, or an opinion of counsel
or indemnity, reasonably satisfactory to Buyer relating to the qualified status
of the General Mills Toledo Plan (as amended to the date of transfer). Subject
to section 414(l) of the Code, the fair market value of the assets to be
transferred in the DB Transfer shall equal the present value as of the
Conversion Date of the accumulated benefit obligations of the Toledo Wage
Employees who become employees of Buyer as of the Conversion Date, less the
amount of any payments made from the General Mills Toledo Plan with respect to
such employees following the Conversion Date and prior to the date of transfer,
with such present value to be determined using assumptions consistent with those
used to determine the pension expense for the current year, except for the
discount rate. The discount rate will be determined using the Merrill Lynch 10
year plus high quality corporate bond index on the Conversion Date. Buyer shall
cause the Multifoods Plan to accept the assets transferred in the DB Transfer
and to assume the liability for all benefits accrued by such Toledo Wage
Employees under the General Mills Toledo Plan as of the Conversion Date. The
calculations shall be performed by the actuary for the General Mills Toledo Plan
with review by the actuary for the Multifoods Plan. If the actuaries disagree, a
third independent actuary shall be engaged (with the costs shared equally by the
Sellers and Buyer), and the determination of such third independent actuary
shall be binding. The DB Transfer shall not take place prior to the 31st day
following the filing of all Internal
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Revenue Service Forms 5310 required in connection therewith. General Mills and
Buyer shall use best efforts to expedite the DB Transfer, including promptly
providing or filing any documents, forms, or other information necessary to
effectuate the DB Transfer, and communicating and cooperating as necessary to
expedite the DB Transfer. Notwithstanding anything to the contrary in this
Section 7.11, in the event that the union representing the Toledo Wage Employees
agrees, pursuant to Section 6.3(e), that such employees shall not participate in
a defined benefit plan of Buyer following the Conversion Date, the DB Transfer
shall not occur.
7.12 OTHER BUSINESSES.
(a) On the Closing Date, General Mills shall sell,
convey, transfer and assign to Buyer, or cause its applicable Subsidiaries to
sell, convey, transfer and assign to Buyer, (i) the Other Assets and (ii) the
Other Business Inventory, as contemplated by Section 7.13. Following the Closing
Date, Buyer shall assume all responsibility for the operation of each Other
Business, as applicable, except as otherwise expressly provided herein.
Notwithstanding anything to the contrary herein, it is agreed and understood
that any Other Asset, Other Business Inventory or any other asset relating to
each Other Business that, pursuant to this Agreement will be transferred to
Buyer, shall be transferred on the Closing Date.
(b) Prior to, on or after the Closing Date, Buyer shall
not assume, or in any way be liable for the payment, performance or discharge
of, any liabilities, obligations or commitments of Sellers or any of their
Affiliates for manufacturer's coupons issued prior to, or by either Seller on,
the Closing Date and relating to Other Products with respect to each Other
Business.
(c) On the Closing Date, Buyer shall assume pursuant to a
written instrument reasonably satisfactory to Buyer and Sellers and shall pay,
perform and discharge when due all liabilities and obligations for trade
promotions arising from (i) trade promotion activities or events primarily
related to each Other Business that are committed to after the Closing Date and
occur at any time following the Closing Date or (ii) trade promotion activities
or events primarily related to each Other Business that occur following the
Closing Date and that were committed to before the Closing Date, except to the
extent any such single activity or promotion was not disclosed to Buyer by
Sellers and the liability and obligation per customer buying group related to
such activity or promotion exceeds $100,000 unless such activity or promotion
was committed to by Sellers in the ordinary course consistent with past
practice.
(d) After the Closing Date, Buyer shall pay, perform and
discharge when due (i) all obligations, liabilities and commitments of each
Seller in respect of any and all Other Products shipped by Buyer or in respect
of the operation of each Other Business by Buyer at any time after the Closing
Date except where such Other Products constituted finished products as of the
Closing Date and such liabilities, obligations or commitments of Sellers
constituted product liabilities or recall liabilities, unless (and to the extent
that) the liabilities, obligations or commitments were caused by Buyer's
negligence in the storage or transportation of such Other Products after the
Closing Date or Buyer's failure after the Closing Date to employ quality control
standards of at least the standards employed by Sellers prior to the Closing
Date, (ii) all refund and replacement obligations relating to Other Products
shipped after the Closing Date,
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and (iii) all liabilities and obligations for customer deductions
attributable to invoices issued by Buyer with respect to Other Products
shipped after the Closing Date.
7.13 OTHER BUSINESS INVENTORY.
(a) On the Closing Date, General Mills shall sell,
convey, transfer and assign to Buyer, or cause its Affiliates to sell, convey,
transfer and assign to Buyer, the Other Business Inventory with respect to each
Other Business, except for an amount of such inventory with respect to such
Other Business necessary for General Mills to fill purchase orders with respect
to each such Other Business existing as of the Closing Date, which inventory
Buyer hereby permits General Mills to retain in order to fill such orders and
which inventory shall not be deemed to be Other Business Inventory for purposes
of this Agreement. Within thirty (30) days following the Closing Date, General
Mills shall prepare and deliver to Buyer a statement setting forth the type and
value of the Other Business Inventory, as of the Closing Date, transferred and
assigned to Buyer on the Closing Date, which statement shall be derived from a
physical taking of such Other Business Inventory as of the Closing Date and
shall be prepared in a manner consistent with the Inventory Standards (the
"Other Business Inventory Statement"). Buyer and its representatives shall have
such opportunity as Buyer reasonably deems appropriate to observe the taking and
reconciliation of such Other Business Inventory (which may begin prior to the
Closing Date) in connection with the preparation of the Other Business Inventory
Statement. Buyer shall provide General Mills and its accountants full access to
the books and records, to any other information, including work papers of its
accountants, and to any employees of Buyer, in each case as may be reasonably
necessary for General Mills to prepare the Other Business Inventory Statement,
to respond to Buyer's Other Business Objection (as defined herein) and to
prepare materials for presentation to the CPA Firm in connection with the
matters contemplated by Section 7.13(c).
(b) Buyer shall, within thirty (30) days after the
delivery by General Mills of the Other Business Inventory Statement, complete
its review thereof. After delivery of the Other Business Inventory Statement,
General Mills shall provide Buyer and its accountants full access to all books
and records, to any other information, including working papers of its
accountants, and to any employees of Sellers, in each case used in the
preparation of the Other Business Inventory Statement or as may otherwise be
reasonably necessary for Buyer to prepare the Buyer's Other Business Objection
and to prepare materials for presentation to the CPA Firm in connection with the
matters contemplated by Section 7.13(c). The Other Business Inventory Statement
shall be binding and conclusive upon, and deemed accepted by, Buyer unless Buyer
shall have notified General Mills in writing within thirty (30) days after
delivery of the Other Business Inventory Statement of any objection thereto
("Buyer's Other Business Objection"). Buyer's Other Business Objection shall set
forth a description of the basis of the Buyer's Other Business Objection and the
adjustments to the value of Other Business Inventory reflected on the Other
Business Inventory Statement that Buyer believes should be made. Any items not
disputed during the foregoing thirty (30) day period shall be deemed to have
been accepted by Buyer.
(c) If General Mills and Buyer are unable to resolve all
of their disputes with respect to the Other Business Inventory Statement within
thirty (30) days following General Mills' receipt of the Buyer's Other Business
Objection to the Other Business Inventory
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Statement pursuant to Section 7.13(b), they shall refer their remaining
differences to the CPA Firm for decision, which decision shall be made
consistent with the Inventory Standards within forty-five (45) days and shall
be final and binding on the parties, PROVIDED that the CPA Firm's
determination as to any item set forth in Buyer's Other Business Objection
shall not be more beneficial to General Mills than the determination of that
item by General Mills in the Other Business Inventory Statement or more
beneficial to Buyer than the determination of that item in Buyer's Other
Business Objection. Any expenses relating to the engagement of the CPA Firm
shall be shared equally by General Mills, on the one hand, and Buyer, on the
other hand. General Mills and Buyer shall each bear the fees of their
respective auditors incurred in connection with the determination and review
of the Other Business Inventory Statement.
(d) The Other Business Inventory Statement shall become
final and binding on the parties upon the earliest of (i) if no Buyer's Other
Business Objection has been given, the expiration of the period within which
Buyer must make its objection pursuant to Section 7.13(b) hereof, (ii) agreement
in writing by General Mills and Buyer that the Other Business Inventory
Statement, together with any modifications thereto agreed to by General Mills
and Buyer, shall be final and binding and (iii) the date on which the CPA Firm
shall issue its written determination with respect to any dispute relating to
the Other Business Inventory Statement. The Other Business Inventory Statement,
as submitted by General Mills if no timely Buyer's Other Business Objection has
been given or as adjusted pursuant to any agreement between the parties or as
determined pursuant to the decision of the CPA Firm, when final and binding on
all parties, is herein referred to as the "Final Other Business Inventory
Statement."
