Chefs’ Warehouse 8-K

Exhibit 10.2

 Execution Version

 

 

 

MERGER AGREEMENT

 

among

 

THE CHEFS’ WAREHOUSE, INC.,

 

DEL MONTE MERGER SUB, LLC,

 

DEL MONTE CAPITOL MEAT CO., INC.,

 

THE SHAREHOLDERS SET FORTH HEREIN

 

and

 

THE SELLERS’ REPRESENTATIVE

 

January 11, 2015

 

 

 

 

 

 

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Table of Contents

 

Article I. THE MERGER 5 1.1   The Merger 5 1.2   Closing; Effective Time;
Closing Deliveries 6 1.3   Effects of the Merger 8 1.4   Conversion of Del Monte
Common Stock 8 1.5   Merger Consideration Adjustments 10 1.6   Escrow Agreement
14 1.7   Certificate of Formation 14 1.8   Limited Liability Company Agreement
14 1.9   Headquarters of Surviving Company 14 1.10   Managers and Officers. 14
Article II. REPRESENTATIONS AND WARRANTIES OF THE SELLERS 14 2.1   Organization;
Ownership of Equity; Capitalization; and Power 14 2.2   Authorization 15
2.3   Non-Contravention 16 2.4   Financial Statements 16 2.5   Books and Records
16 2.6   Inventory 17 2.7   Assets 17 2.8   Real Property; Leased Real Property
17 2.9   Contracts 19 2.10   Absence of Certain Changes 20 2.11   Litigation 22
2.12   Brokerage 22 2.13   Employees 22 2.14   Directors and Officers;
Compensation 23 2.15   Intellectual Property 23 2.16   Employee Benefit Plans 25
2.17   Insurance 28 2.18   Customers and Suppliers 28 2.19   Relationships with
Company Related Persons 29 2.20   Legal Compliance; Governmental Licenses 29
2.21   Taxes 30 2.22   Environmental Matters 33 2.23   Orders, Commitments and
Returns 34 2.24   Accounts Receivable; Trade Accounts Payable 34
2.25   Insolvency 34 2.26   No Undisclosed Liabilities 34 2.27   Securities Laws
Matters. 34 2.28   Business Combination Laws. 35 2.29   Full Disclosure 35

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Article III. REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT 35
3.1   Organization, Power and Authority 35 3.2   Authorization; No Breach 36
3.3   Litigation 36 3.4   Brokerage 36 3.5   Parent SEC Reports.. 36 Article IV.
COVENANTS 37 4.1   Reasonable Best Efforts 37 4.2   Conduct of the Business
Prior to the Closing 37 4.3   Access to Information 37 4.4   No Solicitation of
Other Bids 38 4.5   Notification 38 4.6   Employee Matters and Employee Benefits
39 4.7   Non-Competition 40 4.8   Further Assurances 42 4.9   Confidentiality 42
4.10   Tax Matters.: 43 4.11   Payment of Indebtedness by Company Related
Persons.. 45 4.12   HSR Act 46 4.13   Pre-Closing Financial Statements 46
4.14   Anti-Manipulation 46 Article V. CONDITIONS TO CLOSING 47 5.1   Conditions
to Obligations of Merger Sub and Parent 47 5.2   Conditions to Obligations of
the Sellers 49 Article VI. TERMINATION 50 6.1   Termination 50 6.2   Effect of
Termination 51 Article VII. DEFINITIONS 51 Article VIII. MISCELLANEOUS 62
8.1   Fees and Expenses 62 8.2   Press Release and Announcements 62
8.3   Remedies 63 8.4   Consent to Amendments; Waivers 63 8.5   Successors and
Assigns 63 8.6   Severability 63 8.7   Counterparts 63 8.8   Descriptive
Headings; Interpretation 64 8.9   Entire Agreement 64

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8.10   No Third-Party Beneficiaries 64 8.11   Schedules and Exhibits 64
8.12   Governing Law 64 8.13   Venue 64 8.14   Notices 65 8.15   No Strict
Construction 66 8.16   Sellers’ Representative 66

 

 

 

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MERGER AGREEMENT

This MERGER AGREEMENT (this “Agreement”), dated as of January 11, 2015, is by
and among The Chefs’ Warehouse, Inc., a Delaware corporation (“Parent”), Del
Monte Merger Sub, LLC, a Delaware limited liability company (“Merger Sub”), Del
Monte Capitol Meat Co., Inc., a California corporation (“Del Monte”), David
DeBenedetti (“D. DeBenedetti”), Victoria DeBenedetti (“V. DeBenedetti”),
DeBenedetti/Del Monte Trust (“Trust” and together with D. DeBenedetti and V.
DeBenedetti, the “Shareholders”), and John DeBenedetti (“J. DeBenedetti”) as the
Sellers’ Representative (in such capacity, the “Sellers’ Representative”). Del
Monte and the Shareholders are referred to collectively herein as the “Sellers”
and each individually as a “Seller.” Parent, Merger Sub, Del Monte, the
Shareholders and the Sellers’ Representative are referred to collectively herein
as the “Parties” and each individually as a “Party.” Capitalized terms used
herein and not otherwise defined in the text of this Agreement have the meanings
given to such terms in Article VII.

RECITALS

WHEREAS, the Shareholders collectively own 100% of the equity interests of Del
Monte, which equity interests constitute all of the issued and outstanding
equity interests of Del Monte; and

WHEREAS, the sole member and manager of Merger Sub and the Board of Directors of
each of Parent and Del Monte have approved, and deem it advisable and in the
best interests of their respective entities and equity holders to consummate the
strategic business combination transaction provided for herein in which Del
Monte will, subject to the terms and conditions set forth herein, merge with and
into Merger Sub (the “Merger”), so that Merger Sub is the surviving company (in
such capacity, the “Surviving Company”) in the Merger.

AGREEMENTS

NOW, THEREFORE, in consideration of the respective representations, warranties,
agreements and conditions hereinafter set forth and other good and valuable
consideration, the adequacy and receipt of which are hereby acknowledged, the
Parties hereto agree as follows:

Article I.
THE MERGER 

1.1              The Merger. Subject to the terms and conditions of this
Agreement, in accordance with the Delaware Limited Liability Company Act (the
“DLLCA”) and the California Corporations Code (the “CCC”), at the Closing and
effective as of the Effective Time (as defined below), Del Monte shall merge
with and into Merger Sub. Merger Sub shall be the Surviving Company in the
Merger, and shall continue its corporate existence under the laws of the State
of Delaware. Upon consummation of the Merger, the separate corporate existence
of Del Monte shall terminate.

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1.2              Closing; Effective Time; Closing Deliveries.

(a)                Closing; Effective Time. The closing of the Merger (the
“Closing”) shall take place on the third (3rd) Business Day immediately
following the day on which the conditions set forth in Article V shall be
fulfilled or waived in accordance herewith (other than such conditions which are
to be fulfilled on the Closing Date) or at such other time, date, or place as
the Parties hereafter may agree (the “Closing Date”). The Closing shall occur
concurrently with the “Closing” under the Purchase Agreement. In addition to the
other actions contemplated hereunder, Merger Sub and Del Monte will cause a
Certificate of Merger satisfying the requirements of the DLLCA, in the form
attached hereto as Exhibit A (the “Certificate of Merger”), to be properly
executed, verified and delivered for filing in accordance with the DLLCA and the
CCC, as applicable, on the Closing Date. The Closing of the Merger shall become
effective upon the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware (the “Delaware Secretary”) in accordance with the
DLLCA, or at such later time as shall be reflected in the Certificate of Merger.
The term “Effective Time” shall be the date and time when the Merger becomes
effective, as set forth in the Certificate of Merger.

(b)               Closing Deliveries of Del Monte and the Shareholders. At
Closing, Del Monte and the Shareholders, as applicable, shall deliver to Merger
Sub, in addition to any other documents to be delivered under the provisions of
this Agreement, all of the following documents:

(i)                 the Certificate of Merger, executed by Del Monte;

(ii)               the Closing Statement, duly executed by the Sellers (the
“Closing Statement”);

(iii)             offer letters, in the form attached hereto as Exhibit B (each
an “Offer Letter” and collectively, the “Offer Letters”) which shall include
non-competition and non-solicitation provisions acceptable to Merger Sub and
Sellers, duly executed by those Persons identified on Schedule 1.2(b)(iii);

(iv)             evidence of full and complete payment of all Indebtedness
(including payoff letters with respect thereto) and releases of all Liens (other
than Permitted Liens) on the Assets, including the termination of all security
interests with respect to the Assets, in each case in a form reasonably
acceptable to Merger Sub and Del Monte;

(v)               a certificate of the Secretary of Del Monte (A) certifying
that attached thereto are true and complete copies of all resolutions adopted by
Del Monte’s board of directors, authorizing the execution, delivery and
performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and that all
such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated hereby and thereby; (B)
certifying that attached thereto are true and complete copies of Del Monte’s
articles of incorporation, as amended through and in effect on the Closing Date;
(C) certifying that attached thereto are true and complete copies of Del Monte’s
bylaws, as amended through and in effect on the Closing Date; and (D) certifying
as to the incumbency of the officer(s) of Del Monte executing this Agreement and
the Transaction Documents on behalf of Del Monte;

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(vi)             certificates, dated not earlier than the tenth (10th) Business
Day prior to the Closing Date, of the Secretary of State of California and in
each state in which Del Monte is qualified to conduct business, stating that Del
Monte is in good standing or has comparable active status in such state;

(vii)           the Escrow Agreement (as defined herein), duly executed by the
Sellers’ Representative;

(viii)         the Indemnification Agreement, duly executed by the Shareholders
and the Sellers’ Representative, in the form attached hereto as Exhibit C (the
“Indemnification Agreement”);

(ix)             each of the consents set forth on Schedule 1.2(b)(ix);

(x)               combined financial statements, including balance sheets,
combined statements of income, combined statements of shareholders’ and members’
equity and combined statements of cash flows, for each of the Company Sellers
and Del Monte as of and for the fiscal year ended December 27, 2014, audited by
BDO USA, LLP (the “2014 Audited Financial Statements”), together with the
unaudited interim fiscal monthly financial statements for Del Monte for the
fiscal year in which the Closing occurs up to and including the last fiscal
month prior to the fiscal month in which the Closing occurs;

(xi)             instruments evidencing the termination of agreements and
incentive plans identified on Schedule 1.2(b)(xi), in a form reasonably
acceptable to Merger Sub and Del Monte;

(xii)           an executed certificate from Del Monte, in form and substance
satisfactory to Merger Sub and Del Monte, that satisfies the requirements of
Treasury Regulation Section 1.1445-2(b)(2);

(xiii)         a certificate executed by the Shareholders and a duly authorized
officer of Del Monte, certifying as to the accuracy of the conditions set forth
in Section 5.1(a) and Section 5.1(b);

(xiv)         an executed release from Del Monte and each Shareholder, in the
form attached hereto as Exhibit D;

(xv)           an estoppel letter, in substantially the form attached hereto as
Exhibit E (the “Estoppel Letter”), executed by the landlord or lessor under any
of the Leases;

(xvi)         a lock-up agreement, in the form attached hereto as Exhibit F (the
“Lock-Up Agreement”), executed by each of the Shareholders; and

(xvii)       such other documents relating to the transactions contemplated by
this Agreement as either Merger Sub or Parent may reasonably request.

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(c)                Closing Deliveries of Merger Sub and Parent. At Closing,
Merger Sub or Parent, as applicable, shall deliver to Del Monte and the
Shareholders, as applicable, in addition to any other documents to be delivered
under the provisions of this Agreement, all of the following:

(i)                 the Merger Consideration;

(ii)               the Certificate of Merger, the Escrow Agreement, the
Indemnification Agreement, the Lock-Up Agreement and the Offer Letters in each
case duly executed by Merger Sub or Parent;

(iii)             a certificate of the Secretary of Merger Sub and Parent (A)
certifying that attached thereto are true and complete copies of all resolutions
adopted by such entity’s board of directors, shareholders, members or managers
(or similar governing body), as applicable, authorizing the execution, delivery
and performance of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby, and that all
such resolutions are in full force and effect and are all the resolutions
adopted in connection with the transactions contemplated hereby and thereby; (B)
certifying that attached thereto are true and complete copies of such entity’s
certificate of incorporation or certificate of formation (or similar document),
as applicable, as amended through and in effect on the Closing Date; (C)
certifying that attached thereto are true and complete copies of such entity’s
bylaws or limited liability company agreement, as applicable, as amended through
and in effect on the Closing Date; and (D) certifying as to the incumbency of
the officer(s) of such entity executing this Agreement and the Transaction
Documents on behalf of such entity;

(iv)             certificates, dated not earlier than the tenth (10th) Business
Day prior to the Closing Date, of the Delaware Secretary, stating that Merger
Sub and Parent are in good standing or have comparable active status in such
state;

(v)               an executed certificate from Merger Sub, certifying as to the
accuracy of the conditions set forth in Section 5.2(a) and Section 5.2(b); and

(vi)             such other documents relating to the transactions contemplated
by this Agreement as Del Monte may reasonably request.

1.3              Effects of the Merger. At and after the Effective Time, the
Merger shall have the effects set forth in Section 209 of the DLLCA and Sections
1107 and 1107.5 of the CCC. Without limiting the generality of the foregoing,
and subject to such provisions of the DLLCA and the CCC, at the Effective Time,
all the property, rights, privileges, powers and franchises of Del Monte and
Merger Sub shall vest in the Surviving Company, and all debts, liabilities,
obligations, restrictions, disabilities and duties of Del Monte and Merger Sub
shall become the debts, liabilities, obligations, restrictions, disabilities and
duties of the Surviving Company.

1.4              Conversion of Del Monte Common Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of Merger Sub, Del Monte
or the respective shareholders or members thereof:

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(a)                Aggregate Merger Consideration. Prior to adjustment pursuant
to Section 1.5, the aggregate merger consideration (the “Merger Consideration”)
payable for the issued and outstanding shares of the voting common stock, no par
value per share, of Del Monte (the “Del Monte Voting Common Stock”) and the
issued and outstanding shares of the non-voting common stock, no par value per
share, of Del Monte (the “Del Monte Non-Voting Common Stock,” and together with
the Del Monte Voting Common Stock, the “Del Monte Common Stock”) shall consist
of (i) shares of Parent Common Stock in an amount equal to the quotient of (A)
the lesser of (I) the Targeted Adjusted EBITDA Amount and (II) the Estimated
2014 Adjusted EBITDA Amount (as defined and calculated in accordance with the
Purchase Agreement) (such lesser amount, the “Utilized Adjusted EBITDA Amount”),
divided by (B) the Per-Share Stock Price (the “Estimated Stock Consideration”),
of which a number of shares equal to the quotient of $17,000,000 divided by the
closing price for the Parent Common Stock on the Nasdaq Global Select Market on
the Closing Date, rounded down to the nearest whole share (the “Escrowed Stock
Consideration”), will be delivered to the Escrow Agent under the Escrow
Agreement promptly following the Closing pursuant to Section 1.6 plus or minus
(ii) an amount in cash equal to the Working Capital Adjustment, if any, as set
forth in Section 1.5(a) (the “Estimated Cash Amount”).

(b)               Per-Share Merger Consideration. Each share of Del Monte Common
Stock issued and outstanding immediately prior to the Effective Time shall be
converted into the right to receive the following:

(i)                 shares of Parent Common Stock in an amount equal to the
quotient of (A) the Estimated Stock Consideration (less the Escrowed Stock
Consideration), divided by (B) the number of shares of Del Monte Common Stock
outstanding immediately prior to the Effective Time (the “Per-Share Estimated
Stock Consideration”); plus

(ii)               an interest in the Escrowed Stock Consideration equal to the
quotient of (A) the Escrowed Stock Consideration, divided by (B) the number of
shares of Del Monte Common Stock outstanding immediately prior to the Effective
Time (the “Per-Share Escrowed Stock Consideration”); plus or minus

(iii)             an amount equal to the quotient of (A) the Estimated Cash
Amount, if any, divided by (B) the number of shares of Del Monte Common Stock
outstanding immediately prior to the Effective Time (the “Per-Share Working
Capital Adjustment Consideration”; the Per-Share Working Capital Adjustment
Consideration, Per-Share Estimated Stock Consideration and Per-Share Escrowed
Stock Consideration, collectively, the “Estimated Per-Share Merger
Consideration”).

(c)                All of the shares of Del Monte Common Stock converted into
the right to receive the Estimated Stock Consideration, an interest in the
Escrowed Stock Consideration (in each case, plus any cash in lieu of fractional
shares pursuant to Section 1.4(d)) and if the Estimated Cash Amount is positive,
the Estimated Cash Amount, if any, pursuant to this Article I shall no longer be
outstanding and shall automatically be cancelled and shall cease to exist as of
the Effective Time, and each certificate previously representing any such shares
of Del Monte Common Stock (each, a “Certificate”) shall thereafter represent
only the right to receive (i) a certificate for Parent Common Stock representing
the Per-Share Estimated Stock Consideration,

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(ii) the Per-Share Escrowed Stock Consideration (in each case, plus any cash in
lieu of fractional shares pursuant to Section 1.4(d)) and (iii) if the Per-Share
Working Capital Adjustment is positive, the Per-Share Working Capital
Adjustment, in each case, into which such shares of Del Monte Common Stock
represented by such Certificate have been converted pursuant to this Section
1.4. Certificates previously representing shares of Del Monte Common Stock shall
be exchanged for certificates representing Parent Common Stock, equal to the
Per-Share Estimated Stock Consideration upon the surrender of such Certificates
for cancellation to Merger Sub, without any interest thereon. If, prior to the
Effective Time, the outstanding shares of Del Monte Common Stock shall have been
increased, decreased, changed into or exchanged for a different number or kind
of shares or securities as a result of a reorganization, recapitalization,
reclassification, stock dividend, stock split, reverse stock split, or other
similar change in capitalization, an equitable and proportionate adjustment
shall be made to the Estimated Per-Share Merger Consideration payable pursuant
to this Agreement.

(d)               No Fractional Shares. No certificates representing fractional
shares of Parent Common Stock will be issued upon the conversion of Del Monte
Common Stock pursuant to this Section 1.4. Notwithstanding any other provision
of this Agreement, each holder of shares of Del Monte Common Stock converted
pursuant to Section 1.4(b) who would otherwise have been entitled to receive a
fraction of a share of Parent Common Stock (after taking into account all shares
of Parent Common Stock exchanged by such holder) will receive, in lieu thereof,
cash (without interest) in an amount equal to such fractional amount multiplied
by the Per-Share Stock Price.

(e)                Negative Estimated Cash Amount. In the event that the
Estimated Cash Amount is a negative number, the Shareholders, jointly and
severally, shall pay to Parent the absolute value of the Estimated Cash Amount
within thirty (30) days of demand by Parent.

1.5              Merger Consideration Adjustments.

(a)                Working Capital Merger Consideration Adjustment. The
Estimated Cash Amount shall be an amount equal to the difference between the
Final Closing Date Net Working Capital and Targeted Net Working Capital (the
“Working Capital Adjustment”) to be determined as follows:

(i)                 Closing Date Balance Sheet. On or before (but in no event
earlier than ten (10) Business Days prior to) the Closing Date, the Sellers’
Representative shall deliver an estimated balance sheet of Del Monte as of the
Effective Time (the “Closing Date Balance Sheet”), which will set forth the
estimated Net Working Capital of Del Monte as of the Effective Time (the
“Closing Date Net Working Capital”), and which Closing Date Balance Sheet shall
be substantially in the form of Schedule 1.5(a). The Closing Date Balance Sheet
shall be derived from the balance sheet of Del Monte prepared in connection with
the preparation of the 2014 Audited Financial Statements and shall be prepared
in accordance with GAAP and sound business practices and, to the extent not
inconsistent with GAAP, in a manner consistent with the 2014 Audited Financial
Statements, subject to the following: (A) no amount shall be reflected with
respect to Inventory that is not present in Del Monte’s facilities, or that is
damaged, beyond the stated expiration date (if any), or frozen and then
refrozen; (B) no amount shall be reflected with respect to accounts receivable
(I) that are subject to known dispute, offset, counterclaim or other claim or
defense, (II) that are past due by ninety (90) days or greater, or (III) that
are not evidenced by an invoice rendered to the customer; (C) the calculation of
the Closing Date Net Working Capital shall take into account any rebates, bill
backs or other discounts and (D) adjustments shall be made to eliminate
intercompany transactions that were eliminated in the preparation of the 2014
Audited Financial Statements.

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(ii)               Closing Date Working Capital Adjustment. If the Closing Date
Net Working Capital is less than the Targeted Net Working Capital, then the
Estimated Cash Amount shall be a negative amount equal to the absolute value of
the difference between the Targeted Net Working Capital and the Closing Date Net
Working Capital. If the Closing Date Net Working Capital is greater than the
Targeted Net Working Capital, then the Estimated Cash Amount shall be a positive
amount equal to the absolute value of the difference between the Targeted Net
Working Capital and the Closing Date Net Working Capital.

