Attached files
| file | filename |
|---|---|
| 8-K - LANDEC CORP \CA\ | v183185_8k.htm |
| EX-10.3 - LANDEC CORP \CA\ | v183185_ex10-3.htm |
| EX-10.2 - LANDEC CORP \CA\ | v183185_ex10-2.htm |
| EX-99.1 - LANDEC CORP \CA\ | v183185_ex99-1.htm |
STOCK
PURCHASE AGREEMENT
THIS
STOCK PURCHASE AGREEMENT is made and entered into as of the 30th day of April,
2010, by and among LANDEC CORPORATION, a Delaware corporation (the “Buyer”),
LIFECORE BIOMEDICAL, INC., a Delaware corporation formerly known as SBT
Biomaterials Inc. (the “Holding Company”), LIFECORE BIOMEDICAL, LLC, a Minnesota
limited liability company (the “Operating Company”), and WARBURG PINCUS PRIVATE
EQUITY IX, L.P., a Delaware limited partnership (the “Seller”). The
Holding Company and the Operating Company shall sometimes be referred to herein
collectively as the “Company”. Capitalized terms used but not
otherwise defined herein shall have the meaning assigned to such terms in Article XI
below.
WITNESSETH:
WHEREAS,
the Seller owns all of the issued and outstanding shares of the $0.01 par value
common stock of the Holding Company (the “Common Stock”);
WHEREAS,
the Holding Company owns all of the issued and outstanding membership interests
of the Operating Company (the “Units”); and
WHEREAS,
the Seller desires to sell to the Buyer, and the Buyer desires to purchase from
the Seller, all of the issued and outstanding shares of Common Stock upon the
terms and conditions set forth herein.
NOW,
THEREFORE, the Buyer, the Holding Company, the Operating Company and the Seller,
in consideration of the mutual promises hereinafter set forth, do hereby promise
and agree as follows:
ARTICLE
I
Shares To Be
Purchased
Subject
to the terms and conditions set forth in this Agreement, at the Closing, the
Seller shall sell and transfer to the Buyer, and the Buyer shall purchase from
the Seller, all of the issued and outstanding shares of the Common Stock of the
Holding Company (the “Subject Shares”).
ARTICLE
II
Closing; Purchase
Price
2.1 Closing. The Closing shall
be held at the offices of Willkie Farr & Gallagher LLP located at 787
Seventh Avenue, New York, New York, 10019 at 10:00 a.m. Eastern Daylight Time on
the date hereof, or at such other time and/or place as the Seller and the Buyer
shall mutually agree in writing; provided, that no
party hereto shall issue any press release or otherwise make any public
statement about this Agreement or any of the transactions contemplated hereby
prior to 4:00 p.m. Eastern Daylight Time on the Closing Date.
2.2 Purchase Price. The
consideration for the Subject Shares (the “Purchase Price”) shall be an amount
equal to the sum of (a) Forty Million Dollars ($40,000,000) (the “Cash Purchase
Price”), plus (b) the Cash Distribution Amount as provided in Section 2.5 and Section 2.6
below, plus (c) the Contingent Purchase Price as provided in Section 2.6
below. The Purchase Price shall be paid as provided in Section 2.3, Section 2.4, Section 2.5 and Section 2.6
below.
2.3 Cash Payment. At the
Closing, the Buyer shall deliver to the Seller, by wire transfer of immediately
available funds to a bank account designated in writing by the Seller, an amount
equal to the Cash Purchase Price less (a) the Escrow Amount and (b) the amount,
if any, of outstanding Excluded Indebtedness as of the Closing (such net amount
being referred to herein as the “Cash Payment”).
2.4 Escrow Amount. At the
Closing, the Buyer shall deliver to the Escrow Agent, by wire transfer of
immediately available funds to a bank account designated in writing by the
Escrow Agent, an amount equal to the Escrow Amount to be held, managed and paid
out pursuant to the terms of the Escrow Agreement.
2.5 Closing Cash Distribution
Amount.
(a) Immediately
prior to the Closing, the Operating Company shall deliver to the Holding
Company, and at the Closing, the Holding Company shall deliver to the Seller by
wire transfer of immediately available funds to a bank account designated in
writing by the Seller, an amount equal to the aggregate amount of Cash of the
Operating Company as of the Closing Date, up to a maximum of the Target Amount
(the “Closing Cash Distribution Amount”).
(b) Not
more than ten (10) business days, but in no event less than three (3) business
days, prior to the Closing Date, the Seller, after consultation with the Buyer,
shall prepare, in good faith and in accordance with GAAP, and deliver to the
Buyer an estimated balance sheet as of the open of business on the Closing Date
together with a statement setting forth the determination of the Target Amount,
the estimated amount of Cash of the Operating Company as of the open of business
on the Closing Date and the Closing Cash Distribution Amount on a reasonable
basis using the Company’s then available financial information as of such date
(collectively, the “Estimated Balance Sheet”). The Estimated Balance
Sheet shall be used in order to determine the amount of the Closing Cash
Distribution Amount paid at the Closing pursuant to Section 2.5(a)
above.
2.6 Contingent Purchase Price;
Closing Date Balance Sheet; Post-Closing Cash Distribution
Amount.
(a) Calculation of Contingent
Purchase Price. For purposes of this Agreement, the
“Contingent Purchase Price” means an amount equal to the sum of (i) the amount
(if any) by which the Subject Net Revenues for calendar year 2011 exceed
Twenty-Five Million Dollars ($25,000,000), plus (ii) the amount (if any) by
which the Subject Net Revenues for calendar year 2012 exceed the greater of (A)
Twenty-Five Million Dollars ($25,000,000), or (B) the Subject Net Revenues for
calendar year 2011; provided, that the
Contingent Purchase Price shall in no event exceed Ten Million Dollars
($10,000,000). For purposes of this Section 2.6, each of
calendar year 2011 and calendar year 2012 shall be referred to as an “Earn-Out
Period”, and the portion of the Contingent Purchase Price relating to each
Earn-Out Period shall be referred to as an “Earn-Out Amount”.
2
(b) Preparation of Closing Date
Balance Sheet and Earn-Out Statement. Within ninety (90) days
after the Closing Date, the Buyer shall prepare, in accordance with GAAP, and
deliver to the Seller an unaudited interim balance sheet of the Operating
Company as of the Closing Date together with a statement setting forth the final
determination of the Target Amount, the amount of Remaining Cash, the Closing
Cash Distribution Amount and the Post-Closing Cash Distribution Amount (if any)
(collectively, the “Closing Date Balance Sheet”), and within ninety (90) days
after the end of each Earn-Out Period, the Buyer shall prepare and deliver to
the Seller a statement setting forth the determination of the Earn-Out Amount
for such Earn-Out Period (each, an “Earn-Out Statement”). The Seller
and its Representatives shall have the right to review all records, work papers
and calculations of the Buyer related to the Closing Date Balance Sheet
(including the calculations of the Target Amount, the amount of Remaining Cash,
the Closing Cash Distribution Amount and the Post-Closing Cash Distribution
Amount (if any) set forth therein) and each Earn-Out Statement. The
Seller shall have thirty (30) days after delivery of the Closing Date Balance
Sheet or each Earn-Out Statement, as the case may be, in which to notify the
Buyer in writing of any discrepancy in, or disagreement with, the items
reflected on the Closing Date Balance Sheet (including the calculations of the
Target Amount, the amount of Remaining Cash, the Closing Cash Distribution
Amount and the Post-Closing Cash Distribution Amount (if any) set forth therein)
or the items reflected on such Earn-Out Statement or the determination of the
Earn-Out Amount (a “Notice of Objection”). If the Seller does not
submit a Notice of Objection during such thirty (30) day period, then the
Closing Date Balance Sheet (including the calculations of the Target Amount, the
amount of Remaining Cash, the Closing Cash Distribution Amount and the
Post-Closing Cash Distribution Amount (if any) set forth therein) or such
Earn-Out Statement, as the case may be, shall be deemed to be accepted in the
form presented to the Seller. If the Seller submits a Notice of
Objection during such thirty (30) day period and the Buyer agrees with the
adjustment requested by the Seller, then an appropriate adjustment shall be
made. If the Buyer does not agree, within twenty (20) days after
receipt of a Notice of Objection, to make any adjustment timely requested by the
Seller, then the disputed items or amounts shall be submitted for review and
final determination by the Independent Accounting Firm. Each of the
Buyer and the Seller shall make all records, work papers and calculations
related to the Closing Date Balance Sheet (including the calculations of the
Target Amount, the amount of Remaining Cash, the Closing Cash Distribution
Amount and the Post-Closing Cash Distribution Amount (if any) set forth therein)
and each Earn-Out Statement available to the Independent Accounting Firm, and
the Independent Accounting Firm shall have access to the employees of the Buyer,
the Company and the Seller during regular business hours and upon reasonable
prior notice in order to review the applicable calculations. Each of
the Buyer and the Seller hereby agrees that it will cooperate and assist in the
preparation of the Closing Date Balance Sheet (including the calculations of the
Target Amount, the amount of Remaining Cash, the Closing Cash Distribution
Amount and the Post-Closing Cash Distribution Amount (if any) set forth therein)
and each Earn-Out Statement and in the conduct of reviews contemplated by this
Section
2.6(b). The determination of the Independent Accounting Firm
shall be made as promptly as practical and shall be binding and conclusive upon
the parties hereto for purposes hereof. The Independent Accounting
Firm shall not attribute a value to any disputed amount greater than the
greatest amount proposed by either party nor an amount less than the least
amount proposed by either party. The fees, costs and expenses of the
Independent Accounting Firm shall be shared by the Buyer, on the one hand, and
the Seller, on the other, in inverse proportion to the amount in dispute for
which each of them is successful (by way of example, if the amount in dispute is
$100,000 and the Independent Accounting Firm determines that the Buyer is
entitled to $80,000 of the disputed amount and the Seller is entitled to $20,000
of the disputed amount, then the Seller shall pay 80% of the fees, costs and
expenses of the Independent Accounting Firm and the Buyer shall pay 20% of the
fees, costs and expenses of the Independent Accounting Firm).
3
(c) Post-Closing Cash
Distribution Amount. After the final determination of the
Closing Date Balance Sheet (including the calculations of the Target Amount, the
amount of Remaining Cash, the Closing Cash Distribution Amount and the
Post-Closing Cash Distribution Amount (if any) set forth therein) in accordance
with Section
2.6(b) above, in the event that the Closing Cash Distribution Amount was
less than the Target Amount, the Buyer shall cause the Operating Company to
deliver to the Seller within thirty (30) days after the final determination of
the Closing Date Balance Sheet, by wire transfer of immediately available funds
to a bank account designated in writing by the Seller, an amount equal to the
lesser of (i) One Million Dollars ($1,000,000), or (ii) the difference between
(A) the Target Amount, minus (B) the Closing Cash Distribution
Amount. In the event that the Closing Cash Distribution Amount was
more than the Target Amount, the Seller shall deliver to the Operating Company
within thirty (30) days after the final determination of the Closing Date
Balance Sheet, by wire transfer of immediately available funds to a bank account
designated in writing by the Operating Company, the amount of any such
excess. Any amount payable pursuant to this Section 2.6(c)
shall be referred to as the “Post-Closing Cash Distribution
Amount”.
(d) Payment of Contingent
Purchase Price. Within thirty (30) days after each Earn-Out
Date of Final Determination, the Buyer shall cause the Operating Company to
deliver (i) to each Participant the applicable Earn-Out Bonus (as defined in the
Bonus Plan) (if any) and/or the applicable Incentive Bonus (as defined in the
Bonus Plan) (if any) payable to such Participant pursuant to the terms of the
Bonus Plan, and (ii) to the Seller, by wire transfer of immediately available
funds to a bank account designated in writing by the Seller, the applicable
Earn-Out Amount (if any) less any amounts paid to the Participants pursuant to
the terms of the Bonus Plan pursuant to this Section
2.6(d).
4
(e) Acceleration of Contingent
Purchase Price Payments. If, subsequent to the Closing Date
and prior to December 31, 2012, (i) a Change of Control of either the Operating
Company or the Holding Company occurs, (ii) the Operating Company terminates
Allingham’s employment without Cause, or (iii) Allingham terminates his
employment with the Operating Company for Good Reason, then, within sixty (60)
days after the closing of such Change of Control or the effective date of such
termination of employment, as the case may be, the Buyer shall cause the
Operating Company (or the surviving entity in the event of a Change of Control
in which the Operating Company does not survive) to deliver (A) to each
Participant the Earn-Out Bonus (if any) and/or the Incentive Bonus (if any)
payable to such Participant pursuant to the terms of the Bonus Plan, which shall
be delivered at the time prescribed by the Bonus Plan, and (B) to the Seller, by
wire transfer of immediately available funds to a bank account designated in
writing by the Seller, an amount equal to the difference between (I) Ten Million
Dollars ($10,000,000), minus (II) the aggregate amount of Earn-Out Bonuses (if
any) and Incentive Bonuses (if any) previously paid to the Participants pursuant
to Section
2.6(d) above and Earn-Out Amounts (if any) previously paid to the Seller
pursuant to Section 2.6(d)
above and (III) any amounts paid to Participants pursuant to this Section 2.6(e);
provided, that
in the event the Buyer is subject to an outstanding payment obligation under
Section 2.6(d)
above at the time of acceleration of the Contingent Purchase Price payments
pursuant to this Section 2.6(e), the
parties acknowledge and agree that such outstanding payment obligation under
Section 2.6(d)
above shall be null and void upon receipt by the Participants and the Seller of
the applicable payments under this Section
2.6(e).
(f) Conduct of Business During
the Earn-Out Periods. After the Closing Date until the earlier
of (i) December 31, 2012, or (ii) the acceleration of the Contingent Purchase
Price Payments pursuant to Section 2.6(e) above,
the Buyer shall, and shall cause the Company:
(i) To
maintain separate books and records for the Company and maintain and operate the
Company as a separate and distinct segment in order to facilitate, among other
things, the calculation of the Subject Net Revenues contemplated
hereby;
(ii) To
conduct and operate the Company (or business and operations thereof) in good
faith taking into consideration the obligations under this Agreement; provided, that the
Company will not discontinue any product line without the prior written consent
of Allingham;
(iii) To
provide reasonable capital resources to the Company for its operations;
and
(iv) Not
to divert any revenues away from the Company and to the Buyer or any of the
Buyer’s Affiliates or Subsidiaries.
(g) Guaranty. As
security for the Operating Company’s payment of the Contingent Purchase Price,
the Buyer will execute and deliver to the Seller at the Closing a guaranty in
the form of Exhibit
2.6(g) attached hereto (the “Guaranty”).
5
ARTICLE
III
Conditions Precedent to
Closing; Closing Deliverables
3.1 Conditions Precedent to the Buyer’s
Obligation. The obligation of the Buyer to consummate the
transactions contemplated hereby is subject to the satisfaction as of the
Closing, or the waiver by the Buyer, of each of the following
conditions:
(a) The
warranties and representations of the Seller made in Article V of this
Agreement and the warranties and representations of the Company made in Article IV of this
Agreement shall be true and correct in all material respects on and as of the
date of this Agreement; and the Seller and the Company shall have performed in
all material respects the covenants of the Seller and the Company contained in
this Agreement required to be performed on or prior to the Closing.
(b) All
Consents, in a form reasonably satisfactory to the Buyer, shall have been
received by the Seller and a copy of each shall have been delivered to the Buyer
on or prior to the Closing Date.
(c) There
shall be no effective injunction, writ, preliminary restraining order or any
order of any nature issued by any Governmental Body directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided.
(d) The
Seller and/or the Company shall have delivered, or caused to have been
delivered, to the Buyer the following:
(i) Certificates
representing the Subject Shares, duly endorsed in blank or accompanied by stock
powers duly endorsed in blank;
(ii) A
certificate from each of the Secretary of the Holding Company and the President
and Chief Executive Officer of the Operating Company, in a form reasonably
satisfactory to the Buyer, setting forth the resolutions of the Board of
Directors and the sole shareholder of the Holding Company or the sole member of
the Operating Company, as the case may be, authorizing the execution, delivery
and performance of this Agreement and all Ancillary Agreements to be executed,
delivered and performed by such entity in connection herewith and the taking of
any and all actions deemed necessary or advisable to consummate the transactions
contemplated hereby;
(iii) Resignations
of the directors and any officers who are not also employees of the Operating
Company of each of the Holding Company and the Operating Company, except as the
Buyer shall direct to the contrary in writing at least three (3) days prior to
the Closing Date;
(iv) Resignations
of the signatories of the bank and other depository accounts and safe deposit
boxes of the Company from any Persons who are not also employees of the
Operating Company, except as the Buyer shall direct to the contrary in writing
at least three (3) days prior to the Closing Date;
6
(v) Constructive
possession of the complete Records relating to the business of the Company
(constructive possession shall be deemed to include, without limitation, the
presence of such Records at the Company’s headquarters);
(vi) A
recent good standing certificate (or comparable document) for each of the
Holding Company and the Operating Company issued by the Secretary of State (or
comparable office) of the jurisdiction in which such entity is
domiciled;
(vii) The
Bonus Agreements, duly executed by the Operating Company and the Former Option
Holders;
(viii) Written
evidence, in a form reasonably satisfactory to the Buyer, of the termination of
the Stock Incentive Plan, effective prior to the Closing;
(ix)
The Change of Control Agreement Amendments, duly
executed by the Seller, the Operating Company and the Subject
Officers;
(x) The
Escrow Agreement, duly executed by each of the Seller and the Holding Company;
and
(xi) A
certificate dated the Closing Date and executed by a duly authorized officer of
each of the Holding Company and the Operating Company, in a form reasonably
satisfactory to the Buyer, certifying that all conditions set forth in Section 3.1(a) above,
have been fully satisfied.