(e) Within ten (10) Business Days following issuance of
the Final Other Business Inventory Statement, the payment payable pursuant to
this Section 7.13(e) (the "Other Business Payment") and interest thereon shall
be paid by Buyer to General Mills by wire transfer of immediately available
funds to a bank account or bank accounts designated in writing by General Mills.
The Other Business Payment shall be equal to the value of the Other Business
Inventory as reflected on the Final Other Business Inventory Statement. The
Other Business Payment shall bear interest from the Closing Date to the date of
payment at the Closing Date Interest Rate, which interest shall be calculated on
the basis of a 365-day year and the actual number of days elapsed and such
interest shall be paid on the same date and in the same manner as such Other
Business Payment.
7.14 MANUFACTURER CODES. If after the Closing Date, General Mills
requests in writing that Buyer use reasonable best efforts to change the portion
of universal product codes constituting manufacturer codes with respect to the
Business and each Other Business, Buyer shall use such reasonable best efforts
to change such manufacturer codes. To the extent Buyer incurs any direct,
reasonable documented out-of-pocket costs as a result of the change in such
manufacturer codes (including new or additional slotting allowances or similar
charges), Buyer shall be liable for the first $300,000 of such costs and General
Mills shall be liable for any amount in excess thereof.
7.15 CO-PACKING; MARKETING. (a) Notwithstanding anything to the
contrary herein or in any Collateral Agreement, as reasonably promptly as
practicable prior to the Closing, General Mills shall enter into a co-packing
agreement (the "Third-Party Co-Pack Agreement") with a third-party co-packer
(the "Third Party Co-Packer") to perform General Mills' obligations under
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the Co-Pack Agreement to the extent such obligations relate to co-packing
products at the Tennessee Plant; PROVIDED, that Buyer shall be a third-party
beneficiary of the Third-Party Co-Pack Agreement; PROVIDED, HOWEVER, that
General Mills shall in all events be responsible for ensuring that, directly
or indirectly, all of General Mills' obligations under the Co-Pack Agreement,
including General Mills' obligations under the Co-Pack Agreement to the
extent such obligations relate to co-packing products at the Tennessee Plant,
are performed pursuant to the terms and upon the conditions set forth in the
Co-Pack Agreement.
(b) As reasonably promptly as practicable following
the Closing, General Mills shall provide links on the Pillsbury website (or
other website maintained by General Mills and relating to Pillsbury to the
extent General Mills discontinues the Pillsbury website) to Buyer's website
for so long as and to the extent that General Mills maintains such Pillsbury
website or other website relating to Pillsbury, PROVIDED that Buyer pay
General Mills any incremental direct cost associated with establishing and
maintaining such link and that Buyer may provide General Mills with written
notice of Buyer's decision that General Mills terminate such link to Buyer's
website. Upon receipt of such notice, General Mills shall terminate such link
as promptly as practicable
7.16 ESCROW FUND. The parties acknowledge that each of General Mills
and Diageo has agreed at Closing to deliver to the Trustee, reporting to the
FTC, $5,000,000 ($10,000,000 in the aggregate) in cash to be held by the Trustee
pursuant to an escrow agreement between the Trustee, General Mills, Diageo and
Buyer (the "Escrow Agreement"). The Escrow Agreement shall provide that the
Trustee shall deposit such funds into an interest-bearing account (the "Escrow
Fund") to be used in a manner consistent with this Section 7.16. The Escrow
Agreement shall provide that funds from the Escrow Fund (including earnings, but
excluding costs of administration which shall be paid from the Escrow Fund)
shall be made available to reimburse Buyer for the costs of either (i) Buyer's
restructuring or anticipated restructuring of the composition of its selling
organization in order to assume directly any part of the responsibilities
currently performed by the sales force of Pillsbury or (ii) Buyer's need to
finance changes in Buyer's operations of the businesses that Buyer is acquiring
pursuant to this Agreement, which changes were unforeseen as of the Closing
Date. Buyer shall (A) maintain records relating to and sufficient to identify
all expenditures and costs and recipients of expenditures or anticipated
expenditures and costs and recipients of expenditures related to Buyer's
restructuring or anticipated restructuring of the composition of its selling
organization as described in subpart (i) in the immediately preceding sentence
or Buyer's need to finance changes in Buyer's operations of the businesses as
described in subpart (ii) of the immediately preceding sentence and (B) make
available such records upon request to the Trustee or to representatives of the
FTC. To obtain release of funds from the Escrow Fund, Buyer shall make a written
request to the Trustee, state the amount of funds requested, provide a
description of how the expenditures and costs for which release of funds is
sought were incurred or are anticipated to be incurred, and include an
attestation that the release will not be inconsistent with the use of the Escrow
Fund permitted by this Section 7.16. The Trustee shall have full authority to
review the written request submitted by the Buyer, request any additional
information that may be necessary to determine whether the conditions imposed in
this Section 7.16 for release have been met, and report to the FTC; PROVIDED,
HOWEVER, that no funds from the Escrow Fund shall be paid without approval by
the Trustee. The Trustee shall (X) not disclose any information received from
Buyer to General Mills or Diageo, (Y) maintain records of all
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information submitted by Buyer, and (Z) make available such records upon
request to representatives of the FTC. Funds for reimbursement shall be made
available from the Escrow Fund for a period of up to five years from the time
the Escrow Fund is created at the end of which all funds remaining in the
Escrow Fund shall be paid to and shared equally by General Mills and Diageo.
The FTC may on its own initiative or at the request of the Trustee issue such
additional orders or directions as may be necessary or appropriate to assure
compliance with this Section 7.16.
7.17 DUE DILIGENCE OUT. The parties agree that (A) during the period
from the date hereof until the Closing, Sellers and Buyer shall cooperate to
permit Buyer to conduct due diligence with respect to the Other Assets and the
Other Businesses, (B) Buyer, in its sole discretion for any reason, shall have
the right to provide written notice (the "Due Diligence Out Notice") to Sellers
at any time prior to Closing that sets forth that Buyer has determined not to,
and shall not, purchase the inventory and other assets relating to the Farmhouse
Business, La Pina Business, Pet Milk Business, Red Band Business, and/or
Softasilk Business (which Due Diligence Out Notice shall specify which of such
businesses, if any, Buyer will purchase the inventory and other assets thereof
(the "Wanted Other Business"), and which of such businesses, if any, Buyer will
not purchase the inventory and other assets thereof (the "Unwanted Other
Business")), and (C) that in the event that Buyer provides Sellers with the Due
Diligence Out Notice then this Agreement and the Collateral Agreements shall
hereby be deemed revised accordingly to delete all references and provisions
relating to the purchase and sale of the inventory and other assets relating to
such Unwanted Other Business and the assumption by Buyer of the liabilities
related thereto to the extent provided herein.
ARTICLE 8
CLOSING
8.1 CLOSING. The closing (the "Closing") of the purchase and sale of
the Assets (other than the Toledo Plant Assets) and Other Assets and of the
transactions contemplated by this Agreement (other than the purchase and sale of
the Toledo Plant Assets) shall be held at the offices of Faegre & Benson LLP,
2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis, Minnesota, as
promptly as practicable following the satisfaction or waiver of the conditions
to Closing set forth in Sections 8.2 and 8.3 (except for those conditions to be
satisfied on the Closing Date), but no later than the second Business Day
following occurrence of both (A) such satisfaction or waiver and (B) the later
of (I) thirty days after the consummation of the Acquisition and (II) the
expiration or early termination of the waiting period (and any extension
thereof) under the HSR Act applicable to the purchase and sale of the Assets,
the Other Assets and the Toledo Plant Assets and the other transactions
contemplated by this Agreement and the Collateral Agreements, if not exempted
under the HSR Act and applicable regulations, or on such other date, time and
place as may be mutually agreed in writing by Sellers and Buyer. The date on
which the Closing shall occur is herein referred to as the "Closing Date." The
Closing shall not include the closing of the purchase and sale of the Toledo
Plant, which shall occur at the Toledo Plant Closing on the Toledo Plant Closing
Date, pursuant to Section 8.4. Buyer and Sellers shall also deliver, or cause to
be delivered, as applicable, the following:
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(a) At the Closing, Buyer shall deliver to Sellers (i) by
wire transfer to the bank account or bank accounts per the wire transfer
instructions on SCHEDULE 8.1(a) hereto, immediately available funds in an
aggregate amount equal to the Purchase Price (before giving effect to any
adjustments pursuant to Sections 2.9(e) and 5.8(c)); (ii) appropriately executed
instruments of assumption in form and substance reasonably satisfactory to
Sellers and their counsel evidencing and effecting the assumption by Buyer of
the Assumed Liabilities and such other documents as are specifically required by
this Agreement (it being understood that such instruments shall not require
Buyer or any other Person to make any additional representations, warranties or
covenants, express or implied, not contained in this Agreement); and (iii) the
certificate required pursuant to Section 8.3(a)(iii).