(iii)             Post-Closing Merger Consideration Adjustment. On or before the
120th day following the Closing Date, Parent, at Parent’s sole cost and expense
shall prepare and deliver to the Sellers’ Representative a final balance sheet
of Del Monte as of the Effective Time (the “Final Closing Date Balance Sheet”),
which shall include the final determination of the Net Working Capital of Del
Monte as of the Effective Time (the “Final Closing Date Net Working Capital”).
The Final Closing Date Balance Sheet shall be prepared in a manner consistent
with the preparation of the Closing Date Balance Sheet; provided, however, that
any accounts receivable reflected in the Closing Date Balance Sheet will be
disregarded for purposes of the Final Closing Date Balance Sheet to the extent
such accounts receivable remain uncollected 120 days following the Closing.
During the 30-day period immediately following the Sellers’ Representative’s
receipt of the Final Closing Date Balance Sheet, the Sellers’ Representative, at
its sole cost and expense, shall be permitted to review Parent’s working papers
related to the preparation and determination of the Final Closing Date Balance
Sheet.

(iv)             The Final Closing Date Balance Sheet shall become final and
binding upon the Parties thirty (30) days following the Sellers’
Representative’s receipt thereof, unless the Sellers’ Representative gives
written notice of disagreement (a “Notice of Disagreement”) to Parent prior to
such date. Any Notice of Disagreement shall specify in reasonable detail the
nature and dollar amount of any disagreement so asserted. If Parent receives a
Notice of Disagreement within the appropriate time frame, each undisputed item
on the Final Closing Date Balance Sheet shall become final and binding and each
disputed item on the Final Closing Date Balance Sheet shall become final and
binding on the earliest of (x) the date the Parties resolve in writing each such
difference they have with respect to the matters specified in the Notice of
Disagreement or (y) the date on which each such matter in dispute is finally
resolved jointly by the independent public accounting firm selected by the
Sellers’ Representative and reasonably acceptable to Merger Sub and Parent’s
independent public accountant. During the twenty (20) days following delivery of
a Notice of Disagreement, if the Parties have not resolved such differences
outlined in the Notice of Disagreement, the Parties, unless otherwise mutually
agreed to in writing, shall submit to their respective independent public
accountants for review and resolution only such matters that remain in dispute
and that were properly included in the Notice of Disagreement. The Parties shall
instruct their respective independent public accountants to resolve such
disputed matters within thirty (30) days of submission and to not assign a value
to any item in dispute greater than the greatest value for such item assigned by
either Party or lesser than the smallest value of such item assigned by either
Party. Each Party shall pay the fees and expenses of its respective independent
public accountant.

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(v)               Upon the final determination of the Final Closing Date Net
Working Capital as set forth in Section 1.5(a)(iv), if the Final Closing Date
Net Working Capital as reflected in the Final Closing Date Balance Sheet exceeds
the Closing Date Net Working Capital as reflected in the Closing Date Balance
Sheet, then the Merger Consideration shall be increased in total by an amount in
cash equal to the absolute value of the difference between the Final Closing
Date Net Working Capital and the Closing Date Net Working Capital (such
difference, the “Post-Closing Working Capital Adjustment Amount”), with such
increase to the Merger Consideration being allocated solely to the Estimated
Cash Amount. Any additional Merger Consideration payable in regards to the
Estimated Cash Amount shall be paid in cash to the Shareholders within thirty
(30) days of such amount becoming final pursuant to Section 1.5(a)(iv). Upon the
final determination of the Final Closing Date Net Working Capital, if the Final
Closing Date Net Working Capital as reflected in the Final Closing Date Balance
Sheet is less than the Closing Date Net Working Capital as reflected in the
Closing Date Balance Sheet, then the Merger Consideration shall be reduced in
total by an amount in cash equal to the Post-Closing Working Capital Adjustment
Amount, with such reduction to the Merger Consideration being allocated solely
to the Estimated Cash Amount. Any reduction in the Estimated Cash Amount as a
result of the adjustment contemplated by Section 1.5(a)(iv) shall be paid in
cash by the Shareholders, jointly and severally, to Parent within thirty (30)
days of demand by Parent.

(vi)             Any payments made under this Section 1.5(a) shall be treated by
the Parties as an adjustment to the Merger Consideration for Tax purposes.

(b)               Adjusted EBITDA Merger Consideration Adjustment. The Merger
Consideration shall be adjusted by an amount equal to the difference between the
Final 2014 Adjusted EBITDA Amount and the Utilized Adjusted EBITDA Amount (the
“Adjusted EBITDA Adjustment”), as follows:

(i)                 Post-Closing Adjusted EBITDA Merger Consideration
Adjustment. On or before the 120th day following the Closing Date, Parent shall
prepare and deliver to the Sellers’ Representative a statement (the “Final
Adjusted EBITDA Statement”) setting forth the final determination of the
aggregate Adjusted EBITDA Amount of the Company Sellers and Del Monte for the
fiscal year ended December 27, 2014 (the “Final 2014 Adjusted EBITDA Amount”).
The Final Adjusted EBITDA Statement shall be derived from the income statements
of each of the Company Sellers and Del Monte prepared in connection with the
preparation of the Audited Financial Statements and shall be prepared in
accordance with GAAP, sound business practices and, to the extent not
inconsistent with GAAP, in a manner consistent with the preparation of the
Audited Financial Statements and shall be calculated in a manner consistent with
and substantially in the form of Schedule 1.5(b)(i). During the 30-day period
immediately following the Sellers’ Representative’s receipt of the Final
Adjusted EBITDA Statement, the Sellers’ Representative shall be permitted to
review Parent’s working papers related to the preparation and determination of
the Final 2014 Adjusted EBITDA Amount. The Final Adjusted EBITDA Statement shall
become final and binding upon the Parties thirty (30) days following the
Sellers’ Representative’s receipt thereof, unless the Sellers’ Representative
gives written notice of disagreement (a “Notice of Disagreement - EBITDA”) to
Parent prior to such date. Any Notice of Disagreement - EBITDA shall specify in
reasonable detail the nature and dollar amount of any disagreement so asserted.

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If Parent receives a Notice of Disagreement - EBITDA within the appropriate time
frame, each undisputed item on the Final Adjusted EBITDA Statement shall become
final and binding and each disputed item on the Final Adjusted EBITDA Statement
shall become final and binding on the earliest of (x) the date the Parties
resolve in writing each such difference they have with respect to the matters
specified in the Notice of Disagreement - EBITDA or (y) the date on which each
such matter in dispute is finally resolved jointly by the Sellers’ independent
public accountant selected pursuant to Section 1.5(b) and Parent’s independent
public accountant. During the twenty (20) days following delivery of a Notice of
Disagreement - EBITDA, if the Parties have not resolved such differences
outlined in the Notice of Disagreement - EBITDA, the Parties, unless otherwise
mutually agreed to in writing, shall submit to their respective independent
public accountants for review and resolution only such matters that remain in
dispute and that were properly included in the Notice of Disagreement - EBITDA.
The Parties shall instruct their respective independent public accountants to
resolve such disputed matters within thirty (30) days of submission and to not
assign a value to any item in dispute greater than the greatest value for such
item assigned by either Party or lesser than the smallest value of such item
assigned by either Party. Each Party shall pay the fees and expenses of its
respective independent public accountants.

(ii)               Upon the final determination of the Final 2014 Adjusted
EBITDA Amount as set forth in this Section 1.5(b), if the Final 2014 Adjusted
EBITDA Amount is less than the Utilized Adjusted EBITDA Amount, then the Merger
Consideration shall be decreased in total by that number of shares of Parent
Common Stock, rounded to the nearest whole share, as shall equal the quotient of
(A) the absolute value of the difference between the 2014 Final Adjusted EBITDA
Amount and the Utilized Adjusted EBITDA Amount, divided by (B) the Per-Share
Price (the “Aggregate Number of Reduced Shares”), and each Shareholders’
Per-Share Estimated Stock Consideration shall be decreased by the number of
shares, rounded to the nearest whole share, equal to the product of (A) the
Aggregate Number of Reduced Shares multiplied by the quotient of (I) the number
of shares of Del Monte Common Stock owned by such Shareholder as of immediately
prior to the Effective Time divided by (II) the total number of shares of Del
Monte Common Stock outstanding immediately prior to the Effective Time (the
“Forfeited Shares”).

(iii)             In the event that there is a negative adjustment to the Merger
Consideration pursuant to Section 1.5(b)(ii), each Shareholder shall promptly,
and in no event later than five (5) Business Days following the date that such
adjustment is finalized, surrender to Parent certificates of Parent Common Stock
delivered to such Shareholder pursuant to Section 1.4(c) of this Agreement and
Parent shall thereafter issue to such Shareholder a replacement certificate
representing that number of shares of Parent Common Stock as shall equal the
number of shares of Parent Common Stock issued to such Shareholder as of the
Closing Date less the Shareholders’ Forfeited Shares.

(iv)             Any adjustments made under this Section 1.5(b) shall be treated
by the Parties as an adjustment to the Merger Consideration for Tax purposes.

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1.6              Escrow Agreement. At Closing, the Company Sellers, the Sellers’
Representative, the Assets Buyer, Merger Sub, Parent and the Escrow Agent shall
enter into the Escrow Agreement in the form attached hereto as Exhibit G (the
“Escrow Agreement”), which provides for the payment by the Assets Buyer or
Merger Sub, as of (or in the case of the Escrowed Stock Consideration, promptly
following) the Closing Date, to the escrow account of (i) the aggregate sum of
Five Million Dollars ($5,000,000) in cash (“Asset Purchase Escrow Amount”)
payable to the Company Sellers pursuant to the Purchase Agreement which is
required to be placed into escrow at the closing of the transaction contemplated
thereby; and (ii) a number of shares of Parent Common Stock equal to the
Escrowed Stock Consideration (the Asset Purchase Escrow Amount and the Escrowed
Stock Consideration are herein collectively referred to as the “Escrow Amount”).

1.7              Certificate of Formation. Subject to the terms and conditions
of this Agreement, at the Effective Time, the Certificate of Formation of Merger
Sub, as then amended (the “Certificate of Formation”), shall be the Certificate
of Formation of the Surviving Company until thereafter amended in accordance
with applicable law.

1.8              Limited Liability Company Agreement. Subject to the terms and
conditions of this Agreement, at the Effective Time, the Limited Liability
Company Agreement of Merger Sub, as then amended (the “LLC Agreement”), shall be
the LLC Agreement of the Surviving Company until thereafter amended in
accordance with applicable law.

1.9              Headquarters of Surviving Company. From and after the Effective
Time, the location of the headquarters and principal executive offices of the
Surviving Company shall be determined by Parent, or its designee.

1.10          Managers and Officers. The managers and officers of Merger Sub
shall immediately after the Effective Time be the managers and officers of the
Surviving Company, to serve, in both cases, until their successors shall have
been elected and qualified or until otherwise provided by law and the
Certificate of Formation and/or LLC Agreement of the Surviving Company.

Article II.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS

Each Seller, jointly and severally, represents and warrants to Merger Sub and
Parent as follows:

2.1              Organization; Ownership of Equity; Capitalization; and Power.

(a)                Del Monte is a corporation duly organized, validly existing
and in good standing under the Laws of the State of California. Del Monte is
duly qualified or otherwise authorized to act as a foreign corporation and is in
good standing under the Laws of every other jurisdiction in which such
qualification or authorization is necessary. Each jurisdiction in which Del
Monte is qualified to do business is set forth on Schedule 2.1(a). True,
complete and accurate copies of the organizational documents of Del Monte have
been delivered to Parent and Merger Sub. Except as set forth on Schedule 2.1(a),
Del Monte does not have any subsidiaries or own any equity interests, or rights
to acquire any equity interests, in any other entity.

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(b)               Del Monte possesses all requisite corporate power and
authority necessary to execute and deliver this Agreement and all other
agreements and documents contemplated hereby, including, without limitation
those contemplated by Section 1.2(b) of this Agreement (the “Transaction
Documents”) (to which Del Monte is, or will be, a party), and to carry out the
transactions contemplated by this Agreement and the Transaction Documents (to
which Del Monte is, or will be, a party). Del Monte possesses all requisite
corporate power and authority necessary to own and operate its properties and
its assets, to carry on the Business as presently conducted, to execute and
deliver the Transaction Documents (to which it is, or will be, a party), and to
carry out the transactions contemplated by this Agreement and the Transaction
Documents (to which it is, or will be, a party).

(c)                The Shareholders collectively own 100% of the outstanding
equity interests of Del Monte, and no individual or entity has any option,
warrant, right, call, commitment, conversion right, right of exchange, right of
first refusal or other agreement, right or privilege capable of becoming an
option, commitment, conversion right, right of exchange, right of first refusal
or other agreement for the purchase or other acquisition of any equity interest
in Del Monte. Schedule 2.1(c) sets forth the number and class of equity
interests of Del Monte authorized, issued and outstanding and the number and
class of equity interests of Del Monte and ownership percentage of Del Monte
owned by each equityholder of Del Monte. Each Shareholder owns such equity
interests free and clear of all Liens. As of the Closing Date, each Shareholder
will own the equity interests in Del Monte owned thereby as of the date hereof.
The equity interests of Del Monte have not been issued in violation of, and are
not subject to, any preemptive or subscription rights or rights of first
refusal. Del Monte has not violated the Securities Act of 1933, as amended, or
other applicable Laws in connection with the offer, sale or issuance of its
equity securities. All of the issued and outstanding equity interests of Del
Monte are validly issued, fully paid and nonassessable. There are no outstanding
contractual obligations of Del Monte to repurchase, redeem or otherwise acquire
any shares of Del Monte’s capital stock or other equity interests or to provide
funds to, or make any investment (in the form of a loan, capital contribution or
otherwise) in, any other Person.

(d)               Except as set forth on Schedule 2.1(d), Del Monte does not own
any equity interest in any other Person and Del Monte does not have any option,
warrant, right, call, commitment, conversion right, right of exchange, right of
first refusal or other agreement, right or privilege capable of becoming an
option, commitment, conversion right, right of exchange, right of first refusal
or other agreement for the purchase of any equity interest of any other Person.

2.2              Authorization. Each Seller’s execution, delivery and
performance of this Agreement has been duly authorized by such Seller. This
Agreement has been duly authorized, executed and delivered by each Seller and
constitutes the valid and binding obligation of each Seller, as applicable,
enforceable against such Seller in accordance with its terms, except as may be
limited by applicable bankruptcy, insolvency or similar Laws affecting
creditors’ rights generally or by general principles of equity (the “Creditors'
Rights and Equitable Limitations”). Upon the execution and delivery by the
Sellers of each of the Transaction Documents to which a Seller is a party, each
of such Transaction Documents will constitute the legal, valid and binding
obligation of the Sellers that are a party thereto, enforceable against such
Sellers in accordance with their respective terms except for Creditors’ Rights
and Equitable Limitations.

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2.3              Non-Contravention. Except for the Consents being delivered by
the Sellers pursuant to Section 1.2(b)(ix) and applicable requirements under the
HSR Act, the execution, delivery and performance by each Seller of this
Agreement and the Transaction Documents to which any of them is a party, and the
fulfillment of and compliance with the respective terms hereof and thereof by
each Seller, as applicable, do not and shall not (i) conflict with or result in
a breach of the terms, conditions or provisions of, (ii) result in the creation
of any Lien upon any Asset pursuant to, (iii) result in a violation of or
default under, (iv) require any authorization, Consent, exemption or other
action by or notice or declaration to, or filing with, any Person or any
Government Entity pursuant to, or (v) give any Person the right to default or
exercise any remedy under, accelerate the maturity or performance of or payment
under or cancel, terminate or modify (A) the organizational documents (including
any shareholders’ agreement or similar agreement) of Del Monte, (B) any Contract
to which any Seller is subject or by which the Assets are bound, or (C) any Law
to which any Seller is subject.

2.4              Financial Statements.

(a)                Del Monte has delivered to Merger Sub the following financial
statements, copies of which are attached as Schedule 2.4(a): (i) the audited
combined financial statements of Del Monte, Service and Seafood, including the
combined balance sheets as of December 28, 2013 and December 29, 2012 and the
related combined statements of income, shareholders’ and members’ equity, and
cash flows for the three fiscal years ended December 28, 2013, and the related
notes to the combined financial statements, together with the report of the
independent certified public accounting firm set forth therein (the “Audited
Financial Statements”); and (ii) the unaudited interim monthly and quarterly
financial statements for Del Monte as of and for the eight fiscal monthly
periods ended August __, 2014 (the “Interim Financial Statements” and together
with the Audited Financial Statements, the “Financial Statements”). The
Financial Statements have been prepared consistent with the past practices of
Del Monte, and fairly present the assets, liabilities and financial position of
Del Monte and the results of operations and changes in financial position and
cash flows of Del Monte as of the dates and for the periods specified therein,
all in accordance with GAAP, except to the extent described on Schedule 2.4(a).
The Financial Statements have been prepared in accordance with the books of
account and other financial records of Del Monte, all of which have been made
available to Merger Sub, are complete and correct and represent actual, bona
fide transactions and have been maintained in accordance with sound business
practices.

(b)               The 2014 Audited Financial Statements will be prepared in
accordance with GAAP consistently applied and on a basis consistent with the
Audited Financial Statements. The 2014 Audited Financial Statements will fairly
present the combined financial position of Del Monte and each of the Company
Sellers and the results of operations and changes in financial position and cash
flows for Del Monte and each of the Company Sellers as of the 2014 Fiscal Year
End and for the fiscal year then ended. The 2014 Audited Financial Statements
will be prepared in accordance with the books and records of Del Monte.

2.5              Books and Records. Del Monte has delivered or provided to
Merger Sub for its review true, complete and correct copies, as amended and
presently in effect, as listed on Schedule 2.5: (a) articles of incorporation or
similar organizational document, (b) bylaws, (c) minute books, if any, (d)
equity registration books, if any, and (e) and any shareholders’

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agreement or other similar agreements governing the rights as between the
equityholders thereof which, except as otherwise provided on Schedule 2.5,
contain a record of all shareholder and director meetings, as applicable, and
actions taken without a meeting for the time period from January 1, 2012 to the
date hereof and the equity registration books are complete and accurate and
contain a complete record of all transactions in Del Monte’s equity interests
from the date of its incorporation or organization to the date hereof.

2.6              Inventory. Except as set forth on Schedule 2.6, the Inventory
(i) is merchantable and fit for the purpose for which it was procured or
manufactured, is not damaged, beyond its originally stated expiration date or
frozen and then re-frozen, and consists of a quantity and quality usable and
saleable in the ordinary course of the Business, as conducted by Del Monte in a
commercially reasonable manner and (ii) has been valued at the lower of cost
(first-in, first-out method) or market, net of any related bill backs, discounts
or supplier rebates. All items of Inventory of Del Monte reflected in the
Financial Statements had a commercial value of at least equal to the value shown
in the Financial Statements and there were no items of Inventory reflected in
the Financial Statements which were not present on Del Monte’s premises as of
the date of such Financial Statements. Del Monte is not under any Liability or
obligation with respect to the return of any Inventory in the possession of its
customers or any other Person in excess of its historical experience. Del Monte
is not in possession of any Inventory not owned by Del Monte, including goods
already sold. The Inventory has been stored in compliance with all Laws and is
not adulterated or mislabeled, misbranded or unsafe within the meaning of the
FDA Act (including the Pesticide and Food Additive Amendment of 1958) and the
regulations thereunder.

2.7              Assets.

(a)                Schedule 2.7(a) sets forth a true and complete list of all
tangible personal property of Del Monte, including, without limitation, all
equipment, furniture, fixtures, machinery, vehicles, office furnishings,
computer hardware, instruments and leasehold improvements as of the 2014 Fiscal
Year End (collectively, the “Personal Property”). There are no rights of first
offer, rights of first refusal or other agreements or understandings with
respect to the sale or transfer of the Assets, other than the sale of Inventory
in the ordinary course of business consistent with past practices. Del Monte has
good and valid title to the Assets owned as of the date hereof, free and clear
of all Liens and shall have as of the Closing good and valid title to any Asset
acquired from the 2014 Fiscal Year End through the Closing Date, free and clear
of all Liens.

(b)               Except as set forth on Schedule 2.7(b), the Assets constitute
all assets used or held for use in the conduct of the Business as conducted as
of the 2014 Fiscal Year End and as currently conducted, except for those Assets
disposed of in the ordinary course of business consistent with past practices
and such Assets represent all the assets necessary to conduct the Business as of
the date hereof in the manner in which it is currently being conducted. All
Personal Property and spare parts included in the Assets are in good and usable
condition except for ordinary wear and tear.

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2.8              Real Property; Leased Real Property.

(a)                Del Monte does not own any real property.