3.2 Conditions Precedent to the Seller’s
Obligation. The obligation of the Seller to consummate the
transactions contemplated hereby is subject to the satisfaction as of the
Closing, or the waiver by the Seller, of the following conditions:
(a) The
warranties and representations of the Buyer made in Article VI of this
Agreement shall be true and correct in all material respects on and as of the
date of this Agreement; and the Buyer shall have performed in all material
respects the covenants of the Buyer contained in this Agreement required to be
performed on or prior to the Closing.
(b) There
shall be no effective injunction, writ, preliminary restraining order or any
order of any nature issued by any Governmental Body directing that the
transactions provided for herein, or any of them, not be consummated as herein
provided.
(c) The
Buyer shall have delivered, or caused to have been delivered, to the Seller the
following:
(i) The
Cash Payment as specified in Section 2.3
above;
(ii) A
certificate from the Secretary of the Buyer, in a form reasonably satisfactory
to the Seller, setting forth the resolutions of the Board of Directors of the
Buyer authorizing the execution of this Agreement and all Ancillary Agreements
to be executed, delivered and performed by the Buyer in connection herewith and
the taking of any and all actions deemed necessary or advisable to consummate
the transactions contemplated hereby;
7
(iii) A
recent good standing certificate (or comparable document) for the Buyer issued
by the Secretary of State (or comparable office) of the jurisdiction in which
the Buyer is domiciled;
(iv) The
Escrow Agreement, duly executed by each of the Buyer and the Escrow
Agent;
(v) The
Guaranty, duly executed by the Buyer;
(vi) Such
other endorsements, assignments, affidavits and other good and sufficient
instruments of assignment, conveyance and transfer as are reasonably requested
by the Seller to reflect that the Permitted Indebtedness will remain an
obligation of the Company after the Closing; and
(vii) A
certificate dated the Closing Date and executed by a duly authorized officer of
the Buyer, in a form reasonably satisfactory to the Seller, certifying that all
conditions set forth in Section 3.2(a) above,
have been fully satisfied.
(d) The
Buyer shall have delivered to the Escrow Agent the Escrow Amount as specified in
Section 2.4
above.
(e) The
Holding Company shall have delivered to the Seller the Closing Cash Distribution
Amount as specified in Section 2.5(a)
above.
ARTICLE
IV
Warranties and
Representations of Company
4.1 Warranties and
Representations. Except as set forth in the Disclosure
Schedules (interpreted in accordance with the provisions of Section 12.12 below),
the Company hereby warrants and represents on and as of the date of this
Agreement to the Buyer, which warranties and representations shall survive the
Closing for the period set forth in Section 10.3(a)
below, as follows:
8
4.1.2 Corporate Matters. The
Holding Company is a corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware, and the Operating Company is a
limited liability company duly organized and in good standing under the laws of
the State of Minnesota. The Company has the power and authority to
own or lease its properties and assets and to carry on all business activities
now conducted by it. Schedule
4.1.2 attached hereto contains a true, correct and complete list of all
current and former Subsidiaries of the Company. All former
Subsidiaries of the Company which have been wound up, liquidated and dissolved
were wound up, liquidated and dissolved in compliance in all material respects
with all applicable Legal Requirements. To the Knowledge of the
Company, there have been no, and there are not any facts, conditions or
circumstances that could reasonably be expected to give rise to any, third party
claims or any Proceedings arising from or in connection with the operation of
any former Subsidiaries of the Company during the period when such entity was a
Subsidiary of the Company or the winding up, liquidation and dissolution of any
such former Subsidiaries which have been wound up, liquidated and
dissolved. The Company is duly qualified to do business as a foreign
entity and is in good standing in each jurisdiction in which the nature of its
business or the ownership, leasing or holding of its assets makes such
qualification necessary, except where the failure to be so qualified or to be in
good standing would not, individually or in the aggregate, reasonably be
expected to impact materially the Company’s business. Schedule
4.1.2 contains a true, complete and correct list of all jurisdictions in
which the Company is qualified to do business as a foreign corporation or
limited liability company, as the case may be.
4.1.3 No Conflict. Except as set
forth on Schedule
4.1.3 attached hereto, neither the execution, delivery and performance by
the Company of this Agreement or any of the Ancillary Agreements to which the
Company is a party nor the consummation or performance of any of the
transactions contemplated hereby or thereby will, directly or indirectly:
(a) contravene, conflict with, or result in a breach or violation of any
provision of the Certificate of Incorporation or By Laws of the Holding Company
or the Articles of Organization or the Member Control Agreement of the Operating
Company; (b) contravene, conflict with, or result in a breach or violation
of, or give any Governmental Body the right to challenge any of the transactions
contemplated hereby or to exercise any remedy or obtain relief under, any Legal
Requirement or any Order to which the Company or any of the assets of the
Company may be subject; (c) contravene, conflict with, or result in a breach or
violation of any provision of, or give any Person the right to declare a default
or exercise any remedy under, or to accelerate the maturity or performance of,
or to cancel, terminate or modify, any Applicable Contract; (d) contravene,
conflict with, or result in a violation of any of the terms or requirements of,
or give any Governmental Body the right to revoke, withdraw, suspend, cancel,
terminate or modify, any Governmental Authorization that is held by the Company
or that otherwise relates to the business of or any of the assets owned or used
by the Company; or (e) result in the imposition of any Lien, claim or
restriction upon or with respect to any of the Subject Shares or any of the
assets owned or used by the Company (other than Permitted Liens with respect to
such assets), except with respect to clauses (b) through (d), for such
contraventions, conflicts, breaches, rights to challenge or exercise a remedy,
violations or rights of termination, acceleration, cancellation or modification
that would not have or would not reasonably be expected to impact materially the
Company’s business. No action, consent, approval, Order or
authorization of, or registration, declaration or filing with, any Governmental
Body, including, without limitation, any labor organization pursuant to any
labor or collective bargaining agreement, is required to be obtained or made in
connection with the execution and delivery by the Company of this Agreement and
the Ancillary Agreements to which the Company is a party or the consummation by
the Company of the transactions contemplated hereby and
thereby.
9
4.1.4 Shareholder/Member
Agreements. Except for this Agreement and the Ancillary
Agreements executed in connection herewith, there are no Contracts restricting
or otherwise relating to the management of the Company or the voting, dividend
rights or disposition of the Subject Shares or the Subject Units or otherwise
granting any Person any right in respect of such Subject Shares and/or Subject
Units, and there are no existing contractual restrictions on the transfer of the
Subject Shares or the Subject Units.
4.1.5 Corporate Records; Equity
Interests. The stock certificates, books of account, minute
books and other Records of the Company (copies of which have been made available
to the Buyer and its Representatives) are true, complete and correct in all
material respects. All of the Company’s books and records are in the
possession of the Company. The copies of the Holding Company’s
Certificate of Incorporation and By Laws and the Operating Company’s Articles of
Organization and Member Control Agreement previously made available to Buyer are
true, complete and correct and are in full force and effect without amendment or
modification. Except as set forth on Schedule
4.1.5 attached hereto, the Company does not, directly or indirectly, own
or control, or have any Contract to acquire, any stock of, any equity interest
in or any other ownership or investment interest in any corporation,
partnership, limited liability company, joint venture or other business
entity.
4.1.6 Capitalization;
Options.
(a) The
Holding Company’s authorized capital stock consists solely of Five Million
(5,000,000) shares of Common Stock and One Million (1,000,000) shares of
preferred stock, par value $0.01 per share (the “Preferred
Stock”). The entire issued and outstanding capital stock of the
Holding Company (of whatever class, series or designation) consists of Two
Million Three Hundred Fifty-Two Thousand Nine Hundred Forty-One (2,352,941)
shares of Common Stock, and the entire issued and outstanding capital stock of
the Operating Company (of whatever class, series or designation) consists of
Fourteen Million One Hundred Seventeen Thousand Six Hundred Ninety-Seven
(14,117,697) Units, all of which shares or membership interests, as the case may
be, are duly authorized, validly issued and outstanding, fully paid and
nonassessable. The Subject Shares are all of the shares of Common
Stock issued and outstanding. No shares of Preferred Stock are issued
or outstanding. The Units owned by the Holding Company (the “Subject
Units”) are all of the Units issued and outstanding. Neither the
Subject Shares nor the Subject Units are subject to, nor issued in violation of,
any preemptive or subscription rights, or rights of first
refusal.
10
(b) There
are no stock/membership interest award plans of the Company. There
are no outstanding or authorized warrants, options, agreements, subscriptions,
rights, calls, puts, conversion rights, convertible or exchangeable securities
or other Contracts pursuant to which the Company is or may become obligated or
which are binding upon the Company to issue, sell, purchase, retire or redeem
any shares of capital stock or other securities of the Company. There
are no outstanding or authorized stock appreciation, phantom stock or similar
rights with respect to the Company. There are no voting trusts,
proxies or any other agreements or understandings with respect to the voting of
the capital stock of the Company.
(c) All
of the issued and outstanding shares of Common Stock and Units have been issued
in compliance with all Legal Requirements.
(d) The
Company has not entered into any commitment, arrangement or agreement, or is
otherwise obligated, to contribute capital, loan money or otherwise provide
funds or make additional investments in any Person.
4.1.7 Title to and Condition of
Assets. The Company has good and valid title to all of the
material property and material assets, personal and real, tangible and
intangible, which are used by the Company in connection with the conduct of the
Company’s business other than equipment and other personal property leased by
the Company and included within the Company’s assets, free and clear of all
Liens and claims whatsoever other than Permitted Liens. The Company’s
assets are sufficient for the operation of the Company’s business in the
Ordinary Course of Business as presently being conducted and are suitable for
the purpose for which they are being used, in each case, in all material
respects. Schedule
4.1.7(a) attached hereto contains a true, correct and complete list of
all material equipment and other material personal property leased by the
Company and included within the Company’s assets, all of which such property, to
the Knowledge of the Company, is in the condition required of such property by
the terms and conditions of the lease applicable thereto in all material
respects. To the Company’s Knowledge, the Inventory is sufficient for
the operation of the Company in the Ordinary Course based on current levels of
operation, has been manufactured and/or purchased in the Ordinary Course of
Business consistent in quality and quantity with past practices of the Company,
is not damaged, obsolete or out of specification and is of a quality and
quantity usable and salable in the Ordinary Course of Business, net of any
applicable reserves to be reflected on the Closing Date Balance
Sheet. All accounts receivable of the Company arose from bona fide
transactions in the Ordinary Course of Business. The aggregate value
of all Inventory produced by the Company for the Persons listed on Schedule
4.1.7(b) attached hereto on hand as of the Closing Date and the aggregate
amount of all accounts receivable of the Company due and owing from the Persons
listed on Schedule
4.1.7(b) as of the Closing Date have been reserved for by the Company as
will be reflected on the Closing Date Balance Sheet.
4.1.8 Real Property. The Company
does not own any real property in connection with the operation of its business
other than the real property described on Schedule 4.1.8(a)
attached hereto (together with any buildings or other improvements located
thereon, the “Owned Real Property”). Except as set forth on Schedule
4.1.8(b) attached hereto, the Company does not lease any real property in
connection with the operation of its business. Other than the real
property described on Schedule
4.1.8(a) and Schedule
4.1.8(b), since January 1, 1995, the Company has not owned or leased any
real property. The Company has not received written notice of any
pending Proceeding with respect to the Owned Real Property, nor does the Company
have Knowledge of any such pending or threatened Proceeding. The
Company has not received written notice of any Order requiring repair,
alteration or correction of any existing condition affecting the Owned Real
Property, nor does the Company have Knowledge of any such pending or threatened
Order.
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4.1.9
Proceedings;
Orders. Except as set forth on Schedule
4.1.9 attached hereto, there is no Proceeding pending or, to the
Company’s Knowledge, threatened against the Company. The Company is
not currently subject to any Order. To the Knowledge of the Company,
no event has occurred or circumstances exist that may give rise or serve as a
basis for the commencement of any Proceeding to prohibit the transactions
contemplated by this Agreement.
4.1.10 Intellectual
Property.
(a) Schedule
4.1.10(a) attached hereto contains a complete list (specifying the owner
thereof and the registration or application number) of each of the following
which are owned by the Company: (i) all U.S. and foreign issued patents and
pending applications relating to any inventions, and all reissues, divisions,
continuations, continuations-in-part and extensions thereof; (ii) all U.S. and
foreign registered trademarks, registered service marks, trademark applications
and service mark applications, and all renewals and extensions thereof; (iii)
all U.S. and foreign registered copyrights and copyright applications, and all
renewals and extensions thereof; and (iv) all domain name registrations
(collectively, the “Registered Intellectual Property”). The
Registered Intellectual Property, together with all common law trademarks,
service marks, copyrights, licenses, logos, trade names (including, but not
limited to, “Lifecore” and “Lifecore Biomedical”) and trade dress owned by the
Company and/or used by the Company in the operation of its business, all content
contained or stored in or displayed by the websites covered by the domain name
registrations listed on Schedule
4.1.10(a), all other inventions, trade secrets, methods, processes,
formulae, technical information, know-how, production protocols, product
specifications, improvements, blue-prints, architectural and other drawings,
computer programs and software owned by the Company and/or used by the Company
in the operation of its business and all other similar intellectual property
rights which are owned by the Company and/or used by the Company in the
operation of its business, shall hereinafter collectively be referred to as the
“Intellectual Property”.
(b) Schedule
4.1.10(b) attached hereto contains a complete list of: (i) all licenses
or other Contracts granted by the Company which create rights in any third
Person regarding any item of the Intellectual Property; and (ii) all material
licenses or other Contracts granted to the Company (excluding shrink-wrap,
click-wrap, click-through or other similar Contracts with respect to
off-the-shelf or personal computer software) which create rights in the Company
regarding any intellectual property rights owned by any third Person
(hereinafter individually referred to as an “IP Contract” and collectively
referred to as “IP Contracts”).
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(c) The
Company owns or has the valid right to use in the Ordinary Course operation of
the Company’s business all Intellectual Property, free and clear of all Liens
other than Permitted Liens. To the Company’s Knowledge, no current or
former employee, officer or consultant of the Company has any right, title or
interest in or to any of the Intellectual Property. All Intellectual
Property developed by or on behalf of the Company and owned or purported to be
owned by the Company was developed by employees or consultants who have executed
written agreements assigning exclusive rights in and to such developed and owned
Intellectual Property to the Company.
(d) The
Company has paid all fees required to be paid as of the Closing Date to maintain
the Registered Intellectual Property. All registrations for the
Registered Intellectual Property are in force and have not been abandoned, and
all applications for the Registered Intellectual Property are active and
currently pending.
(e) There
are no existing or, to the Company’s Knowledge, threatened claims or Proceedings
by any Person relating to the use by the Company of the Intellectual Property or
challenging the Company’s ownership of, or the validity or enforceability of,
the Intellectual Property owned by the Company. None of the
Intellectual Property is subject to any outstanding Order limiting the scope or
use of such Intellectual Property or declaring any of it abandoned, invalid or
unenforceable. Except for any such written restrictions, undertakings
or agreements contained in the IP Contracts, and excluding shrink wrap,
click-wrap, click-through or other similar Contracts with respect to off the
shelf or personal computer software, none of the Intellectual Property owned by
the Company is subject to any written restriction, undertaking or agreement
limiting the scope or use of such Intellectual Property or declaring any of it
abandoned, invalid or unenforceable.
(f) (i)
To the Company’s Knowledge, the Company is not infringing, misappropriating or
otherwise violating in any material respect the intellectual property rights of
any other Person; (ii) the Company is not in receipt of any complaint, claim or
other notice alleging that the operation of the Company’s business or any of the
Intellectual Property is infringing, misappropriating or otherwise violating the
intellectual property rights of any other Person; and (iii) to the Company’s
Knowledge, no other Person is infringing, misappropriating or otherwise
violating the Intellectual Property.
(g) The
Company has taken commercially reasonable steps to maintain the confidentiality
of its trade secrets, and, to the Company’s Knowledge, none of such trade
secrets have been disclosed to any third Person except pursuant to written
confidentiality obligations.
(h) Except
for the IP Contracts, the Company has not granted any license, franchise, permit
or other right (including covenants not to sue) to any third Person to use any
of the Intellectual Property.