(b) At the Closing, each Seller, as applicable, shall
deliver and cause its applicable Subsidiaries to deliver to Buyer (i)
appropriately executed instruments of sale, assignment, transfer and conveyance,
in each case in form and substance reasonably satisfactory to Buyer and its
counsel evidencing and effecting the sale and transfer to Buyer of the Assets
(other than the Toledo Plant Assets) and Other Assets and such other documents
as are specifically required by this Agreement (it being understood that such
instruments shall not require either Sellers, their Subsidiaries or any other
Person to make any additional representations, warranties or covenants, express
or implied, not contained in this Agreement); (ii) the certificate required
pursuant to Section 8.2(a)(iii); (iii) a Schedule of Accrued Paid Time Off for
Business Employees who have been employed by Buyer at the Closing Date, to the
extent practicable; and (iv) stock certificates representing the Stock, with
appropriate properly signed stock powers suitable to transfer the Stock to
Buyer, with stamps attached, if any.
(c) At the Closing, the Buyer and each Seller, as
applicable shall deliver, and Sellers shall cause their applicable Subsidiaries
to deliver, the executed Collateral Agreements, as applicable, to which they are
parties.
(d) At the Closing, (i) each Seller shall deliver
certificates of the Secretary or an Assistant Secretary of such Seller, dated
the Closing Date, (A) as to the incumbency and signatures of the officers or
representatives of such Seller executing this Agreement and the Collateral
Agreements, as applicable, together with evidence of incumbency of such
Secretary or Assistant Secretary, and (B) certifying attached resolutions of the
Board of Directors of such Seller that authorize the execution, delivery and
performance of this Agreement and the Collateral Agreements, and (ii) each
Seller shall deliver a good standing certificate, dated no more than two (2)
Business Days prior to the Closing, of such Seller.
(e) At the Closing, (i) Buyer shall deliver certificates
of the Secretary or an Assistant Secretary of Buyer, dated the Closing Date, (A)
as to the incumbency and signatures of the officers or representatives of Buyer
executing this Agreement and the Collateral Agreements, together with evidence
of incumbency of such Secretary or Assistant Secretary, and (B) certifying
attached resolutions of the Board of Directors of Buyer that authorize the
execution, delivery and performance of this Agreement and the Collateral
Agreements, and (ii) Buyer shall deliver a good standing certificate, dated no
more than two (2) Business Days prior to the Closing, of Buyer.
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(f) General Mills on behalf of itself, and Pillsbury on
behalf of itself, shall deliver to Buyer a duly executed and acknowledged
affidavit dated the Closing Date in form and substance reasonably acceptable to
Buyer, certifying facts that would exempt the transactions contemplated hereby
from the provisions of the Foreign Investors Real Property Tax Act.
8.2 BUYER'S CONDITIONS TO CLOSING. The obligation of Buyer to purchase
and pay for the Assets (other than the Toledo Plant Assets) and the Other Assets
at the Closing and assume the Assumed Liabilities at the Closing, and to
consummate the other transactions contemplated hereby, is subject to the
satisfaction (or waiver by Buyer) as of the Closing of the following conditions:
(a) (i) each of the representations and warranties of
Sellers contained in this Agreement shall be true and correct except for such
failures to be true and correct (without giving effect to any Materiality
Qualifiers) that, individually or in the aggregate, have not had and would not
reasonably be expected to have a Material Adverse Effect or prohibit or
materially impair the ability of each Seller to consummate the transactions
hereunder, in each case on and as of the Closing Date, as though made on and as
of the Closing Date (unless and to the extent any such representation or
warranty speaks specifically as of an earlier date, in which case, as of such
earlier date); (ii) each Seller shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by such Seller by the time of the Closing; and (iii)
Sellers shall have delivered to Buyer a certificate dated the Closing Date and
signed by a duly authorized officer of each Seller confirming the foregoing;
(b) no injunction or order, writ, decree or judgment of
any Governmental Entity of competent jurisdiction shall be in effect as of the
Closing that makes illegal, restrains or prohibits the purchase and sale of the
Assets or the consummation of the other material transactions contemplated by
this Agreement;
(c) each Seller or its Affiliates, as applicable, shall
have executed and delivered to Buyer each of the Collateral Agreements, as
applicable, and all other documents and instruments required to be delivered by
such Seller to Buyer hereunder;
(d) since the date of this Agreement, there shall not
have been any condition, circumstance, event or occurrence occurring or existing
that, individually or in the aggregate, has resulted or would reasonably be
expected to result in a Material Adverse Effect;
(e) the provisions of Section 7.9 shall have been
implemented in such a manner that Buyer shall have the ability to continue to
operate the Business on terms that are, taken as a whole, not materially less
advantageous to Buyer than the terms on which the Business was conducted as of
the date of the Original Asset Purchase Agreement;
(f) the proceeds of the financing contemplated by the
Financing Commitment, or such lesser amount as may be necessary to consummate
the transactions contemplated by this Agreement on the terms set forth herein
and to provide Buyer with at least $75,000,000 of working capital and other
post-Closing financing, shall be available to Buyer;
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(g) other than the filing pursuant to the HSR Act, Buyer
shall have received all consents, licenses, authorizations, certificates and
permits required by Governmental Entities to consummate the transactions
contemplated by this Agreement, except for failures to receive such consents,
licenses, authorizations, certificates and permits that, individually or in the
aggregate, and taking into account the availability of the arrangements
contemplated by the Transition Services Agreement, the Co-Pack Agreement and the
other Collateral Agreements, would not reasonably be expected to have a Material
Adverse Effect or prohibit or materially impair the ability of Buyer to
consummate the transactions hereunder;
(h) the Acquisition shall have been consummated;
(i) General Mills, Diageo and the Trustee shall have executed
and delivered to Buyer the Escrow Agreement;
(j) Buyer shall have received consents from, or modifications
to or new agreements or arrangements with, the Persons identified in SCHEDULE
8.2(j) in such a manner that Buyer shall have the ability to continue to operate
the Business on terms that are, taken as a whole, not materially less
advantageous to Buyer than the terms on which the Business was conducted as of
the date of the Original Asset Purchase Agreement, which modifications or new
agreements, to the extent SCHEDULE 8.2(j) contemplates specific terms, shall be
on substantially the terms contemplated by such Schedule;
(k) the Diageo Debt Guarantee Agreement shall have been
executed by all necessary parties thereto and delivered to Buyer; and
(l) the waiting period (and any extension thereof) under the
HSR Act applicable to the purchase and sale of the Assets, the Other Assets and
the Toledo Plant Assets and the other transactions contemplated by this
Agreement and the Collateral Agreements, if not exempted under the HSR Act and
applicable regulations, shall have been terminated or shall have expired; and
all other material consents of, or registrations, declarations or filings with,
or expirations of waiting periods imposed by, any Governmental Entity legally
required for the consummation of the purchase and sale of the Assets, the Other
Assets and the Toledo Plant Assets and the other transactions contemplated by
this Agreement and the Collateral Agreements shall have been obtained or filed
or shall have occurred.
8.3 SELLERS' CONDITIONS TO CLOSING. The obligation of each Seller to
sell and deliver or cause to be sold and delivered the Assets (other than the
Toledo Plant Assets) and the Other Assets at the Closing to Buyer, and to
consummate the other transactions contemplated hereby, is subject to the
satisfaction (or waiver by such Seller) as of the Closing of the following
conditions:
(a) (i) each of the representations and warranties of
Buyer contained in this Agreement shall be true and correct except for such
failures to be true and correct (without giving effect to any Materiality
Qualifiers) that, individually or in the aggregate, have not had and would not
reasonably be expected to have a material adverse effect on the financial
condition of Buyer or the ability of Buyer to consummate the transactions
hereunder, in each case on and as of the Closing Date, as though made on and as
of the Closing Date (unless and to
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the extent any such representation or warranty speaks specifically as of an
earlier date, in which case, as of such earlier date); (ii) Buyer shall have
performed or complied in all material respects with the obligations and
covenants required by this Agreement to be performed or complied with by
Buyer by the time of the Closing; and (iii) Buyer shall have delivered to
Sellers a certificate dated the Closing Date and signed by a duly authorized
officer of Buyer confirming the foregoing;
(b) no injunction or order, writ, decree or judgment of
any Governmental Entity of competent jurisdiction shall be in effect as of the
Closing that makes illegal or restrains or prohibits the purchase and sale of
the Assets or the consummation of the other transactions contemplated by this
Agreement;
(c) Buyer shall have executed and delivered to Sellers
each of the Collateral Agreements, as applicable, and all other documents and
instruments required to be delivered by Buyer to such Seller hereunder;
(d) Buyer shall have delivered to Sellers properly executed
resale exemption certificates containing the requisite tax registration numbers
for the Inventory being transferred by Sellers pursuant to this Agreement;
(e) the Acquisition shall have been consummated;
(f) Buyer and the Trustee shall have executed and delivered to
General Mills and Diageo the Escrow Agreement; and
(g) the waiting period (and any extension thereof) under the
HSR Act applicable to the purchase and sale of the Assets, the Other Assets and
the Toledo Plant Assets and the other transactions contemplated by this
Agreement and the Collateral Agreements, if not exempted under the HSR Act and
applicable regulations, shall have been terminated or shall have expired; and
all other material consents of, or registrations, declarations or filings with,
or expirations of waiting periods imposed by, any Governmental Entity legally
required for the consummation of the purchase and sale of the Assets, the Other
Assets and the Toledo Plant Assets and the other transactions contemplated by
this Agreement and the Collateral Agreements shall have been obtained or filed
or shall have occurred.