(b)               Schedule 2.8(b) sets forth each parcel of real property leased
by Del Monte (together with all rights, title and interest of Del Monte in and
to leasehold improvements relating thereto, including, but not limited to,
security deposits, reserves or prepaid rents paid in connection therewith,
(collectively, the “Leased Real Property”), and a true and complete list of all
leases, subleases, licenses, concessions and other agreements (whether written
or oral), including all amendments, extensions, renewals, guaranties and other
agreements with respect thereto, pursuant to which Del Monte holds any Leased
Real Property, including the parties, street address, rentable square footage,
rent, expiration date and renewal options (collectively, the “Leases”). The
Sellers have delivered to Merger Sub a true and complete copy of each Lease.
With respect to each Lease:

(i)                 such Lease is valid, binding, enforceable and in full force
and effect;

(ii)               neither Del Monte, nor to the Knowledge of the Sellers, the
landlord, is in breach or default under such Lease, and no event has occurred or
circumstance exists which, with the delivery of notice, passage of time or both,
would constitute such a breach or default on the part of Del Monte, or, to the
Knowledge of the Sellers, the landlord, and Del Monte has paid all rent due and
payable under such Lease;

(iii)             Del Monte has not received any written notice or given any
notice of any default or event that with notice or lapse of time, or both, would
constitute a default by Del Monte under any of the Leases and to the Knowledge
of Sellers, no other party is in default thereof. No party to any Lease has
exercised any termination rights with respect thereto;

(iv)             except as set forth on Schedule 2.8(b), Del Monte has not
subleased, assigned or otherwise granted to any Person the right to use or
occupy such Leased Real Property or any portion thereof;

(v)               Del Monte has not pledged, mortgaged or otherwise granted a
Lien on its leasehold interest in any Leased Real Property; and

(vi)             none of the Leases have been modified or amended.

(c)                Del Monte has not received any written notice of (i)
violations of building codes and/or zoning ordinances or other governmental or
regulatory Laws affecting the Leased Real Property, (ii) existing, pending or
threatened condemnation Proceedings affecting the Leased Real Property, or (iii)
existing, pending or threatened zoning, building code or other moratorium
Proceedings, or similar matters which could reasonably be expected to adversely
affect the ability to operate the Leased Real Property as currently operated.
Neither the whole nor any material portion of any Leased Real Property has been
damaged or destroyed by fire or other casualty.

(d)               The Leased Real Property is sufficient for the continued
conduct of the Business after the Closing in substantially the same manner as
conducted prior to the Closing.

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(e)                Except as set forth on Schedule 2.8(e), and to the Knowledge
of Sellers, the use of each parcel of the Leased Real Property by Del Monte for
the purposes for which it is currently being used, conforms in all respects to
all applicable public and private restrictions, fire, safety, zoning and
building laws and ordinances, laws relating to the disabled, and other
applicable Laws and each parcel of Leased Real Property has adequate rights of
access to dedicated public ways.

(f)                To the Knowledge of the Sellers, there is no existing or
proposed eminent domain proceeding that would result in the taking of all or any
part of the Leased Real Property or that would preclude or impair the continued
use of the Leased Real Property as heretofore used in the conduct of the
Business. To the Knowledge of Sellers, with respect to the Leased Real Property,
Del Monte has legal and adequate access to water supply, storm and sanitary
sewer facilities, telephone, gas and electrical connections, fire protection,
drainage and other public utilities, in each case as is necessary for the
conduct of the Business as heretofore conducted. To the Knowledge of the
Sellers, the Leased Real Property, and its continued use, occupancy and
operation as currently used, occupied and operated, does not constitute a
nonconforming use under all applicable building, zoning, subdivision and other
land use and similar Laws, regulations and ordinances and Del Monte has not
received any notice of such nonconforming use or of a violation of such Laws. To
the Knowledge of the Sellers, all buildings, structures, fixtures and
improvements (“Improvements”) located at the Leased Real Property are
structurally sound with no material defects and are in good operating condition.

2.9              Contracts.

(a)                Schedule 2.9(a) sets forth a list of all Material Contracts
to which Del Monte is a party or by which the Assets are bound as of the date
hereof. Del Monte has not violated or breached, or committed any default under,
any such Material Contract, and each such Material Contract is (a) in full force
and effect and (b) a legal, valid and binding obligation of Del Monte subject to
the Creditors' Rights and Equitable Limitations, and, to the Knowledge of the
Sellers, a legal, valid and binding obligation of each other party thereto
subject to the Creditors' Rights and Equitable Limitations. To the Knowledge of
the Sellers, each other party thereto has performed all obligations required to
be performed by it and has not violated, breached or committed any default in
any respect. There has not occurred any event or events that, with or without
the lapse of time or the giving of notice or both, constitutes, or that could
reasonably be expected to result in, a default, breach or violation by Del Monte
under any Material Contract. Since January 1, 2012, Del Monte has not given to,
or received from, any other party to any Material Contract any notice or other
communication regarding any actual or alleged breach of or default under, or
threat or indication of any intention to terminate prior to the expiration of
its term, any such Material Contract.

(b)               Except as required by Law or as set forth on Schedule 2.9(b),
there are no outstanding material warranties, other than those made in the
ordinary course of business consistent with past practices of Del Monte, made by
Del Monte and there have been no material warranty claims within the past two
(2) years and there are no material unresolved claims thereunder.

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2.10          Absence of Certain Changes. Except as and to the extent set forth
on Schedule 2.10, Del Monte has conducted the Business since December 31, 2013
in the ordinary course consistent with past practices. Without limiting the
generality of the foregoing, except as and to the extent set forth on Schedule
2.10, since December 31, 2013, Del Monte has not:

(a)                suffered any adverse change in its working capital, financial
condition, assets, liabilities, business or prospects, experienced any labor
difficulty, or suffered any casualty loss (whether or not insured);

(b)               made any material change in the Business or operations or in
the manner of conducting the Business;

(c)                incurred any Indebtedness or incurred any Liabilities, except
Liabilities that are reflected or reserved against in the Financial Statements
or that were incurred since the end of the last fiscal month prior to the date
hereof for which the Financial Statements have been provided in the ordinary
course of business and consistent with past practices, or experienced any change
in any assumptions underlying or methods of calculating any bad debt,
contingency or other reserves;

(d)               paid, discharged or satisfied any Lien or Liability, other
than Liens or Liabilities which are reflected or reserved against in the
Financial Statements and which were paid, discharged or satisfied since the date
thereof in the ordinary course of business and consistent with past practices;

(e)                written down the value of any Inventory, or written off as
uncollectible any notes or accounts receivable or any portion thereof, except
for write-downs and write-offs of less than $25,000 in the aggregate;

(f)                authorized or adopted a plan of liquidation or dissolution;

(g)               cancelled any debts or claims, except as contemplated by this
Agreement, or waived any rights of substantial value;

(h)               entered into any new line of business;

(i)                 entered into a settlement or compromise of any pending or
threatened Proceeding;

(j)                 sold, transferred or conveyed any of its properties or
assets (whether real, personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past practices;

(k)               granted any increase in the compensation of, or paid any bonus
or other compensation (including, without limitation, any severance or
termination pay) to, any officer, director, employee or agent (including,
without limitation, any increase pursuant to any bonus, pension, profit sharing
or other plan or commitment) or adopted any such plan or other arrangements; and
no such increase, or the adoption of any such plan or arrangement is planned or
required;

20

 

(l)                 adopted, amended or increased the payments or benefits under
any Employee Benefit Plan, employment agreement or other arrangements, and no
such increase, amendment or adoption of any such plan or arrangement is planned
or required;

(m)             made any capital expenditures or commitments in excess of
$100,000 in the aggregate for replacements or additions to property, plant,
equipment or intangible capital assets;

(n)               declared, set aside or paid any dividend or other distribution
(whether in cash, securities or other combination thereof) in respect of any
equity interests of Del Monte, excluding distributions of profits, including Tax
distributions made in the ordinary course of business and consistent with past
practices;

(o)               except as indicated in the Audited Financial Statements, made
any change in any method of accounting or accounting practice or any method of
income Tax accounting or income Tax elections;

(p)               paid, loaned or advanced any amount to or in respect of, or
sold, transferred or leased any properties or assets (real, personal or mixed,
tangible or intangible) to, or entered into any agreement, arrangement or
transaction with, any Shareholder or any other equity holder of Del Monte or the
officers or directors of Del Monte, any Affiliates or associates of Del Monte or
any of Del Monte’s officers or directors, or any business or entity in which any
of such Persons has any direct or indirect interest, except for compensation to
the officers and employees of Del Monte at rates not exceeding the rates of
compensation in effect at December 31, 2013 and advances to employees in the
ordinary course of business and consistent with past practices for travel and
expense disbursements, but not in excess of $5,000 at any one time outstanding;

(q)               sold, transferred, licensed, abandoned, let lapse, encumbered
or otherwise disposed of any Intellectual Property;

(r)                 compromised or settled any Proceeding;

(s)                suffered any Material Adverse Effect;

(t)                 failed to preserve and maintain all Consents required for
the conduct of the Business as currently conducted or the ownership and use of
the Assets;

(u)               failed to pay the debts, Taxes and other obligations of the
Business or such Party when due;

(v)               failed to collect accounts receivable in a manner consistent
with past practices, without discounting such accounts receivable;

(w)             discontinued any insurance policies, except as required by
applicable Law;

(x)               failed to perform any of its obligations under any Material
Contract;

21

 

(y)               entered into, terminated or amended any Material Contract (or
any Contract that if in effect as of the date hereof would be a Material
Contract), other than in the ordinary course of business consistent with past
practices;

(z)                failed to maintain the books and records of the Business in
accordance with past practices;

(aa)            failed to comply in all respects with all Laws applicable to the
conduct of the Business or the ownership and use of the Assets;

(bb)           amended its articles of incorporation, bylaws, or similar
governing documents;

(cc)            entered into any change in control, severance, termination or
employment agreement or any similar agreement with any employee or director or
established any collective bargaining, bonus, profit sharing, thrift,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan, trust fund,
policy or arrangement for the benefit of any current or former employee; or

(dd)          agreed, whether in writing or otherwise, to take any action
described in this Section 2.10.

2.11          Litigation. Except as set forth on Schedule 2.11, there are no
actions, suits, hearings, proceedings (including any arbitration proceedings),
orders, investigations, grievances, indictments, mediations or other claims
(collectively, “Proceedings”) pending or, to the Knowledge of the Sellers,
threatened against or affecting Del Monte or the Business or any Shareholder, at
law or in equity, or before or by any Government Entity (including any
Proceedings with respect to the transactions contemplated by this Agreement and
the Transaction Documents) and, to the Knowledge of the Sellers, there has not
occurred any event or events that, with or without the lapse of time or the
giving of notice or both, could reasonably be expected to give rise to such a
Proceeding.

2.12          Brokerage. There are no claims for brokerage commissions, finders’
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which any Seller is a
party or to which any Seller is subject for which Merger Sub or any of its
Affiliates could become liable or obligated.

2.13          Employees.

(a)                Schedule 2.13(a) identifies, as of the date hereof, all of
Del Monte’s sales representatives, customer service representatives, office
personnel, office managers, and other employees employed by Del Monte (the
“Company Employees”). To the Knowledge of the Sellers, no Company Employee plans
to terminate employment with Del Monte during the next twelve (12) months. Del
Monte is not party to or bound by any collective bargaining agreement relating
to any Company Employees. To the Knowledge of the Sellers, there is no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to the Company Employees. Del Monte has not committed
any unfair labor practice in connection with the Business, no charge alleging
any unfair labor practice has been filed or is currently pending against Del
Monte, and except as set forth on Schedule 2.13(a), Del Monte is, and since
January 1, 2012, has been, in full compliance with all federal, state and local
labor and employment Laws, including without limitation, wage and hour Laws
governing payment of wages and/or overtime pay and the Immigration Reform and
Control Act of 1986. All individuals who are performing consulting or other
services for Del Monte are correctly classified as either “independent
contractors,” or “employees,” as the case may be. All individuals employed by
Del Monte are correctly classified as either exempt or non-exempt under the Fair
Labor Standards Act and any applicable state or local wage and hour Laws.

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(b)               Except as set forth on Schedule 2.13(b), Del Monte has not
received, at any time since January 1, 2012, any written notice or other
communication from any Government Entity or other Person regarding any actual,
alleged or potential violation of or failure to comply with any Law regarding
employment and employment practices, including, but not limited to, terms and
conditions of employment, wages and hours, employment discrimination and
retaliation and occupational health and safety. Except as set forth on Schedule
2.13(b), there are no claims or other Proceedings brought by or on behalf of any
employee or former employee of Del Monte under any federal, state or local Law
governing employment and employment practices, and terms and conditions of
employment or any other Law pending or, to the Knowledge of the Sellers,
threatened against Del Monte.

(c)                Del Monte has complied with all requirements to give notice
to its employees and to any Government Entity, pursuant to any applicable Laws
with respect to the employment, discharge or layoff of employees by Del Monte,
including but not limited to, to the extent it may be applicable, the Worker
Adjustment and Retraining Notification Act and/or similar state and local Laws
and any rules or regulations as have been issued in connection with the
foregoing.

(d)               Schedule 2.13(d) sets forth a complete and accurate list with
respect to the Company Employees of the name (or other identifier), title,
location, annual salary, hire date, adjusted service date, incentive/bonus plan
eligibility and target, YTD paid bonus/incentives, FLSA status, department name,
vacation/PTO balance, FTE, supervisor, last review result, last increase pay
amount, last pay increase date, medical/dental/vision elections, 401k
contribution, actively at work (y/n), FMLA, salary continuation,
employee/independent contractor or leased employee indicator.

2.14          Directors and Officers; Compensation. Schedule 2.14 contains a
true and correct listing of (i) the names of Del Monte's directors and officers;
(ii) the names of all persons whose compensation from Del Monte for the twelve
(12) months ended as of the 2014 Fiscal Year End is reasonably expected to equal
or exceed $100,000; and (iii) the names of all persons holding powers of
attorney from Del Monte, and a summary statement of the terms thereof.

2.15          Intellectual Property.

(a)                Schedule 2.15(a) contains a true, correct and complete list
of any (i) Company Intellectual Property registered or applied for or subject to
registration or application before any Government Entity, specifying, where
applicable, the respective registration or application numbers and the names of
all registered owners; (ii) Company Software and (iii) licenses and other
Contracts pursuant to which Del Monte obtains rights to any Company Intellectual
Property from a third party or grants rights in any material Company
Intellectual Property. Del Monte exclusively owns or possesses valid licenses or
other legal rights, free and clear of all Liens, to all Company Intellectual
Property. Except as disclosed on Schedule 2.15(a), the Company Intellectual
Property is (A) in full force and effect, (B) has not lapsed, expired or been
abandoned or withdrawn, (C) is valid, enforceable and subsisting and is not
subject to any Contract containing any covenant or other provision, outstanding
claim, settlement agreement, consents, judgments, orders, forbearances to sue or
similar obligations or Proceedings that in any way limit or adversely affect, or
that could adversely affect or limit, any of Del Monte’s use or exploitation
thereof or rights thereto.

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(b)               The conduct of the Business (and Del Monte’s employees’ and
consultants’ performances of their duties in connection therewith) and Del
Monte’s use of any Company Intellectual Property does not copy without
permission, infringe, misappropriate, violate, impair or conflict with
(“Infringe”) any common law, statutory or other Law or right of any Person,
including any rights relating to any Intellectual Property. There is no
litigation, opposition, cancellation, Proceeding, objection or claim pending or,
to the Knowledge of the Sellers, asserted or threatened in writing against Del
Monte concerning the ownership, validity, registrability, enforceability,
infringement, misappropriation, violation or use of, or licensed right to use
any Company Intellectual Property, and, to the Knowledge of the Sellers, no
valid basis exists for any such litigation, opposition, cancellation,
Proceeding, objection or claim. To the Knowledge of the Sellers, no Person is
Infringing any of the Company Intellectual Property. To the extent that any
Company Intellectual Property has been developed or created by an employee or a
third party for or on behalf of Del Monte, except as set forth in Schedule
2.15(b) Del Monte has a written agreement with such employee or third party with
respect thereto and thereby has obtained exclusive ownership of all intellectual
property rights in and to such Company Intellectual Property. Del Monte has
taken all commercially reasonable measures to protect the secrecy,
confidentiality and value of its Trade Secrets, and to the Knowledge of the
Sellers, its Trade Secrets have not been used, divulged or appropriated either
for the benefit of any third party (other than Del Monte) or to the detriment of
Del Monte.

(c)                To the Knowledge of the Sellers, all Information Systems
operate and perform in all material respects in accordance with past practices.
To the Knowledge of the Sellers, the Information Systems do not contain any
disabling or destructive code or virus that would impede or result in the
disruption of the operation of the business operations of Del Monte. All
licenses and other Contracts pursuant to which Del Monte obtains rights to any
Company Intellectual Property from a third party or grants rights in any
material Company Intellectual Property to a third party are in full force and
effect in accordance with their terms and no default exists under any of the
same by Del Monte or, to the Knowledge of the Sellers, by any other party
thereto. To the Knowledge of the Sellers, the licenses or other Contracts
related to the Company Intellectual Property disclosed on Schedule 2.15(c)
constitute all of the Material Contracts relating to any grant or receipt of
rights in and to any Company Intellectual Property.

(d)               Del Monte is and has been in compliance with (i) all
applicable data protection and privacy Laws and Card Association Rules governing
the collection or use of Seller Data, including without limitation all payment
card information, and (ii) all written privacy and security policies, programs
or other notices that concern or govern the collection, use and disclosure of
Seller Data, including payment card information, confidential information of Del
Monte and Trade Secrets. To the Knowledge of the Sellers, there have been no
facts or circumstances that would require Del Monte to give notice to any
customers, suppliers or other Persons of any actual or perceived data security
breaches pursuant to any Law or Card Association Rule. Del Monte has taken
commercially reasonable precautions to protect the confidentiality, integrity
and security of the Information Systems, including Del Monte’s websites, and all
information stored or contained therein or transmitted thereby from any
unauthorized use, access, interruption or modification by any Person. There has
been no actual or, to the Knowledge of the Sellers, alleged unauthorized access
to or breaches of the security of (a) any of the Information Systems or websites
of Del Monte, or (b) any Seller Data, payment card information, confidential or
proprietary data or any other such information collected, maintained or stored
by or on behalf of Del Monte, including any acquisition, use, loss, destruction,
compromise or disclosure thereof. The transfer of Seller Data to Merger Sub
requires no consent from any customer of Del Monte.

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(e)                To the Knowledge of the Sellers, neither the execution,
delivery or performance of this Agreement nor the consummation of any of the
transactions contemplated by this Agreement will, with or without notice or
lapse of time, result in or give any third party the right or option to cause or
declare (i) a loss of, or Lien on any Company Intellectual Property; (ii)
release, disclosure or delivery of any Company Intellectual Property by or to
any escrow agent or other third party; (iii) the grant, assignment or transfer
to any other third party of any license or other right or interest under, to, or
in any of the Company Intellectual Property; or (iv) Del Monte, Merger Sub, the
Surviving Company or Parent being bound by or subject to any non-compete or
other restriction on the operation of scope of the Business.

2.16          Employee Benefit Plans.

(a)                Schedule 2.16(a) lists all deferred compensation, incentive
compensation, stock purchase, stock option or other equity-based, retention,
change in control, severance or termination pay, hospitalization or other
medical, life, dental, vision, disability or other insurance, supplemental
unemployment benefits, profit-sharing, pension or retirement plans, programs,
agreements or arrangements, and each other fringe or other employee benefit
plan, program, agreement or arrangement (including any “employee benefit plan”,
within the meaning of Section 3(3) of ERISA), sponsored, maintained or
contributed to or required to be contributed to by Del Monte or by any ERISA
Affiliate for the benefit of any current or former employee, independent
contractor or director (and/or their dependents or beneficiaries) of Del Monte,
or with respect to which Del Monte or any ERISA Affiliate otherwise has any
Liabilities or obligations (the “Employee Benefit Plans”).

(b)               Except as disclosed on Schedule 2.16(b), no Employee Benefit
Plan is (i) a “multiemployer plan,” as such term is defined in Section 3(37) of
ERISA, (ii) a plan that is subject to Title IV of ERISA, Section 302 of ERISA or
Sections 412, 430 or 436 of the Code, (iii) a multiple employer plan as defined
in Section 413(c) of the Code or (iv) a multiple employer welfare arrangement as
defined in Section 3(40) of ERISA, and neither Del Monte nor any ERISA
Affiliate, has maintained, contributed to, or been required to contribute to any
Employee Benefit Plan described in clauses (i), (ii), (iii) or (iv) above within
the last six (6) years.

25

 

(c)                Each Employee Benefit Plan is and has been maintained and
administered in all material respects in compliance with its terms and with the
applicable requirements of ERISA, the Code and any other applicable Laws. Del
Monte has paid all contributions, premiums and expenses payable to or in respect
of each Employee Benefit Plan under the terms thereof and in substantial
compliance with applicable Laws. Neither Del Monte nor any ERISA Affiliate or,
to the Knowledge of the Sellers, any other Person, has engaged in any
transaction with respect to any Employee Benefit Plan that would be reasonably
likely to subject Del Monte, Merger Sub, the Surviving Company or any Affiliate
thereof to any Tax or penalty (civil or otherwise) imposed by ERISA, the Code or
other applicable Laws.