4.1.11 Financial Statements. The
Financial Statements attached hereto as Schedule
4.1.11 (a) fairly present in all material respects the financial
condition of the Company’s business on the dates designated thereon and the
results of operations for the period designated therein, (b) were prepared in
accordance with GAAP consistently applied throughout all of the periods covered
therein, except as disclosed therein and, with respect to the Interim Financial
Statements, for the absence of footnotes and year-end adjustments (which will
not be material individually or in the aggregate), and (c) were prepared from,
and are consistent with, the Records.
13
4.1.12 Taxes.
(a) Provision for
Taxes. All income and other material Taxes of the Company
attributable to periods preceding or ending with the Closing Date that are
required to be paid have been paid by the Company.
(b) Tax Returns
Filed. All income and other material Tax Returns required to
be filed by or on behalf of the Company have been timely filed and, when filed,
were true, correct and complete in all material respects; provided, however, the
foregoing shall not constitute a representation or warranty regarding the
accuracy of the tax basis of the assets of the Company or the amount of any net
operating loss, net capital loss, unused investment or other credit, foreign tax
credit or any similar tax attribute of the Company. Except as set
forth on Schedule
4.1.12(b) attached hereto, the Company is currently not the beneficiary
of any extension of time within which to file any income or other Tax
Return.
(c) Withholding. The
Company has duly withheld and paid all Taxes that it is required to withhold and
pay in connection with amounts paid or owing to any employee, independent
contractor, creditor, shareholder or other third party of the Company and all
forms W-2 and 1099 required with respect thereto have been properly completed
and timely filed.
(d) Tax
Audits. Since January 15, 2008, no claim has been made by any
authority in a jurisdiction in which the Company does not file Tax Returns that
it is or may be subject to taxation by that jurisdiction or
authority. The Tax Returns of the Company that are under audit by the
IRS or other applicable Tax authorities, together with a true, correct and
complete list of all powers of attorney granted by Company with respect to any
such Tax matter, are set forth on Schedule
4.1.12(d) attached hereto. The Company has not received from
the IRS or any other applicable Tax authorities any written notice of
underpayment or assessment of any income or other Taxes that has not been paid
or any objection to any income or other Tax Return filed by the
Company. There are no outstanding Contracts or waivers extending the
statutory period of limitations applicable to any income or other Tax Return or
extending the time with respect to an income or other Tax assessment or
deficiency. There is no dispute or claim or, to the Company’s
Knowledge, an intent to open an audit, request information or conduct other
review concerning any Tax of the Company, including Taxes of those jurisdictions
where the Company has not filed Tax Returns, either (i) claimed or raised by any
authority in writing, or (ii) as to which the Company has Knowledge based upon
personal contact with any agent of such authority.
(e) Consolidated
Group. The Company has never been a member of an affiliated
group of corporations that filed a consolidated tax return and has no liability
or obligation for the Taxes of any other entity under Section 1.1502-6 of the
Treasury Regulations (or any similar provision of state, municipal, county,
local, foreign or other Tax Legal Requirement) as a transferee or successor, by
Contract or otherwise.
14
(f) No Tax
Liens. The Company is not subject to any Liens for Taxes other
than for Taxes not yet due and owing.
(g) Tax
Positions. The Company has disclosed on its federal income Tax
Returns all positions taken therein that could give rise to a substantial
understatement of federal income Tax within the meaning of Section 6662 of the
Code. The Company has not received a Tax opinion with respect to any
transaction relating to the Company other than a transaction in the Ordinary
Course of Business. The Company is not the direct or indirect
beneficiary of a guarantee of Tax benefits or any other arrangement that has the
same economic effect with respect to any transaction or Tax opinion relating to
the Company. The Company is not and has not been a party to any
“reportable transaction” as defined in Section 6707A of the Code and Treasury
Regulation Section 1.6011-4(b). The Company is not party to a lease
arrangement involving a defeasance of rent, interest or principal.
(h) Consents and
Rulings. The Company has not (i) applied for any Tax ruling,
(ii) entered into a closing agreement as described in Section 7121 of the Code
or otherwise (or any corresponding or similar provision of state, municipal,
county, local, foreign or other Tax Legal Requirement) or any other Contract
with any Tax authority, (iii) filed an election under Section 338(g) or Section
338(h)(10) of the Code (nor has a deemed election under Section 338(e) of the
Code occurred), (iv) made any payments, or been a party to a Contract (including
this Agreement) that under any circumstances could obligate it to make payments
(either before or after the Closing Date) that will not be deductible because of
Section 162(m) or Section 280G of the Code, (v) been a party to any Tax
allocation, Tax sharing or Tax indemnification Contract (other than pursuant to
Contracts entered into in the Ordinary Course of Business pursuant to commercial
lending arrangements) or (vi) filed or made any material election for any Tax
purpose which has not been disclosed on Schedule
4.1.12(h) attached hereto.
(i) Real Property Holding
Company. The Company is not a “United States real property
holding Company” within the meaning of Section 897 of the Code.
(j) Accounting
Methods. The Company has not agreed, nor is it required to
make, any adjustment under Section 263A, Section 481 or Section 482 of the Code
(or any corresponding or similar provision of state, municipal, county, local,
foreign or other Tax Legal Requirement) by reason of a change in accounting
method or otherwise.
(k) Section 355
Transactions. The Company has not been the “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355 of
the Code) with respect to a transaction described in Section 355 of the
Code.
(l) Tax Agreements and
Arrangements. The Company is in compliance with the terms and
conditions of any applicable Tax exemptions, Tax Contracts or Tax Orders of any
government or Governmental Body to which it may be subject or that it may have
claimed, and the transactions contemplated by this Agreement will not have any
adverse effect on such compliance.
15
(m) Effect of
Transaction. The Company will not be required to include any
item of income in, or exclude any item of deduction from, taxable income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any (i) installment sale or open transaction disposition made on or prior to the
Closing Date, (ii) prepaid amount received on or prior to the Closing Date, or
(iii) use of the cash, modified cash or modified accrual method of
accounting.
4.1.13 No Undisclosed
Liabilities. There are no commitments, liabilities or
obligations relating to the Company, whether known or unknown, accrued or
unaccrued, absolute, contingent or otherwise, including, without limitation, (a)
any liabilities arising, directly or indirectly, from or in connection with the
Lifecore Acquisition or the Dental Operations and Divestiture, or (b) guaranties
by the Company of the liabilities of third parties, except for (i) liabilities
disclosed, reflected or reserved against on the consolidated balance sheet of
the Company (including the notes thereto), dated as of the Interim Balance Sheet
Date, (ii) current liabilities incurred in the Ordinary Course of Business
between the Interim Balance Sheet Date and the Closing Date, and (iii)
liabilities relating to performance obligations under contracts, including
Applicable Contracts, and Permitted Liens in accordance with the terms and
conditions thereof which are not required by GAAP to be reflected on the
consolidated balance sheet of the Company.
4.1.14 Contracts and Other
Agreements. Schedule
4.1.14(a) attached hereto sets forth a true, correct and complete list of
all Applicable Contracts. True, correct and complete copies (or
memoranda describing each with respect to oral agreements or plans) of each of
the Applicable Contracts, and all amendments and modifications thereof, have
been made available to the Buyer prior to the Closing Date. Each
Applicable Contract is valid, binding and in full force and effect in all
material respects in accordance with its terms. Except as set forth
on Schedule
4.1.14(b) attached hereto, neither the Company nor, to the Company’s
Knowledge, any other Person who is a party to any Applicable Contract is in
breach or default under any Applicable Contract (with or without the lapse of
time, or the giving of notice, or both). Except as set forth on Schedule
4.1.14(b), since January 1, 2009 until the date of this Agreement, the
Company has not given or received from any other Person any written notice
regarding any actual or alleged violation or breach of, or default under, any
Applicable Contract or any termination or possible termination
thereof. Except as set forth on Schedule
4.1.14(c) attached hereto, there are not, and since January 1, 2009 there
have not been any, renegotiations of or attempts to renegotiate any material
amounts paid or payable to the Company under any Applicable
Contract.
4.1.15 Product Warranties. To the
Company’s Knowledge, since January 15, 2008, all products and services
manufactured and/or sold by the Company (and the delivery thereof) prior to the
Closing Date have been in conformity with all applicable contractual commitments
and all expressed or implied warranties, in each case in all material
respects. Except as set forth on Schedule
4.1.15 attached hereto, since January 15, 2008, no claim for product
liability has been asserted against the Company, and, to the Knowledge of the
Company, there are no facts, conditions or circumstances that could reasonably
be expected to give rise to any such claim.
16
4.1.16 Employees. Schedule
4.1.16 attached hereto contains:
(a) A
list of all handbooks, manuals, policies and/or procedures relating to the
employees of the Company, true, correct and complete copies of which have been
made available to the Buyer prior to the Closing Date; and
(b) A
list of all employees of the Company as of March 31, 2010, together with their
job titles and current rates of salary, wages or commissions.
4.1.17 Labor
Practices.
(a) The
Company is in compliance in all material respects with all Legal Requirements
applicable to the Company’s employees, including, but not limited to, Legal
Requirements relating to employment discrimination, family, medical and/or other
employee leave, employee welfare and benefits and labor
standards. There are no pending or, to the Company’s Knowledge,
threatened claims, charges, complaints, causes of action, demands or liabilities
by any past or present employee of the Company, including, without limitation,
that such employee was subject to a wrongful discharge, any unlawful employment
discrimination or unlawful harassment by the Company or its management, a breach
of contract (whether written or oral, express or implied) or tortious conduct of
any type.
(b) The
Company is in compliance in all material respects with the Federal Occupational
Safety and Health Act, the regulations promulgated thereunder and all other
applicable Legal Requirements relating to the safety of employees or the
workplace or relating to the employment of labor, including, without limitation,
any provisions thereof relating to wages, bonuses, collective bargaining, equal
pay and the payment of social security and other payroll taxes. No
Proceedings are pending before any Governmental Body relating to labor or
employment matters, and there is no pending investigation by any Governmental
Body or, to the Knowledge of the Company, threatened claim by any such
Governmental Body or other Person relating to labor or employment
matters.
(c) The
Company is not a party to any Contract with any union, labor organization,
employee group, or other similar Person which affects the labor or employment of
employees of the Company, including, but not limited to, any collective
bargaining agreements or labor contracts. To the Company’s Knowledge,
none of the employees of the Company are in the process of being organized by or
into any other labor unions or organizations. The Company has not
agreed to recognize any union or other collective bargaining unit, and no union
or collective bargaining unit has been certified as representing any employees
of the Company. There is no strike, slowdown or other work stoppage
pending or, to the Company’s Knowledge, threatened, against the
Company.
(d) The
execution of this Agreement and the consummation of the transaction contemplated
by this Agreement will not result in any breach or other violation of any
employment agreement, consulting agreement, labor or collective bargaining
agreement or any other labor-related agreement to which the Company is a
party.
17
4.1.18 Employee Benefit
Plans.
(a) Schedule
4.1.18(a) attached hereto contains a true, correct and complete list of
all Plans.
(b) With
respect to each Plan, the Company has made available to the Buyer true and
complete copies of (i) the Plan document, including all amendments thereto,
(ii) the most recent summary plan description, including all summaries of
material modifications, (iii) all trust agreements, insurance contracts or other
funding instruments, (iv) the actuarial and financial reports and the annual
reports filed with any Governmental Body for the three (3) most recent three
plan years, (v) copies of all IRS determination and opinion letters in the case
of a Plan intended to qualify under Section 401(a) of the Code, (vi) the results
of all required coverage and nondiscrimination tests for the three (3) most
recent plan years, and (vii) any correspondence to or from the IRS, the U.S.
Department of Labor or any other Governmental Body relating to any potential
compliance issues.
(c) No
Plan is or has been a “multiemployer plan” (within the meaning of Section 3(37)
of ERISA), a “multiple employer plan” (within the meaning of Section 413 of the
Code) or a “multiple employer welfare arrangement” (within the meaning of
Section 3(40) of ERISA), and neither the Company nor, to the Company’s
Knowledge, any ERISA Affiliate has any actual or potential liability under any
such provision (or related provision) of ERISA or the Code.
(d) No
Plan is or has been covered by Title IV of ERISA, Section 302 of ERISA or
Section 412 or 430 of the Code, and neither the Company nor, to the Company’s
Knowledge, any ERISA Affiliate has any actual or potential liability under any
such provision (or related provision) of ERISA or the Code.
(e) Each
Plan intended to be qualified under Section 401(a) of the Code and each trust
intended to be exempt under Section 501(a) of the Code has been determined to be
so qualified or exempt by the IRS and is the subject of a favorable
determination letter covering all applicable Legal Requirements with respect to
which such a letter can be issued, or the Company has relied on the IRS opinion
letter issued to the prototype plan sponsor with respect to such
Plan. Since the date of each most recent determination or opinion
letter, there has been no event, condition or circumstance that has adversely
affected or is reasonably likely to affect such qualified status.
(f) Full
payment has been made of all amounts which the Company or any ERISA Affiliate is
required to pay with respect to each Plan for the most recent plan year thereof
ended prior to the Closing Date, and all such amounts payable with respect to
the portion of the current plan year will be paid by the Company on or prior to
the Closing Date.
18
(g) Each
of the Plans conforms to, and has been operated and administered in all material
respects in accordance with, all applicable Legal Requirements, including, but
not limited to, ERISA and the Code. No event has occurred which could
subject the Company to any liability (other than routine claims for benefits)
under the terms of any Plan, ERISA, the Code or other applicable Legal
Requirements. No Plan is currently under audit or review by any
Governmental Body and, to the Knowledge of the Company, no such audit or review
has been threatened. No charge, complaint or Proceeding with respect
to any Plan or the administration of any Plan (except for claims for benefits
routinely submitted in the ordinary course of Plan administration) is pending
or, to the Knowledge of the Company, threatened with respect to any
Plan.
(h) To
the extent permitted under applicable Legal Requirements, each Plan can be
amended or terminated at any time without the consent of any non-Company party
and without liability other than for benefits accrued as of the date of such
amendment or termination.
(i) The
Company has no obligation to provide health benefits, death benefits or any
other welfare benefits to any employee of the Company (or any dependent of such
employee) following the termination of such employee’s employment, except as is
specifically required by applicable Legal Requirements.
(j) No
Plan is subject to the Legal Requirements of any jurisdiction outside of the
United States.
(k) Each
Plan which is a “nonqualified deferred compensation plan” (within the meaning of
Section 409A of the Code) has at all times since January 15, 2008 complied
with the requirements of paragraphs (2), (3) and (4) of
Section 409A(a) of the Code by its terms and has been operated in
accordance with such requirements. No participant in any such Plan will
incur any Taxes on any benefit under such Plan before the date as of which such
benefit is actually paid to such participant. No event has occurred
that would be treated by Section 409A(b) of the Code as a transfer of
property for purposes of Section 83 of the Code. No Plan
requires the Company to gross up a payment to any former or current employee,
officer, director or contractor of the Company for Tax related payments under
Section 409A of the Code.
(l) Neither
the execution and delivery of this Agreement nor the consummation of the
transactions contemplated hereby will (either alone or in combination with
another event including notice, lapse of time or both) (i) result in any payment
becoming due, or increase the amount of any compensation or benefits due, to any
current or former employee of the Company or with respect to any Plan, (ii)
increase any benefits otherwise payable under any Plan, or (iii) result in the
payment of any amount that would, individually or in combination with any other
such payment, constitute an “excess parachute payment,” as defined in Section
280G(b)(1) of the Code.
4.1.19
Events Since December 31,
2009. Since December 31, 2009, the Company has operated its
business in the Ordinary Course of Business, has used, preserved and maintained
its assets on a basis consistent with past practices, has maintained its books,
accounts and records in the usual manner and on a basis consistent with past
practices and has not made any payments of the kind described in the definition
of “Restricted Payments” set forth in Article XI
below.
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4.1.20 Insurance. The Company
maintains policies of fire and casualty, liability and other forms of insurance
and bonds in such amounts, with such deductibles, and against such risks and
losses which do not provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Company. A true,
correct and complete list of all material insurance and bonds currently
maintained by the Company is attached hereto as Schedule
4.1.20(1). The Company has paid all premiums due and has
otherwise performed in all material respects all of its obligations under each
insurance policy to which the Company is a party or that provides coverage to
the Company. Each such insurance policy and bond is in full force and
effect and the Company has not received notice of any cancellation or, to the
Knowledge of the Company, threat of cancellation of, any such insurance or
bond. Schedule 4.1.20(2)
attached hereto also sets forth all property damage, personal injury, workers’
compensation, products liability or other claims that have been made against the
Company or the Company’s insurance policies since January 15, 2008, or which are
pending against the Company or the Company’s insurance policies or, to the
Company’s Knowledge, threatened against the Company or any of the Company’s
insurance policies. The Company has given notice to the insurer under
each insurance policy of any claims that may be insured thereby within the time
periods required. Schedule
4.1.20(3) also sets forth a true, correct and complete list of any
self-insurance arrangements by or affecting the Company, including any reserves
established thereunder, and all Contracts or arrangements, other than policies
of insurance, for the transfer or sharing of any risk by the
Company.
4.1.21 Environmental
Matters.