8.4 TOLEDO PLANT CLOSING.
(a) The closing of the purchase and sale of the Toledo
Plant Assets (the "Toledo Plant Closing") shall be held at the offices of Faegre
& Benson LLP, 2200 Wells Fargo Center, 90 South Seventh Street, Minneapolis,
Minnesota on the Conversion Date. The date on which the Toledo Plant Closing
shall occur is referred to herein as the "Toledo Plant Closing Date."
Notwithstanding any provision hereof to the contrary, the only conditions to the
occurrence of the Toledo Plant Closing shall be that the Closing and the
Conversion Date shall have occurred, and none of the conditions set forth in
Sections 8.2 or 8.3 shall apply to or be conditions to the occurrence of the
Toledo Plant Closing or shall have any force or effect after the Closing.
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(b) At the Toledo Plant Closing, (i) General Mills shall cause
General Mills Operations to deliver appropriately executed instruments of sale,
assignment, transfer and conveyance (including a limited warranty deed; an
affidavit of title; notices of transfer addressed to utility companies, parties
to the Toledo Plant Assigned Contracts and the Toledo Plant Dividable Contracts
and other applicable parties; a settlement statement summarizing the prorations
described in Section 8.4(c) below; assignments of any assignable warranties
relating to the roof or equipment which are a part of the Toledo Plant; and
other customary transfer instruments in connection with the real property
portions of the Toledo Plant) in each case in form and substance reasonably
satisfactory to Buyer and Sellers and their respective counsel, evidencing and
effecting the sale and transfer to Buyer of all of Sellers' and General Mills
Operations' right, title and interest in and to the Toledo Plant Assets (other
than Excluded Toledo Assets), it being understood that such instruments shall
not require General Mills, its Subsidiaries or any other Person to make any
additional representations, warranties or covenants, express or implied, not
contained in this Agreement; (ii) Buyer shall deliver to General Mills by wire
transfer to the bank account or bank accounts per the wire transfer instructions
on SCHEDULE 8.1(a) hereto, immediately available funds in an aggregate amount
equal to one-half of the Toledo Plant Purchase Price ($5,750,000); (iii) General
Mills and Buyer shall deliver to one another certificates, evidence of authority
and (in the case of General Mills) a FIRPTA affidavit substantially similar to
those which were delivered at the Closing pursuant to subparts (d), (e) and (f)
of Section 8.1, in form and substance reasonably acceptable to Buyer and General
Mills, with respect to the purchase and sale of the Toledo Plant Assets; (iv)
General Mills shall deliver to Buyer legal and actual possession of the Toledo
Plant (subject, however to the lease described in Section 8.4(d), if
applicable), including keys and any maintenance records and plans and
specifications in Sellers' possession relating to the physical condition of the
Toledo Plant (to the extent they do not include confidential information with
respect to Sellers' cereal-related operations); and (v) General Mills shall
deliver to Buyer evidence of General Mills' satisfaction of requirements 5 and 8
set forth in Schedule B-Section 1 of the Title Commitment. Buyer agrees
irrevocably and unconditionally that on the 180th day after the Toledo Plant
Closing Date, Buyer shall deliver to General Mills by wire transfer to the bank
account or bank accounts per the wire transfer instructions on SCHEDULE 8.1(a)
hereto, immediately available funds in an aggregate amount equal to $5,750,000,
the balance of the Toledo Plant Purchase Price (the "Deferred Amount"). Buyer
agrees that it shall pay such Deferred Amount in full, without deduction or
offset, pursuant to the terms set forth in the immediately preceding sentence
and that Buyer in no event shall refuse to pay such Deferred Amount in full on
such 180th day or attempt to set off against the Deferred Amount any claims
Buyer may have against either Seller.
(c) The Toledo Plant Purchase Price shall be adjusted,
upwards or downwards, to reflect the proration as of the Toledo Plant Closing
Date, as between Sellers, on the one hand, and Buyer, on the other hand, of (i)
utility charges and personal or real property Taxes relating to the Toledo
Plant, with Sellers being responsible for all such charges and personal or real
property Taxes applicable to the period prior to and including the Toledo Plant
Closing Date and Buyer being responsible for all such charges and personal or
real property Taxes applicable to the period after the Toledo Plant Closing Date
and (ii) any special or other assessments levied or pending by any Governmental
Entity prior to the Toledo Plant Closing Date with respect to the Toledo Plant,
with Sellers being responsible for all such assessments regardless of whether
payable prior to or after the Toledo Plant Closing Date. All such prorations
referred to in clause (i) of the immediately preceding sentence shall be
calculated on a
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per diem basis (based upon the actual number of calendar days in the
applicable proration period) in the customary manner for commercial real
estate transactions in the county in which the Toledo Plant is located. To
the extent any such prorations are made based on estimates of actual charges
or property Taxes, such prorations shall be adjusted as between the parties
when the actual charges become known.
(d) General Mills and Buyer agree that if General
Mills notifies Buyer in writing at least 30 days prior to the anticipated
Toledo Plant Closing Date that General Mills elects to lease from Buyer the
portions of the Toledo Plant currently used for cereal processing,
production, packaging and material handling, then at the Toledo Plant Closing
General Mills and Buyer shall enter into a lease on the terms set forth in
the Toledo Plant Lease Term Sheet and other customary and commercially
reasonable terms. Such notice shall specify the term of the lease (which term
shall not exceed three months commencing upon the Toledo Plant Closing Date).
In no event shall the premises under such lease include the warehousing space
used in connection with cereal production at the Toledo Plant or the storage
silos which are to be used by Buyer in its dry-mix production operations
pursuant to the Conversion Plan (collectively, the "Warehouse Space"). The
parties agree to negotiate such lease agreement in good faith and to resolve
any disputes expeditiously prior to the Toledo Plant Closing Date.
ARTICLE 9
INDEMNIFICATION
9.1 SURVIVAL. The representations and warranties of the parties
hereto in this Agreement shall survive the execution and delivery hereof and
the delivery of all of the documents executed in connection herewith and
shall continue in full force and effect after the date hereof and after the
Closing Date for a period of eighteen (18) months after the Closing Date,
except that (x) the representations and warranties of Sellers pursuant to
Sections 3.1(a), 3.2, 3.3(a), the last sentence of Section 3.3(b), Section
3.7, and Sections 3.19(b)(i), 3.19(b)(viii), 3.19(b)(ix), 3.19(b)(x), and of
Buyer pursuant to Sections 4.1(a) and 4.4 and claims based upon any party's
fraudulent misrepresentations shall survive until the expiration of the
relevant statute of limitations (including any extensions thereto) and (y)
the other representations and warranties of Sellers pursuant to Section 3.19
and, to the extent related to the Toledo Plant Assigned Contracts and the
Toledo Plant Dividable Contracts, pursuant to Section 3.5, shall survive for
a period of eighteen (18) months after the Toledo Plant Closing Date (as the
case may be, the "Expiration Date"). No action or proceeding may be brought
with respect to any of the representations and warranties unless written
notice thereof, setting forth in reasonable detail the claimed
misrepresentation or breach of warranty, shall have been delivered to the
party alleged to have breached such representation or warranty prior to the
applicable Expiration Date.