(d)               Each Employee Benefit Plan that is a “nonqualified deferred
compensation plan” (within the meaning of Section 409A(d)(1) of the Code) has
been operated in compliance with Section 409A of the Code, IRS Notice 2005-1,
Treasury Regulations issued under Section 409A of the Code, and any subsequent
guidance relating thereto, and no additional Tax under Section 409A(a)(1)(B) of
the Code has been or is reasonably expected to be incurred by a participant in
any such Employee Benefit Plan, and no employee or independent contractor of Del
Monte is entitled to any gross-up or otherwise entitled to indemnification by
Del Monte or any ERISA Affiliate for any violation of Section 409A of the Code.

(e)                With respect to each Employee Benefit Plan, Del Monte has
made available to Merger Sub true, correct and complete copies of each of the
following documents: (i) a copy of each Employee Benefit Plan (including any
amendments thereto and all administration agreements, insurance policies,
investment management or advisory agreements and all prior Employee Benefit Plan
documents, if amended within the last three (3) years); (ii) a copy of the three
(3) most recent Form 5500 annual reports, if any, required under ERISA or the
Code; (iii) a copy of the most recent summary plan description (and any summary
of material modifications), if any, required under ERISA; (iv) if the Employee
Benefit Plan is funded through a trust or any third party funding vehicle, a
copy of the trust or other funding agreement (including any amendments thereto);
(v) if the Employee Benefit Plan is intended to be qualified under Section
401(a) of the Code, the most recent determination and/or opinion letter received
from the Internal Revenue Service; (vi) actuarial reports (if any); (vii) all
written correspondence with the Internal Revenue Service, Department of Labor or
any other Government Entity regarding any Employee Benefit Plan (if any); (viii)
all discrimination tests for each Employee Benefit Plan for the three (3) most
recent plan years (if any); (ix) a list of all employees or former employees of
Del Monte currently receiving COBRA benefits; and (x) any other related material
or documents regarding the Employee Benefit Plans. Schedule 2.16(a) sets forth
the terms and conditions of any unwritten Employee Benefit Plan.

(f)                None of the Employee Benefit Plans that are “welfare benefit
plans” within the meaning of Section 3(1) of ERISA provide for continuing
benefits or coverage after termination or retirement from employment, except for
COBRA continuation coverage rights under a “group health plan” as defined in
Section 4980B(g) of the Code and Section 607 of ERISA.

(g)               Except as set forth on Schedule 2.16(g), each Employee Benefit
Plan that is intended to be qualified under Section 401(a) of the Code has
received a determination from the Internal Revenue Service that it is so
qualified and/or has an opinion letter upon which it is entitled to rely, and
there are no facts or circumstances that would be reasonably likely to adversely
affect the qualified status of any such Employee Benefit Plan.

26

 

(h)               Except as set forth in Schedule 2.16(h), the consummation of
the transactions contemplated by this Agreement and the Transaction Documents
will not (i) result in an increase in or accelerate the vesting of any of the
benefits available under any Employee Benefit Plan, (ii) otherwise entitle any
current or former director or employee of Del Monte to any payment from Del
Monte, or (iii) result in any “parachute payment” that would not be deductible
by reason of the application of Section 280G of the Code and subject the
recipient of any such payment to the excise tax under Section 4999 of the Code.

(i)                 There are no pending or, to the Knowledge of the Sellers,
threatened, Proceedings that have been asserted relating to any Employee Benefit
Plan by any employee or beneficiary covered under any Employee Benefit Plan or
otherwise involving any Employee Benefit Plan (other than routine claims for
benefits). No examination, voluntary correction proceeding or audit of any
Employee Benefit Plan by any Government Entity is currently in progress or, to
the Knowledge of the Sellers, threatened. Del Monte is not a party to any
agreement or understanding with the Pension Benefit Guaranty Corporation, the
Internal Revenue Service or the Department of Labor or any other similar
Government Entity with respect to an Employee Benefit Plan.

(j)                 Neither Del Monte nor any ERISA Affiliate thereof has used
the services or workers provided by third party contract labor suppliers,
temporary employees, “leased employees” (as that term is defined in Section
414(n) of the Code), or individuals who have provided services as independent
contractors, to an extent that would reasonably be expected to result in the
disqualification of any of the Employee Benefit Plans or the imposition of
penalties or excise Taxes with respect to any of the Employee Benefit Plans by
the Internal Revenue Service, the Department of Labor, the Pension Benefit
Guaranty Corporation or any other similar Government Entity.

(k)               Del Monte has complied with the continuation coverage
provisions of COBRA and any applicable Laws mandating health insurance coverage
for employees.

(l)                 With respect to each Employment Benefit Plan: (i) there has
been no non-exempt prohibited transaction within the meaning of Section 406 of
ERISA and Code Section 4975; and (ii) no fiduciary within the meaning of
Section 3(21) of ERISA has breached any fiduciary duty imposed under Title I of
ERISA.

(m)             No state of facts or conditions exist which could be expected to
subject Del Monte to any Liability (other than routine claims for benefits) with
respect to any Employee Benefit Plan or voluntary employees’ beneficiary
association within the meaning of Section 501(c)(9) of the Code under applicable
Laws.

(n)               Neither Del Monte nor any ERISA Affiliate of Del Monte has
established or contributed to, is required to contribute to or has any liability
with respect to any “welfare benefit fund” within the meaning of Section 419 of
the Code, “qualified asset account” within the meaning of Section 419A of the
Code.

27

 

(o)               There are no loans by Del Monte to any of its employees,
independent contractors, directors or managers outstanding on the date of this
Agreement other than plan loans under any Employee Benefit Plan intended to
qualify under Section 401(k) of the Code.

(p)               No Shareholder, nor any Affiliate thereof, has entered into
any agreement or arrangement (whether written, oral or otherwise) with any
Person whether denominated as a payment, security, gift, or otherwise, pursuant
to which such Person would be entitled to receive any portion of the Purchase
Price or Merger Consideration (including, without limitation, the Earn-Out
Amount (as defined in the Purchase Agreement) or the Additional Earn-Out Amount
(as defined in the Purchase Agreement)), whether denominated in cash or equity
securities, if the effect of such agreement or arrangement would be that Merger
Sub or Parent, or any Subsidiary of Parent other than Merger Sub, would be
required to recognize expense (including, without limitation, compensation
expense) following the Closing on account thereof.

2.17          Insurance. Schedule 2.17 sets forth a complete and accurate list
of all insurance (including casualty loss, general liability, product liability,
malpractice, theft, errors and omissions and all other types of insurance
policies maintained by Del Monte) under which the Business, the Assets or the
Company Employees are covered, including policy numbers, names and addresses of
insurers and liability or risk covered, amounts of coverage, limitations and
deductions and expirations dates. To the Knowledge of the Sellers, all such
policies are in full force and effect and no application therefor included a
material misstatement or omission. All premiums with respect thereto have been
paid to the extent due. Del Monte has not received notice of, nor, to the
Knowledge of the Sellers, is there threatened, any cancellation, termination,
reduction of coverage or material premium increases with respect to such policy.
Except as set forth on Schedule 2.11, no claim that relates to the Business, the
Assets or the Company Employees currently is pending under any such policy.
Schedule 2.17 identifies which insurance policies are “occurrence” or “claims
made” and which Person is the policy holder. The activities and operations of
the Business have been conducted in a manner so as to conform in all material
respects to all applicable provisions of such insurance policies. Del Monte has
made available to Merger Sub (a) true and complete copies or binders of all such
insurance policies and (b) a list of all claims paid under the insurance
policies of Del Monte since 2011.

2.18          Customers and Suppliers. Schedule 2.18 contains a complete and
accurate list of all Company Customers both as of the date hereof and during the
12-month period ended as of the 2014 Fiscal Year End, showing the total sales to
each such customer during 2013 and the 12-month period ended on the 2014 Fiscal
Year End. Schedule 2.18 also contains a complete and accurate list of all of Del
Monte’s suppliers both as of the date hereof and during the 12-month period
ended on the 2014 Fiscal Year End.

Del Monte has not received any notice that any of the Company Customers (a) has
ceased or substantially reduced, or will cease or substantially reduce, its
purchases of products or services of the Business or (b) has sought, or is
seeking, to reduce the price it will pay for the products and services of the
Business. Further, to the Knowledge of the Sellers, no Company Customer has
otherwise threatened to take any action described in the preceding sentence as a
result of the consummation of the transactions contemplated by this Agreement
and the Transaction Documents. Del Monte has not received any notice that any
supplier of the Business has sought, or is seeking, any material adverse change
in the price offered or the services provided during the fiscal year ended as of
the 2014 Fiscal Year End by such supplier of the Business, or that any supplier
of the Business will not sell supplies or services to the Business at any time
after the Closing Date on terms and conditions substantially the same as those
used in its current sales to the Business. Further, to the Knowledge of the
Sellers, no supplier of the Business has otherwise threatened to take any action
described in the preceding sentence as a result of the consummation of the
transactions contemplated by this Agreement and the Transaction Documents.

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2.19          Relationships with Company Related Persons. Except as set forth on
Schedule 2.19, (i) no Shareholder, director or officer of any Company Seller or
Del Monte (any such individual, a “Company Related Person”), or, to the
Knowledge of the Sellers, any Affiliate or member of the immediate family of any
Company Related Person, is, or since December 31, 2012 has been, directly or
indirectly, an owner of more than 5% of an Affiliate, of any Company Customer or
of any supplier of Del Monte or otherwise involved in any business arrangement
or relationship with Del Monte or any Company Customer or supplier of Del Monte,
other than employment arrangements entered into in the ordinary course of
business consistent with past practices, and (ii) no Company Related Person or,
to the Knowledge of the Sellers, any Affiliate or member of the immediate family
of any Company Related Person, directly or indirectly, owns, or since December
31, 2012 has owned, any property or right, tangible or intangible, used by Del
Monte in the conduct of the Business. Except as set forth on Schedule 2.19, as
of, and after giving effect to the Closing, no amounts will be payable by any
Company Related Person to Del Monte or by Del Monte to any Company Related
Person.

2.20          Legal Compliance; Governmental Licenses.

(a)                Except as set forth on Schedule 2.20(a), Del Monte and each
officer, director, manager and employee of Del Monte is, and at all times since
January 1, 2010 has been, in full compliance with all Laws that are or were
applicable to the operation of the Business or the ownership or use of any of
the Assets.

(b)               Except as set forth on Schedule 2.20(b), since January 1,
2012, (i) neither Del Monte nor any Company Related Person has received written
notice from any Government Entity that alleges any non-compliance (or that Del
Monte or any officer, director, manager or employee thereof is under
investigation or the subject of an inquiry by any such Government Entity for
such alleged non-compliance) with any applicable Law; and (ii) Del Monte has not
entered into any written or, to the Knowledge of the Sellers, express oral
agreement or settlement with any Government Entity with respect to its
non-compliance with, or violation of, any applicable Law.

(c)                Since January 1, 2012, Del Monte has timely filed all
regulatory reports, schedules, statements, documents, filings, submissions,
forms, registrations and other documents, together with any amendments required
to be made with respect thereto, that Del Monte was required to file with any
Government Entity.

(d)               Neither Del Monte nor, to the Knowledge of the Sellers, any
director, manager, officer, agent, or employee of Del Monte or any other
authorized Person acting for or on behalf of Del Monte, has directly or
indirectly in material violation of any applicable Law, rule or regulation of
any Government Entity (including the Foreign Corrupt Practices Act of 1977, as
amended) made any illegal, or otherwise material, contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other improper payment to any
Person, regardless of form, whether in money, property, or services (A) to
obtain favorable treatment in securing business, (B) to pay for favorable
treatment for business secured, or (C) to obtain special concessions or for
special concessions already obtained, for or in respect of Del Monte or any
Affiliate thereof.

29

 

(e)                Del Monte possesses, and is in material compliance with, all
Governmental Licenses necessary to conduct the Business as currently conducted.
Schedule 2.20(e) contains a true and complete list of all Governmental Licenses
maintained by Del Monte. To the Knowledge of the Sellers, the consummation of
the transactions contemplated by this Agreement and the Transaction Documents
shall not result in a revocation or cancellation of any Governmental License
maintained by Del Monte.

2.21          Taxes.

(a)                Del Monte has filed all Tax Returns that it was required to
file under applicable Laws; all such Tax Returns were true, correct and complete
in all material respects and were prepared in compliance with all applicable
Laws; and all Taxes due and owing by Del Monte (whether or not shown on any Tax
Return) have been paid. Del Monte is not the beneficiary of any extension of
time within which to file any Tax Return. No claim has ever been made by a
Government Entity in a jurisdiction where Del Monte does not file Tax Returns
that Del Monte is or may be subject to taxation by that jurisdiction. There are
no Liens for Taxes (other than Taxes not yet due and payable) upon any of the
assets of Del Monte.

(b)               Del Monte has withheld and paid (i) all Taxes required to have
been withheld and paid in connection with any amounts paid or owing to any
employee, independent contractor, creditor, stockholder, or other third party,
and all Forms W-2 and 1099 required with respect thereto have been properly
completed and timely filed, and (ii) all Taxes required to be withheld in
respect of any amount distributed to or allocable to any owners thereof.

(c)                To the Knowledge of the Sellers, no Government Entity may
assess any additional Taxes on Del Monte for any period for which Tax Returns
have been filed. Except as set forth on Schedule 2.21(c), no foreign, federal,
state, or local Tax audits or administrative or judicial Tax proceedings are
pending or, to the Knowledge of the Sellers, being conducted with respect to Del
Monte. Except as set forth on Schedule 2.21(c), Del Monte has not received from
any Government Entity (including jurisdictions where Del Monte has not filed Tax
Returns) any (i) notice indicating an intent to open an audit or other review,
(ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any Government Entity against Del Monte. Schedule 2.21(c) lists all
federal, state, local, and foreign income Tax Returns filed with respect to Del
Monte for taxable periods ended on or after December 31, 2010, indicates those
Tax Returns that have been audited, and indicates those Tax Returns that
currently are the subject of audit. Del Monte has provided Parent with correct
and complete copies of all federal income Tax Returns, examination reports, and
statements of deficiencies assessed against or agreed to by Del Monte filed or
received since January 1, 2010.

30

 

(d)               Del Monte has not waived any statute of limitations in respect
of Taxes and Del Monte has not agreed to any extension of time with respect to a
Tax assessment or deficiency.

(e)                Del Monte is not a party to any agreement, contract,
arrangement or plan that has resulted or could result, separately or in the
aggregate, in the payment of any “excess parachute payment” within the meaning
of Section 280G of the Code (or any corresponding provision of state, local or
foreign Tax law) (including any payment required to be made in connection with
the transactions contemplated hereby). Del Monte 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
6663 of the Code. Del Monte has not participated in any “reportable transaction”
within the meaning of Treasury Regulation Section 1.6011-4. Del Monte is not a
party to or bound by any Tax allocation, sharing or similar agreement (including
any advance pricing agreement, closing agreement or other agreement relating to
Taxes with any Government Entity), and does not have any current or potential
contractual or legal obligation to indemnify any other Person with respect to
Taxes. Del Monte (A) is not nor ever has been a member of an “affiliated group”
within the meaning of Section 1504(a) of the Code filing a consolidated federal
income Tax Return or a member of an affiliated, consolidated, combined or
unitary group with respect to any state, local or foreign Taxes, and (B) does
not have any Liability for the Taxes of any Person under Treasury Regulation
Section 1.1502-6 (or any similar provision of state, local, or foreign law), as
a transferee or successor, by contract, or otherwise.

(f)                Del Monte does not have any unpaid Liability for any Tax
under Section 1374 of the Code. The unpaid Taxes of Del Monte do not exceed the
reserve for Tax Liabilities set forth on the Financial Statements and will not
exceed the reserve as adjusted for the passage of time through the Closing Date
in accordance with the past custom and practice of Del Monte in filing Tax
Returns.

(g)               Del Monte 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:

(h)               change in method of accounting for a taxable period ending on
or prior to the Closing Date;

(i)                 “closing agreement” as described in Section 7121 of the Code
(or any corresponding or similar provision of state, local or foreign income Tax
law) executed on or prior to the Closing Date;

(j)                 installment sale or open transaction disposition made on or
prior to the Closing Date; or

(k)               prepaid amount received on or prior to the Closing Date.

(l)                 To the Knowledge of the Sellers, all books and records
relating to Taxes (including related work papers) have been adequately
maintained for all periods ending on or after December 31, 2010 (or for periods
with respect to which the statute of limitations remains open).

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(m)             Del Monte has not elected to defer cancellation of indebtedness
income under Section 108(i) of the Code.

(n)               All fees, charges, costs or expenses pursuant to Affiliate
services agreements or otherwise which are paid by Del Monte or any of its
Affiliates are made on an arms’ length basis within the meaning of Section 482
of the Code and the regulations and rulings promulgated thereunder. No claim has
been asserted by any Government Entity that Del Monte is liable for any Taxes
based on Section 482 of the Code or comparable provisions of other applicable
Laws.

(o)               Schedule 2.21(o) sets forth a description of all transactions
with respect to which Del Monte has received a ruling request from any Taxing
authority and contains a copy of such ruling requests and the corresponding
rulings.

(p)               Schedule 2.21(p) sets forth all Tax grants, abatements or
incentives granted or made available by any Government Entity for the benefit of
Del Monte, and, to the Knowledge of the Sellers, any condition relating to the
continued availability of such Tax grants, abatements or incentives to Del
Monte, or events or circumstances which could impair the ability of Merger Sub
or its Affiliates or Del Monte to utilize such Tax grants, abatements or
incentives following the Closing.

(q)               Del Monte has not distributed stock of another Person, nor has
it had its stock distributed to another Person, in a transaction that was
purported or intended to be governed in whole or in part by Sections 355 or 361
of the Code.

(r)                 Except as set forth on Schedule 2.21(r), there is no power
of attorney given by or binding on Del Monte with respect to Taxes for any
period for which the statute of limitations (including any waivers or
extensions) has not expired.

(s)                Del Monte has filed with the appropriate Government Entities
all unclaimed property reports as required under applicable Laws.

(t)                 Del Monte does not have an interest in an entity classified
as a partnership for federal income Tax purposes.

(u)               Del Monte has not taken any positions with respect to Taxes
shown on Tax Returns filed prior to the date hereof that would require
disclosure on Schedule UTP to IRS Form 1120, assuming for such purposes that Del
Monte is required to file Schedule UTP.

(v)               As of the date hereof, Del Monte has in place a valid election
to be treated as an S corporation for U.S. federal income Tax purposes (and any
corresponding provision of state, local and foreign Law) and has validly held
such status since those dates set forth on Schedule 2.21(v) and will be an S
corporation up to and including the Closing Date, and Del Monte has not made any
filings or taken any actions inconsistent with such status.]

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2.22          Environmental Matters.

(a)                Del Monte has obtained all Governmental Licenses under
Environmental Laws required for the conduct and operation of the Business and is
in compliance with the terms and conditions contained therein and with all
applicable Environmental Laws;

(b)               Except as set forth on Schedule 2.22(b):

(i)                 there are no Environmental Claims pending or, to the
Knowledge of the Sellers, threatened with respect to the Assets or the Business;

(ii)               there is no condition on, at or under any property (including
the air, soil and groundwater) currently or formerly owned, leased or used by
Del Monte (including off-site waste disposal facilities) or created by Del
Monte’s operations that would create a Liability with respect to the Assets or
the Business under applicable Environmental Laws;

(iii)             there are no past or present actions, activities,
circumstances, events or incidents (including the Release or Handling of any
Hazardous Material) with respect to the Business or any property currently or
formerly owned, leased or used by Del Monte that would form the basis of an
Environmental Claim or create a Liability under applicable Environmental Laws;

(iv)             to the Knowledge of the Sellers, there are no underground
storage tanks, above ground storage tanks or drums of Hazardous Materials
present on any portion of any property leased or used by Del Monte;

(v)               except as otherwise provided in the Leases, Del Monte has not
agreed to assume, undertake or provide indemnification for any liability of any
other Person under any Environmental Law or to investigate or clean up any
Hazardous Materials;

(vi)             Del Monte has not caused a Release or otherwise placed any
Hazardous Materials into, on or under the soils, surface water or groundwater
at, on, under or from any portion of any property owned, leased, operated or
used by Del Monte or any other location; and

(vii)           to the Knowledge of the Sellers, no portion of any structures on
any property owned, leased, operated or used by Del Monte in the Business
contains any asbestos or mold in violation of any Environmental Law.

(c)                Except as set forth on Schedule 2.22(c), Del Monte has not
been provided with any site assessments, compliance audits, notices,
environmental studies or similar reports relating to (i) the environmental
conditions on, under or about the properties or assets currently owned, leased,
operated or used by Del Monte or any predecessor in interest thereto, (ii) any
Hazardous Materials Handled or Released by Del Monte or any other Person in
connection with the Business and any Hazardous Materials Released on, under,
about or from, or otherwise in connection with, any of the properties or assets
currently owned, leased, operated or used by Del Monte in connection with the
Business or (iii) compliance by Del Monte with Environmental Laws.