(a) Except
as set forth on Schedule
4.1.21(a) attached hereto, (i) there are no and there have never been any
Hazardous Substances at, on, in, above or under the Owned Real Property except
in the Ordinary Course of Business and in compliance with Environmental Laws,
and (ii) to the Knowledge of the Company, there are no and there have never been
any Hazardous Substances on any property adjacent to the Owned Real
Property. Except in the Ordinary Course of Business and in compliance
with all Environmental Laws, no Hazardous Substances have ever been generated,
treated, stored or handled on, or removed from, the Owned Real
Property.
(b) Since
January 1, 2005, the Company has not received any written notice from any
Governmental Body or any third party notifying of (i) any Hazardous Substances
which are present on or have been generated, treated, stored, handled or removed
from, or disposed of on, the Real Property, in violation of Environmental Laws,
(ii) any Hazardous Substance which has migrated on, in, under or above or to the
Real Property from any adjacent property or which has migrated, emanated or
originated from the Real Property onto any other property, or (iii) any
actual or potential liability, arising out of or relating to any Environmental
Law with respect to the Company, the Owned Real Property or the Company’s prior
use of the Prior Real Property.
20
(c) The
Company has obtained all material Governmental Authorizations required for the
operation of its business and the use of the Owned Real Property required by any
Environmental Law. To the Company’s Knowledge, the consummation of
the transactions contemplated by this Agreement will not (i) impose any
obligation on the Company under any Environmental Law, including, without
limitation, for the investigation or cleanup of the Owned Real Property, or (ii)
require notification to or consent of any Governmental Body or third party
pursuant to any Environmental Law.
(d) The
Company, the Owned Real Property and the Company’s other assets are in
compliance in all material respects with each Environmental Law and with all
Governmental Authorizations issued in connection with the operation of the
Company’s business and the use of the Owned Real Property.
(e) No
material Environmental Claim with respect to the Company or the Owned Real
Property is pending or, to the Knowledge of the Company,
threatened.
(f) The
Owned Real Property does not contain, and, to the Knowledge of the Company, has
never contained, any (i) USTs, (ii) to the Knowledge of the Company,
asbestos-containing material, PCBs, radon or urea formaldehyde foam, (iii)
landfill or dumps, or (iv) a hazardous waste management facility as defined
pursuant to RCRA or any comparable state Legal Requirement.
(g) Schedule
4.1.21(g) attached hereto contains a list of all material Environmental
Claims, reports, studies, assessments and audits in the possession or control of
the Company relating to environmental matters and relating to the Company’s
business, the Owned Real Property or any of the Company’s other assets (complete
copies of which have been provided to the Buyer).
(h) To
the Knowledge of the Company, the assets of the Company are not required to be
materially upgraded, modified or replaced to be in compliance with any
Environmental Law.
21
4.1.22 FDA. The Company develops,
manufactures, labels, stores, tests, distributes and markets, and since January
1, 2005 has developed, manufactured, labeled, stored, tested, distributed and
marketed, its products in all material respects in accordance with all
applicable rules and regulations of the United States Food and Drug
Administration (the “FDA”) (including the “Good Manufacturing Practices” and the
“Medical Device Reporting” regulations) and all other applicable foreign,
federal, state and local regulatory authorities, and the Company’s quality
control procedures in effect at the time of developing, manufacture, labeling,
storing, testing and distribution. To the extent required, all of the
products currently sold by the Company have been approved or cleared for sale by
the FDA and applicable foreign regulatory agencies. The Company has
not received any written notice from the FDA or any other federal, state or
foreign regulatory agency or third party (a) of any circumstances that have
arisen which would reasonably be expected to lead to the questioning of its
development, application, manufacturing or marketing practices or the safety or
efficacy of its products, or (b) threatening to revoke, suspend, cancel,
withdraw, place sales or marketing restrictions on, curtail any product
clearance or approval, or seek damages (for past or present products or product
candidates), and, with respect to clauses (a) and (b) above, the Company is not
aware of any intent to deliver any such notice. To the Knowledge of
the Company, there are no circumstances which would reasonably be expected to
require any material recall, market withdrawal, correction, removal,
notification, take repair/replace/refund action or similar action, or claim by
order of any Governmental Body or any third party of any product or which would
reasonably be expected to lead to an injunction pertaining to such product,
including the procedures used to manufacture and test such
product. Schedule
4.1.22(a) attached hereto contains a complete list of all products
manufactured or marketed by the Company, including those which require the
approval of, or premarket notification to, or listing with the FDA or any other
federal, state or foreign governmental agency or bureau under any existing Legal
Requirement. Except as set forth on Schedule
4.1.22(b) attached hereto, none of the products identified on Schedule
4.1.22(a), or any product candidate or previously marketed or approved
product, has been the subject of any voluntary or involuntary recall, third
party action, or governmental investigation other than routine inspections of
the Company’s facilities. All U.S. and international regulatory
approvals or premarket notifications are owned by and registered in the name of
the Company and are in full force and effect. To the Knowledge of the
Company, all preclinical studies and clinical trials conducted by the Company
since January 1, 2005 have been, and are being, conducted in substantial
compliance with the requirements of Good Laboratory Practice, data
protection/privacy standards and Good Clinical Practice and applicable
requirements relating to protection of human subjects contained in Title 21,
Parts 50, 54 and 56 of the United States Code of Federal Regulations and foreign
equivalents. Any preclinical tests and clinical trials associated
with the Company’s products and product candidates since January 1, 2005 were,
and, if still pending, are, to the Company’s Knowledge, being conducted in all
material respects in accordance with applicable Legal Requirements of the
appropriate regulatory authorities for each such test or trial and in accordance
with all Legal Requirements and with good clinical practices. The
Company has no Knowledge of any studies or tests the results of which call into
question the efficacy, safety or approvability by the FDA or authorizations by
its foreign equivalents of the product or product candidate; and the Company has
not received any notices or other correspondence from the FDA or any committee
thereof or from any other U.S. or foreign government or drug, biologic or
medical device regulatory agency requiring the termination or suspension of any
clinical trials related to the Company’s product or product
candidates.
22
4.1.23 Compliance With Legal Requirements;
Governmental Authorizations. The Company has complied in all
material respects with each Legal Requirement that is applicable to it for the
conduct or operation of its business or the ownership or use of its
assets. No event has occurred or, to the Knowledge of the Company,
circumstances exist (with or without notice or lapse of time) that may
constitute or result in a violation by the Company of, or failure on the part of
the Company to comply with, any Legal Requirement. The Company has
not received a written notice or other communication from any Governmental Body
or any other Person regarding any actual, alleged, possible or potential
violation of, or failure to comply with, any Legal Requirement. Schedule 4.1.23
attached hereto contains a list of all material Governmental Authorizations that
are held by the Company, including, without limitation, all approvals, premarket
notifications to, or listings with the FDA or any other federal, state or
foreign governmental agency or bureau under any existing Legal Requirement with
respect to any products listed on Schedule 4.1.22(a)
attached hereto, regardless of whether such approvals of, premarket
notifications and/or registrations are deemed material; and with respect to any
such approvals, premarket notifications and registrations, Schedule
4.1.23 specifies the type of approval, premarket notification or listing
required and the reference number or identification thereof. Each
such Governmental Authorization is valid and in full force and effect in all
material respects. The Company has complied in all material respects
with all of the terms and requirements of each Governmental Authorization
identified or required to be identified on Schedule
4.1.23. No event has occurred that would or, to the Knowledge
of the Company, circumstances exist that may (with or without notice or lapse of
time) (a) constitute or result, directly or indirectly, in a material violation
of or a failure to comply with a term or requirement of any Governmental
Authorization, or (b) result, directly or indirectly, in the revocation,
withdrawal, suspension, cancellation or termination of, or modification to, any
Governmental Authorization. The Company has not received any written
notice or other communication from any Governmental Body or any other Person
regarding (i) any actual, alleged, possible or potential violation of or failure
to comply with any term or requirement of any Governmental Authorization, or
(ii) any actual, proposed, possible or potential revocation, withdrawal,
suspension, cancellation, termination of, or modification to any Governmental
Authorization. The Governmental Authorizations listed on Schedule 4.1.23
constitute all of the material Governmental Authorizations necessary to permit
the Company to conduct and operate lawfully its business in the manner in which
it is currently conducted and to permit the Company to own and use its assets in
the manner in which it currently owns and uses such assets.
4.1.24 Customers; Suppliers. Schedule
4.1.24 attached hereto sets forth, with respect to the twelve (12) month
period ended March 31, 2010, a list of (a) the ten (10) largest customers of the
Company (based on dollar amounts purchased from the Company) (the “Scheduled Customers”
and the dollar amount derived from each of them during such period, and (b) the
ten (10) largest suppliers of the Company (based on dollar amounts purchased by
the Company) (the “Scheduled Suppliers”)
and the dollar amount derived from each of them during such
period. The Company has not received any written notice or, to the
Company’s Knowledge, indication (whether written or oral) of the intention of
any of the Scheduled Customers or Scheduled Suppliers to cease doing business or
to reduce in any material respect the business transacted with the Company or to
terminate or modify any Contracts with the Company (whether upon consummation of
the transactions contemplated hereby or otherwise).
4.1.25 Accounts Payable. All
material accounts payable and material accrued expenses of the Company have been
incurred and, to the extent paid prior to the Closing, have been paid in the
Ordinary Course of Business consistent with past business
practices.
4.1.26 Brokers; Agents. The
Company has not dealt with any agent, finder, broker or other representative in
any manner which could result in the Buyer or the Company being liable for any
fee or commission in the nature of a finder’s fee or originator’s fee in
connection with the subject matter of this Agreement.
4.1.27 Accounts; Safe Deposit
Boxes. Attached hereto as Schedule
4.1.27 is a true, correct and complete list of the bank and savings
accounts, certificates of deposit and safe deposit boxes of the Company and all
persons authorized to sign thereon.
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4.1.28 Relationships with Related
Parties. Except as set forth on Schedule
4.1.28 attached hereto, since January 15, 2008, (a) no officer, director
or Affiliate of the Company (other than the portfolio companies of the Seller or
its Affiliates) (i) has, or has had, any interest in any property being used in
or pertaining to the Company’s business, (ii) owns, or has owned an equity
interest or any other financial or profit interest in, a Person that has (x) had
business dealings or a material financial interest in any transaction with the
Company, or (y) engaged in competition with the Company with respect to any line
of products or services of the Company, or (iii) is a party to any Contract
with, or has any claim or right against, the Company, and (b) no Related
Person of the Seller is a party to any Applicable Contract with the Company or
has any claim or right against the Company with respect to any Applicable
Contract. The Company is not a party to any management fee or similar
agreement (whether written or oral) with the Seller or any Related Person of the
Seller.
4.1.29 Outstanding
Indebtedness. As of the Closing Date, the Company shall have
no outstanding indebtedness for borrowed money (excluding the Permitted
Indebtedness and the Excluded Indebtedness (if any), which Excluded Indebtedness
will be paid in full prior to the Closing). In addition, as of the
Closing Date, all indebtedness owed to the Company by the Seller or any
Affiliate of the Seller (excluding, in the case of any Affiliate of the Seller,
accounts payable incurred in the Ordinary Course of Business, if any) will have
been paid in full.
4.1.30 Lifecore Acquisition. To
the Company’s Knowledge, there was no material breach of any representation or
warranty made by Lifecore Biomedical, Inc. (n/k/a Lifecore Biomedical, LLC) to
SBT Holdings Inc. and SBT Acquisition Inc. in that certain Agreement and Plan of
Merger, dated as of January 15, 2008, among SBT Holdings Inc., SBT Acquisition
Inc. and Lifecore Biomedical, Inc. as of the closing of such
transaction.
4.2 Disclaimer. Except for the
representations and warranties of the Company contained in this Article IV, neither
the Company nor any Person on behalf of the Company makes any other express or
implied representation or warranty with respect to the Company or any of its
Affiliates or the execution and delivery of this Agreement or with respect to
any other information (including, but not limited to, the Cash Flow Projections
and any other projections, forecasts or estimates of revenues, earnings or
performance of the Company) provided by the Company or its
Affiliates.
ARTICLE
V
Warranties and
Representations of Seller
5.1 Warranties and
Representations. Except as set forth in the Disclosure
Schedules (interpreted in accordance with the provisions of Section 12.12 below),
the Seller hereby warrants and represents on and as of the date of this
Agreement to the Buyer, which warranties and representations shall survive the
Closing for the period set forth in Section 10.3(a)
below, as follows:
5.1.1 Authority of Seller. The
Seller has the right, power and authority to enter into this Agreement and the
Ancillary Agreements to which it is a party and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and
performance by the Seller of this Agreement and the Ancillary Agreements to
which the Seller is a party have been duly and validly authorized by all
necessary limited partnership action. This Agreement has been, and
each Ancillary Agreement to which the Seller is a party hereto will be, duly and
validly executed and delivered by the Seller, and this Agreement and such
Ancillary Agreements are and shall constitute the legal, valid and binding
obligations of the Seller enforceable against the Seller in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors’ rights
generally or by general principles of equity.
24
5.1.2 Organizational Matters. The
Seller is a limited partnership duly formed, validly existing and in good
standing under the laws of the State of Delaware. The Seller has the
power and authority to own or lease its properties and assets and to carry on
all business activities now conducted by it.
5.1.3 No Conflict. Neither the
execution, delivery and performance by the Seller of this Agreement or any of
the Ancillary Agreements to which the Seller is a party nor the consummation or
performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly: (a) contravene, conflict with, or result in a breach or
violation of any provision of the organizational documents of the Seller; (b)
contravene, conflict with, or result in a breach or violation of, or give any
Governmental Body the right to challenge any of the transactions contemplated
hereby or to exercise any remedy or obtain relief under, any Legal Requirement
or any Order to which the Seller or the Subject Shares may be subject;
(c) contravene, conflict with, or result in a breach or violation of any
provision of, or give any Person the right to declare a default or exercise any
remedy under, or to accelerate the maturity or performance of, or to cancel,
terminate or modify, any material Contract to which the Seller is subject; or
(d) result in the imposition of any Lien, claim or restriction upon or with
respect to any of the Subject Shares except for restrictions on the transfer of
unregistered securities under applicable securities laws; provided, that,
assuming the truthfulness and correctness of the Buyer’s investment purpose
warranties and representations set forth in Section 6.1.5 below,
no such restrictions on the transfer of unregistered securities under applicable
securities laws shall apply to the transfer of the Subject Shares contemplated
hereunder. No action, consent, approval, Order or authorization of,
or registration, declaration or filing with, any Governmental Body is required
to be obtained or made in connection with the execution and delivery by the
Seller of this Agreement and the Ancillary Agreements to which the Seller is a
party or the consummation by the Seller of the transactions contemplated hereby
and thereby.
5.1.4 Title to Subject
Shares. The Seller is the beneficial and record owner of all
of the Subject Shares and at the Closing will deliver to the Buyer valid title
to such Subject Shares free and clear of all Liens and claims except for
restrictions on the transfer of unregistered securities under applicable
securities laws; provided, that,
assuming the truthfulness and correctness of the Buyer’s investment purpose
warranties and representations set forth in Section 6.1.5
below, no such restrictions on the transfer of unregistered securities under
applicable securities laws shall apply to the transfer of the Subject Shares
contemplated hereunder.
5.1.5 Proceedings Against
Seller. There is no Proceeding now pending which would affect
the Seller’s rights in and to the Subject Shares or the ability of the Seller to
consummate the sale and/or the transfer of the Subject Shares or the other
transactions contemplated by this Agreement or the Ancillary
Agreements.
25
5.1.6 Brokers; Agents. The Seller
has not dealt with any agent, finder, broker or other representative in any
manner which could result in the Buyer or the Company being liable for any fee
or commission in the nature of a finder’s fee or originator’s fee in connection
with the subject matter of this Agreement.
5.2 Disclaimer. Except for the
representations and warranties of the Seller contained in this Article V, neither
the Seller nor any Person on behalf of the Seller makes any other express or
implied representation or warranty with respect to the Seller or any of its
Affiliates or the execution and delivery of this Agreement or with respect to
any other information provided by the Seller or its Affiliates.
ARTICLE
VI
Warranties and
Representations of Buyer
6.1 Warranties and
Representations. The Buyer hereby warrants and represents on
and as of the date of this Agreement to the Seller, which warranties and
representations shall survive the Closing for the period set forth in Section 10.3(a)
below, as follows:
6.1.1 Authority of Buyer. The
Buyer has the right, power and authority to enter into this Agreement and the
Ancillary Agreements which the Buyer is a party to and to consummate the
transactions contemplated hereby and thereby. The execution, delivery
and performance by the Buyer of this Agreement and the Ancillary Agreements to
which the Buyer is a party have been approved by the Board of Directors of the
Buyer. This Agreement has been, and each Ancillary Agreement to which
the Buyer is a party will be, duly and validly executed and delivered by the
Buyer, and this Agreement and such Ancillary Agreements are and shall constitute
the legal, valid and binding obligations of the Buyer enforceable against the
Buyer in accordance with their respective terms, except as enforceability may be
limited by bankruptcy, insolvency or similar laws affecting the enforcement of
creditors’ rights generally or by general principles of equity.