9.2 INDEMNIFICATION BY SELLERS. From and after the Closing Date,
subject to the provisions of this Article 9, Sellers shall jointly and
severally indemnify Buyer, its Affiliates and each of their respective
officers, directors, employees, agents and representatives, against and hold
them harmless from any loss, claim, damage, liability, cost or expense
(including reasonable fees and expenses of lawyers, accountants,
investigators, experts and other professionals) (collectively, a "Loss")
suffered or incurred by any such indemnified party to the extent arising from
(i) any breach of any representation or warranty of either Seller contained
in
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this Agreement or in any certificate delivered pursuant to Sections 8.1 and
8.2, (ii) any nonfulfillment of or failure to comply with any covenant or
agreement of Sellers or any of them contained in this Agreement or any
Collateral Agreement, (iii) the Excluded Liabilities, (iv) without limiting
the generality of the foregoing, any liability, obligation or commitment
resulting or arising from the ownership, operation or condition of the
Business or the Assets (other than the Toledo Plant Assets) on or prior to
the Closing Date (except to the extent arising from Buyer's operation on the
Closing Date) or from the ownership, operation or condition of the Toledo
Plant Assets on or prior to the Toledo Plant Closing Date (except to the
extent arising from Buyer's operation on the Toledo Plant Closing Date), or
from the ownership, operation or condition of each Other Business on or prior
to the Closing Date (except to the extent arising from Buyer's operation on
the Closing Date), in each case other than Assumed Liabilities or other
obligations which Buyer has expressly agreed to pay pursuant to this
Agreement or the Collateral Agreements, (v) any liability or obligation
resulting from any failure of Sellers or Buyer to comply fully with any
applicable bulk transfer Laws or any Tax Laws relating to the obligations of
a buyer of assets in bulk transfer, except to the extent they constitute
Assumed Liabilities, Transfer Taxes or other obligations which Buyer has
expressly agreed to pay pursuant to this Agreement or the Collateral
Agreements; (vi) the failure of Sellers to have the right prior to Closing
(or of Buyer to have the right after Closing if Buyer conducts the applicable
operations of the Business in substantially the same manner as Sellers
conducted such applicable operations prior to Closing) to use the Lemelson
Patents or the Research Resources Patent or any of them or any intellectual
property subject thereto in connection with the Business or each Other
Business; (vii) any additional Taxes (calculated as set forth in Section
9.6(e)) of the Buyer or Windmill (or successors thereto) for Tax periods (or
portions thereof) beginning after the Closing Date that would not have arisen
but for an increase in the fair market value of the Stock above the amount
set forth on SCHEDULE 2.2 as a result of any adjustment by a Taxing Authority
made in an audit or other Tax proceeding; and (viii) any liability,
obligation or commitment of Windmill or Buyer arising out of Windmill's
existence, operations or ownership of assets on or prior to the Closing Date
(except to the extent arising from Buyer's operation on the Closing Date) or
the ownership of the Stock prior to Closing (provided that Tax liabilities
and obligations shall not be governed by the above provisions of this clause
(viii) and shall instead be governed by Section 2.6(f), the definition of
"Excluded Taxes" and clause (vii) of this Section 9.2); PROVIDED, HOWEVER,
that, notwithstanding any provision of this Agreement to the contrary, (a)
Sellers' liability or obligation hereunder relating to or arising from the
presence of any Hazardous Material in, on or under the Toledo Plant shall not
apply to the extent that (x) such Hazardous Material was not classified as a
Hazardous Material as of the Toledo Plant Closing Date, (y) if the quantity
or other aspect of such Hazardous Material is regulated under any
Environmental Law as of the Toledo Plant Closing Date, the quantity or such
other aspect was then in compliance with the applicable regulation, or (z)
such liability or obligation shall have been caused by the negligent act or
omission of Buyer or Buyer's Affiliates or successors or their respective
employees, directors, officers, agents or representatives, and (b) Sellers
shall be liable for the costs of any cleanup, remediation or other action in
response to or in connection with any Excluded Environmental Liability only
to the extent that: (A) such cleanup, remediation or other action is
reasonably necessary in accordance with prevailing standards and is conducted
in a commercially reasonable manner (without regard to the availability of
indemnification hereunder); and (B) Buyer agrees to assign to Sellers any
rights or claims it or its Affiliates might have against any third parties to
recover the cost of such cleanup, remediation or other
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action subsequent to (x) completion thereof and full payment by Sellers of
all of their obligations in respect thereof or (y) Sellers' payment to Buyer
of the estimated cost of such obligations and Sellers' agreement, by
instrument in form and substance and with an obligor reasonably acceptable to
Buyer, to (1) pay any additional amounts necessary to pay in full all of
their obligations in respect thereof and (2) in the case of either (x) or (y)
above in this clause (B), indemnify Buyer against any and all claims,
counterclaims and other liabilities asserted against Buyer or any party for
which Buyer is liable in connection therewith. Sellers shall be provided a
reasonable opportunity to monitor any cleanup, remediation or other action
(either directly or through reports from third parties reasonably acceptable
to Sellers) for which Sellers are liable or potentially liable hereunder. The
foregoing limitations shall not limit any liability of Sellers for matters
arising in connection with Hazardous Materials which arise independently of
this Agreement. Notwithstanding anything to the contrary in this Section 9.2,
no liability shall arise or be attributable to Pillsbury prior to the Closing
for indemnification obligations, if any, of Sellers hereunder related to
Losses to the extent arising (a) from any breach of any representation or
warranty in Section 3.19 or (b) with respect to the Toledo Plant, pursuant to
clause (iv) of this Section 9.2.
9.3 INDEMNIFICATION BY BUYER. From and after the Closing Date, Buyer
shall indemnify Sellers, their Affiliates and each of their respective
officers, directors, employees, agents and representatives against and hold
them harmless from any Loss suffered or incurred by any such indemnified
party to the extent arising from (i) any breach of any representation or
warranty of Buyer contained in this Agreement or in any certificate delivered
pursuant to Sections 8.1 and 8.3; (ii) any non-fulfillment of or failure to
comply with any covenant or agreement of Buyer contained in this Agreement or
any Collateral Agreement; (iii) the Assumed Liabilities; (iv) any Taxes of
Windmill (other than Excluded Taxes); (v) any liability, commitment or
obligation with respect to portions of the Puerto Rico Distributorship
Agreements transferred to Buyer that arises under Puerto Rico's local "law
75" or otherwise as a result of the termination or other action by Buyer on
or after the date of such transfer with respect to such portions; and (vi)
without limiting the generality of the foregoing, any liability, obligation
or commitment resulting from the ownership, operation or condition (x) of the
Business, the Assets (not including the Toledo Plant Assets), Conversion Date
Inventory, or Windmill following the Closing, (y) of each Other Business, the
Other Business Inventory or the Other Assets following the Closing Date, or
(z) of the Toledo Plant Assets (including in respect of any Hazardous
Materials located in, on, under or about the Toledo Plant after the Toledo
Plant Closing Date, except to the extent the related liability, obligation or
commitment is covered by Sellers' indemnification obligation set forth in
Section 9.2) following the Toledo Plant Closing Date (or on the Toledo Plant
Closing Date to the extent arising from Buyer's operation on the Toledo Plant
Closing Date), in each case other than Excluded Liabilities (except for
Excluded Environmental Liabilities in respect of which Sellers are not
obligated to indemnify Buyer pursuant to Section 9.2) or other obligations
which Sellers have expressly agreed to pay pursuant to this Agreement or the
Collateral Agreements; PROVIDED, HOWEVER, that with respect to any such
liability, obligation or commitment that would not have resulted but for a
breach of either Seller's representations, warranties, covenants or
agreements contained herein that is covered by Sellers' indemnification
obligations under Section 9.2, Buyer's indemnification obligations under this
clause (vi) shall not apply to the extent of (but only to the extent of) the
indemnification obligations of Sellers for such breach pursuant to Section
9.2.
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9.4 EXCLUSIVE REMEDY. Buyer and Sellers each acknowledge and agree
that, from and after the Closing, their sole and exclusive remedy, with
respect to any and all claims relating to breaches of representations and
warranties (but, for the avoidance of doubt, not covenants or fraud) in this
Agreement, shall be pursuant to the indemnification provisions set forth in
this Article 9. In furtherance of the foregoing, Buyer and Sellers hereby
waive, from and after the Closing, to the fullest extent permitted under
applicable Law, any and all rights, claims and causes of action they may have
against each other relating to breaches of representations and warranties
(but, for the avoidance of doubt, not covenants or fraud) in this Agreement
arising under or based upon any federal, state or local statute, Law
(including common law), ordinance, rule or regulation or otherwise.
9.5 LOSSES NET OF INSURANCE. The amount of any Loss for which
indemnification is provided under this Article 9 shall be net of any amounts
recovered by the indemnified party under its insurance policies with respect
to such Loss after giving effect to any impact of such claims on the
indemnifying party's premiums and other costs of insurance. Each party hereby
waives, to the extent permitted under its applicable insurance policies, any
subrogation rights that its insurer may have with respect to any indemnified
Loss. Any payments made pursuant to this Article 9 shall be treated as an
adjustment to the Purchase Price for Tax purposes, unless a final
determination (which shall include the execution of a Form 870-AD or
successor form) with respect to the indemnified party causes such payment not
to constitute an adjustment to the Purchase Price for federal income Tax
purposes.
9.6 PROCEDURES RELATING TO INDEMNIFICATION.
(a) In order for an indemnified party to be entitled
to any indemnification provided for under this Article 9 in respect of,
arising out of or involving a claim or demand made by any person, firm,
Governmental Entity or corporation against the indemnified party (a
"Third-Party Claim"), such indemnified party must notify the indemnifying
party in writing, and in reasonable detail, of the Third-Party Claim as
promptly as reasonably possible after receipt by such indemnified party of
written notice of the Third-Party Claim; PROVIDED, HOWEVER, that failure to
give such notification shall not affect the indemnification provided
hereunder except to the extent the indemnifying party shall have been
actually prejudiced as a result of such failure. Thereafter, the indemnified
party shall deliver to the indemnifying party, within five (5) Business Days
after the indemnified party's receipt thereof, copies of all notices and
documents (including court papers) received by the indemnified party relating
to the Third-Party Claim; PROVIDED, HOWEVER, that failure to make such
deliveries shall not affect the indemnification provided hereunder except to
the extent the indemnifying party shall have been actually prejudiced as a
result of such failure.