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2.23          Orders, Commitments and Returns. There are no asserted, or, to the
Knowledge of the Sellers, if unasserted, sustainable, claims to return
merchandise of Del Monte by reason of alleged over-shipments, defective
merchandise, breach of warranty or otherwise, other than such claims regularly
experienced and resolved in the ordinary course of business and consistent with
past practices. There is no merchandise in the hands of customers under any
understanding that such merchandise is returnable other than pursuant to the
standard returns policy set forth in any of Del Monte’s Contracts. The Sellers
do not have Knowledge that the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby will result in any material
cancellations or withdrawals of accepted and unfilled orders for the sale of any
of Del Monte’s merchandise.

2.24          Accounts Receivable; Trade Accounts Payable. The accounts
receivable of Del Monte (i) arose through Del Monte’s bona fide sales of goods
or merchandise to a customer, (ii) are not subject to any dispute, offset,
counterclaim or other claim or defense on the part of the customer, (iii) are
not subject to any return or rejection of the merchandise in respect of such
account receivable which has not been cured or remedied to the satisfaction of
the customer, and (iv) are evidenced by an invoice rendered to the customer. The
Trade Accounts Payable of Del Monte have arisen from bona fide transactions.

2.25          Insolvency. Del Monte is not now insolvent, and will not be
rendered insolvent by any of the transactions contemplated hereby. In addition,
immediately after giving effect to the consummation of the transactions
contemplated hereby, (a) the Surviving Company will be able to pay its debts as
they become due, (b) the Surviving Company will not have unreasonably small
capital with which to conduct its present or proposed business, and (c) the
Surviving Company will have assets (calculated at fair market value) that exceed
its liabilities.

2.26          No Undisclosed Liabilities. Except as set forth on Schedule 2.26,
Del Monte does not have any Liabilities, except for (i) liabilities or
obligations reflected or reserved against in the Financial Statements and (ii)
current Liabilities incurred in the ordinary course of business of Del Monte
consistent with past practices since the date of the most recently delivered
Financial Statements.

2.27          Securities Laws Matters.

(a)                The Parent Common Stock to be issued to each of the
Shareholders hereunder is being acquired for the account of each Shareholder for
the purpose of investment and not with a view to the resale or distribution
thereof except pursuant to an effective registration under the Securities Act
and applicable state securities laws, or pursuant to an available exemption from
such registration requirement.

(b)               Each Shareholder is familiar with the business to be conducted
by Parent and its subsidiaries, taking into account the consummation of the
transactions contemplated hereby; (ii) each Shareholder and its representatives
have had the opportunity to ask questions and receive answers from
representatives of Merger Sub and Parent concerning the business, financial
condition and prospects of Merger Sub and Parent and their respective
Subsidiaries, and the Parent Common Stock to be issued hereunder; and (iii) each
Shareholder has received any additional information concerning Merger Sub and
Parent and their respective Subsidiaries that such Shareholder has requested.
The Shareholders have been provided access by Parent to the following filings of
Parent with the SEC: (1) Parent’s Annual Report on Form 10-K for the fiscal year
ended December 27, 2013, filed on March 12, 2014, (ii) Parent’s Quarterly
Reports on Form 10-Q for the quarters ended September 26, 2014, June 27, 2014
and March 28, 2014, filed on November 5, 2014, August 6, 2014 and May 12, 2014,
respectively, (iii) Parent’s definitive proxy statement for its 2014 annual
meeting of stockholders, filed on April 4, 2014, and (iv) Parent’s Current
Reports on Form 8-K, filed on December 12, 2014, August 6, 2014, July 28, 2014,
May 22, 2014 and March 12, 2014.

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(c)                Each Shareholder (i) is an “accredited investor,” as such
term is defined in rule 501 of Regulation D under the Securities Act, and (ii)
has such knowledge and experience in financial and business matters that such
Shareholder is capable of evaluating the merits and risks of the acquisition of
the Parent Common Stock to be issued to such Shareholder hereunder.

2.28          Business Combination Laws. No “fair price,” “moratorium,” “control
share acquisition” or similar anti-takeover statute or regulation enacted under
any applicable Law is applicable to the Merger or the transactions contemplated
by this Agreement. The board of directors of Del Monte has taken all necessary
actions such that the restrictions on business combinations contained in the
DLLCA and the CCC will not apply to the Merger or the transactions contemplated
by this Agreement.

2.29          Full Disclosure. To the Knowledge of the Sellers, neither this
Agreement, nor any Schedule, Exhibit, list, certificate or other instrument and
document furnished or to be furnished by the Sellers to Merger Sub or Parent
pursuant to this Agreement or any Transaction Document, contains any untrue
statement of a fact or omits to state any fact required to be stated herein or
therein or necessary to make the statements and information contained herein or
therein not misleading.

Article III.
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT

Merger Sub and Parent, jointly and severally, represent and warrant to the
Sellers as follows:

3.1              Organization, Power and Authority. Each of Parent and Merger
Sub is a corporation or limited liability company, as applicable, duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Each of Parent and Merger Sub is duly qualified or otherwise
authorized to act as a foreign corporation or limited liability company, as
applicable, and is in good standing under the Laws of every other jurisdiction
in which such qualification or authorization is necessary. Parent and Merger Sub
each possess all requisite corporate and limited liability company power and
authority, as applicable, necessary to own and operate its properties, to carry
on its business as presently conducted, to execute and deliver this Agreement
and the Transaction Documents to which it is or will be a party and to carry out
the transactions contemplated by this Agreement.

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3.2              Authorization; No Breach.

(a)                The execution, delivery and performance of this Agreement has
been duly authorized by Merger Sub and Parent. This Agreement constitutes a
valid and binding obligation of each of Merger Sub and Parent, enforceable in
accordance with its terms, and all of the Transaction Documents to which Merger
Sub and Parent are a party, when executed and delivered by Merger Sub or Parent
in accordance with the terms hereof, shall each constitute a valid and binding
obligation of Merger Sub or Parent, as applicable, enforceable in accordance
with its terms, except for Creditors' Rights and Equitable Limitations.

(b)               Except as set forth on Schedule 3.2(b), the execution,
delivery and performance by Merger Sub and Parent of this Agreement and all
other Transaction Documents to which Merger Sub or Parent is a party, and the
fulfillment of and compliance with the respective terms hereof and thereof by
Merger Sub or Parent, as applicable, do not and shall not (i) conflict with or
result in a breach of the terms, conditions or provisions of, (ii) constitute a
default under (whether with or without the passage of time, the giving of notice
or both), (iii) give any third party the right to modify, terminate or
accelerate any obligation under, (iv) result in a violation of, or (v) require
any authorization, Consent, approval, exemption or other action by or notice or
declaration to, or filing with, any third party or Government Entity pursuant
to, (A) the organizational documents of Merger Sub or Parent, (B) any Law to
which Merger Sub or Parent is subject, or (C) any agreement or instrument to
which Merger Sub or Parent is subject (but specifically excluding the Contracts
to which Merger Sub or Parent is a party as a result of this Agreement).

3.3              Litigation. There are no Proceedings pending or, to the
Knowledge of either Merger Sub or Parent, threatened against or affecting either
Merger Sub or Parent, at law or in equity, or before any Government Entity, with
respect to the transactions contemplated by this Agreement or which if adversely
determined would have an effect on Merger Sub’s or Parent’s ability to
consummate the transactions contemplated hereby in a timely manner or perform
its obligations hereunder.

3.4              Brokerage. There are no claims for brokerage commissions,
finders’ fees or similar compensation in connection with the transactions
contemplated by this Agreement based on any arrangement or agreement to which
either Merger Sub or Parent (or their respective Affiliates) is subject for
which the Sellers could become liable or obligated.

3.5              Parent SEC Reports. Parent has filed with the SEC all forms,
reports and documents required to be filed by Parent since January 1, 2014
(collectively, the “Parent SEC Reports”). As of their respective dates, the
Parent SEC Reports (including any Parent SEC Reports filed after the date of
this Agreement until the Closing) (i) were prepared in all material respects in
accordance with the requirements of the Securities Act or the Exchange Act, as
the case may be, and the rules and regulations of the SEC thereunder applicable
to such Parent SEC Reports and (ii) did not at the time they were filed (or if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.

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Article IV.
 COVENANTS

4.1              Reasonable Best Efforts. Each Party shall use its reasonable
best efforts to take, or cause to be taken, all actions, and to do, or cause to
be done, all things reasonably necessary, proper or advisable to cause all of
the conditions to the Parties’ obligations set forth in Article V to be
satisfied and to consummate the transactions contemplated hereby as soon as
practicable.

4.2              Conduct of the Business Prior to the Closing. From the date
hereof until the Closing, except as otherwise provided in this Agreement or
consented to in writing by Merger Sub, which consent shall not be unreasonably
withheld, Del Monte shall, and the Shareholders shall cause Del Monte to (x)
conduct the Business in the ordinary course of business consistent with past
practices and (y) use commercially reasonable efforts to maintain and preserve
intact the current business organization, operations and franchises of Del Monte
and to preserve the rights, franchises, goodwill and relationships of Del
Monte’s employees, customers, lenders, suppliers, regulators and others having
relationships with the Business. Without limiting the foregoing, from the date
hereof until the Closing Date, Del Monte shall, and the Shareholders shall cause
Del Monte to:

(a)                except as set forth on Schedule 4.2(a), maintain the
properties of Del Monte and the Assets in the same condition as they were on the
date of this Agreement, subject to reasonable wear and tear;

(b)               defend and protect the properties of Del Monte and the Assets
from known infringement or usurpation;

(c)                not voluntarily allow the creation of any Lien or other
encumbrance upon any of the Assets;

(d)               except as set forth on Schedule 4.2(d), not take or fail to
take any action that if taken or not taken immediately prior to the date hereof
would be required to be disclosed on Schedule 2.10;

(e)                grant any increase in the compensation of, or pay any bonus
to, any officer, director, employee or agent (including, without limitation, any
increase pursuant to any bonus, pension, profit sharing or other plan or
commitment) or adopt any such plan or other arrangements; and

(f)                adopt, amend or increase the payments or benefits under any
Employee Plan, employment agreement or other arrangements.

4.3              Access to Information. From the date hereof until the Closing,
Del Monte shall, and the Shareholders shall cause Del Monte to (a) afford Merger
Sub, Parent and their representatives reasonable access to and the right to
inspect all of the Leased Real Property, properties, Assets, premises, books and
records, Contracts and other documents and data related to the Business; (b)
furnish Merger Sub, Parent and their representatives with such financial,
operating and other data and information related to the Business as Merger Sub,
Parent or any of their representatives may reasonably request; and (c) instruct
the representatives of each Seller to reasonably cooperate with Merger Sub and
Parent in their investigation of the Business. Any investigation pursuant to
this Section 4.3 shall be conducted in such manner as not to interfere
unreasonably with the conduct of the Business. No investigation by Merger Sub or
Parent or other information received by Merger Sub or Parent shall operate as a
waiver or otherwise affect any representation, warranty or agreement given or
made by any of the Sellers in this Agreement. The exercise of any rights of
access, inspection or examination by or on behalf of Merger Sub or Parent shall
not affect or mitigate any of the Sellers’ covenants, representations and
warranties in this Agreement or Merger Sub’s or Parent’s rights under this
Agreement.

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4.4              No Solicitation of Other Bids.

(a)                None of the Sellers shall, and none of the Sellers shall
authorize or permit any of their Affiliates or any of their representatives
(including the Sellers’ Representative) to, directly or indirectly, (i)
encourage, solicit, initiate, facilitate or continue inquiries regarding an
Acquisition Proposal; (ii) enter into discussions or negotiations with, or
provide any information to, any Person concerning a possible Acquisition
Proposal; or (iii) enter into any agreements or other instruments (whether or
not binding) regarding an Acquisition Proposal. Each of the Sellers shall
immediately cease and cause to be terminated, and shall cause their Affiliates
and all of their representatives to immediately cease and cause to be
terminated, all existing discussions or negotiations with any Persons conducted
heretofore with respect to, or that could lead to, an Acquisition Proposal. For
purposes hereof, "Acquisition Proposal" means any inquiry, proposal or offer
from any Person (other than Merger Sub or Parent or any of their Affiliates)
relating to the direct or indirect disposition, whether by sale, stock purchase,
merger or otherwise, of all or any portion of the Business or the Assets.

(b)               In addition to the other obligations under this Section 4.4,
the Sellers shall promptly (and in any event within forty-eight hours after
receipt thereof by such Seller or their representatives) advise Merger Sub and
Parent orally and in writing of any Acquisition Proposal, any request for
information with respect to any Acquisition Proposal, or any inquiry with
respect to or which could reasonably be expected to result in an Acquisition
Proposal, the material terms and conditions of such request, Acquisition
Proposal or inquiry, and the identity of the Person making the same.

(c)                Each Seller agrees that in the event of any breach or alleged
breach of this Section 4.4, Merger Sub and Parent are entitled to have this
provision specifically enforced by any court having equity jurisdiction, it
being acknowledged and agreed that any such breach or threatened breach shall
cause irreparable injury to Merger Sub and Parent and that money damages would
not provide an adequate remedy to Merger Sub and Parent.

4.5              Notification.

(a)                From the date hereof until the Closing, the Sellers shall
promptly notify Merger Sub and Parent in writing of:

(i)                 any fact, circumstance, event, condition or action to which
any Seller is made aware, the existence, occurrence or taking of which (A) has
had or could reasonably be expected to have a Material Adverse Effect, (B) has
resulted in, or could reasonably be expected to result in, any representation or
warranty made by the Sellers hereunder not being true and correct or (C) has
resulted in, or could reasonably be expected to result in, the failure of any of
the conditions set forth in Section 5.1 to be satisfied;

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(ii)               any notice or other communication from any Person to which
any Seller is made aware alleging that the consent of such Person is or may be
required in connection with the transactions contemplated by this Agreement;

(iii)             any notice or other communication from any Government Entity
to which any Seller is made aware in connection with the transactions
contemplated by this Agreement;

(iv)             any Proceedings commenced or threatened against, to which any
Seller is made aware, relating to or involving or otherwise affecting the
Business or the Assets or that relates to the consummation of the transactions
contemplated by this Agreement;

(v)               the occurrence of any breach of any covenant by any of the
Sellers to which any Seller is made aware.

(b)               Merger Sub’s and Parent’s receipt of information pursuant to
this Section 4.5 shall not operate as a waiver or otherwise affect any
representation, warranty or agreement given or made by the Sellers in this
Agreement shall not be deemed to amend or supplement the Schedules to this
Agreement, and shall not affect the Buyer Indemnitees’ rights to indemnification
under the Indemnification Agreement.

(c)                No disclosure pursuant to this Section 4.5 will prevent or
cure any breach of any representation or warranty or covenant set forth herein.

4.6              Employee Matters and Employee Benefits.

(a)                Not later than the Closing Date, Del Monte shall terminate
those employees identified on Schedule 4.6(a) hereto.

(b)               The Shareholders and Del Monte shall cease contributions to,
and adopt all corporate resolutions required to terminate Del Monte’s Employee
Benefit Plans, and vest all participants under any applicable 401(k) Plan, in
each case as prescribed by Law, immediately prior to Closing.

(c)                No Shareholder, nor any Affiliate thereof, shall enter into
any agreement or arrangement (whether written, oral or otherwise) with any
Person whether denominated as a payment, security, gift, or otherwise, pursuant
to which such Person would be entitled to receive any portion of the Purchase
Price or Merger Consideration (including, without limitation, the Earn-Out
Amount or the Additional Earn-Out Amount), whether denominated in cash or equity
securities, if the effect of such agreement or arrangement would be that Merger
Sub or Parent, or any Subsidiary of Parent other than Merger Sub, would be
required to recognize expense for financial reporting purposes (including,
without limitation, compensation expense) following the Closing on account
thereof.

39

 

4.7              Non-Competition.

(a)                Material Inducement. Each Shareholder hereby acknowledges
that such Shareholder is familiar with the Combined Companies’ Business’s Trade
Secrets and with other Confidential Information and Trade Secrets pertaining to
the Assets and the assets of the Company Sellers and the Business and the
Company Sellers’ Business. Each Shareholder acknowledges and agrees that Merger
Sub and Parent and their Affiliates would be irreparably damaged if any of the
Shareholders or any of their Affiliates were to provide services to or otherwise
participate in the business of any Person competing or planning to compete with
Merger Sub or its Affiliates in a business similar to the Combined Companies’
Business and that any such competition by any of the Shareholders or any of
their Affiliates would result in a significant loss of goodwill by the Business.
The Shareholders further acknowledge and agree that the covenants and agreements
set forth in this Section 4.7 were a material inducement to Merger Sub and
Parent to enter into this Agreement and to perform their obligations hereunder
and that neither Merger Sub nor its Affiliates would obtain the benefit of the
bargain set forth in this Agreement as specifically negotiated by the Parties if
any of the Shareholders or their Affiliates breached the provisions of this
Section 4.7.

(b)               Restrictive Covenants. In further consideration of the amounts
to be paid hereunder for the Business, each of the Shareholders covenants and
agrees that it will not, and will cause its Affiliates not to, without the prior
written consent of Parent (which consent may be withheld in Parent’s sole
discretion), engage, directly or indirectly, including through direct or
indirect equity ownership, in any business competing or planning to compete with
the Combined Companies’ Business, including, but not limited to, soliciting or
serving any customers of the Combined Companies’ Business, for a period of five
(5) years following the Closing in all States of the United States of America
and all foreign jurisdictions where the Combined Companies’ Business has
operations or does business. In addition, each Shareholder agrees that until the
fifth (5th) anniversary of the Closing, it shall not (and shall cause its
Affiliates not to) directly, or indirectly through another Person, solicit, hire
or attempt to hire any employee of Del Monte or the Company Sellers as of the
date hereof or the Closing Date or other employee of Parent or its Affiliates
without Parent’s prior written consent, which consent may be withheld in
Parent’s sole discretion.

(c)                Remedies. If, at the time of enforcement of any of the
covenants contained in Section 4.7(b) (the “Restrictive Covenants”), a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the Parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed and directed to revise the restrictions contained herein to cover the
maximum period, scope and area permitted by applicable Laws. Each Shareholder
has determined and hereby acknowledges that the Restrictive Covenants are
reasonable in terms of duration, scope and area restrictions and are necessary
to protect the goodwill of the Business and the substantial investment in the
Assets and the Business made by Parent hereunder. Each Shareholder further
acknowledges and agrees that the Restrictive Covenants are being entered into by
them in connection with the sale of the Business and the goodwill of the
Business.

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If any of the Shareholders, or any of their Affiliates, breaches, or threatens
to commit a breach of, any of the Restrictive Covenants, Parent or any of its
Affiliates shall have the following rights and remedies, each of which rights
and remedies shall be independent of the others and severally enforceable, and
each of which is in addition to, and not in lieu of, any other rights and
remedies available to Parent, or any of its Affiliates, at law or in equity:

(i)                 the right and remedy to have the Restrictive Covenants
specifically enforced by any court of competent jurisdiction, it being agreed
that any breach or threatened breach of the Restrictive Covenants would cause
irreparable injury to Parent and that monetary damages would not provide an
adequate remedy to Parent; and

(ii)               the right and remedy to require the Shareholders to account
for and pay over to Parent or its Affiliates any profits, monies, accruals,
increments or other benefits derived or received by such Person as the result of
any transactions constituting a breach of the Restrictive Covenants from the
date any Shareholder or any Shareholder’s Affiliate was in breach of any of the
Restrictive Covenants.

(d)               In the event of any breach or violation by any Shareholder or
any Shareholder’s Affiliate of any of the Restrictive Covenants, the time period
of such covenant shall be tolled until such breach or violation is resolved.

(e)                The parties recognize the possibility that a Shareholder may
execute in the future or may have executed in the past other agreements with
Parent, Merger Sub, any of their Subsidiaries or any of their Affiliates,
including, but not limited to, the Purchase Agreement and the Transaction
Documents contemplated in the Purchase Agreement including any employment
agreement or offer letter (the “Additional Agreements”), which contain
restrictive covenants similar to the ones contained in this Section 4.7. It is
intended that Parent, Merger Sub, their Subsidiaries and their Affiliates at all
times be afforded the broadest benefit and protection possible under this
Agreement and any Additional Agreements, and, to the extent possible and
permissible under applicable law, any similar restrictive covenants contained in
this Agreement and any Additional Agreement shall be read together and their
terms combined in the manner most restrictive to a Shareholder and most
protective to Parent, Merger Sub, their Subsidiaries and their Affiliates. To
the extent that any restrictive covenants contained in any Additional Agreement
differ from, conflict with or are inconsistent with any restrictive covenants
contained in any other Additional Agreement or contained in this Agreement, the
restrictive covenants most restrictive to a Shareholder and most protective to
Parent, Merger Sub, their Subsidiaries and their Affiliates shall control,
without regard to the relative timing of their execution, to the maximum extent
permissible under applicable law.