6.1.2 Corporate Matters. The
Buyer is a corporation duly incorporated, validly existing and in good standing
under the laws of the State of Delaware. The Buyer has the power and
authority to own or lease its properties and assets and to carry on all business
activities now conducted by it.
6.1.3 No Conflict. Neither the
execution, delivery and performance by the Buyer of this Agreement or any of the
Ancillary Agreements to which the Buyer is a party nor the consummation or
performance of any of the transactions contemplated hereby or thereby will,
directly or indirectly: (a) contravene, conflict with, or result in a breach or
violation of any provision of the Certificate of Incorporation or By Laws of the
Buyer; (b) contravene, conflict with, or result in a breach or violation of, or
give any Governmental Body the right to challenge any of the transactions
contemplated hereby or to exercise any remedy or obtain relief under, any Legal
Requirement or any Order to which the Buyer may be subject; or (c) contravene,
conflict with, or result in a breach or violation of any provision of, or give
any Person the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate or modify,
any material Contract to which the Buyer is subject. Other than any
filings required by, and any approvals required under, the applicable
requirements of the Exchange Act and the rules and regulations of The NASDAQ
Global Select Market, no action, consent, approval, Order or authorization of,
or registration, declaration or filing with, any Governmental Body is required
to be obtained or made in connection with the execution and delivery by the
Buyer of this Agreement and the Ancillary Agreements to which the Buyer is a
party or the consummation by the Buyer of the transactions contemplated hereby
and thereby.
26
6.1.4 Proceedings Against
Buyer. There is no Proceeding now pending which would affect
the ability of the Buyer to consummate the purchase of the Subject Shares or the
other transactions contemplated by this Agreement or the Ancillary
Agreements.
6.1.5 Investment Purpose. The
Buyer understands that the Subject Shares have not been registered under the
Securities Act of 1933, as amended, nor qualified under any state securities
laws, and that they are being offered and sold pursuant to an exemption from
such registration and qualification based in part upon the Buyer’s
representations contained herein. The Buyer is acquiring the Subject
Shares solely for the Buyer’s own account for investment and not with a view
toward the resale, transfer or distribution thereof, nor with any present
intention of distributing the Subject Shares in violation of any securities
laws. No other Person has any right with respect to or interest in
the Subject Shares to be purchased by the Buyer, nor has the Buyer agreed to
give any Person any such interest or right in the future.
6.1.6 Brokers; Agents. Other than
Grace Matthews, Inc., the Buyer has not dealt with any agent, finder, broker or
other representative in any manner which could result in the Seller being liable
for any fee or commission in the nature of a finder’s fee or originator’s fee in
connection with the subject matter of this Agreement.
6.2 Disclaimer. Except for the
representations and warranties of the Buyer contained in this Article VI, neither
the Buyer nor any Person on behalf of the Buyer makes any other express or
implied representation or warranty with respect to the Buyer or any of its
Affiliates or the execution and delivery of this Agreement or with respect to
any other information provided by the Seller or its Affiliates.
ARTICLE
VII
Certain Covenants of the
Buyer
7.1 Benefits. The Buyer agrees
that, during the period beginning on the Closing Date and ending one (1) year
following the Closing Date, all employees of the Company as of immediately prior
to the Closing who continue employment with the Buyer or any of its Affiliates
after the Closing (the “Continuing Employees”) shall be eligible to participate
in benefit plans and programs that are substantially similar in the aggregate to
either those currently provided by the Company or those provided to
similarly-situated employees of the Buyer or the Buyer’s Affiliates
(collectively, the “Specified Parent Benefit Plans”).
27
7.2 Eligibility; Service
Credit. From and after the Closing, each Continuing Employee
shall (to the extent permitted by applicable Legal Requirements) be credited
under each Specified Parent Benefit Plan with his or her years of services with
the Company and their respective predecessors before the Closing for purposes of
vesting, eligibility and level of benefits (except for purposes of benefit
accrual under a defined benefit pension plan or where such credit would result
in a duplication of benefits) to the same extent as such Continuing Employee was
entitled, before the Closing, to credit for such service with the Company under
any similar Plan in which such Continuing Employee participated immediately
prior to the Closing. In addition, and without limiting the
generality of the foregoing, the Buyer (or its Affiliates) shall (to the extent
that such limitation would not apply with respect to substantially similar plans
maintained by the Company prior to the Closing) use its commercially reasonable
efforts to (i) cause to be waived any eligibility requirements or pre-existing
condition limitations, and (ii) give effect, in determining any deductible
maximum out of pocket limitations, to amounts paid by such Continuing Employees
during the plan year in which the Closing occurs.
7.3 No Third Party
Beneficiaries. This Article VII shall be
binding upon and inure solely to the benefit of each of the parties to this
Agreement, and nothing in this Article VII,
expressed or implied, is intended to confer upon any other Person any rights or
remedies of any nature whatsoever under or by reason of this Article
VII. Without limiting the foregoing, no provision of this
Article VII
shall create any third party beneficiary rights in any current or former
employee, director or consultant of the Company in respect of continued
employment or service (or resumed employment or service) or any other
matter. Nothing in this Article VII is
intended to amend any Plan, or interfere with the Buyer’s or the Company’s right
from and after the Closing to amend or terminate any Plan or the employment or
provision of services by any director, employee, independent contractor or
consultant.
7.4 Environmental Matters. The
Buyer hereby acknowledges and agrees that Section 4.1.21
of this Agreement is the Company’s sole and exclusive representation as to
environmental matters and that none of the other representations and warranties
contained in this Agreement shall be deemed to apply, directly or indirectly, to
environmental matters.
7.5 Bonus
Plan. The Buyer hereby acknowledges that the Bonus Plan shall
continue pursuant to its terms after the Closing.
ARTICLE
VIII
Mutual
Covenants
The
Seller and the Buyer covenant and agree as follows:
8.1 Records.
(a) On
the Closing Date, the Seller will deliver or cause to be delivered to the Buyer
constructive possession of all original Records in the possession or control of
the Seller (constructive possession shall be deemed to include, without
limitation, the presence of such Records at the Company’s
headquarters);
28
(b) For
a period of three (3) years after the Closing, upon reasonable written notice,
the Buyer and the Seller agree to furnish or cause to be furnished to each other
and their respective Representatives reasonable access, during normal business
hours, to such information in such parties’ possession directly related to the
Company and its operations with respect to periods prior to Closing and shall
otherwise cooperate with such other party at the expense of the requesting
party, to the extent such access is reasonably necessary for financial reporting
and accounting matters, the preparation and filing of any returns, reports or
forms with any Governmental Bodies or the defense of any Tax claim or
assessment; provided, however, that such
access (i) does not unreasonably disrupt the normal operations of the Seller,
the Buyer or the Company and (ii) is not reasonably likely to adversely affect
the ability of the disclosing party to assert attorney-client privilege,
work-product privilege or similar privilege.
8.2 Public
Announcements. Subject to the provisions of Section 2.1 above,
the Buyer, the Company and the Seller will consult with each other before
issuing any press release or otherwise making any public statements about this
Agreement or any of the transactions contemplated by this
Agreement. Neither the Buyer, the Company nor the Seller will issue
any such press release or make any such public statement prior to such
consultation, except to the extent that the disclosing party determines in good
faith it is required to do so by applicable Legal Requirements, in which case
that party will use reasonable efforts to consult with the other parties hereto
before issuing any such release or making any such public
statement.
8.3 Execution of Additional
Documents. From time to time, as and when requested by a party
hereto, each party hereto shall execute and deliver, or cause to be executed and
delivered, all such documents and instruments, and shall take, or cause to be
taken, all such further or other actions, as such other party may reasonably
deem necessary to consummate the transactions contemplated by this
Agreement.
ARTICLE
IX
Restrictive
Covenants
9.1 Standstill. At no time for
a period of three (3) years after the Closing Date shall the Seller, either
directly or indirectly through a Related Person, acquire an ownership interest
in any Person listed on Schedule
9.1 attached hereto, except as the holder of not more than five percent
(5%) of the publicly traded equity securities of such Person. The
total amount of all Losses of all of the Buyer Indemnified Persons for claims
under this Section
9.1 shall in no event exceed the Purchase Price.
9.2 Non-Solicitation. The
Seller acknowledges and agrees that at no time for a period of three (3) years
after the Closing Date shall the Seller, either directly or indirectly through a
Related Person, induce, or attempt to induce, any person who is an employee or
consultant of the Company as of the Closing Date to leave the employ of, or
terminate his or her engagement with, the Company and/or to accept employment or
engagement elsewhere; provided, however, that
notwithstanding the foregoing, neither the Seller nor any of its Related Persons
shall be prohibited from engaging in any general solicitation (including in any
newspaper or magazine, over the internet or by any search or employment agency)
for employment or hiring of any person who responds to such general solicitation
if such general solicitation is not specifically directed towards an employee of
the Company or a solicitation of any individual whose employment by the Company
has ceased for reasons other than a breach of this Section
9.2.
29
9.3 Non-Disclosure of Confidential
Information. The Seller acknowledges that for a period of
three (3) years after the Closing Date it shall not disclose any Confidential
Information (as defined below) to anyone other than to employees and
Representatives of the Buyer except any such Confidential Information which is
required to be disclosed by the Seller in connection with any court action or
any Proceeding before any Governmental Body or pursuant to any Legal
Requirement; provided, that the
Seller shall, to the extent practicable, give reasonable prior written notice to
the Buyer of the intention so to disclose such Confidential
Information. For purposes of this Section 9.3, the
term “Confidential Information” shall mean all non-public and all proprietary
information relating to the Company, its customers and products and services
including, without limitation, the following: (a) all formulations, test
results, manufacturing and engineering specifications, production and
manufacturing information and know-how and all other technical information
relating to the manufacture, formulation or production of the products or
services of the Company; (b) all information and records concerning products or
services being researched by, under development by or being tested by the
Company but not yet offered for sale; (c) all trade secrets relating to the
Company; (d) all information concerning pricing policies of the Company, the
prices charged by the Company to its customers, the volume or orders of such
customers and other information concerning the transactions of the Company with
its customers or proposed customers; (e) the customer and prospective customer
lists of the Company; (f) financial information concerning the Company; (g)
information concerning salaries or wages paid to, the work records of and other
personnel information relative to employees of the Company; (h) information
concerning the marketing programs or strategies of the Company; and (i) all
other confidential and proprietary information of the
Company. Notwithstanding the foregoing, the Seller acknowledges and
agrees that it will be bound by its obligations under applicable trade secret
Legal Requirements which, in the case of Confidential Information that qualifies
as a trade secret, may exceed the obligations imposed under this Section
9.3. Nothing in this Section 9.3 shall be
construed to limit or supersede the common law of torts or statutory or other
protection of trade secrets where such law provides the Company with greater
protections or protections for a longer duration than that provided under this
Section
9.3. “Confidential Information” shall not be deemed to mean or
refer to information that (i) is or becomes a matter of public knowledge through
no fault of the Seller; (ii) is rightfully received by the Seller from a third
Person (other than a Related Person of the Seller) without violation of any duty
of confidentiality; or (iii) is independently developed by the Seller without
use of or reference to the Confidential Information.
9.4 Enforcement. In addition to
all other legal remedies available to the Buyer for the enforcement of the
covenants of this Article IX, the
Seller acknowledges and agrees that the Buyer shall be entitled to seek
temporary and permanent injunctive relief by any court of competent jurisdiction
to prevent or restrain any breach hereof. The Seller further agrees
that, because these restrictions arise in the context of the sale of a business
and the goodwill associated with such business, if any of the covenants set
forth in this Article
IX shall at any time be adjudged invalid to any extent by any court of
competent jurisdiction, such covenant shall be deemed modified to the extent
necessary to render it enforceable.
30
ARTICLE
X
Indemnification
10.1 Indemnification of the Buyer and the
Company. The Seller agrees to indemnify the Buyer, the Company
and their respective shareholders, Representatives, controlling persons and
Affiliates and their respective successors and assigns (collectively, the “Buyer
Indemnified Persons”) and to hold them harmless from and against any and all
Losses, whether or not involving a third party claim, arising directly or
indirectly from, or in connection with, (a) any misrepresentation or breach of
any warranty or representation made by the Company and/or the Seller in Article IV and Article V of this
Agreement, (b) any breach or non-fulfillment of any agreement or covenant of the
Seller contained in this Agreement, (c) any failure of the Company to satisfy
the Excluded Indebtedness at or prior to the Closing, or (d) any of the Express
Indemnification Items.
10.2 Indemnification of the
Seller. The Buyer agrees to indemnify the Seller and its
partners, Representatives, controlling persons and Affiliates and their
respective successors and assigns (collectively, the “Seller Indemnified
Persons”) and to hold them harmless from and against any and all Losses, whether
or not involving a third party claim, arising directly or indirectly from, or in
connection with, (a) any misrepresentation or breach of any warranty or
representation made by the Buyer in this Agreement, or (b) any breach or
non-fulfillment of any agreement or covenant of the Buyer contained in this
Agreement.
10.3 Liability Limitations;
Survival of Representations and Warranties.
(a) Survival of Representations
and Warranties.
(i) Notwithstanding
any investigation by or information supplied to the Buyer, the warranties and
representations of the Seller and the Company contained in this Agreement or any
certificate delivered pursuant hereto shall survive the Closing for a period of
eighteen (18) months after the Closing Date; provided, that (A)
any warranties and representations fraudulently made or intentionally
misrepresented shall survive the Closing and continue in full force and effect
indefinitely, (B) the warranties and representations of the Company contained in
Section 4.1.12
(Taxes) above, shall survive the Closing and continue in full force and effect
until the date that is sixty (60) days after the applicable statutory
limitations period has expired, including any extensions thereto, and
(C) the warranties and representations of (I) the Company contained in
Section 4.1.1
(Authority of Company), the first sentence of Section 4.1.7 (Title
to and Condition of Assets) and Section 4.1.21
(Environmental Matters) above, and (II) of the Seller contained in Section 5.1.1
(Authority of Seller) and Section 5.1.4 (Title
to Subject Shares) above shall survive the Closing and continue in full force
and effect for a period of two (2) years after the Closing Date. Any
claim for indemnification under clause (a) of Section 10.1 above,
properly made in writing pursuant to this Article X prior to
the expiration of such applicable survival period, and the rights of indemnity
with respect thereto, shall survive such expiration, but only for purposes of
such claim, until resolved or judicially determined; and any such claim not so
made in writing prior to the expiration of such applicable survival period shall
be deemed to have been waived.
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(ii) The
warranties and representations of the Buyer contained in this Agreement or any
certificate delivered pursuant hereto shall survive the Closing for a period of
eighteen (18) months after the Closing Date; provided, that (A)
any warranties and representations fraudulently made or intentionally
misrepresented shall survive the Closing and continue in full force and effect
indefinitely, and (B) the warranties and representations contained in Section 6.1.1
(Authority of Buyer) above shall survive the Closing and continue in full force
and effect for a period of two (2) years after the Closing Date. Any
claim for indemnification under clause (a) of Section 10.2 above,
properly made in writing pursuant to this Article X prior
to the expiration of such applicable survival period, and the rights of
indemnity with respect thereto, shall survive such expiration, but only for
purposes of such claim, until resolved or judicially determined; and any such
claim not so made in writing prior to the expiration of such applicable survival
period shall be deemed to have been waived.
(b) Threshold. The
Seller shall not have any obligation to indemnify any Buyer Indemnified Person
for claims under clause (a) of Section 10.1 above
until the aggregate amount of Losses for which the Buyer Indemnified Persons are
entitled to indemnification under clause (a) of Section 10.1 above
exceeds Four Hundred Forty Thousand Dollars ($440,000) (the “Indemnification
Threshold”); provided, however, that once
such Losses for which the Buyer Indemnified Persons are entitled to
indemnification hereunder exceeds the Indemnification Threshold, then the Seller
shall be liable from the first dollar of all such
Losses. Notwithstanding the foregoing, the limitations set forth in
this Section
10.3(b) shall not apply (i) to any indemnification obligations arising
under clause (a) of Section 10.1 above
from or in connection with any misrepresentation or breach of any warranty or
representation made by the Company in Section 4.1.1
(Authority of Company), the first sentence of Section 4.1.7 (Title
to and Condition of Assets), Section 4.1.12
(Taxes) or Section
4.1.21 (Environmental Matters) or by the Seller in Section 5.1.1
(Authority of Seller) and Section 5.1.4 (Title
to Subject Shares), (ii) to any indemnification obligations arising under clause
(b), (c) or (d) of Section 10.1 above,
or (iii) to any claims arising, directly or indirectly, from, or in connection
with, any fraud or intentional misrepresentation by the Seller or the
Company.
(c) Caps.