(b) If a Third-Party Claim is made against an
indemnified party, the indemnifying party will be entitled to participate in
the defense thereof and, if it so elects in writing within ten (10) days of
receipt of written notice from the indemnified party and acknowledges its
obligation to indemnify the indemnified party therefor, to assume the defense
thereof with counsel, accountants or other designee selected by the
indemnifying party and reasonably satisfactory to the indemnified party,
PROVIDED that the indemnifying party conducts the defense actively and
diligently thereafter. Should the indemnifying party so elect to assume the
defense of a Third-Party Claim, the indemnifying party will not be liable to
the indemnified
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party for legal or accounting expenses subsequently incurred by the
indemnified party in connection with the defense thereof, absent any conflict
of interest between such parties. If the indemnifying party assumes such
defense, the indemnified party shall have the right to participate in the
defense thereof and to employ counsel, at its own expense, unless a conflict
of interest would arise if counsel to the indemnifying party also represented
the indemnified party, separate from the counsel employed by the indemnifying
party, it being understood that the indemnifying party shall control such
defense, except to the extent of any such conflict of interest between such
parties. The indemnifying party shall be liable for the fees and expenses of
counsel employed by the indemnified party for any period during which the
indemnifying party has not assumed the defense thereof or in the event of any
conflict of interest between the indemnified party and the indemnifying
party. All the parties hereto shall cooperate in the defense or prosecution
of any Third-Party Claim. Such cooperation shall include the retention and
(upon the other party's request) the provision to the other party of records
and information that are reasonably relevant to such Third-Party Claim, and
making employees available on a mutually convenient basis to provide
additional information and explanation of any material provided hereunder, at
the reasonable expense of the indemnifying party. Whether or not the
indemnifying party shall have assumed the defense of a Third-Party Claim, the
indemnified party shall not admit any liability with respect to, or settle,
compromise or discharge, such Third-Party Claim without the indemnifying
party's prior written consent (which consent shall not be unreasonably
withheld). The indemnifying party shall not, without the prior written
consent of the indemnified party, enter into any settlement of any
Third-Party Claim that would result in the imposition of a consent order,
injunction or decree which would materially restrict or otherwise materially
adversely affect the future activity or conduct of the indemnified party or
any Affiliate thereof, or without the prior written consent of the
indemnified party (which consent shall not be unreasonably withheld) that
does not include, as an unconditional term thereof, the release of the
indemnified party from all liability in respect of such Third-Party Claim
except the liability satisfied by the indemnifying party.
(c) Notwithstanding the foregoing in this Section 9.6, if
a Third-Party Claim for a Straddle Period includes or could reasonably be
expected to include both a claim for Taxes that are Excluded Taxes and a claim
for Taxes that are Assumed Liabilities, and such claim for Taxes that are
Excluded Taxes is not separable from such claim for Taxes that are Assumed
Liabilities, the Sellers (if the claim for Taxes that are Excluded Taxes exceeds
or reasonably could be expected to exceed in amount the claim for Taxes that are
Assumed Liabilities) or otherwise Buyer (Sellers, on the one hand, or Buyer, on
the other hand, as the case may be, the "Controlling Party") shall be entitled
to control the defense of such Third-Party Claim (such Third-Party Claim, a "Tax
Claim"). In such case, the other party (the "Non-Controlling Party") shall be
entitled to participate fully (at the Non-Controlling Party's sole expense) in
the conduct of such Tax Claim and the Controlling Party shall not settle such
Tax Claim without the consent of such Non-Controlling Party (which consent shall
not be unreasonably withheld). The costs and expenses of conducting the defense
of such Tax Claim shall be reasonably apportioned based on the relative amounts
of the claim for Taxes that are Excluded Taxes and the claim for Taxes that are
Assumed Liabilities. For purposes of this Section 9.6(c), the term "Assumed
Liabilities" shall include any Taxes of Windmill (other than Excluded Taxes).
(d) Notwithstanding any other provision, (a) Sellers
shall be entitled to control in all respects, and neither Buyer nor any of
its Affiliates shall be entitled to participate in, any
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Tax audit or other proceeding with respect to any consolidated, combined or
unitary Return that includes any of the Sellers or any of their Affiliates;
PROVIDED, HOWEVER, that Sellers may not settle or otherwise resolve the
portion, if any, of any such Tax audit or other proceeding that pertains to
income, gain, loss, deduction or credit of Windmill (other than any such
portion that could impact an indemnification by the Sellers under clause
(vii) of Section 9.2 of this Agreement) without the consent of Buyer, which
consent shall not be unreasonably withheld, (b) except as set forth in clause
(c) below, Buyer shall be entitled to control in all respects, and neither
Sellers nor any of their Affiliates shall be entitled to participate in, any
Tax audit or other proceeding with respect to any consolidated, combined or
unitary Return that includes the Buyer or any of its Affiliates, (c) if a Tax
audit or other proceeding (including but not limited to a Tax audit or other
proceeding relating to a consolidated, combined or unitary Return) could give
rise to an indemnification by the Sellers under clause (vii) of Section 9.2
of this Agreement, Sellers shall have the right to control in all respects,
including as to settlement, at Sellers' expense, the conduct of the portion
of such Tax audit or other proceeding which could give rise to such an
indemnification, and with respect to such portion, Buyer (A) shall promptly
notify Sellers upon receipt of notice of the Tax audit or other proceeding or
any proposed assessment, (B) shall thereafter promptly forward to Sellers
copies of any communications received from or sent to any Taxing Authority by
Buyer, Windmill or any of their Affiliates and (C) shall facilitate to the
extent reasonably required by the Sellers, and shall not impede, Seller's
control over, such Tax audit or proceeding, and (d) none of the Sellers shall
have any obligation whatsoever pursuant to clause (vii) of Section 9.2 or
pursuant to Section 9.6(e) of this Agreement if Buyer fails to comply with
any of the covenants set forth in clauses (A), (B) and (C) of clause (c)
above and Sellers are actually prejudiced as a result of such failure.
(e) If and to the extent that Sellers are required to
indemnify Buyer pursuant to clause (vii) of Section 9.2 of this Agreement,
within thirty (30) days of receipt from Buyer of notification (together with
supporting documentation reasonably acceptable to Sellers) of a
"determination" within the meaning of Section 1313 of the Code or other final
agreement negotiated by Sellers with the relevant Taxing Authority, but in no
case sooner than one (1) Business Day prior to the date on which Buyer is
obligated to pay the applicable Taxing Authority, Sellers shall pay to Buyer
an amount equal to the sum of (1) the net present value (assuming a nine and
one-half percent (9.5%) discount rate) of forty percent (40%) of the excess
of (x) the amount allocated to the Stock pursuant to the determination over
(y) the amount set forth in SCHEDULE 2.2 hereto, amortized over fifteen (15)
years, and (2) any interest and penalties incurred by Buyer that would not
have been incurred but for such determination.
9.7 INDEMNIFICATION AMOUNTS. Notwithstanding anything to the
contrary stated in this Article 9, no indemnifying party shall have liability
under Section 9.2(i) or 9.3(i), as the case may be, for breaches of
representations and warranties (a) other than those representations and
warranties set forth in Section 3.1(a), 3.2, 3.3(a), the last sentence of
Section 3.3(b), and Sections 3.7, 4.1(a) or 4.4 or fraudulent
misrepresentations, for any individual Loss less than $20,000 or until the
aggregate amount of Losses (excluding any Loss less than $20,000) that the
indemnifying party would, but for this Section 9.7, be liable exceeds on a
cumulative basis an amount equal to three million dollars ($3,000,000) (the
"Basket"), and then only to the extent that the aggregate of all Losses
exceeds the Basket or (b) other than those representations and warranties set
forth in Section 3.1(a), 3.2, 3.3(a), the last sentence of Section 3.3(b),
and Sections 3.7, 3.19(b)(i), 3.19(b)(viii), 3.19(b)(ix), 3.19(b)(x), 4.1(a)
or 4.4 or fraudulent
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misrepresentations, for Losses in excess of fifteen (15) percent of the
Purchase Price. Buyer and Sellers agree that certain representations and
warranties contained in this Agreement are qualified by materiality
references or by matters having or not having a Material Adverse Effect
(collectively, the "Materiality Qualifiers"). Buyer and Sellers agree that,
except in the case of claims relating to the representations set forth in
Section 3.19(b)(i), for purposes of Sections 9.2 and 9.3 hereof and for
purposes of calculating the Basket and the amount of Losses, the Materiality
Qualifiers shall be ignored and the representations and warranties shall be
construed without regard to any Materiality Qualifiers therein contained.
ARTICLE 10
TERMINATION
10.1 BASES FOR TERMINATION. Anything contained herein to the
contrary notwithstanding, this Agreement may be terminated and the
transactions contemplated hereby abandoned at any time prior to the Closing
Date:
(a) by mutual written consent of Sellers and Buyer;
(b) by Buyer if any of the conditions set forth in
Section 8.2 shall have become incapable of fulfillment and shall not have
been waived by Buyer;
(c) by either Seller if any of the conditions set
forth in Section 8.3 shall have become incapable of fulfillment and shall not
have been waived by such Seller;
(d) by either Seller or Buyer if the Closing does not
occur on or prior to December 15, 2001 (provided, however, that in the event
that all of the conditions set forth in Sections 8.2 and 8.3 have been
satisfied or waived except that the applicable waiting period (and any
extension thereof) under the HSR Act has not expired or been terminated, then
such date shall automatically be extended until June 30, 2002); or
(e) by either Seller if the Merger Agreement is
terminated
PROVIDED, HOWEVER, that the party seeking termination pursuant to clause (b),
(c), or (d) is not in material breach of any of its representations,
warranties, covenants or agreements contained in this Agreement.