(f)                Notwithstanding anything in this Section 4.7 or this
Agreement or the Transaction Documents to the contrary, the provisions of this
Section 4.7, including but not limited to, the prohibitions, restrictions and
limitations on the Shareholders (and/or its/their Affiliates or family members),
shall not prohibit the ownership by such Persons of the OWP Interest held or to
be held by the Shareholders (and/or its/their Affiliates or family members), and
shall not apply to the OWP Business as it is conducted on the date hereof, nor
any of the Shareholders’ (and/or its/their Affiliates’ or family members’)
involvement in the OWP Business as it is conducted on the date hereof, which OWP
Interests and OWP Business the Shareholders (and/or its/their Affiliates or
family members) may, subject to the terms and conditions of this Section 4.7(f),
hold and conduct in the Shareholders’ (and/or its/their Affiliates’ or family
members’) sole and absolute discretion.

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Schedule 4.7(f) attached hereto contains a description (including a description
of the mix of business between retail and wholesale) of the OWP Business as it
is conducted on the date hereof, and each of the Shareholders, Merger Sub and
Parent acknowledge and agree that the description of the OWP Business included
on Schedule 4.7(f) represents a business that is not in violation of the
Restrictive Covenants and is non-competitive with the Business. Should the OWP
Business as conducted on the date hereof materially change at any time
post-Closing, then the Sellers’ Representative shall promptly notify Merger Sub
and Parent in writing of such change and if Parent and Merger Sub reasonably
conclude that as so changed the OWP Business is competitive with the Combined
Companies’ Business or any Shareholders’ (and/or its/their Affiliates’ or family
members’) involvement in the OWP Business or continued ownership of the OWP
Interests violates the Restrictive Covenants, then any such Shareholder,
Affiliate or family member shall promptly resign from the Board of Directors or
other organizational body and as an employee of OWP or any successor thereof,
and shall divest its/their OWP Interests on or before twelve (12) months from
the date of such material change in the OWP Business.

4.8              Further Assurances. Following the Closing, the Shareholders
shall execute and deliver such further instruments of conveyance and transfer as
Merger Sub or Parent may reasonably request and provide and shall take such
additional action as Merger Sub or Parent may reasonably request to effect,
consummate, confirm or evidence the transactions contemplated by this Agreement.

4.9              Confidentiality.

(a)                The Parties acknowledge and agree that certain information
relating to the Parties is confidential (“Confidential Information”).
Confidential Information includes (i) all of the terms and conditions of this
Agreement and any of the other Transaction Documents, (ii) all information
regarding the Sellers disclosed to Merger Sub or Parent or learned by Merger Sub
or Parent during due diligence of the Sellers, and all information regarding
Merger Sub or Parent disclosed to the Sellers or learned by the Sellers during
the Parties’ negotiations, and (iii) any information relating to the
negotiations between the Parties, including, without limitation, offers and
counteroffers regarding the terms and conditions of this Agreement and the
Transaction Documents which do and do not ultimately form part of the final
executed versions of the Transaction Documents. The Parties further acknowledge
and agree that Confidential Information also includes (A) financial, accounting
and Tax information, including, without limitation, earnings, sales, financial
projections and other similar information, (B) internal policies and procedures,
marketing strategies, customer lists pricing information, products, services and
budgets, (C) sources of supplies and terms of suppliers, (D) information
relating to business practices, (E) personnel information, (F) information
relating to litigation or possible litigation and (G) information relating to
the other Intellectual Property of the Parties.

(b)               The Parties shall treat all Confidential Information as
strictly confidential and proprietary, shall not disclose such Confidential
Information and shall comply in all material respects with all Laws protecting
such Confidential Information from unauthorized disclosure. The Parties further
agree not to take any action which would cause all or any portion of the
Confidential Information which is privileged to lose such protection. Each Party
shall implement such systems and controls as may be reasonably necessary to
ensure that it and each of its officers, directors, Affiliates, agents,
representatives and employees comply with the confidentiality provisions of this
Agreement. Each Party further agrees, if and to the extent permitted by
applicable Law, to notify the other Parties immediately in writing of any Known
attempt or effort by any third party to obtain information or documents that
comprise a part of the Confidential Information, including, without limitation,
receipt of a subpoena or request for information or documents, to permit such
other Parties, at their own expense, to seek a protective order or otherwise
defend against such disclosure or delivery.

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(c)                Notwithstanding any terms herein to the contrary, information
shall not be considered Confidential Information if such information (i) was
available to the public prior to the time of disclosure to the receiving Party,
(ii) becomes available to the public as a result of action by Persons other than
the receiving Party, (iii) is information which the receiving Party can document
was independently developed by such Party or (iv) as to Merger Sub, the
Surviving Company or Parent after the Closing, is any information regarding Del
Monte.

(d)               If, for any reason, the terms of this Section 4.9 conflict
with any other confidentiality agreement to which any Party is subject for the
benefit of the other Parties, including, but not limited to, the Confidentiality
Agreement, all such conflicts shall be resolved by giving the maximum
confidentiality protections to the Confidential Information.

(e)                Notwithstanding this Section 4.9, the Sellers agree and
acknowledge that Parent may have to disclose certain information with respect to
the transactions contemplated by this Agreement pursuant to the Exchange Act.
Accordingly, the Parties hereby agree, if Parent is required to disclose the
transactions contemplated hereby pursuant to the Exchange Act, such disclosure
shall not be a violation or breach of this Section 4.9.

4.10          Tax Matters. The following provisions shall govern the allocation
of responsibility as between Parent, Merger Sub, Del Monte and the Shareholders
for certain tax matters following the Closing Date:

(a)                Straddle Periods. For purposes of this Agreement, whenever it
is necessary to determine the liability for Taxes of Del Monte for any taxable
period of Del Monte that includes (but does not end on) the Closing Date (a
“Straddle Period”), the determination of the Taxes of Del Monte for the portion
of the Straddle Period ending on and including, and the portion of the Straddle
Period beginning after, the Closing Date shall be determined by assuming that
the Straddle Period consisted of two taxable years or periods, one which ended
at the close of the Closing Date and the other which began at the beginning of
the day following the Closing Date, and items of income, gain, deduction, loss
or credit, and state and local apportionment factors of Del Monte for the
Straddle Period, shall be allocated between such two taxable years or periods on
a “closing of the books basis” by assuming that the books of Del Monte were
closed at the close of the Closing Date. However, (i) exemptions, allowances or
deductions that are calculated on an annual basis, such as the deduction for
depreciation, and (ii) periodic taxes such as real and personal property taxes
shall be apportioned ratably between such periods on a daily basis.

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(b)               Responsibility for Filing Tax Returns.

(i)                 Del Monte shall timely prepare and file (or cause to be
prepared and filed) all Tax Returns of Del Monte for all taxable periods ending
on or before the Closing Date (the "Pre-Closing Tax Returns”) that are required
to be filed on or prior to the Closing Date and all such Pre-Closing Tax Returns
shall be prepared in a manner consistent with prior practice in respect of such
entities unless otherwise required by applicable Law or unless Parent consents
to such different treatment, such consent not to be unreasonably withheld,
conditioned or delayed. Del Monte shall provide (or cause to be provided) to
Parent a copy of any such Pre-Closing Tax Return filed prior to the Closing Date
at least fifteen (15) Business Days prior to the due date for filing such
return, and Parent shall have ten (10) Business Days in which to review and
comment on such return prior to the filing thereof. Del Monte shall consider in
good faith any comments provided by Parent. Del Monte shall pay (or cause to be
paid) prior to Closing all Taxes due and payable on the Pre-Closing Tax Returns
required to be filed on or prior to the Closing Date. Del Monte shall not file
any amended Pre-Closing Tax Return without the consent of the Parent, such
consent not to be unreasonably withheld, conditioned or delayed.

(ii)               The Sellers’ Representative shall timely prepare and file (or
cause to be prepared and filed) all Forms 1120S (and all related state and local
income Tax Returns) of Del Monte for all taxable periods ending on or before the
Closing Date that are required to be filed after the Closing Date and all such
Pre-Closing Tax Returns shall be prepared in a manner consistent with prior
practice of Del Monte unless otherwise required by applicable Law or unless
Parent consents to such different treatment, such consent not to be unreasonably
withheld, conditioned or delayed. The Sellers’ Representative shall provide (or
cause to be provided) to Parent a copy of any such Pre-Closing Tax Returns at
least twenty (20) Business Days prior to the due date for filing such returns,
and Parent shall have ten (10) Business Days in which to review and comment on
such returns prior to the filing thereof. The Sellers’ Representative shall
consider in good faith any comments provided by Parent. The Sellers’
Representative shall timely pay (or cause to be paid) all Taxes shown as due and
payable on any Tax Returns filed pursuant to this subsection (b)(ii).

(iii)             Notwithstanding anything herein or in the Indemnification
Agreement to the contrary, the provisions of this Section 4.10(b)(iii) shall
control the contest of any Tax Claim. For purposes of this Agreement, a “Tax
Claim” means the assertion of any claim, or the commencement of any audit, suit,
action or proceeding involving Taxes. After the Closing, the Surviving Company
agrees to give written notice to the Sellers’ Representative of the receipt of
any written notice by the Surviving Company which involves a Tax Claim in
respect of which indemnity may be sought pursuant to the Indemnification
Agreement within twenty (20) days of such receipt of such written notice;
provided, that failure to comply with this provision shall not affect any
party’s right to indemnification under the Indemnification Agreement except to
the extent such failure materially impairs the Sellers’ Representative’s ability
to contest any such Tax Claim. In the case of a Tax Claim relating solely to a
Tax period of Del Monte ending on or before the Closing Date, the Sellers’
Representative, at the expense of the Sellers’ Representative, may participate
in and, upon the written notice to the Surviving Company, assume control of the
defense of any such Tax Claim; provided, however, that the Sellers’
Representative shall have no right to represent the Surviving Company’s interest
in any Tax Claim unless the Sellers’ Representative, on behalf of the Selling
Party Indemnitors, agrees with the Surviving Company that, as between the
Selling Party Indemnitors and the Surviving Company, the Selling Party
Indemnitors shall be liable for any Losses relating to Taxes that result from
such Tax Claim; provided, further, that if the Sellers’ Representative so
assumes control, the Surviving Company may participate in the conduct of such
Tax Claim at its own expense.

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Notwithstanding the foregoing, the Sellers’ Representative shall not be entitled
to settle, either administratively or after the commencement of litigation, any
claim for Taxes which could adversely affect the liability for Taxes of the
Surviving Company (or any of its Affiliates) for any period after the Closing to
any extent unless the Selling Party Idemnitors have indemnified the Surviving
Company or the applicable Affiliate against the effects of any such settlement
(including the imposition of income Tax deficiencies, the reduction of asset
basis or cost adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions, or the reduction
of loss or credit carryforwards) without the prior written consent of the
Surviving Company, which consent shall not be unreasonably withheld or delayed.
Any proceeding with respect to which the Sellers’ Representative does not assume
control in accordance with this Section 4.10(b)(iii) may be settled or
compromised in the discretion of the Surviving Company, and any such settlement
or compromise shall not affect the Surviving Company’s or Parent’s right to
indemnification under this Agreement.

(c)                Cooperation on Tax Matters.

(i)                 The Surviving Company and the Sellers’ Representative shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of Tax Returns pursuant to this Section 4.10 and
any audit, litigation or other Proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party’s request) the
provision of records and information that are reasonably relevant to any such
audit, litigation or other Proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. The Sellers’ Representative and the Surviving
Company agree (i) to retain all books and records with respect to Tax matters
pertinent to Del Monte relating to any taxable period beginning before the
Closing Date until the expiration of the statute of limitations (and, to the
extent notified by the Surviving Company or the Sellers’ Representative, any
extensions thereof) of the respective taxable periods, and to abide by all
record retention agreements entered into with any taxing authority, and (ii) to
give the other party reasonable written notice prior to transferring, destroying
or discarding any such books and records and, if the Surviving Company so
requests, the Sellers’ Representative shall allow the Surviving Company to take
possession of such books and records.

(ii)               The Surviving Company, the Sellers’ Representative and the
Shareholders further agree, upon request, to use their reasonable best efforts
to obtain any certificate or other document from any Governmental Authority or
any other Person as may be necessary to mitigate, reduce or eliminate any Tax
that could be imposed in connection with the transactions contemplated hereby.

4.11          Payment of Indebtedness by Company Related Persons. At or prior to
the Closing, Del Monte shall cause all amounts payable by Del Monte to any
Company Related Person, or by any Company Related Person to Del Monte, to be
paid.

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4.12          HSR Act.

Promptly following the execution of this Agreement, but in no event later than
twenty (20) Business Days following the date of this Agreement, the Parties
shall file with the Federal Trade Commission (the “FTC”) and the Department of
Justice (the “DOJ”) the notifications and other information (if any) required to
be filed under the HSR Act. Promptly following the execution of this Agreement,
the Sellers and Merger Sub shall promptly proceed to prepare and file with the
appropriate Government Entities such additional requests, reports or
notifications as may be required or, in the reasonable opinion of Merger Sub and
the Sellers’ Representative, advisable, in connection with this Agreement and
shall diligently and expeditiously prosecute, and shall reasonably cooperate
with each other in the prosecution of, such matters. Except as may be prohibited
by any Government Entity or by any Law, each Party shall furnish to the other
such necessary information and reasonable assistance as the other may reasonably
request in connection with its preparation of any filing or submission which is
necessary or, in the opinion of Merger Sub and the Sellers’ Representative,
advisable, under the HSR Act. Each Party shall keep each other Party apprised of
the status of any communications with, and any inquiries or requests for
additional information from, the FTC or DOJ. The Parties shall reasonably
cooperate to direct any Proceedings or negotiations with any Government Entity
and, to the extent that any Party is required by applicable Laws to make the
filing, request or other submission which triggers any proceedings or
negotiations with any Government Entity relating to any of the foregoing, such
Party shall afford the other a reasonable opportunity to participate therein.
Notwithstanding anything to the contrary contained in this Agreement, no Party
shall have any obligation under this Agreement: (i) to dispose, transfer or hold
separate, or cause any of their subsidiaries to dispose, transfer or hold
separate any assets or operations, or to commit or to cause the other to dispose
of any assets; (ii) to discontinue or cause any of their subsidiaries to
discontinue offering any product or service, or to commit to cause the other to
discontinue offering any product or service; (iii) to make or cause any of their
subsidiaries to make any commitment (to any Government Entity or otherwise)
regarding its future operations or the future operations of any of the other.
Parent, on the one hand, and the Sellers, on the other hand, shall each pay
fifty percent of any filing fees required with respect to the Consent of any
Government Entity, including any fees required pursuant to the HSR Act.

4.13          Pre-Closing Financial Statements. Until the Closing Date, Sellers
shall deliver to Merger Sub within fifteen (15) days after the end of each month
a copy of the unaudited monthly consolidated financial statements of Del Monte
as of the end of such month and for the fiscal period then ended prepared in a
manner and containing information consistent with the preparation of the Interim
Financial Statements.

4.14          Anti-Manipulation.  Between the date hereof and the Closing, no
Shareholder shall engage in any transactions involving the Parent Common Stock,
including establishing any short position or otherwise executing any hedging
transaction, the effect of which would be to cause a reduction in the price of
the Parent Common Stock.

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Article V.
 CONDITIONS TO CLOSING

5.1              Conditions to Obligations of Merger Sub and Parent. The
obligations of Merger Sub and Parent to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment or Merger Sub’s or
Parent’s waiver, at or prior to the Closing, of each of the following
conditions:

(a)                (i) Each of the representations and warranties of the Sellers
set forth in Section 2.1 (Organization; Ownership of Equity; Capitalization and
Power), Section 2.2 (Authority), Section 2.3 (Non-Contravention), Section 2.7
(Assets) and Section 2.12 (Brokerage) and set forth in Article II that are
qualified with reference to “material,” “materiality,” or “material adverse
effect” (or other similar terms or qualifiers) shall be true and correct as of
the date of this Agreement and as of the Closing Date with the same effect as if
made at and as of the Closing Date (except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date), without giving effect to any supplement to the Schedules to this
Agreement; and (ii) each of the representations and warranties of the Sellers
set forth in Article II (other than those described in clause (i) of this
Section 5.1(a)) shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date with the same effect as if
made at and as of the Closing Date (except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations and warranties shall be true and correct as of such earlier
date), without giving effect to any supplement to the Schedules to this
Agreement. The Sellers shall deliver or cause to be delivered to Parent and
Merger Sub a certificate dated as of the Closing Date executed by the
Shareholders and a duly authorized officer Del Monte confirming the foregoing.

(b)               Each of the Sellers shall have duly performed and complied in
all material respects with all agreements, covenants and conditions required by
this Agreement and each of the other Transaction Documents to be performed or
complied with by it prior to or on the Closing Date. The Sellers shall deliver
or cause to be delivered to Parent and Merger Sub a certificate dated as of the
Closing Date executed by the Shareholders and a duly authorized officer of Del
Monte confirming the foregoing.

(c)                No Proceeding shall have been commenced against Merger Sub or
Parent, or any of their Affiliates, or any of the Sellers related to the
Business, the Transaction Documents or any of the transactions contemplated
thereby.

(d)               The Sellers shall have delivered the 2014 Audited Financial
Statements.

(e)                All approvals, consents and waivers that are listed on
Schedule 1.2(b)(ix) shall have been received.

(f)                There shall not have occurred any Material Adverse Effect
since the date of this Agreement.

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(g)               Merger Sub shall have received all Consents from Government
Entities, including USDA Grant of Inspection Establishment Numbers that are
necessary for them to conduct the Business as conducted by Del Monte as of the
Closing Date.

(h)               All Liens relating to the Assets shall have been released in
full, other than Permitted Liens, and the Sellers shall have delivered to Parent
and Merger Sub written evidence, in form satisfactory to Parent, Merger Sub and
the Sellers, of the release of such Liens.

(i)                 Merger Sub shall have conducted a count of the Inventory at
Merger Sub’s sole cost and expense and be satisfied, in Merger Sub’s sole
discretion, that a sufficient amount of inventory, of a quality and quantity
usable and saleable in the ordinary course of the Business of Del Monte, exists
as of the Closing.

(j)                 Each of the officers and directors of Del Monte must have
resigned effective as of the Closing.

(k)               No Shareholder shall have exercised, or shall have provided
notice of such Shareholder’s intent to exercise, his, her or its dissenter’s
right of appraisal under the CCC in connection with the consummation of the
transactions contemplated hereby.

(l)                 The Sellers shall have delivered the Estoppel Letters,
executed by the landlord/lessor of each of the Leases.

(m)             Del Monte and the Shareholders shall have ceased contributions
to, and adopted all corporate resolutions required to terminate all of its
Employee Benefit Plans and vest all participants under any applicable 401(k)
Plan immediately prior to Closing, and such resolutions shall be in full force
and effect.

(n)               The Business shall have working capital of at least the
Targeted Net Working Capital to operate consistent with past practices over the
twelve months immediately preceding the Closing.

(o)               The applicable waiting period under the HSR Act shall have
expired or been terminated.

(p)               The Sellers shall have caused the documents and instruments
required by Section 1.2(b) to be delivered (or tendered subject only to Closing)
to Parent and Merger Sub.

(q)               Merger Sub shall have completed, to its satisfaction,
financial, accounting, legal, environmental, systems, tax and business due
diligence review of the Business, the Assets, and the operations of Del Monte,
including any I-9 examination or audit.

(r)                 Except with respect to Indebtedness for borrowed money that
is to be paid at the Closing, the Sellers shall deliver evidence reasonably
satisfactory to Parent and Merger Sub of full and complete payment of all
Indebtedness, and releases of all Liens on the properties and Assets of Del
Monte in a form reasonably acceptable to the Sellers, Parent and Merger Sub.

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(s)                With respect to Indebtedness for borrowed money to be paid at
the Closing, the Sellers shall have caused to be delivered payoff letters or
other statements reasonably satisfactory to Parent, Merger Sub and the Sellers
setting forth payment instructions and amounts and confirming that all Liens on
the Assets secured in connection with such Indebtedness will be released, or
entitled to be released, upon payment, in each case in a form reasonably
acceptable to Parent, Merger Sub and the Sellers.

(t)                 Each of the conditions to the obligation of Parent or any
Affiliate thereof that is a party thereto to consummate the transactions under
the Purchase Agreement shall have been satisfied and the transactions
contemplated thereby shall be consummated.

(u)               There must not have been made or threatened by and Person any
claim asserting that such Person (a) is the holder or beneficial owner of, or
has the right to acquire beneficial ownership of, any stock of, or any other
voting, equity, or ownership interest in Del Monte, or (b) is entitled to all or
any portion of the Merger Consideration (except as otherwise contemplated
herein).

(v)               This Agreement and the transactions contemplated hereby shall
have been approved and adopted by the requisite vote of the Shareholders of Del
Monte, in accordance with applicable Law.

(w)             Del Monte shall have completed the systems conversion as
described in Schedule 5.1(w).

(x)               The Sellers shall have delivered to Parent and Merger Sub such
other documents or instruments as Parent and Merger Sub may reasonably request
and are reasonably necessary to consummate the transactions contemplated by this
Agreement.