(i) The
total amount of Losses of all of the Buyer Indemnified Persons for claims under
clause (a) of Section
10.1 above shall in no event exceed Six Million Six Hundred Thousand
Dollars ($6,600,000) (the “General Cap”); provided, however, that the
General Cap shall not apply to (A) any claims arising directly or indirectly
from, or in connection with, any fraud or intentional misrepresentation by the
Seller or the Company; (B) any claims arising directly or indirectly from, or in
connection with, any misrepresentation or breach of any warranty or
representation made by the Company in Section 4.1.1
(Authority of Company), the first sentence of Section 4.1.7 (Title
to and Condition of Assets), Section 4.1.12
(Taxes) or Section
4.1.21 (Environmental Matters); or (C) any claims arising directly or
indirectly from, or in connection with, any misrepresentation or breach of any
warranty or representation made by the Seller in Section 5.1.1
(Authority of Seller) or Section 5.1.4 (Title
to Subject Shares). Notwithstanding the foregoing, the total amount
of Losses of all of the Buyer Indemnified Persons for claims under clause (a) of
Section 10.1
above arising directly or indirectly from, or in connection with, any
misrepresentation or breach of any warranty or representation made by the
Company in Section
4.1.21 (Environmental Matters) above shall in no event exceed the
Purchase Price (the “Environmental Cap”).
32
(ii) The
total amount of Losses of all of the Buyer Indemnified Persons for claims under
clause (d) of Section
10.1 above relating to clause (b) of the definition of “Express
Indemnification Items” set forth in Article XI below shall in no event exceed
the Purchase Price (the “Bonus Plan Cap”).
(iii) The
total amount of Losses of all of the Buyer Indemnified Persons for claims under
clause (d) of Section
10.1 above relating to clause (a) of the definition of “Express
Indemnification Items” set forth in Article XI below shall in no event exceed
the Purchase Price (the “FeHA Litigation Cap”).
(iv) Notwithstanding
anything to the contrary in this Agreement, in no event shall the Seller be
responsible for Losses under this Agreement in excess of the Purchase Price,
including, but not limited to, any Losses relating to claims under Section 9.1 and Section 10.1 of this
Agreement.
(d) Insurance
Effect. The amount of any indemnifiable Loss otherwise
recoverable by a Buyer Indemnified Person hereunder shall be reduced by the
amount of any insurance proceeds paid to the Buyer Indemnified Person with
respect to the event giving rise to the Loss. If the Buyer has
received the payment required by this Agreement from the Seller in respect of
any Losses and later receives proceeds from insurance or other amounts in
respect of such Losses, then it shall hold in trust for the benefit of the
Seller and shall, as promptly as practicable after receipt thereof, pay to the
Seller a sum equal to the amount of such proceeds or other amount received, up
to the aggregate amount of any payments received pursuant to this Agreement in
respect of such Losses. Notwithstanding any other provisions of this
Agreement, it is the intention of the parties that no insurer or any other third
party shall be (x) entitled to a benefit it would not be entitled to receive in
the absence of the foregoing indemnification provisions, or (y) relieved of the
responsibility to pay any claims for which it is obligated.
33
10.4 Procedure Relative to
Indemnification.
(a) In
the event that any party hereto shall claim that it is entitled to be
indemnified pursuant to the terms of this Article X, such party
(the “Claiming Party”) shall so notify the party or parties against which the
claim is made (the “Indemnifying Party”) in writing (each, a “Claims Notice”) of
such claim within thirty (30) days after the Claiming Party receives notice of
any demand, claim or circumstance which is reasonably likely to give rise to a
claim or the commencement of any Proceeding (an “Asserted Liability”) that may
reasonably be expected to result in a claim for indemnification by the Claiming
Party against the Indemnifying Party; 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. Each Claims Notice shall
describe the Asserted Liability in reasonable detail, and shall indicate the
amount (estimated, if necessary) of the Losses that have been or may be suffered
by the Claiming Party; provided, however, that failure
to provide such reasonable detail 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; and provided, further, that in no
event shall the Claiming Party’s right to recoup Losses from the Indemnifying
Party be limited to the amount set forth or estimated in the Claims
Notice. If such Losses are liquidated in amount, the Claims Notice
shall so state and such amount shall be deemed the amount of the claim of the
Claiming Party. If the amount is not liquidated, the Claims Notice
shall so state and in such event a claim shall be deemed asserted against the
Indemnifying Party on behalf of the Claiming Party, but no payment shall be made
on account thereof until the amount of such claim is liquidated and the claim is
finally determined.
(b) The
following provisions shall apply to claims of the Claiming Party which are based
upon a Proceeding filed or instituted by any third party or by any Governmental
Body:
(i) Upon
receipt of a Claims Notice involving an Asserted Liability against or sought to
be collected by a third party, the Indemnifying Party shall have twenty (20)
days within which to notify the Claiming Party whether the Indemnifying Party
desires to assume the defense of such Asserted Liability.
(ii) If
the Indemnifying Party notifies the Claiming Party, within such twenty (20) day
period, that the Indemnifying Party desires to defend against such Asserted
Liability, then the Indemnifying Party shall assume the defense of such Asserted
Liability with counsel of the Indemnifying Party’s choice and, after notice from
the Indemnifying Party to the Claiming Party of its election to assume the
defense of such Asserted Liability, the Indemnifying Party will not be liable to
the Claiming Party under this Article X for any
fees and expenses of other counsel or any other expenses with respect to the
defense of such Asserted Liability subsequently incurred by the Claiming Party
in connection with the defense of such Asserted Liability, unless the
Indemnifying Party does not actually assume the defense thereof following notice
of such election. The Claiming Party shall cooperate, at the
Indemnifying Party’s expense (with respect to out-of-pocket expenses incurred by
the Claiming Party), in the compromise of, or defense against such Asserted
Liability and may participate in, but not control, such Asserted Liability at
its own expense. If the Indemnifying Party is controlling the defense
of an Asserted Liability, no compromise or settlement of such Asserted Liability
may be effected without the Claiming Party’s consent (which consent shall not be
withheld unreasonably) unless (A) there is no finding or admission of any
violation of Legal Requirements or any violation of the rights of any Person and
(B) the sole relief provided is monetary damages that are paid in full by the
Indemnifying Party.
34
(iii) If
a Claims Notice is given to an Indemnifying Party and the Indemnifying Party
does not, within twenty (20) days after receipt of the Claims Notice, notify the
Claiming Party that it elects to assume the defense of such Asserted Liability,
then the Claiming Party will have the right to conduct a defense of the Asserted
Liability, the Indemnifying Party will be bound by any determination made with
respect to such Asserted Liability or any compromise or settlement effected by
the Claiming Party and the Indemnifying Party will be responsible for paying all
reasonable professional fees and expenses incurred by the Claiming Party in
connection with such defense; provided, however, that in no
event shall the Claiming Party, without the prior written consent of the
Indemnifying Party (which consent shall not be unreasonably withheld), settle,
compromise or offer to settle or compromise any such Asserted
Liability.
(iv) Notwithstanding
the foregoing, if (A) there exists a conflict of interest that would make it
inappropriate in the reasonable judgment of the Claiming Party for the same
counsel to represent both the Claiming Party and the Indemnifying Party; (B) the
third Person claim seeks injunctive or other non-monetary relief against the
Claiming Party; or (C) the Claiming Party elects to pursue one or more defenses
or counterclaims available to it that are inconsistent with one or more defenses
or counterclaims that are being pursued by the Indemnifying Party in respect of
such third Person claim or any litigation related thereto, then the Claiming
Party may, by notice to the Indemnifying Party, participate in the defense of
such third Person claim and shall be entitled to retain its own counsel at the
Indemnifying Party’s cost and expense. It is understood and agreed
that the Indemnifying Party will not be bound by any determination of an
Asserted Liability so defended or any compromise or settlement effected by the
Claiming Party without its consent (which may not be withheld
unreasonably).
(c) Upon
receipt of a Claims Notice involving an Asserted Liability that does not involve
an Asserted Liability against or sought to be collected by a third Person, the
Indemnifying Party shall have twenty (20) days from the receipt of a Claims
Notice to notify the Claiming Party that the Indemnifying Party disputes such
Asserted Liability. If the Indemnifying Party does not so notify the
Claiming Party, then the amount of such Asserted Liability shall be deemed,
conclusively, a liability of the Indemnifying Party hereunder. If the
Indemnifying Party shall object in writing to such Asserted Liability, then the
Claiming Party shall have twenty (20) days to respond in a written statement to
the objection of the Indemnifying Party. If after such twenty (20) day period
there remains a dispute as to any Asserted Liability, then the parties shall
attempt in good faith for thirty (30) days to agree upon the rights of the
respective parties with respect to such Asserted Liability. If the
parties should so agree, a memorandum setting forth such agreement shall be
prepared and signed by both parties. If after such thirty (30) day
period, the parties are unable in good faith to negotiate a resolution of the
dispute, then either party may submit the dispute for resolution to a court of
competent jurisdiction in accordance with Section 12.9 of this
Agreement. Any payment in respect of an Asserted Liability as finally
determined shall be made by wire transfer of immediately available funds to an
account designed by the party entitled to such payment within ten (10) days
after the determination thereof; provided, however, to the
extent that any Buyer Indemnified Persons are entitled to indemnification from
the Seller pursuant to Section 10.1
above, such Buyer Indemnified Persons shall first recover any Losses from the
funds then held pursuant to the terms of the Escrow Agreement.
35
10.5 Characterization of Indemnification
Payments. Except as otherwise required by applicable Legal
Requirements, any payment made pursuant to Section 10.1 above
shall be treated for Tax purposes as an adjustment to the Purchase
Price.
10.6 No Punitive Damages. Except
to the extent included in Losses incurred pursuant to an Asserted Liability
against or sought to be collected by a third Person, in no event shall the
Seller or the Buyer have any liability to a Buyer Indemnified Party or a Seller
Indemnified Party, respectively, hereunder for any exemplary or punitive damages
relating to the breach or alleged breach of any representation, warranty or
covenant in this Agreement.
10.7 Set-Off. The Seller and the
Buyer acknowledge and agree that the Buyer shall be entitled, in addition to any
other remedies which may be available to it, to set-off against the amount of
any unpaid Contingent Purchase Price the aggregate amount of any Losses, as
finally determined in accordance with the provisions of Section 10.4 above,
arising from, or in connection with, any misrepresentation or breach of any
warranty or representation made by the Company in Article IV of this
Agreement or by the Seller in Article V of this
Agreement. It is understood and agreed that the exercise by the Buyer
of its right of set-off pursuant to this Section 10.7 shall be
subject to the provisions set forth in Section 2.6 of this
Agreement relating to the final determination of the Contingent Purchase
Price.
10.8 Exclusive Remedy. Except
for claims arising from, or in connection with, fraud or intentional
misrepresentation, the foregoing indemnification provisions shall constitute the
sole and exclusive remedy for monetary damages in respect of any breach of, or
default under, this Agreement by any party hereto and each party hereby waives
and releases any and all statutory, equitable, or common law remedy for monetary
damages any party may have in respect of any breach of or default under this
Agreement, including, without limitation, any rights of
contribution.
ARTICLE
XI
Definitions
“Affiliate” means, as to any
Person, any other Person which, directly or indirectly, is in control of, is
controlled by, or is under common control with, such Person. A Person
shall be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract or otherwise. For purposes of
clarification, (a) any Related Persons of the Seller shall be deemed to be
Affiliates of the Seller, and (b) after the Closing, the Holding Company and the
Operating Company shall be deemed to be Affiliates of the
Buyer.
36
“Agreement” means this Stock
Purchase Agreement, as the same may be amended or modified from time to time,
including all Exhibits and Schedules attached hereto.
“Allingham” means Dennis J.
Allingham.
“Ancillary Agreements” means,
as to any party, the agreements, documents and instruments to be executed and
delivered by such party pursuant to this Agreement.
“Applicable Contract” means
any Contract that is in effect on the Closing Date (a) under which the
Company is or may be entitled to receive revenues of more than $50,000 in any
calendar year, (b) under which the Company may become subject to any obligation
to pay a liability of more than $100,000 in any calendar year, (c) by which
assets owned or used by the Company having a net book value of at least $100,000
are bound, (d) which affects the voting, transfer, purchase or acquisition of
the Subject Shares, (e) whereby the Company has granted any license, franchise,
permit or right to any third party to use any of the Intellectual Property owned
by the Company or any Contract pursuant to which the Company has a license,
franchise, permit or other right to use any intellectual property owned by a
third party, (f) involving a share of profits or losses by the Company with any
other Person, including any joint venture, partnership or other similar
agreement, (g) containing covenants that in any way purport to restrict the
business activity of the Company or limit the freedom of the Company to use or
disclose confidential information (other than confidentiality agreements or
confidentiality provisions entered into in the Ordinary Course of Business) or
to engage in any line of business or to compete with any Person,
(h) entered into outside the Ordinary Course of Business, (i) which is
a material lease, rental or occupancy agreement, license, installment
or conditional sale agreement or other Contract affecting the ownership of,
leasing of, title to, use of or any leasehold or other interest in, any real or
material personal property, (j) which is a Change of Control Agreement
Amendment, and (k) each material amendment, supplement and modification with
respect to any of the foregoing.
“Asserted Liability” has the
meaning set forth in Section 10.4(a)
above.
“Beneficially Owns” (including
the terms “Beneficially
Owned” or “Beneficially
Owning”) shall mean beneficial ownership within the meaning of Rule 13d-3
under the Exchange Act.
“Bonus Agreements” means those
certain agreements between the Operating Company and the Former Option Holders
in the form of Exhibit
11(i) attached hereto pursuant to which the Former Option Holders, among
other things, waive their rights with respect to any stock options granted to
them pursuant to the Lifecore Biomedical, Inc. 2009 Stock Incentive Plan (which
2009 Stock Incentive Plan shall be terminated effective as of the
Closing).
“Bonus Plan” has the meaning
set forth in Section
2.6(c) above.
“Bonus Plan Cap” has the
meaning set forth in Section 10.3(c)(ii)
above.
“Buyer” has the meaning set
forth in the preface above.
“Buyer Indemnified Persons”
has the meaning set forth in Section 10.1
above.
37
“Capital Lease” means any
leasing or similar arrangement which, in accordance with GAAP, is classified as
a capital lease.
“Cash” means cash and cash
equivalent assets (including, for this purpose, all collected funds and checks
included or located in any lock box accounts of the Company, at or prior to
12:01 a.m. New York City time on the Closing Date, but excluding, for this
purpose, all checks written by the Company and wire transfers sent by the
Company which have not cleared or been completed, as the case may be, at or
prior to 12:01 a.m. New York City time on the Closing Date).
“Cash Distribution Amount”
means an amount equal to the sum of (a) the Closing Cash Distribution Amount,
plus or minus (b) the Post Closing Cash Distribution Amount (if
any).
“Cash Flow Projections” means
the cash flow projections for the Operating Company for fiscal year 2010
delivered to Grace Matthews, Inc. and dated January 22, 2010, a copy of which
are attached hereto as Exhibit
11(a).
“Cash Payment” has the meaning
set forth in Section
2.3 above.
“Cash Purchase Price” has the
meaning set forth in Section 2.2
above.
“Cause” means (a) Allingham’s
conviction of, indictment for, or pleading “guilty” or “no contest” to any crime
(whether or not involving the Company or its Affiliates) (i) constituting a
felony, or (ii) that has, or could reasonably be expected to result in, an
adverse impact on the performance of Allingham’s duties to the Company, or
otherwise has, or could reasonably be expected to result in, an adverse impact
to the business or reputation of the Company or its Affiliates; (b) Allingham’s
willful and continued failure to perform his duties or willful misconduct in the
course of his employment that has, or could reasonably be expected to result in,
material injury to the business or reputation of the Company or its Affiliates;
or (c) any material violation of the policies of the Company or its Affiliates,
including, but not limited to, those relating to sexual harassment, the
disclosure or misuse of confidential information, or those set forth in the
manuals or statements of policy of the Company or its Affiliates. For
purposes of this definition, an act, or failure to act, shall be considered
“willful” if done, or omitted to be done, by Allingham in bad faith and without
reasonable belief that the action or omission was in the best interests of the
Company.
“CERCLA” means the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
codified at 42 U.S.C. 9601 et seq., as amended by the Superfund Amendments and
Reauthorization Act of 1986.
“Change of Control” means,
with respect to any entity, any transaction or series of transactions resulting
in any of the following: (a) the direct or indirect acquisition by
one or more Unrelated Purchasers of all or substantially all of the assets of
such entity; (b) the direct or indirect acquisition of equity interests that
result in one or more Unrelated Purchasers Beneficially Owning more than fifty
percent (50%) of the issued and outstanding equity interests of such entity,
including, without limitation, pursuant to a purchase of stock, plan of merger,
share exchange or consolidation; or (c) a combination or plan of merger
involving such entity in which one or more Unrelated Purchasers Beneficially Own
more than fifty percent (50%) of the economic and voting interests of the
surviving entity.
38
“Change of Control Agreement
Amendments” means those certain amended and restated change of control
agreements among the Seller, the Operating Company and the Subject Officers in
the form of Exhibit
11(b) attached hereto.
“Claiming Party” has the
meaning set forth in Section 10.4(a)
above.
“Claims Notice” has the
meaning set forth in Section 10.4(a)
above.
“Closing” means the closing of
the purchase and sale contemplated herein.
“Closing Cash Distribution
Amount” has the meaning set forth in Section 2.5(a)
above.