10.2 NOTICE OF TERMINATION; RETURN OF DOCUMENTS; CONTINUING
CONFIDENTIALITY OBLIGATION. In the event of termination by either Seller or
by Buyer pursuant to this Article 10, written notice thereof shall forthwith
be given to the other parties and the transactions contemplated by this
Agreement shall be terminated, without further action by any party. If the
transactions contemplated by this Agreement are terminated or rescinded as
provided herein:
(a) Buyer shall return all documents and copies and
other material received from Sellers relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to Sellers; and
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(b) all confidential information received by Buyer
with respect to the Business shall be treated in accordance with the
Confidentiality Agreement, which shall remain in full force and effect
notwithstanding the termination of this Agreement.
10.3 EFFECT OF TERMINATION. If this Agreement is terminated and the
transactions contemplated hereby are abandoned as described in this Article
10, this Agreement shall become void and of no further force and effect,
except for the provisions of (a) Section 5.5 relating to reimbursement of
expenses, (b) Section 6.1 relating to the obligation of Buyer to keep
confidential certain information and data obtained by it, (c) Section 7.6
relating generally to expenses, (d) Section 7.2 relating to publicity, (e)
Sections 3.7 and 4.4 relating to finders' fees and brokers' fees or
commissions, and (f) Section 10.2 and this Section 10.3. Nothing in this
Article 10 shall be deemed to release any party from any liability for any
breach by such party of the terms and provisions of this Agreement or to
impair the right of any party to compel specific performance by another party
of its obligations under this Agreement.
ARTICLE 11
GENERAL PROVISIONS
11.1 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Except as set forth below,
this Agreement and the rights and obligations hereunder shall not be
assignable or transferable by Buyer or Sellers (including by operation of law
in connection with a merger or sale of substantially all the assets of Buyer
or Sellers) without the prior written consent of each of the other parties
hereto. Buyer may assign or delegate its rights, obligations or liabilities
under this Agreement in whole or in part to one or more Subsidiaries of Buyer
or to the lender or lenders providing to it the financing to consummate the
transactions contemplated hereby, in each case without the consent of Sellers
(provided that a pledge of Buyer's rights, obligations or liabilities under
this Agreement to such lender or lenders shall not constitute an assignment
hereunder until such time as any such lender exercises its rights under the
pledge agreement or other applicable agreement or document); PROVIDED,
HOWEVER, that in any such event, Buyer shall remain fully liable for the
fulfillment of all its obligations hereunder. Any attempted assignment or
delegation in contravention hereof shall be null and void. This Agreement
shall be binding upon and inure to the benefit of the successors and assigns
of the parties hereto.
11.2 RISK OF LOSS.
(a) If, prior to the Toledo Plant Closing Date, the
Toledo Plant or any part thereof shall be damaged or destroyed by fire or
other casualty or taken as a result of any condemnation or eminent domain
proceeding, General Mills shall promptly notify Buyer of such occurrence.
Notwithstanding any such casualty or condemnation, the parties shall proceed
with the Toledo Plant Closing (subject to and in accordance with the
provisions of Section 8.4 above) and neither party shall have any right to
terminate this Agreement as a result of any such casualty or condemnation.
(b) In the event of a casualty or condemnation in respect
of the Converted Portion of the Toledo Plant prior to the Toledo Plant Closing,
General Mills shall, at its sole cost and expense, repair, restore or rebuild or
cause to be repaired, restored or rebuilt, the affected
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Converted Portion to its condition immediately prior to such casualty or
condemnation to the extent reasonably and commercially practicable, subject
to such alterations and modifications as may be contemplated by the
Conversion Plan. In the event of a casualty or condemnation in respect of the
Non-Converted Portion of the Toledo Plant prior to the Toledo Plant Closing,
promptly after the occurrence of such casualty or condemnation, General Mills
shall, at its sole cost and expense, repair, restore and rebuild or cause to
be repaired, restored or rebuilt, the affected Non-Converted Portion to the
condition required pursuant to the second sentence of Section 5.9 above.
Notwithstanding the foregoing, however, (x) any repair, restoration or
rebuilding shall be consistent with the Conversion Plan and (y) if General
Mills shall commence to repair, restore or rebuild or cause to be repaired,
restored or rebuilt, the Non-Converted Portion but such repair, restoration
or rebuilding shall not be completed on or before the Toledo Plant Closing
Date, then, the Toledo Plant Closing shall nonetheless proceed on the Toledo
Plant Closing Date without delay, and General Mills shall (a) provide Buyer
at the Toledo Plant Closing insurance or condemnation proceeds and any such
additional amount as reasonably estimated to be sufficient to complete such
repair, restoration or rebuilding and Buyer shall thereafter be responsible
for such completion and (b) within 20 days after demand after the Toledo
Plant Closing, pay to Buyer (i) such additional amounts as Buyer reasonably
incurs to complete such repair, restoration or rebuilding in excess of the
amounts paid to Buyer at the Toledo Plant Closing, and (ii) if the Warehouse
Space shall have suffered a casualty or condemnation and shall not be useable
by Buyer, any reasonable cost incurred by Buyer in its rental or use of
alternative warehouse space in connection with its operation of the Toledo
Plant during the period from and after the Toledo Plant Closing Date through
the date of completion of the repair, restoration and rebuilding of the
Warehouse Space (including any penalties or excess charges reasonably
incurred or obligations reasonably undertaken under a lease for such
alternative space having a term longer than the period required to complete
the repair, restoration and rebuilding of the Warehouse Space, PROVIDED that
General Mills shall not be obligated to reimburse Buyer for such charges to
the extent allocable to the period, if any, during which Buyer uses such
alternative space for longer than is reasonably necessary). Except to the
extent applied to such repair, restoration or rebuilding, all condemnation
proceeds relating to a condemnation of the Toledo Plant from and after the
date hereof shall belong to and shall be paid to Buyer at the Toledo Plant
Closing or if not then paid by the condemning authority, assigned to Buyer at
the Toledo Plant Closing.
11.3 NO THIRD-PARTY BENEFICIARIES. Except for Persons entitled to
indemnification under Article 9 hereof and the FTC, this Agreement is for the
sole benefit of the parties hereto, and nothing herein express or implied
shall give or be construed to give to any Person or entity, other than the
parties hereto, any legal or equitable rights hereunder.
11.4 AMENDMENTS. No amendment to this Agreement shall be effective
unless it shall be in writing and signed by each party hereto.
11.5 WAIVER OF COMPLIANCE. Except as otherwise provided in this
Agreement, any failure of any of the parties to comply with any obligation,
covenant, agreement or condition herein may be waived by the party entitled
to the benefits thereof only by a written instrument signed by the party,
granting such waiver, but such waiver or failure to insist upon strict
compliance with such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any subsequent or other
failure. Any consent given by any party
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pursuant to this Agreement shall be valid only if contained in a written
consent signed by such party.
11.6 NOTICES. All notices or other communications required or
permitted to be given hereunder shall be in writing and shall be delivered by
hand or sent by telecopy, or by postage prepaid, registered, certified or
express mail or by reputable overnight courier service and shall be deemed
given when delivered by hand or telecopied, three days after mailing (one (1)
Business Day in the case of guaranteed overnight express mail or guaranteed
overnight courier service), as follows (or at such other address or to such
other fax for a party as shall be specified by like notice):
(i) If to General Mills or if to Pillsbury after
the Acquisition:
General Mills, Inc.
Number One General Mills Blvd.
Minneapolis, Minnesota 55426
Attn: General Counsel
Fax: (763) 764-3302
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, New York 10019
Attn: Steven A. Rosenblum, Esq.
Fax: (212) 403-2000
(ii) If to Pillsbury before the Acquisition:
Diageo plc
8 Henrietta Place
London, England W1M9AG
Attn: Group General Counsel
Fax: 011-44207-927-4864
with a copy to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attn: Francis J. Aquila, Esq.
Fax: (212) 558-3588
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(iii) If to Buyer:
International Multifoods Corporation
110 Cheshire Lane, Suite 300
Minnetonka, Minnesota 55305-1060
Attn: General Counsel
Fax: (952) 594-3367
with a copy to:
Faegre & Benson LLP
2200 Wells Fargo Center
90 South Seventh Street
Minneapolis, Minnesota 55402
Attn: Philip S. Garon, Esq.