5.2              Conditions to Obligations of the Sellers. The obligations of
the Sellers to consummate the transactions contemplated by this Agreement shall
be subject to the fulfillment or the Sellers’, waiver, at or prior to the
Closing, of each of the following conditions:

(a)                (i) Each of the representations and warranties of Merger Sub
and Parent set forth in Section 3.1 (Organization and Good Standing), Section
3.2 (Authority; No Conflict), and Section 3.4 (Brokerage) and set forth in
Article III that are qualified with references to “material,” “materiality” or
“material adverse effect” shall be true and correct as of the date of this
Agreement and as of the Closing Date with the same effect as if made at and as
of the Closing Date (except to the extent such representations and warranties
specifically relate to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date), without giving
effect to any supplement to the Schedules to this Agreement; and (ii) each of
the representations and warranties of Merger Sub and Parent set forth in Article
III (other than those described in clause (i) of this Section 5.2(a)) shall be
true and correct in all material respects as of the date of this Agreement and
as of the Closing Date with the same effect as if made at and as of the Closing
Date (except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties
shall be true and correct as of such earlier date), without giving effect to any
supplement to the Schedules to this Agreement. Merger Sub and Parent shall
deliver or cause to be delivered to the Sellers’ Representative a certificate
dated as of the Closing Date executed by a duly authorized officer of each of
Merger Sub and Parent, as applicable, confirming the foregoing.

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(b)               Merger Sub and Parent shall have duly performed and complied
in all material respects with all agreements, covenants and conditions required
by this Agreement and each of the other Transaction Documents to which it is a
party to be performed or complied with by it prior to or on the Closing Date.

(c)                J. DeBenedetti shall have been appointed to the Board of
Directors of Parent or arrangements shall have been made reasonably satisfactory
to J. DeBenedetti to so appoint J. DeBenedetti to the Board of Directors of
Parent immediately after the Effective Time.

(d)               No Proceeding shall have been commenced against either Merger
Sub or Parent or any of the Sellers, which could reasonably be expected to
prevent the Closing.

(e)                The applicable waiting period under the HSR Act shall have
expired or been terminated.

(f)                Each of Merger Sub and Parent, as applicable, shall have
delivered to Sellers duly executed counterparts to the Transaction Documents
(other than this Agreement) and such other documents and deliveries set forth in
Section 1.2(c).

(g)               Each of the conditions to the obligation of the Company
Sellers to consummate the transactions under the Purchase Agreement shall have
been satisfied and the transactions contemplated thereby shall be consummated.

(h)               Merger Sub and Parent shall have delivered to the Sellers such
other documents or instruments as the Sellers may reasonably request and are
reasonably necessary to consummate the transactions contemplated by this
Agreement.

Article VI.
TERMINATION

6.1              Termination. This Agreement may be terminated at any time prior
to the Closing:

(a)                by the mutual written consent of all of the Parties hereto;

(b)               by Merger Sub or Parent by written notice to the Sellers if:

(i)                 neither Merger Sub nor Parent is then in material breach of
any provision of this Agreement and there has been a material breach, inaccuracy
in or failure to perform any representation, warranty, covenant or agreement
made by any Seller pursuant to this Agreement and such breach, inaccuracy or
failure has not been cured by the Sellers, as applicable, within ten (10) days
of receipt of written notice of such breach from Merger Sub or Parent;

(ii)               the satisfaction of any of the conditions to Merger Sub’s and
Parent’s obligation to close the transactions contemplated hereby as set forth
in Section 5.1 becomes impossible (other than through the failure of Merger Sub
or Parent to comply with its obligations under this Agreement), and neither
Merger Sub nor Parent has waived such condition in writing on or before such
date; or

50

 

(iii)             the Purchase Agreement is terminated in accordance with its
terms;

(c)                by the Sellers’ Representative by written notice to Merger
Sub and Parent if:

(i)                 No Seller is then in material breach of any provision of
this Agreement and there has been a material breach, inaccuracy in or failure to
perform any representation, warranty, covenant or agreement made by Merger Sub
or Parent pursuant to this Agreement that would give rise to the failure of any
of the conditions specified in Section 5.2 and such breach, inaccuracy or
failure has not been cured by Merger Sub or Parent, as applicable, within ten
(10) days of Merger Sub's or Parent’s receipt of written notice of such breach
from the Sellers’ Representative;

(ii)               the satisfaction of any of the conditions to Sellers’
obligation to close the transactions contemplated hereby as set forth in Section
5.2 becomes impossible (other than through the failure of any Seller to comply
with its obligations under this Agreement), and Sellers have not waived such
condition in writing on or before such date; or

(iii)             the Purchase Agreement is terminated in accordance with its
terms;

(d)               by any of the Parties if any Order of any Government Entity of
competent jurisdiction permanently restraining, enjoining or otherwise
preventing the consummation of the transactions contemplated hereby has been
issued and becomes final and non-appealable; or

(e)                by any of the Parties if the Closing has not occurred on or
before May 31, 2015 or such later date as the parties may agree upon in writing,
unless the terminating party is in material breach of this Agreement; provided,
however, that in the event the FTC or DOJ issues a “second request” in
connection with any review of the transactions contemplated by this Agreement,
such date will be extended until July 31, 2015.

6.2              Effect of Termination. In the event of the termination of this
Agreement in accordance with this Article VI, this Agreement shall forthwith
become void and there shall be no liability on the part of any Party hereto
except that Section 4.9, this Article VI and Article VIII hereof shall survive
such termination, and that nothing herein shall relieve any Party hereto from
liability for any failure to close when required hereunder, for fraud, willful
misconduct or intentional misrepresentation or for any breach of any provision
hereof occurring prior such termination.

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Article VII.
DEFINITIONS

(a)                For the purposes hereof, the following terms have the
meanings set forth below:

“2014 Fiscal Year End ” shall mean December 27, 2014.

“2014 Audited Financial Statements” has the meaning set forth in Section
1.2(b)(x).

“401(k) Plan” means any 401(k) plan of Del Monte.

“Acquisition Proposal” has the meaning set forth in Section 4.4(a).

“Additional Agreements” has the meaning set forth in Section 4.7(e).

“Adjusted EBITDA Amount” means an amount equal to the sum (without duplication)
of (i) net income of the Company Sellers and Del Monte for the fiscal year ended
December 27, 2014, plus (ii) (A) interest expense; (B) income tax expense; (C)
depreciation and amortization expense; and plus or minus (D) such other
adjustments as set forth on, and in a manner consistent with, Schedule
1.5(b)(i).

“Affiliate” of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
“control” means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, contract or otherwise.

“Aggregate Number of Reduced Shares” has the meaning set forth in Section
1.5(b)(ii).

“Agreement” has the meaning set forth in the preamble.

“Asset Purchase Escrow Amount” has the meaning set forth in Section 1.6.

“Assets” mean the assets of Del Monte.

“Assets Buyer” means Del Monte Capitol Meat Company, LLC, a Delaware limited
liability company.

“Audited Financial Statements” has the meaning set forth in Section 2.4(a).

“Business” means the business conducted by Del Monte immediately prior to the
signing of this Agreement, including, but not limited to, the sale and
distribution of food products and other items sold for use in the operations of
a Company Customer’s business. For clarity, “Business” shall not include the OWP
Business as it is conducted on the date hereof.

“Business Day” means each day which is not a day on which banking institutions
in the City of New York, New York are authorized or obligated by law or
executive order to close.

“Buyer Indemnitees” has the meaning set forth in the Indemnification Agreement.

“Card Association Rules” shall mean the rules, regulations, standards, policies,
manuals, and procedures of the Card Associations, including, with respect to the
processing of credit card information, the Payment Card Industry Data Security
Standards (PCI-DSS).

“CCC” has the meaning set forth in Section 1.1.

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“Certificate” has the meaning set forth in Section 1.4(c).

“Certificate of Formation” has the meaning set forth in Section 1.7.

“Certificate of Merger” has the meaning set forth in Section 1.2(a).

“Closing” has the meaning set forth in Section 1.2(a).

“Closing Date” has the meaning set forth in Section 1.2(a).

“Closing Date Balance Sheet” has the meaning set forth in Section 1.5(a)(i).

“Closing Date Adjusted EBITDA Statement” has the meaning set forth in Section
1.5(b)(i).

“Closing Date Net Working Capital” has the meaning set forth in Section
1.5(a)(i).

“Closing Statement” has the meaning set forth in Section 1.2(b)(ii).

“COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended.

“Code” means the Internal Revenue Code of 1986, as amended.

“Combined Companies’ Business” means the Business and the Company Sellers’
Business combined.

“Company Customers” means those Persons to which Del Monte has sold any products
at any time, whether or not such Person is a current customer of any of Del
Monte.

“Company Employees” has the meaning set forth in Section 2.13(a).

“Company Intellectual Property” means all Intellectual Property used or held for
use by Del Monte in connection with the conduct of the Business as currently
conducted and as proposed to be conducted and any Company Product, including
without limitation, all Company Software.

“Company Product” means any product, good or service owned by Del Monte
(regardless of commercial availability) or otherwise marketed, sold or offered
for license or sale by Del Monte, including without limitation any such product
or service in active development by Del Monte.

“Company Related Person” has the meaning set forth in Section 2.19.

“Company Seller” or “Company Sellers” means Seafood and Service.

“Company Sellers’ Business” means the business conducted by the Company Sellers
immediately prior to the signing of this Agreement, including, but not limited
to, the sale and distribution of food products and other items sold for use in
the operation of the Company Sellers’ customers’ business.

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“Company Software” means any proprietary computer software, applications, tools,
databases, and data warehouses owned or purported to be owned by Del Monte or
licensed to Del Monte on an exclusive basis, including, without limitation,
compiled and object code versions thereof, source code therefor, and all
libraries, database structures, (including without limitation scripts, triggers,
stored procedures, and the like), and technical and user documentation relating
thereto.

“Confidential Information” has the meaning set forth in Section 4.9(a).

“Consent” means any approval, consent, license, permit, ratification, waiver or
other authorization issued, granted, given or otherwise made available by or
under the authority of any Government Entity or third party or pursuant to any
applicable Law, and all consents and approvals of third parties necessary to
prevent any conflict with, violation or breach of, or default under, or any
right of termination or buy-out by any third party, cancellation, amendment or
acceleration of any obligation or the loss of any benefit under, any Contracts.

“Contract” means any written or oral loan or credit agreement, note, bond,
debenture, indenture, mortgage, guarantee, deed of trust, lease, franchise,
permit, authorization, license, contract, instrument, employee benefit plan or
practice or other binding agreement, obligation, arrangement, understanding or
commitment.

“Creditors’ Rights and Equitable Limitations” has the meaning set forth in
Section 2.2.

“Del Monte” has the meaning set forth in the Preamble.

“Del Monte Common Stock” has the meaning set forth in Section 1.4(a).

“Del Monte Non-Voting Common Stock” has the meaning set forth in Section 1.4(a).

“Del Monte Voting Common Stock” has the meaning set forth in Section 1.4(a).

“Delaware Secretary” has the meaning set forth in Section 1.2(a).

“DLLCA” has the meaning set forth in Section 1.1.

“DOJ” has the meaning set forth in Section 4.12.

“Effective Time” has the meaning set forth in Section 1.2(a).

“Employee Benefit Plans” has the meaning set forth in Section 2.16(a).

“Environmental Claim” shall mean any Proceeding, notice, letter, demand or
request for information (in each case in writing) by any Person alleging
potential Liability (including potential Liability for investigatory costs,
cleanup costs, governmental response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of, based on or resulting
from any violation of Environmental Laws or the Release, emission or presence of
any Hazardous Material at any location.

54

 

“Environmental Laws” shall mean any and all Laws promulgated, approved or
entered thereunder by any Government Entity, including requirements of common
law, relating to pollution or the protection, cleanup or restoration of the
environment, or to human health or safety, including the Federal Clean Air Act,
the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act,
the Federal Comprehensive Environmental Response, Compensation, and Liability
Act, the Federal Occupational Safety and Health Act and the Federal Toxic
Substances Control Act.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

“ERISA Affiliate” means any Person, whether or not incorporated, which is, or at
any relevant time was, a member of a “controlled group of corporations” with,
under “common control” with, or a member of an “affiliated service group” with,
Del Monte within the meaning of Section 414(b), (c), (m) or (o) of the Code.

“Escrow Agent” means US Bank, National Association.

“Escrow Agreement” has the meaning set forth in Section 1.6.

“Escrow Amount” has the meaning set forth in Section 1.6.

“Escrowed Stock Consideration” has the meaning set forth in Section 1.4(a).

“Estimated Cash Amount” has the meaning set forth in Section 1.4(a).

“Estimated Per-Share Merger Consideration” has the meaning set forth in Section
1.4(b)(ii).

“Estimated Stock Consideration” has the meaning set forth in Section 1.4(a).

“Estoppel Letter” has the meaning set forth in Section 1.2(b)(xv).

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“FDA Act” means the United Stated Federal Food, Drug, and Cosmetic Act of 1938,
as amended.

“Final 2014 Adjusted EBITDA Amount” has the meaning set forth in Section
1.5(b)(i).

“Final Adjusted EBITDA Statement” has the meaning set forth in Section
1.5(b)(i).

“Final Closing Date Balance Sheet(s)” has the meaning set forth in Section
1.5(a)(iii).

“Final Closing Date Net Working Capital” has the meaning set forth in Section
1.5(a)(iii).

55

 

“Financial Statements” has the meaning set forth in Section 2.4(a).

“Forfeited Shares” has the meaning set forth in Section 1.5(b)(iii).

“FTC” has the meaning set forth in Section 4.12.

“Government Entity” means individually, and “Government Entities” means
collectively, the United States of America or any other nation, any state or
other political subdivision thereof, or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of government,
including any court, in each case having jurisdiction over Del Monte.

“Governmental License” means any license, permit, franchise certification,
registration, identification number, certificate of need, certificate of
occupancy, Food and Drug Administration registration, franchise, Consent or
order of, or filing with, any state or federal Government Entity.

“Handling” shall mean the production, use, generation, emission, storage,
treatment, transportation (including for disposal off-site), recycling, disposal
(whether on-site or off-site), discharge, abandonment, Release or other
management or disposition of any kind of any Hazardous Material.

“Hazardous Material” shall mean chemicals, pollutants, contaminants, hazardous
materials, hazardous substances and hazardous wastes, medical waste, toxic
substances, petroleum and petroleum products and by-products,
asbestos-containing materials, mold, fungus, PCBs and any other chemicals,
pollutants, substances or wastes, in each case regulated, or that could result
in Liability, under Environmental Laws.

“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.

“Improvements” has the meaning set forth in Section 2.8(f).

“Indebtedness” means, with respect to any Person, (i) indebtedness of such
Person for borrowed money, whether secured or unsecured, (ii) obligations of
such Person evidenced by notes, bonds, debentures or other similar instruments,
(iii) obligations of such Person under conditional sale or other title retention
agreements relating to property purchased by such Person, (iv) capital lease
obligations of such Person, (v) obligations of such Person under letter of
credit or similar facilities, (vi) obligations of such Person under interest
rate cap, swap, collar or similar transaction or currency hedging transactions,
and (vii) guarantees of such Person of any such indebtedness referred to in
clauses (i)-(vi) of any other Person.

“Indemnification Agreement” has the meaning set forth in Section 1.2(b)(viii).

“Information Systems” means all Company Software, computer hardware, data
storage systems, computer and communications networks, architecture interfaces
and firewalls (whether for data, voice, video, or other media access,
transmission, or reception) and other apparatus used in the products and/or
services of Del Monte to create, manipulate, store, transmit, exchange, or
receive information in any form.

56

 

“Infringe” has the meaning set forth in Section 2.15(b).

“Intellectual Property” shall mean all U.S. and foreign (i) patents, patent
applications (including all provisional, divisions, divisionals, continuations,
continuations in part and reissues), renewals, patent disclosures and inventions
(whether patentable or unpatentable and whether or not reduced to practice),
business methods, continuing patent applications, reexaminations, and extensions
thereof, any counterparts claiming priority therefrom, utility models, patents
of importation/confirmation, certificates of invention, certificates of
registration and like rights, including invention disclosures (“Patents”), (ii)
registered and unregistered trademarks, service marks, logos, designs, slogans,
trade dress, trade names, brand names and corporate names, assumed names,
business names and all other indicia of origin and registrations and
applications for registration thereof (“Trademarks”), (iii) registered and
unregistered copyrights in both published works and unpublished works of
authorship and applications for registration thereof (“Copyrights”), (iv)
computer software (including source code, object code, binary code and
algorithms), applications, programming, user interfaces, websites, databases and
all documentation related thereto (“Software”), (v) trade secrets and
Confidential Information (including without limitation ideas, formulas,
compositions, know-how, trade secrets, manufacturing and production processes
and techniques, research and development information, drawings, specifications,
designs, plans, proposals, technical data, financial and marketing plans and
customer and supplier lists and information), data, data collection and all
rights therein throughout the world, blueprints, and all other non-public
information, Confidential Information and tangible and intangible proprietary
information (“Trade Secrets”), (vi) domain name registrations, web addresses,
and uniform resource locators (“Domain Names”) and (vii) any similar or
equivalent rights to any of the foregoing anywhere in the world.

“Interim Financial Statements” has the meaning set forth in Section 2.4(a).

“Inventory” means Del Monte’s goods, products and other items located at or in
transit to or from Del Monte’s facilities for sale to Company Customers.

“J. DeBenedetti” has the meaning set forth in the preamble.

“Knowledge” or “Known” or “Knows” means, with respect to any Person, actual
knowledge after reasonable inquiry and investigation and in the case of Del
Monte or the Sellers, includes the Knowledge of J. DeBenedetti, V. DeBenedetti,
T. Lincoln, Kevin Lee, Bill Burch, Vince Licata, Dave Schamun and Patti Sanders
and in the case of Merger Sub or Parent includes the Knowledge of Christopher
Pappas, John Austin and Alexandros Aldous.

“Laws” means all statutes, laws, codes, ordinances, regulations, rules, orders,
judgments, writs, injunctions, assessments, awards, acts or decrees of any
Government Entity.

“Leased Real Property” has the meaning set forth in Section 2.8(b).

“Leases” has the meaning set forth in Section 2.8(b).

“Liability” shall mean any and all charges, debts, obligations, bonds,
indemnification and similar obligations, covenants, promises, guarantees, make
whole agreements and similar obligations, and other liabilities, including all
contractual obligations, whether absolute or contingent, inchoate or otherwise,
matured or unmatured, liquidated or unliquidated, accrued or unaccrued, Known or
unknown, whenever arising, and including those arising under any Law, threatened
or contemplated Proceeding or ruling of any Government Entity or any award of
any arbitrator (public or private) of any kind, including attorneys’ fees, and
those arising under any Contract, commitment or undertaking, including those
arising under this Agreement.

57

 

“Lien” or “Liens” means any lien, pledge (including any negative pledge),
purchase option, easement, restrictive covenant, security interest, deed of
trust, right of first refusal, servitude, proxy, transfer restriction under any
shareholder agreement or similar agreement, mortgage, conditional sales
agreement, encumbrance or other right of third parties, voluntarily incurred or
arising by operation of Law, and includes any agreement to give any of the
foregoing in the future, and any contingent sale or other title retention
agreement or lease in the nature thereof.

“LLC Agreement” has the meaning set forth in Section 1.8.

“Lock-Up Agreement” has the meaning set forth in Section 1.2(b)(xvi).

“Loss” or “Losses” shall mean all claims, demands, suits, Proceedings,
judgments, losses, lost profits or multiple of lost profits, Liabilities,
damages (including consequential damages), Taxes, costs, diminution of value and
expenses of every kind and nature (including reasonable attorneys’ fees and
costs of investigation).

“Material Adverse Effect” shall mean any change, effect, event, occurrence,
state of facts or development that has had, or reasonably would be expected to
have, individually or in the aggregate, a material adverse effect on (i) the
Assets, the Business, financial condition, prospects or results of operations of
Del Monte or (ii) the ability of any Seller, as applicable, to perform in a
timely manner any of its obligations under this Agreement or any Transaction
Document to which it is a party or any transaction contemplated hereby or
thereby; provided, however, that in no event shall any of the following, alone
or in combination, be deemed to constitute, nor shall any of the following be
taken into account in determining whether there has been or will be, a “Material
Adverse Effect”: (A) factors or conditions affecting the industries in which Del
Monte participates, or the United States economy as a whole, (B) an outbreak or
escalation of hostilities involving the United States, the declaration by the
United States of a national emergency or war, or the occurrence of any acts of
terrorism, (C) the announcement, disclosure, or pendency of this Agreement or
the performance of this Agreement or the transactions contemplated hereby by the
parties, including loss of employees, customers, suppliers, partners or
distributors, (D) changes in any Law or the interpretation thereof, (E) changes
in GAAP or the interpretation thereof, (F) any failure to meet any forecast or
budget by Del Monte (provided, however, that the facts and circumstances
underlying any such failure may be considered in determining whether a Material
Adverse Effect has occurred), or (G) acts of God, natural disasters, weather
conditions or other calamities.