“Closing Date” means the date
on which the Closing occurs.
“Closing Date Balance Sheet”
has the meaning set forth in Section 2.6(b)
above.
“COBRA” means the Consolidated
Omnibus Budget Reconciliation Act of 1986 and the rules and regulations
promulgated thereunder, each as amended.
“Code” means the Internal
Revenue Code of 1986, as amended.
“Common Stock” has the meaning
set forth in the recitals above.
“Company” has the meaning set
forth in the preface above.
“Confidential Information” has
the meaning set forth in Section 9.3
above.
“Confidentiality Agreement”
means that certain Confidentiality Agreement, dated May 27, 2009, between
the Operating Company and the Buyer.
“Consents” means the consents
and approvals from, or the written notifications to, the parties to those
Contracts listed on Exhibit
11(c) attached hereto.
“Contingent Purchase Price”
has the meaning set forth in Section 2.6(a)
above.
“Continuing Employee” has the
meaning set forth in Section 7.1
above.
“Contract” means any
agreement, contract, arrangement, lease, license, obligation, promise,
understanding or undertaking (whether written or oral) that is legally
binding.
“Dental Operations and
Divestiture” means, collectively, (a) the operation by the Company of its
dental business on or prior to June 2, 2008, and (b) the series of transactions
amongst Affiliates of the Seller culminating in the distribution of all of the
equity of the Operating Company to the Holding Company effective as of November
12, 2008.
“Disclosure Schedules” means
the disclosure schedules attached to this Agreement.
39
“Earn-Out Amount” has the
meaning set forth in Section 2.6(a)
above.
“Earn-Out Date of Final
Determination” means (a) the last day on which a Notice of Objection with
respect to an Earn-Out Statement may be given if no such Notice of Objection is
given, or (b) the date of resolution of any objections by the parties hereto or
by the Independent Accounting Firm if a Notice of Objection with respect to an
Earn-Out Statement is timely given.
“Earn-Out Period” has the
meaning set forth in Section 2.6(a)
above.
“Earn-Out Statement” has the
meaning set forth in Section 2.6(b)
above.
“Environmental Cap” has the
meaning set forth in Section 10.3(c)(i)
above.
“Environmental Claims” means
any investigation, notice, violation, demand, allegation, action, suit,
injunction, order, consent decree, penalty, fine, Lien, proceeding or claim
(whether administrative, judicial or private in nature) arising (a) pursuant to
an actual or alleged violation of any applicable Environmental Law; (b) from the
release of a Hazardous Substance; (c) from any abatement, removal, remedial,
corrective or other response action in connection with Hazardous Substances,
Environmental Law or other order of a Governmental Body; or (d) from any actual
or alleged damage, injury, threat, or harm to human health, safety, natural
resources, wildlife or the environment.
“Environmental Law” means any
Legal Requirements pertaining to (a) human health, safety, natural resources,
wildlife or the environment, (b) the Occupational Safety and Health
Administration, the U.S. Environmental Protection Agency, the Nuclear Regulatory
Commission, the Minnesota Department of Natural Resources and the Minnesota
Pollution Control Agency, or (c) the management, manufacture, possession,
presence, use, generation, transportation, treatment, storage, disposal,
release, threatened release, abatement, removal, remediation, emission,
discharge or handling of, or exposure to, any petroleum products or Hazardous
Substances into ambient air, surface water, ground water or land, or any
exposure or impact on worker health and safety, and all amendments,
modifications and additions thereto, in each case as amended to date, including,
without limitation, CERCLA, RCRA, the Toxic Substances Control Act of 1976,
codified at 15 U.S.C. 2601 et seq., the Federal Water Pollution Control Act, as
amended by the Clean Water Act of 1977, codified at 33 U.S.C. 1251 et seq., the
Clean Air Act of 1966, codified at 42 U.S.C. 741 et seq., the Hazardous
Materials Transportation Act, codified at 49, U.S.C. 651 et seq., the Oil
Pollution Act of 1990, codified at 33 U.S.C. 2701 et seq., the Emergency
Planning and Community Right-To-Know Act of 1986, codified at 42 U.S.C. 11001,
et seq., the National Environmental Policy Act of 1969, codified at 42 U.S.C.
4321, et seq., the Occupational Safety and Health Act of 1970, the Safe Drinking
Water Act of 1974, codified at 42 U.S.C. 300(f), et seq., the Atomic Energy
Community Act of 1955, the Atomic Testing Liability Act, the Atomic Energy
Damages Act, the Atomic Energy Omnibus Act, the Atomic/Nuclear Waste Policy Act
of 1982, the Atomic/Nuclear Waste Policy Amendments of 1987 or any similar,
implementing or successor law.
“ERISA” means the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder.
40
“ERISA Affiliate” means any
Person (whether or not incorporated) that is treated as a single employer with
the Company under Section 414(b), (c), (m) or (o) of the Code.
“Escrow Agent” means Wells
Fargo Bank, N.A.
“Escrow Agreement” means that
certain Escrow Agreement among the Buyer, the Seller, the Holding Company and
the Escrow Agent in the form attached hereto as Exhibit 11(d).
“Escrow Amount” means an
amount equal to Six Million Six Hundred Thousand Dollars ($6,600,000), as set
forth in the Escrow Agreement.
“Estimated Balance Sheet” has
the meaning set forth in Section 2.5(b)
above.
“Exchange Act” means the
Securities Act of 1934, as amended, and the rules and regulations promulgated
thereunder.
“Excluded Indebtedness” means
all outstanding indebtedness of the Company for borrowed money as of the Closing
Date, including, without limitation, interest-bearing debt and obligations under
Capital Leases, as set forth on Exhibit
11(e) attached hereto (if any), but excluding the Permitted
Indebtedness.
“Express Indemnification Items”
means (a) any Losses arising directly or indirectly from or in connection
with the Proceeding described on Schedule
4.1.9 attached hereto, and (b) any Losses arising directly or
indirectly from or in connection with the Bonus Plan and/or the Bonus Agreements
referenced therein (including, without limitation, Losses arising directly or
indirectly from or in connection with a claim of a Participant under the Bonus
Plan) other than any such Losses arising directly or indirectly from or in
connection with a breach by the Company of its scheduled payment obligations
thereunder, the willful misconduct or gross negligence of the Company or any
other action or inaction of the Company.
“FDA” has the meaning set
forth in Section
4.1.22 above.
“FeHA Litigation Cap” has the
meaning set forth in Section 10.3(c)(iii)
above.
“Financial Statements” means
(a) the audited balance sheet of each of the Holding Company and the Operating
Company as of December 31, 2008, and the related statement of operations,
statement of changes in stockholder/member equity and statement of cash flows
for the fiscal period beginning March 26, 2008 and ending December 31, 2008, (b)
the audited balance sheet of each of the Holding Company and the Operating
Company as of December 31, 2009, and the related statement of operations,
statement of changes in stockholder/member equity and statement of cash flows
for the fiscal period then ended, and (c) the unaudited interim balance sheet of
each of the Holding Company and the Operating Company as of March 31, 2010 (the
“Interim Balance Sheet Date”), and the related statement of operations,
statement of changes in stockholder/member equity and statement of cash flows
for the three (3) month period then ended, all attached hereto as Schedule
4.1.11.
41
“Former Option Holders” means
Allingham, Larry D. Hiebert, James G. Hall, Kipling Thacker, Jeff Rue, Scott
Collins, Phil Sticha, Karl Reindel and Tom Clemens.
“GAAP” means United States
generally accepted accounting principles and practices as in effect from time to
time, consistently applied.
“General Cap” has the meaning
set forth in Section
10.3(c)(i) above.
“Good Reason” means the
occurrence of any of the following events without Allingham’s written consent:
(a) a material diminution in Allingham’s authority, duties or responsibilities
as in effect during the ninety (90) day period immediately preceding the
Closing; (b) a material diminution in Allingham’s annual base salary or annual
bonus opportunity as in effect immediately preceding the Closing; (c) the
Company requiring Allingham to be based more than fifty (50) miles from where
his office is located immediately prior to the Closing, except for required
travel on the Company’s business, and then only to the extent substantially
consistent with the business travel obligations which Allingham undertook on
behalf of the Company during the ninety (90) day period ending on the Closing
Date (without regard to travel related to or in anticipation of the Closing); or
(d) any other action or inaction that constitutes a material breach (i) by the
Holding Company of the Bonus Plan which relates to the rights of Allingham
asserting Good Reason under the Bonus Plan, or (ii) by the Operating Company of
the Change of Control Agreement Amendment to which Allingham is a
party. Allingham may not terminate employment for Good Reason unless
Allingham has provided written notice to the Operating Company of the existence
of the event constituting Good Reason within ninety (90) days of the initial
existence of the event and the Operating Company has not remedied the condition
within thirty (30) days after such notice is received. Allingham’s
mental or physical incapacity following the occurrence of an event described
above in clauses (a) through (d) shall not affect Allingham’s ability to
terminate employment for Good Reason, and Allingham’s death following delivery
of a notice of termination for Good Reason shall not affect Allingham’s estate’s
entitlement to severance payments or benefits provided under the Bonus Plan upon
a termination of employment for Good Reason. Notwithstanding the
foregoing, none of the foregoing events shall be considered “Good Reason” if it
occurs in connection with Allingham’s death or permanent disability or
termination for Cause.
“Governmental Authorization”
means any permit, license, variance, certificate, closure, exemption, action,
consent, waiver or approval or other authorization issued, granted, given or
otherwise made available by, or under the authority of, any Governmental Body or
pursuant to any Legal Requirement.
“Governmental Body” means any
(a) nation, state, county, city, town, village, district or other jurisdiction
of any nature; (b) federal, state, local, municipal, foreign or other
government; (c) governmental or quasi-governmental authority of any nature
(including any governmental agency, bureau, branch, department, official or
entity and any court or other tribunal); or (d) body exercising, or
entitled to exercise, any administrative, executive, judicial, legislative,
regulatory or taxing authority, including self-regulatory
organizations.
“Guaranty” has the meaning set
forth in Section
2.6(g) above.
42
“Hazardous Substances” means
and includes any “hazardous substance” and any “pollutant or contaminant” as
those terms are defined in CERCLA; any “hazardous waste” as that term is defined
in RCRA; and any “hazardous material” as that term is defined in the Hazardous
Materials Transportation Act (49 U.S.C. § 1801 et seq.), as amended (including
as those terms are further defined, construed or otherwise used in rules,
regulations issued pursuant to said Environmental Laws); and including, without
limitation, any petroleum product or byproduct, solvent, flammable or explosive
material, radioactive material, asbestos, polychlorinated biphenyls (PCBs),
dioxins, dibenzofurans, heavy metals, radon gas, urea formaldehyde foam,
hazardous waste source and raw materials which include hazardous constituents;
and including any other substance, chemical, compound, product, solid, gas,
liquid, waste, by-product, material, pollutant or contaminant which is
hazardous, toxic or otherwise harmful to health, safety, natural resources
wildlife or the environment.
“Holding Company” has the
meaning set forth in the preface above.
“Indemnification Threshold”
has the meaning set forth in Section 10.3(b)
above.
“Indemnifying Party” has the
meaning set forth in Section 10.4(a)
above.
“Independent Accounting Firm”
means Grant Thornton, LLP.
“Intellectual Property” has
the meaning set forth in Section 4.1.10(a)
above.
“Interim Balance Sheet Date”
has the meaning set forth in the definition of “Financial Statements” set forth
above in this Article
XI.
“Interim Financial Statements”
means the unaudited interim balance sheet of each of the Holding Company and the
Operating Company as of the Interim Balance Sheet Date, and the related
statement of operations, statement of changes in stockholder/member equity and
statement of cash flows for the three (3) month period then ended.
“Inventory” means all
inventories relating to the business of the Company, wherever located,
including, without limitation, raw materials, work in process and finished
goods.
“IP Contract” has the meaning
set forth in Section
4.1.10(b) above.
“IRS” means the United States
Internal Revenue Service.
“Knowledge” – An individual
will be deemed to have “Knowledge” of a particular fact or other matter if such
individual is actually aware of such fact or other matter following a reasonable
inquiry of the subject matter thereof. The Company will be deemed to
have “Knowledge” of a particular fact or other matter if any of Allingham, Larry
D. Hiebert, Scott Collins, James G. Hall or Kipling Thacker is actually aware of
such fact or other matter following a reasonable inquiry of the subject matter
thereof.
“Legal Requirement” means any
federal, state, local, municipal, foreign, international, multinational,
territorial or other administrative constitution, law, ordinance, code, policy,
principle of common law, rule, regulation, statute, treaty and the
like.
43
“Lien” means any mortgage,
deed of trust, pledge, hypothecation, assignment, charge or deposit arrangement,
encumbrance, lien (statutory or otherwise) or other security interest of any
kind or nature whatsoever (including those created by, arising under or
evidenced by any conditional sale or other title retention agreement, the
interest of a lessor under a Capital Lease, any financing lease having
substantially the same economic effect as any of the foregoing, or the filing of
any financing statement naming the owner of the asset to which such lien relates
as debtor, under the Uniform Commercial Code or any comparable law) and any
contingent or other agreement to provide any of the foregoing.
“Lifecore Acquisition” means
the acquisition by SBT Holdings Inc., a Delaware corporation, of the business of
the Operating Company pursuant to the terms and conditions of that certain
Agreement and Plan of Merger, dated as of January 15, 2008, among SBT Holdings
Inc., SBT Acquisition Inc. and Lifecore Biomedical, Inc. (n/k/a Lifecore
Biomedical, LLC).
“Losses” means all damages,
losses, deficiencies, liabilities, claims, actions, demands, judgments, fines,
fees, costs and expenses (including, without limitation, reasonable attorneys’
and accountants’ fees and expenses).
“Member Control Agreement”
means that certain Second Amended and Restated Member Control Agreement of
Lifecore Biomedical, LLC, dated as of November 12, 2008, by and between the
Operating Company and the Holding Company.
“Notice of Objection” has the
meaning set forth in Section 2.6(b)
above.
“Operating Company” has the
meaning set forth in the preface above.
“Order” means any award,
decision, injunction, judgment, order, ruling, subpoena or verdict entered,
issued, made or rendered by any court, administrative agency or any other
Governmental Body or by any arbitrator.
“Ordinary Course of Business”
or “Ordinary Course”
means any action taken by a Person which (a) is consistent with past practices
of such Person and is taken in the ordinary course of the normal day to day
operations of such Person; (b) is not required to be authorized by the board of
directors of such Person (or by any Person or group of Persons exercising
similar authority); and (c) is similar in nature and magnitude in actions
customarily taken, without any authorization by the board of directors (or by
any Person or group of Persons exercising similar authority), in the ordinary
course of the normal day to day operations of other Persons that are in the same
line of business as such Person.
“Owned Real Property” has the
meaning set forth in Section 4.1.8
above.
“Participant” has the meaning
set forth in the Bonus Plan.
“Permitted Indebtedness” means
the obligations of the Company set forth on Exhibit 11(f)
attached hereto.
44
“Permitted Liens” means (a)
Liens for Taxes and assessments not yet due and payable or which are being
contested in good faith by appropriate Proceedings, (b) Liens of carriers,
warehousemen, mechanics, materialmen and repairmen incurred in the Ordinary
Course of Business consistent with past practice and not yet delinquent, and (c)
the Liens set forth on Exhibit
11(g) attached hereto.
“Person” means any individual,
corporation, general or limited partnership, limited liability company,
association, joint stock company, joint venture, estate, trust association,
organization, labor union or other entity or Governmental Body.
“Plan” means (a) any “employee
benefit plan,” as defined in Section 3(3) of ERISA, that (i) is subject to Title
I of ERISA, (ii) is maintained, administered or contributed to by the Company,
and (iii) covers or covered any current or former employee, officer, director or
shareholder of, or any other Person that performed or is performing services
for, the Company, and (b) any other employment, severance, benefit or similar
Contract (whether or not written and whether or not currently in effect) or
Contract, plan, program or policy (whether or not written and whether or not
currently in effect) providing any compensation or benefits to any current or
former employee, officer, director or shareholder of the Company or the
dependents of any such individual (including, without limitation, any Contract,
plan, program or policy making available bonuses, equity awards, non-taxable
benefits such as those provided under a Section 125 Cafeteria Plan or deferred
compensation).
“Post-Closing Cash Distribution
Amount” has the meaning set forth in Section 2.6(c)
above.
“Preferred Stock” has the
meaning set forth in Section 4.1.6(a)
above.
“Prior Real Property” means
all real property previously owned or leased by the Company (together with any
buildings or other improvements that were located thereon during the period of
the Company’s use thereof).
“Proceeding” means any action,
arbitration, audit, hearing, formal investigation by a Governmental Body,
litigation or suit (whether civil, criminal, administrative, investigative or
informal) commenced, brought, conducted or heard by or before, or otherwise
involving, any Governmental Body.
“Purchase Price” has the
meaning set forth in Section 2.2
above.
“RCRA” means the Solid Waste
Disposal Act, codified at 42 U.S.C. 6901 et seq., as amended by the Resource
Conservation and Recovery Act of 1976 and the Hazardous and Solid Waste
Amendment of 1984.