Fax: (612) 766-1600
11.7 INTERPRETATION. The headings contained in this Agreement, in
any Exhibit or Schedule hereto and in the table of contents to this
Agreement, are for reference purposes only and shall not affect in any way
the meaning or interpretation of this Agreement. The terms defined in the
singular shall have a comparable meaning when used in the plural, and vice
versa. This Agreement shall be construed without regard to any presumption or
rule requiring construction or interpretation against the party drafting or
causing any instrument to be drafted. When a reference is made in this
Agreement to Sections, Exhibits or Schedules, such reference shall be to a
Section of or Exhibit or Schedule to this Agreement unless otherwise
indicated. Whenever the words "include," "includes" or "including" are used
in this Agreement, they shall be deemed to be followed by the words "without
limitation." The phrases "the date of this Agreement," "the date hereof" and
terms of similar import, unless the context otherwise requires, shall be
deemed to refer to the date set forth in the first paragraph of this
Agreement. The words "hereof," "hereby," "herein," "hereunder" and similar
terms in this Agreement shall refer to this Agreement as a whole and not to
any particular Section or Article in which such words appear. All references
to dollar amounts shall be deemed to be references to U.S. Dollars.
11.8 COUNTERPARTS. This Agreement and any amendments hereto may be
executed by facsimile and in one or more counterparts, all of which shall be
considered one and the same agreement, and shall become effective when one or
more such counterparts have been signed by each of the parties and delivered
to the other party.
11.9 SEVERABILITY. If any provision of this Agreement or the
application of any such provision to any Person or circumstance shall be held
invalid, illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof.
11.10 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota applicable to agreements
made and to be performed entirely within such State, without regard to the
choice of law principles of such State.
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11.11 ACTIONS AND PROCEEDINGS. Sellers and Buyer hereby irrevocably
consent to the exclusive jurisdiction and venue of the Courts of the State of
Minnesota and the United States District Court for the District of Minnesota,
in connection with any action or proceeding arising out of or relating to
this Agreement or the transactions contemplated hereby. Buyer hereby
irrevocably appoints Buyer's General Counsel as its authorized agent upon
whom process may be served in any such action or proceeding instituted in any
such court and waives any objections to personal jurisdiction with respect
thereto. Sellers hereby irrevocably appoint General Mills' General Counsel as
their authorized agent (PROVIDED that until the Acquisition is consummated,
Pillsbury appoints its General Counsel as its authorized agent) upon whom
process may be served in any such action or proceeding instituted in any such
court and waives any objections to personal jurisdiction with respect thereto.
11.12 EXHIBITS AND SCHEDULES. All Exhibits and Schedules annexed
hereto or referred to herein are hereby incorporated in and made a part of
this Agreement as if set forth in full herein. If a matter is disclosed in
any Schedule to this Agreement, it shall be deemed to have been disclosed
with respect to all Schedules to this Agreement for which its relevance is
evident from the disclosure made, PROVIDED that the disclosure in such
Schedule is sufficient to reasonably inform the non-disclosing party of the
information required to be disclosed in another Schedule to avoid a
misrepresentation under the counterpart section or paragraph of this
Agreement. For the avoidance of doubt, the mere listing in any Schedule to
this Agreement of a document or other item shall be deemed adequate to
disclose an exception to a representation or warranty made herein only if
such listing of the document or item in the Schedule is sufficient to
reasonably inform Buyer of such exception to such representation or warranty.
Inclusion of any matter in any Schedule does not imply that such matter
would, under the provisions of this Agreement, have to be included in such
Schedule.
11.13 SPECIFIC PERFORMANCE. Buyer and each Seller hereby
acknowledge, recognize and agree that (a) the Business, each Other Business,
the Assets and the Other Assets are unique property that cannot be duplicated
and (b) irreparable injury may result to the non-breaching party and its
business if the other party or parties breach any provision of this Agreement
such that money damages alone would not be sufficient remedy for any such
breach. Each party hereto therefore agrees that if it should engage, or cause
or permit any other Person to engage, in any act in violation of any
provision hereof, the other party or parties shall be entitled, in addition
to such other remedies, damages and relief as may be available under this
Agreement or applicable Law, to an injunction prohibiting the breaching party
from engaging in any such act or specifically enforcing this Agreement, as
the case may be.
11.14 ENTIRE AGREEMENT. Except to the extent otherwise contemplated
herein, this Agreement (including the Schedules and Exhibits attached hereto
and the Collateral Agreements) contains the entire agreement and
understanding between the parties hereto with respect to the subject matter
hereof and, except to the extent specifically set forth herein, supersedes
all prior agreements and understandings relating to such subject matter.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
amending and restating the Original Asset Purchase Agreement to be duly
executed as of the date first written above.
GENERAL MILLS, INC.
By: /s/ Stephen W. Sanger
--------------------------------------------
Name: Stephen W. Sanger
Title: Chairman of the Board and
Chief Executive Officer
THE PILLSBURY COMPANY
By: /s/ David E. Schmitt
--------------------------------------------
Name: David E. Schmitt
Title: Vice President
INTERNATIONAL MULTIFOODS
CORPORATION
By: /s/ Gary E. Costley
---------------------------------------------
Name: Gary E. Costley
Title: Chairman of the Board, President and
Chief Executive Officer
The Company hereby agrees to furnish to the Securities and Exchange Commission
upon request copies of all of the following Exhibits and Schedules to the
Amended and Restated Asset and Purchase Agreement:
[Download Table]
EXHIBITS
Exhibit A-1 Retail Trademark License Agreement
Exhibit A-2 Foodservice Trademark License Agreement
Exhibit B-1 Omnibus Patent Assignment
Exhibit B-2(A) Pillsbury Omnibus Trademark Assignment
Exhibit B-2(B) General Mills Omnibus Trademark Assignment
Exhibit B-2(C) Pet Inc. Omnibus Trademark Assignment
Exhibit B-2(D) Guinness Omnibus Trademark Assignment
Exhibit C Transition Services Agreement
Exhibit D Co-Pack Agreement
Exhibit E-1 Retail Patent and Technology License Agreement
Exhibit E-2 Foodservice Patent and Technology License Agreement
Exhibit F Toledo Plant Lease Term Sheet
Exhibit G Martha White Trademark License Agreement
Exhibit H Hungry Jack Trademark License Agreement
Exhibit I Grant Back Patent and Technology License Agreement
Exhibit J Conversion Plan Agreement
Exhibit K-1 General Mills Retail Trademark License Agreement Guaranty
Exhibit K-2 General Mills Foodservice Trademark License Guaranty
Exhibit L Form of Diageo Debt Guarantee Agreement
SCHEDULES
Schedule 1.1(a)(i) Products
Schedule 1.1(a)(ii) Other Products
Schedule 1.1(b) General Mills' Knowledge
Schedule 1.1(c) Pillsbury's Knowledge
Schedule 1.1(d) Toledo Plant
Schedule 1.1(e) Windmill Intellectual Property
Schedule 1.1(f) (i) Excluded Toledo Assets Exceptions
Schedule 1.1(f) (ii) Excluded Toledo Assets
Schedule 1.1(g) Toledo Plant Permits
Schedule 1.1(h) Puerto Rico Verbal Distributorship Agreements
Schedule 2.2 Fair Market Value of the Stock
Schedule 2.3(c)(i) Registered Trademarks and Patents and Universal Product Codes
Schedule 2.3(c)(ii) Other Intellectual Property
Schedule 2.3(f)(i) Assigned Contracts
Schedule 2.3(f)(ii) Toledo Plant Assigned Contracts
Schedule 2.3(g) Equipment
Schedule 2.4 Excluded Assets
Schedule 2.5(e) Trade Promotions
[Download Table]
Schedule 2.5(g) Customer Deductions
Schedule 2.9(a) Inventory Standards
Schedule 2.13(i) Dividable Contracts
Schedule 2.13(ii) Toledo Plant Dividable Contracts
Schedule 3.3(a) Intellectual Property
Schedule 3.3(b) Intellectual Property Litigation and Third-Party Rights
Schedule 3.4 Litigation
Schedule 3.5 Contracts
Schedule 3.6 Compliance with Applicable Laws
Schedule 3.9 Recent Events
Schedule 3.11 Financial Information
Schedule 3.12 Labor Matters
Schedule 3.13 Suppliers and Customers
Schedule 3.15 Recalls
Schedule 3.16 Affiliate Transactions
Schedule 3.17 Exceptions to Equipment Representation
Schedule 3.18 Trade Coupons, Programs, Prepayments
Schedule 3.19(b)(i) Toledo Plant Permitted Liens
Schedule 3.19(b)(iv) Toledo Plant Rail Agreements and Defaults
Schedule 3.19(b)(vi) Toledo Plant Zoning Exceptions
Schedule 3.19(b)(viii) Toledo Plant Environmental Condition Reports
Schedule 3.19(b)(xiv) Toledo Plant Reliance on other Facilities
Schedule 3.19(b)(xviii) Toledo Plant Material Proceedings
Schedule 3.19(b)(xx) Toledo Plant Wells
Schedule 3.20 Warranties
Schedule 4.1(b) Buyer Conflicts
Schedule 5.8(a)(i) Toledo Employees
Schedule 5.8(a)(ii) Closing Date Employees
Schedule 5.8(e) Defined Contribution Plans
Schedule 5.8(f) Defined Benefit Plans
Schedule 5.10 Non-Use
Schedule 8.1(a) Wire Instructions
Schedule 8.2(j) Third Party Consents
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Dates Referenced Herein and Documents Incorporated by Reference
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