58

 

“Material Contract” means those Contracts to which Del Monte is a party or by
which it or its assets or properties are otherwise bound, and that are
categorized by any of the following: (a) each Contract that involves the
performance of services or delivery of goods or materials by or to Del Monte
resulting or reasonably expected to result in receipts or payment in excess of
$25,000, (b) each employment Contract, termination Contract, retention, change
in control, severance, compensation and bonus Contract with any Company
Employee, (c) each joint venture, partnership, franchise, joint research and
development and joint marketing agreement or any other similar Contract
(including a sharing of profits, Losses, costs or Liabilities by Del Monte with
any other Person), (d) all Contracts to loan money or extend credit to any other
Person outside of the ordinary course of business, consistent with past
practices, (e) each Contract containing covenants that in any way purport to
restrict or prohibit the business activity of Del Monte to engage in any line of
business or to compete with any Person, (f) each Contract providing for
indemnification by Del Monte with respect to the Business or the Assets, (g)
each Contract that creates or establishes a material Lien on any of the Assets
or otherwise is a Contract for borrowed money, and (h) each Contract with any
Government Entity.

“Merger” has the meaning set forth in the recitals.

“Merger Consideration” has the meaning set forth in Section 1.4(a).

“Merger Sub” has the meaning set forth in the preamble.

“Net Working Capital” shall mean (i) all current assets (excluding cash and
equivalents) of Del Monte included within the Assets, minus (ii) all current
liabilities of Del Monte (excluding Indebtedness and other amounts to be paid or
discharged at Closing or that are the responsibility of the Shareholders under
the terms of this Agreement), it being understood that the sum of the Net
Working Capital under this Agreement plus the Net Working Capital of Company
Sellers (as calculated under the Purchase Agreement) shall be equal to (i) all
current assets (excluding cash and equivalents) of Del Monte and the Company
Sellers (in the case of Company Sellers included within the Acquired Assets(as
defined in the Purchase Agreement)), minus (ii) all current liabilities of Del
Monte and the Company Sellers (in the case of the Company Sellers included
within the Assumed Liabilities (as defined in the Purchase Agreement) (excluding
Indebtedness and other amounts to be paid or discharged at Closing or that are
the responsibility of the Company Sellers under the terms of the Purchase
Agreement)).

“Notice of Disagreement” has the meaning set forth in Section 1.5(a)(i).

“Notice of Disagreement - EBITDA” has the meaning set forth in Section
1.5(b)(i).

“Offer Letter” or “Offer Letters” has the meaning set forth in Section
1.2(b)(iii).

“OWP Business” means the business conducted by Old World Provisions, Inc. and
its Affiliates, including but not limited to the purchase, inventory, sale and
distribution of food products and other items held, sold and/or distributed in
connection with its business, as such business is conducted on the date hereof
as described on Schedule 4.7(f).

“OWP Interests” means any and all legal, equitable, beneficial and contractual
right, title and interest of TJ Investments, LLC, a California corporation,
JAD-OWP Investment, LLC, a California limited liability company, and TKL
Investments, LLC, a California limited liability company (Affiliates of the
Shareholders) in and to the assets of or equity interests in Old World
Provisions, Inc., a New York corporation, Industrial Park Cold Storage, LLC, a
New York limited liability company, and Westerlo Street Cold Storage, LLC, a New
York limited liability company, whether such rights, title and interests exist
or arise or are exercised prior to, upon, or following the Closing.

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“Party” or “Parties” has the meaning set forth in the preamble.

“Parent” has the meaning set forth in the preamble.

“Parent Common Stock” means shares of common stock of Parent, par value $0.01
per share.

“Parent SEC Reports” has the meaning set forth in Section 3.5.

“Per-Share Escrowed Stock Consideration” has the meaning set forth in Section
1.4(b)(ii).

“Per-Share Estimated Stock Consideration” has the meaning set forth in Section
1.4(b)(i).

“Per-Share Stock Price” means $22.00.

“Per-Share Working Capital Adjustment Consideration” has the meaning set forth
in Section 1.4(b)(iii).

“Permitted Liens” means (i) Liens for Taxes not yet due and payable; and (ii)
mechanics’, carriers’, workers’, repairers’ and similar statutory liens arising
or incurred in the ordinary course of business for amounts which are not
delinquent and which are not, individually or in the aggregate, material.

“Person” means an individual, a partnership, a corporation, a limited liability
company, an association, a joint stock company, a trust, a joint venture, an
unincorporated organization and a Government Entity or any department, agency or
political subdivision thereof.

“Personal Property” has the meaning set forth in Section 2.7(a).

“Post-Closing Working Capital Adjustment Amount” has the meaning set forth in
Section 1.5(a).

“Pre-Closing Liabilities” means those debts and Liabilities arising in
connection with the ownership or operation of the Assets or the Business prior
to the Effective Time.

“Proceedings” has the meaning set forth in Section 2.11.

“Purchase Agreement” means that certain Asset Purchase Agreement, dated as of
the date hereof, by and among Parent, Assets Buyer, Service, Seafood, J.
DeBenedetti, Victoria DeBenedetti, Theresa Lincoln, and the Sellers’
Representative.

“Purchase Price” has the meaning set forth in the Purchase Agreement.

60

 

“Release” or “Released” means any spilling, leaking, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, migrating or
disposing (including abandoning or discarding).

“Restrictive Covenants” has the meaning set forth in Section 4.7(c).

“Seafood” means TJ Seafood, LLC, a California limited liability company.

“SEC” means the Securities and Exchange Commission.

“Sellers’ Representative” has the meaning set forth in the preamble.

“Seller” or “Sellers” has the meaning set forth in the preamble.

“Seller Data” shall mean (i) any piece of information that allows the
identification of a natural person or any other personally identifiable data or
sensitive data as defined under applicable Laws, and (ii) any data or
information collected by or on behalf of Del Monte with respect to any customer
of Del Monte and/or user of Del Monte’s websites.

“Selling Party Indemnitees” has the meaning set forth in the Indemnification
Agreement.

“Selling Party Indemnitors” has the meaning set forth in the Indemnification
Agreement.

“Service” means T.J. Foodservice Co., Inc., a California corporation.

“Shareholder” or “Shareholders” has the meaning set forth in the preamble.

“Surviving Company” has the meaning set forth in the recitals.

“Targeted Adjusted EBITDA Amount” means that amount set forth on Schedule
1.5(b)(i).

“Targeted Net Working Capital” means the average of the Net Working Capital as
of the last day of each of the twelve most recently completed fiscal monthly
periods ended on the 2014 Fiscal Year End (less Two Million Dollars ($2,000,000)
for each of the fiscal monthly period components ended in September, October,
November and December), calculated in accordance with GAAP and, to the extent
not inconsistent with GAAP, in a manner consistent with the Financial
Statements. The Targeted Net Working Capital determinations under Section
1.5(a)(ii) and Section 1.5(a)(iii) shall be calculated in a manner substantially
consistent with and substantially in the form of the sample Targeted Net Working
Capital calculation prepared by Del Monte as set forth on Schedule 1.5(a).

“Tax” or “Taxes” means (i) federal, state, province, county, local, foreign or
other income, gross receipts, ad valorem, franchise, profits, sales or use,
transfer, registration, excise, utility, environmental, communications, real or
personal property, capital stock, license, payroll, wage or other withholding,
employment, unemployment, social security, severance, stamp, occupation,
alternative or add-on minimum, estimated, customs duties, fees, assessments
charges and other taxes of any kind whatsoever, whether disputed or not, (ii)
all interest, penalties, fines, additions to tax or additional amounts imposed
by any taxing authority in connection with any item described in clause (i)
above, and (iii) all amounts described in clauses (i) and (ii) above payable as
a result of having been a member of a consolidated, combined, affiliated or
unitary group.

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“Tax Return” means any return, declaration, report, claim for refund, estimate,
information report, return statement or filing relating to Taxes, including any
schedule or attachment thereto and including any amendment thereof.

“Trade Accounts Payable” means accounts payable of Del Monte with respect to the
Business for services rendered or for the procurement of supplies and inventory.

“Transaction Documents” has the meaning set forth in Section 2.1(b).

“Treasury Regulation” means the United States Treasury Regulations promulgated
under the Code, and any reference to any particular Treasury Regulation section
shall be interpreted to include any final or temporary revision of or successor
to that section regardless of how numbered or classified.

“Trust” has the meaning set forth in the preamble.

“Utilized Adjusted EBITDA Amount” has the meaning set forth in Section 1.4(a).

“V. DeBenedetti” has the meaning set forth in the preamble.

“Working Capital Adjustment” has the meaning set forth in Section 1.5(a).

(a)                The words “hereof,” “herein,” and “hereunder” and words of
similar import, when used in this Agreement, shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Whenever the words
“include,” “includes” or “including” (or any variation thereof) are used in this
Agreement, they shall be deemed to be followed by the words “without
limitation.”

(b)               The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa. All references to “dollars” or
“$” mean United States dollars. The term “foreign” shall mean non-United States.

Article VIII.
MISCELLANEOUS

8.1              Fees and Expenses. Except as specifically set forth in this
Agreement, each Party to this Agreement shall pay its own costs and expenses
incurred in connection with the negotiation, preparation and execution of this
Agreement and the other agreements referred to herein, and the consummation of
the transactions contemplated hereby and thereby.

8.2              Press Release and Announcements. None of the Parties hereto nor
any of their respective Affiliates shall issue any press releases or make any
public announcement with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other Party hereto.
Notwithstanding the foregoing, any such press release or public announcement may
be made if required by applicable Law or pursuant to the Exchange Act; provided,
that the Party required to make such press release or public announcement shall,
to the extent possible, confer with the other Party concerning the timing and
content of such press release or public announcement before the same is made.

62

 

8.3              Remedies. Following the Closing and except as specifically
provided for elsewhere in this Agreement or the Indemnification Agreement, the
indemnity obligations under the Indemnification Agreement shall be the sole and
exclusive remedy for any breach of any representation or warranty. Subject to
the terms, provisions, conditions and limitations in the Indemnification
Agreement, all such rights and remedies shall be cumulative and non-exclusive,
and may be exercised singularly or concurrently. Subject to the terms,
provisions, conditions and limitations in the Indemnification Agreement, one or
more successive actions may be brought, either in the same action or in separate
actions, as often as is deemed advisable, until all of the obligations to such
Person are paid and performed in full. In any action arising out of or relating
to this Agreement, including any interpretation or enforcement thereof, the
prevailing party shall be entitled to recover its reasonable attorney fees,
costs and disbursements incurred in such action or an appeal from the
non-prevailing party.

8.4              Consent to Amendments; Waivers. This Agreement may be amended,
or any provision of this Agreement may be waived upon the approval, in a
writing, executed by Merger Sub, Parent and the Sellers’ Representative. No
course of dealing between or among the Parties hereto shall be deemed effective
to modify, amend or discharge any part of this Agreement or any rights or
obligations of any such Party or such holder under or by reason of this
Agreement.

8.5              Successors and Assigns. This Agreement and all covenants and
agreements contained herein and rights, interests or obligations hereunder, by
or on behalf of any of the Parties hereto, shall bind and inure to the benefit
of the respective successors and permitted assigns of the Parties hereto whether
so expressed or not, except that neither this Agreement nor any of the covenants
and agreements herein or rights, interests or obligations hereunder may be
assigned or delegated by the Sellers or the Sellers’ Representative without the
prior written consent of Merger Sub and Parent, and neither this Agreement nor
any of the covenants and agreements herein or rights, interests or obligations
hereunder may be assigned or delegated by Merger Sub and Parent without the
prior written consent of the Sellers’ Representative.

8.6              Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held to be prohibited by,
illegal or unenforceable under applicable Law or rule in any respect by a court
of competent jurisdiction, such provision shall be ineffective only to the
extent of such prohibition, illegality or unenforceability, without invalidating
the remainder of such provision or the remaining provisions of this Agreement.

8.7              Counterparts. This Agreement may be executed in counterparts
(including by means of telecopied signature pages), any one of which need not
contain the signatures of more than one Party, but all such counterparts taken
together shall constitute one and the same agreement.

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8.8              Descriptive Headings; Interpretation. The headings and captions
used in this Agreement and the table of contents to this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized terms used in any Schedule or
Exhibit and not otherwise defined therein shall have the meanings set forth in
this Agreement.

8.9              Entire Agreement. This Agreement and the agreements and
documents referred to herein contain the entire agreement and understanding
among the Parties hereto with respect to the subject matter hereof and supersede
all prior agreements and understandings, whether written or oral, relating to
such subject matter in any way. Except as expressly set forth in this Agreement
(or as set forth in any certificate delivered pursuant to this Agreement), no
Party hereto has made any representations or warranties of any kind to any other
Party hereto with respect to the transactions contemplated hereby and none shall
be implied.

8.10          No Third-Party Beneficiaries. This Agreement is for the sole
benefit of the Parties hereto and their permitted successors and assigns and
nothing herein expressed or implied shall give or be construed to give any
Person, other than the Parties hereto and such permitted successors and assigns,
any legal or equitable rights hereunder.

8.11          Schedules and Exhibits. All Schedules and Exhibits referred to
herein are hereby incorporated in and made a part of this Agreement as if set
forth in full herein.

8.12          Governing Law. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
Schedules and Exhibits hereto shall be governed by, and construed in accordance
with, the Laws of the State of New York without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of New York or
any other jurisdiction) that would cause the application of the Laws of any
jurisdiction other than the State of New York. In furtherance of the foregoing,
the internal Law of the State of New York shall control the interpretation and
construction of this Agreement (and all Schedules and Exhibits hereto), even
though under that jurisdiction’s choice of law or conflict of law analysis, the
substantive Law of some other jurisdiction would ordinarily apply.

8.13          Venue. MERGER SUB, PARENT, THE SELLERS AND THE SELLERS’
REPRESENTATIVE IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE OR U.S. FEDERAL COURT LOCATED IN NEW YORK COUNTY OVER ANY PROCEEDING
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION DOCUMENT
AND MERGER SUB, PARENT, THE SELLERS AND THE SELLERS’ REPRESENTATIVE HEREBY
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH PROCEEDING MAY BE HELD AND
DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT. MERGER SUB, PARENT, THE
SELLERS AND THE SELLERS’ REPRESENTATIVE AGREE THAT A FINAL JUDGMENT IN ANY SUCH
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. MERGER SUB, PARENT,
THE SELLERS AND THE SELLERS’ REPRESENTATIVE HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THEY MAY HAVE TO THE LAYING OF VENUE IN NEW YORK
COUNTY AND ANY OBJECTION TO ANY PROCEEDING IN NEW YORK COUNTY AS THE BASIS OF AN
INCONVENIENT FORUM OR THAT THE VENUE OF THE PROCEEDING IS IMPROPER. MERGER SUB,
PARENT, THE SELLERS AND THE SELLERS’ REPRESENTATIVE HEREBY FURTHER WAIVE SERVICE
OF PROCESS AND CONSENT TO PROCESS BEING SERVED IN ANY SUCH PROCEEDINGS BY
MAILING OF COPIES THEREOF BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, OR DISPATCHED THROUGH A REPUTABLE OVERNIGHT COURIER SERVICE,
ADDRESSED TO MERGER SUB, PARENT, THE SELLERS OR THE SELLERS’ REPRESENTATIVE AT
THEIR RESPECTIVE ADDRESSES APPEARING IN THIS AGREEMENT, AND AGREE THAT SUCH
SERVICE SHALL CONSTITUTE GOOD AND SUFFICIENT SERVICE OF PROCESS AND NOTICE
THEREOF.

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8.14          Notices. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been given when delivered personally, five
(5) Business Days after being sent by U.S. First Class mail (postage prepaid),
or one (1) Business Day after dispatch to a reputable overnight courier service
(charges prepaid). Such notices, demands and other communications shall be sent
to Merger Sub, Parent and the Sellers at the addresses indicated below or to
such other address or to the attention of such other Person as the recipient
party has specified by prior written notice to the sending party. All notices,
demands and other communications hereunder may be given by any other mans
(including telecopy or electronic mail), but shall not be deemed to have been
duly given unless and until it is actually received by the intended recipient.

Merger Sub and Parent:

 

Del Monte Merger Sub, LLC

c/o The Chefs’ Warehouse, Inc.

100 East Ridge Road

Ridgefield, CT 06877

Attn: Alexandros Aldous, General Counsel

 

with copies to (which shall not constitute notice to Merger Sub or Parent):

 

Bass, Berry & Sims PLC

150 Third Avenue South, Suite 2800

Nashville, TN 37201

Attn: D. Scott Holley, Esq.

 

Sellers’ Representative:

 

John DeBenedetti

c/o TPBS, LLP

1545 River Park Dr.

Suite 375

Sacramento, CA 95815

 

65

 

Sellers:

 

c/o TPBS, LLP

1545 River Park Dr.

Suite 375

Sacramento, CA 95815

 

With an optional copy to:

 

Wagner Kirkman Blaine Klomparens & Youmans, LLP

10640 Mather Blvd., Suite 200

Mather, CA 95655

Attn: Belan K. Wagner, Esq.

 

8.15          No Strict Construction. The Parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the Parties hereto, and no presumption or
burden of proof shall arise favoring or disfavoring any Party hereto by virtue
of the authorship of any of the provisions of this Agreement.

8.16          Sellers’ Representative.

(a)                J. DeBenedetti, as the Sellers’ Representative, shall be
constituted and appointed as agent for and on behalf of each Shareholder to give
and receive notices and communications, to agree to, negotiate and enter into,
on behalf of the Shareholders, amendments, consents and waivers under this
Agreement pursuant to the terms set forth herein, to make and receive payments
on behalf of the Shareholders pursuant to the terms set forth herein, to take
such other actions as authorized by this Agreement, and to take all actions
necessary or appropriate in the judgment of the Sellers’ Representative for the
accomplishment of the foregoing. If at any time the Sellers’ Representative
resigns, dies or becomes incapable of acting, the Shareholders shall choose
another person to act as the Sellers’ Representative under this Agreement. The
Selling Party Indemnitees may not make a claim for indemnity against either
Merger Sub or Parent pursuant to this Agreement except through the Sellers’
Representative. Once the Sellers’ Representative has initiated such a claim for
indemnity, the Sellers’ Representative may enforce, prosecute and settle such
claim without further directions from the Selling Party Indemnitees, and all
acts and decisions of the Sellers’ Representative in connection with such matter
shall be binding on all the Selling Party Indemnitees. No bond shall be required
of the Sellers’ Representative, and the Sellers’ Representative shall receive no
compensation for services provided hereunder. Notices or communications to or
from the Sellers’ Representative shall constitute notice to or from each
Shareholder.

(b)               The Sellers’ Representative will be entitled to engage such
counsel, experts and other agents as the Sellers’ Representative deems necessary
or proper in connection with performing the Sellers’ Representative’s
obligations hereunder, and will be promptly reimbursed by the Shareholders for
all reasonable expenses, disbursements and advances incurred by the Sellers’
Representative in such capacity upon demand. Each Shareholder shall indemnify
and hold harmless the Sellers’ Representative pro rata based upon such
Shareholder’s pro rata share of the equity interests in Del Monte as of the
Closing Date, from any and all Losses that are incurred by the Sellers’
Representative as a result of actions taken, or actions not taken, by the
Sellers’ Representative herein, except to the extent that such Losses arise from
the gross negligence or willful misconduct of the Sellers’ Representative. The
Sellers’ Representative shall not be liable to the Shareholders for any act done
or omitted hereunder as the Sellers’ Representative, excluding acts which
constitute gross negligence or willful misconduct.

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(c)                A decision, act, consent or instruction of the Sellers’
Representative in respect of any action under this Agreement shall constitute a
decision of all of the Shareholders and shall be final, binding and conclusive
upon each such Shareholder and Merger Sub and Parent may rely upon any decision,
act, consent or instruction of the Sellers’ Representative hereunder as being
the decision, act, consent or instruction of each and every such Shareholder.
Each of Merger Sub and Parent is hereby relieved from any Liability to any
Person (including any Shareholder) for any acts done by Merger Sub or Parent in
accordance with such decision, act, consent or instruction of the Sellers’
Representative.

[Signature Pages Follow]

67

 

IN WITNESS WHEREOF, the Parties hereto have executed this Merger Agreement as of
the date first written above.

 

MERGER SUB:

 

DEL MONTE MERGER SUB, LLC

 

By:_/s/ Alexandros Aldous________

Name: Alexandros Aldous

Title: General Counsel and Corporate Secretary

 

PARENT:

 

THE CHEFS’ WAREHOUSE, INC.

 

By:_/s/ Alexandros Aldous________

Name: Alexandros Aldous

Title: General Counsel and Corporate Secretary

 

[Signature Page to Merger Agreement]

 

DEL MONTE:

 

DEL MONTE CAPITOL MEAT CO., INC.

 

By:_/s/ David DeBenedetti________

Name: David DeBenedetti

Title: President

 

 

SHAREHOLDERS:

 

By:_/s/ Victoria DeBenedetti_______

Name: Victoria DeBenedetti

 

 

By:_/s/ David DeBenedetti_______

Name: David DeBenedetti

 

DeBenedetti/Del Monte Trust

 

By:_/s/ Robert Tate________

Name: Robert Tate

Title: Trustee

 

THE SELLERS’ REPRESENTATIVE:

 

 By:_/s/ John DeBenedetti_______

Name: John DeBenedetti

 

[Signature Page to Merger Agreement]