“Real Property” means
collectively the Owned Real Property and the Prior Real Property.
“Records” means all books,
records, manuals and other materials of the Company, including, without
limitation, all sales, manufacturing, customer, prospective customer and
supplier/vendor records, advertising, promotional, marketing and sales
literature, catalogs and materials, personnel and payroll records, accounting
records, purchase and sale records, price lists, correspondence, quality control
records and research and development files, wherever located.
45
“Registered Intellectual
Property” has the meaning set forth in Section 4.1.10(a)
above.
“Related Person” means, with
respect to the Seller, (a) any affiliated investment fund of Warburg Pincus
Partners LLC, Warburg Pincus LLC, Warburg Pincus International LLC or any of
their respective Affiliates, (b) any “portfolio company” (as such term is
customarily used among private equity investors) of the Seller or any other such
affiliated investment fund with respect to which Warburg Pincus Partners LLC,
Warburg Pincus LLC, Warburg Pincus International LLC or any of their respective
Affiliates directs the investment decisions of such portfolio company (for the
purposes hereof, a Person shall be deemed to direct the investment decision of a
portfolio company if such Person specifically authorizes the portfolio company
to make such investment), (c) any “portfolio company” (as such term is
customarily used among private equity investors) of the Seller or any other such
affiliated investment fund with respect to which the Seller or such other
affiliated investment fund possesses the right to appoint or elect more than
fifty percent (50%) of the members of the Board of Directors (or similar body)
of such portfolio company and/or owns more than fifty percent (50%) of the
voting securities of such portfolio company, or (d) the Persons listed on Schedule
XI attached hereto.
“Remaining Cash” means an
amount equal to the Cash of the Company as of the open of business on the
Closing Date, as finally determined pursuant to the terms of this Agreement, but
not including the Closing Cash Distribution Amount.
“Representative” means with
respect to a particular Person, any director, officer, employee, agent,
consultant, advisor or other representative of such Person, including legal
counsel, accountants and financial advisors.
“Restricted Payments” means
(a) any debt payments (other than scheduled debt payments reflected in the Cash
Flow Projections), dividend declarations and/or payments, distributions on
capital stock, payments to any Affiliates of the Seller outside of the Ordinary
Course of Business (other than any payments made in respect of compensation,
salary, wages, commissions or fees payable to the officers, directors or
employees of the Company in the Ordinary Course of Business), including, without
limitation, Keystone Dental, Inc., a Delaware corporation, any funds of Warburg
Pincus Partners LLC, Warburg Pincus LLC and Warburg Pincus International LLC,
and any other affiliated funds, and any portfolio companies of any of such
funds, or payments of any costs or expenses related to the transactions
contemplated by this Agreement or otherwise not incurred in the Ordinary Course
of Business made by the Company between February 2, 2010 and the Closing Date,
and (b) payments of Closing Bonuses (as defined in the Bonus Plan) made by the
Company pursuant to the terms of the Bonus Plan.
“Satisfied Liens” means all
Liens on the assets of the Company other than Permitted Liens, including those
specified on Exhibit
11(h) attached hereto, which Liens shall be released by the holder(s)
thereof at or prior to the Closing.
“Scheduled Customers” has the
meaning set forth in Section 4.1.24
above.
46
“Scheduled Suppliers” has the
meaning set forth in Section 4.1.24
above.
“Seller” has the meaning set
forth in the preface above.
“Seller Indemnified Persons”
has the meaning set forth in Section 10.2
above.
“Specified Parent Benefit
Plan” has the meaning set forth in Section 7.1
above.
“Stock Incentive Plan” means
the Lifecore Biomedical, Inc. 2009 Stock Incentive Plan, to be terminated prior
to the Closing.
“Subject Net Revenues” means,
for any given period, the Ordinary Course gross sales of the Company during such
period, determined in accordance with GAAP consistent with the past practices of
the Company, net of (a) any returns made during such period or made, but not
taken into account, during any prior period, and (b) any allowances, discounts,
authorized deductions and/or credits paid and/or given by the Company and
approved by Allingham with respect to any such sales, in each case, calculated
in accordance with GAAP consistent with the past practices of the Company; provided, that
“Subject Net Revenues” shall include any revenues generated from the sale of
products and/or services (whether sold or provided by the Company, the Buyer or
any of their respective Subsidiaries or Affiliates) related to (i) the business
or assets of the Company as of the Closing Date; (ii) any technology,
processes, methods or similar proprietary rights (whether owned or licensed by
the Company) or assets of the Company as of the Closing Date, in any form and
including derivatives and modifications thereon made after the Closing Date,
including, but not limited to, the use of hyaluronan in any indication
(including, but not limited to, ophthalmic, orthopedic, medical and veterinary
applications) that is sold, produced, under development or previously under
development by the Company as of the Closing Date; or (iii) any such revenues
that are diverted from the Company by the Buyer or any of its Affiliates
(whether due to the direct or indirect acquisition of any third Person,
including, without limitation, pursuant to a purchase of stock, plan of merger,
share exchange or consolidation, or acquisition of assets of any third Person)
or otherwise allocated from the Company to the Buyer or any of its Affiliates;
provided further, that
“Subject Net Revenues” shall exclude any revenues generated from the sale of
products and/or services (whether sold or provided by the Company, the Buyer or
any of their respective Subsidiaries or Affiliates) (v) related to the
business or assets of any other business or entity acquired (including, without
limitation, pursuant to a purchase of stock, plan of merger, share exchange or
consolidation, or acquisition of assets of any third Person) by the Company
after the Closing Date, (w) related to any technology, processes, methods or
similar proprietary rights contributed by the Buyer or any Affiliate or
Subsidiary of the Buyer to the business of the Company, (x) related to any
operations of the Company that are not related to the Intellectual Property
owned or licensed by the Company as of the Closing Date or the business
conducted by the Company as of the Closing Date, (y) related to the use of
hyaluronan in any indication (including, but not limited to, ophthalmic,
orthopedic, medical and veterinary applications) that is not sold, produced,
under development or previously under development by the Company as of the
Closing Date, or (z) which, but for the technology or other assets of the
Buyer or any other Affiliate or Subsidiary of the Buyer, would not have been
made.
“Subject Officers” means
Allingham, Larry D. Hiebert and James G. Hall.
47
“Subject Shares” has the
meaning set forth in Article I
above.
“Subject Units” has the
meaning set forth in Section 4.1.6(a)
above.
“Subsidiary” means, with
respect to any Person, any corporation or other Person of which (or in which)
50% or more of (a) the outstanding capital stock or other equity interest having
voting power to elect a majority of the Board of Directors of such corporation
or Persons having a similar role as to an entity that is not a corporation, (b)
the interest in the profits of such partnership or joint venture, or (c) the
beneficial interest of such trust or estate are at such time directly or
indirectly owned by such Person or one or more of such Person’s
Subsidiaries.
“Target Amount” means Eight
Million Dollars ($8,000,000) less the aggregate amount of any Restricted
Payments.
“Tax” or “Taxes” means all federal,
state, county, local, foreign and other taxes or assessments, however
denominated, including, without limitation, income, estimated income, business,
occupation, franchise, property (real and personal), sales, employment, gross
receipts, use, transfer, ad valorem, profits, license, capital, payroll,
employee withholding, unemployment, excise, goods and services, severance and
stamp, and including interest, penalties and additions in connection therewith,
for which any applicable Person is or may be required to pay, withhold or
collect.
“Tax Return” means any return,
declaration, report, estimate, claim for refund or information return or
statement relating to, or required to be filed in connection with, any Taxes,
including any schedule, form, attachment or amendment.
“Treasury Regulations” means
the regulations adopted from time to time by the United States Department of
Treasury under the Code.
“Units” has the meaning set
forth in the recitals above.
“Unrelated Purchaser” means
any Person other than the Buyer or an Affiliate of the Buyer.
“UST” means an underground
storage tank, including as that term is defined, construed and otherwise used in
the RCRA and in rules, regulations, standards, guidelines and publications
issued pursuant to RCRA and comparable state and local laws.
ARTICLE
XII
Miscellaneous
12.1 Expenses. Except as
otherwise specifically provided herein, the parties hereto shall pay their own
expenses, including, without limitation, accountants’ and attorneys’ fees and
expenses incurred in connection with the negotiation and consummation of the
transactions contemplated by this Agreement, except that the Seller shall be
responsible for all expenses that are incurred by the Company in connection with
the transactions contemplated by this Agreement prior to the Closing Date but
which are not paid by the Company on or prior to the Closing
Date. The Seller and the Buyer shall share equally all Taxes or fees
(including any penalties and interest) applicable to, imposed upon or arising
out of the sale or transfer of the Subject Shares to the Buyer and the other
transactions contemplated hereby (all necessary Tax Returns and other
documentation with respect thereto which shall be filed by the party obligated
to make such filings under applicable law at its own
expense). Neither the Seller nor the Company shall have any
obligation to pay any fees to any one or more third Persons for the purposes of
obtaining the Consents or any cost and expense of any one or more third Persons
resulting from the process of obtaining any Consents.
48
12.2 Notices. All notices or
other communications required or permitted to be given hereunder shall be in
writing and shall be considered to be given and received in all respects when
hand delivered, one (1) business day after sent by prepaid express or courier
delivery service, when sent by facsimile transmission actually received by the
receiving equipment or three (3) days after deposited in the United States mail,
certified mail, postage prepaid, return receipt requested, in each case
addressed as follows, or to such other address as shall be designated by notice
duly given:
IF TO THE
BUYER: Landec
Corporation
3603
Haven Avenue
Menlo
Park, CA 94025
Attn: Gary
Steele
Fax
No.: (650) 368-9818
with a
copy (which shall not constitute notice) to:
Godfrey
& Kahn, S.C.
780 North
Water Street
Milwaukee,
WI 53202
Attn: Nicholas
P. Wahl
Fax
No.: (414) 273-5198
IF TO THE
SELLER: Warburg
Pincus Private Equity IX, L.P.
c/o
Warburg Pincus LLC
One
Market Plaza
Spear
Tower, Suite 1700
San
Francisco, CA 94105
Attn: Sean
Carney
Noah
Knauf
Fax
No.: (212) 716-8682
49
with a
copy (which shall not constitute notice) to:
Willkie
Farr & Gallagher LLP
787
Seventh Avenue
New York,
NY 10019
Attn: Steven
J. Gartner
Mark A.
Cognetti
Fax
No.: (212) 728-8111
12.3 Right to Specific
Performance. The parties agree that the Subject Shares
constitute unique property, that there is no adequate remedy at law for the
damage which any of them might sustain for the failure of the others to
consummate this Agreement, and, accordingly, that each of them is entitled to
the remedy of specific performance to enforce such consummation.
12.4 Entire Agreement;
Amendment. This Agreement, the Exhibits attached hereto, the
Disclosure Schedules and the Ancillary Agreements constitute the entire
agreement among the parties hereto relating to the subject matter hereof, and
all prior agreements, correspondence, discussions and understandings of the
parties (whether oral or written), with the exception of the Confidentiality
Agreement, are merged herein and made a part hereof, it being the intention of
the parties hereto that this Agreement and the instruments and agreements
contemplated hereby shall serve as the complete and exclusive statement of the
terms of their agreement together. No amendment, waiver or
modification hereto or hereunder shall be valid unless in writing signed by an
authorized signatory of the party or parties to be affected
thereby. Each party to this Agreement acknowledges that no other
party, nor any agent or attorney of any party, has made any promise,
representation or warranty whatsoever, express or implied, not contained herein,
concerning the subject matter hereof, to induce the other party to execute this
Agreement, and each party acknowledges that it has not executed this Agreement
in reliance on any such promise, representation or warranty not contained
herein.
12.5 Waiver. The waiver by any
party of any provision of this Agreement shall not operate or be construed as a
waiver of any subsequent breach by any party.
12.6 Binding Effect. This
Agreement shall be binding upon the parties hereto and their respective heirs,
successors, legal representatives and permitted assigns.
12.7 Section Headings. The
headings in this Agreement are for purposes of convenience and ease of reference
only and shall not be construed to limit or otherwise affect the meaning of any
part of this Agreement.
12.8 Severability. The parties
agree that if any provision of this Agreement shall under any circumstances be
deemed invalid or inoperative, this Agreement shall be construed with the
invalid or inoperative provision deleted, and the rights and obligations of the
parties shall be construed and enforced accordingly.
12.9 Applicable Law; Venue. This
Agreement and all questions arising in connection herewith shall be governed by
and construed in accordance with the laws of the State of Delaware without
application of choice of law or conflicts of law principles. All
disputes arising hereunder and any claims made relating to the representations,
warranties, covenants or agreements contained in this Agreement shall be
resolved exclusively in state or federal courts located in Hennepin County,
Minnesota, to which jurisdiction the parties hereto irrevocably
consent.
50
12.10 Assignment. No party hereto
may assign any of its rights or obligations hereunder without the prior written
consent of the other parties hereto.
12.11 Parties in Interest. With
the exception of the Buyer Indemnified Persons and Seller Indemnified Persons
who are not parties to this Agreement but who may have rights, benefits or
remedies under Article
X above, this Agreement shall be binding upon and inure solely to the
benefit of each party hereto, and nothing in this Agreement, express or implied,
is intended to or shall confer upon any other Person any right, benefit or
remedy of any nature whatsoever under or by reason of this
Agreement. The Seller and the Buyer shall not be liable for actions
or inactions of the Escrow Agent in connection with the performance of the
Escrow Agent’s obligations, except as explicitly set forth in the Escrow
Agreement.
12.12 Disclosure Schedules and
Exhibits. Any reference to a section or subsection in the
Disclosure Schedules and/or the Exhibits attached hereto refers to the sections
and subsections of this Agreement, unless the context requires otherwise; provided, however, a particular
matter disclosed in any section or subsection of the Disclosure Schedules or the
Exhibits attached hereto that a reasonable buyer would infer, based on the
location and express content of such disclosure, qualifies another section or
subsection of this Agreement shall also be deemed to qualify such other section
or subsection of this Agreement. No disclosure of any matter
contained in the applicable Disclosure Schedules shall create an implication
that such matter meets any standard of materiality (matters reflected in the
applicable Disclosure Schedule are not necessarily limited to matters required
by this Agreement to be reflected in the applicable Disclosure Schedule); such
additional matters are set forth for informational purposes only and do not
necessarily include other matters of a similar nature, nor shall the inclusion
of any item be construed as implying that any such item is “material” for any
purpose. All capitalized terms used in the Disclosure Schedules and
the Exhibits attached hereto and not otherwise defined therein shall have the
same meanings as are ascribed to such terms in this Agreement.
12.13 Counterparts; Facsimile
Copy. This Agreement may be executed in counterparts, each of
which shall be deemed an original, but all of which taken together shall
constitute one and the same instrument. This Agreement may be
executed in facsimile copy or by other electronic means with the same binding
effect as the original.
12.14 Passage of Title. Legal
title, equitable title and risk of loss with respect to the Subject Shares will
not pass to Buyer until the Subject Shares are transferred at the Closing, which
transfer, once it has occurred, will be deemed effective for tax, accounting and
other computational purposes as of 12:01 a.m. New York City time on the Closing
Date.
Signature
page follows.
51
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day, month
and year first above written.
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HOLDING
COMPANY:
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||
|
LIFECORE
BIOMEDICAL, INC. (formerly known as SBT BIOMATERIALS
INC.)
|
||
|
By:
|
/s/
Dennis J Allingham
|
|
|
Dennis
J. Allingham, President
|
||
|
OPERATING
COMPANY:
|
||
|
LIFECORE
BIOMEDICAL, LLC
|
||
|
By:
|
/s/
Dennis J. Allingham
|
|
|
Dennis
J. Allingham, President
|
||
|
SELLER:
|
||
|
WARBURG
PINCUS PRIVATE EQUITY IX, L.P.
|
||
|
By:
|
Warburg
Pincus IX, LLC, its General Partner
|
|
|
By:
|
Warburg
Pincus Partners LLC, its Sole Member
|
|
|
By:
|
Warburg
Pincus & Co., its Managing Member
|
|
|
By:
|
/s/
Sean D. Carney
|
|
|
Sean
D. Carney, Managing Director
|
||
|
BUYER:
|
||
|
LANDEC
CORPORATION
|
||
|
By:
|
/s/
Gary T. Steele
|
|
|
Gary
T. Steele, Chief Executive Officer
|
||
[Signature
Page to Stock Purchase Agreement]
Exhibits:
|
Form
of Guaranty
|
||
|
Exhibit
11(a)
|
Cash
Flow Projections
|
|
|
Exhibit
11(b)
|
Form
of Change of Control Agreement Amendments
|
|
|
Exhibit
11(c)
|
Consents
|
|
|
Exhibit
11(d)
|
Form
of Escrow Agreement
|
|
|
Exhibit
11(e)
|
Excluded
Indebtedness
|
|
|
Exhibit
11(f)
|
Permitted
Indebtedness
|
|
|
Exhibit
11(g)
|
Permitted
Liens
|
|
|
Satisfied
Liens
|
||
|
Exhibit
11(i)
|
Form
of Bonus Agreements
|