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EXHIBIT 4
AGREEMENT OF PURCHASE
AND SALE
THIS AGREEMENT, made and entered into as of this the 1st day of
March, 1997, by and among WSMP, INC., a North Carolina corporation,
(hereinafter "WSMP"); and F & H COMPANIES, INC., a North Carolina corporation
("F&H"), WESTERN STEER OF NORTH CAROLINA, INC., a North Carolina corporation
("Western"), NORTHWEST FOOD SYSTEMS, INC., a North Carolina corporation
("Northwest"), DAVIDSON FOOD SYSTEMS, INC., a North Carolina corporation
("Davidson"), MOCKSVILLE FOOD SYSTEMS, INC., a North Carolina corporation
("Mocksville"), and CFR FOODS, INC., a North Carolina corporation ("CFR") (F&H,
Western, Northwest, Davidson, Mocksville, and CFR are sometimes collectively
hereinafter referred to as the "Sellers");
W I T N E S S E T H:
WHEREAS, WSMP owns, operates and franchises Western Steer - Steaks,
Buffet & Bakery restaurants and Prime Sirloin - Buffet, Bakery & Steaks
throughout the Southeast, and
WHEREAS, the Sellers are franchisees of WSMP, and own and operate
certain restaurants in North Carolina, Virginia and Tennessee; and
WHEREAS, the Sellers have agreed to sell, and WSMP has agreed to
purchase, certain of the Sellers' restaurants, by the purchase of certain assets
of the Sellers and by accepting assignment of certain leases, upon the terms and
conditions herein set forth;
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NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, and for other good and valuable consideration, the
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
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"Affiliates" means as to any Person, any other Person that, directly or
indirectly, along or through others, controls, is controlled by or is under
common control with such Person. For purposes of this definition "controls"
(including with correlative meanings, the terms "controlled by" and "under
common control with" as applied to any Person) means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"Agreement" means this Agreement of Purchase and Sale.
"Business" means the provision of restaurant services like or similar
to Western Steer - Steaks, Buffet & Bakery restaurants, Western Steer Family
Restaurants, Prime Sirloin - Buffet, Bakery & Steaks restaurants and Xxxxxxx'x
Smokehouse & Saloon Restaurants.
"Closing" means the consummation of the transactions contemplated by
this Agreement, as provided in Articles II and III, which shall occur at
9:00 a.m. (local time) on March 3, 1997 at the executive offices of WSMP, or at
such other time, date and place or may be agreeable to the parties.
"Closing Date" means the date on which the Closing takes place.
"Effective Time" means the time and date the Agreement of Purchase and
Sale is effective pursuant to the provisions of Section 2.3.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied throughout the indicated periods.
"Interest" means any equity ownership of any kind of any Person,
including without limitation, equity ownership represented by common stock,
preferred stock, securities convertible into or exercisable for the purchase or
other acquisition of common stock (including convertible debentures, warrants
and options), trust certificates, general or limited partnership interests or
limited liability company member interests.
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"Investment" in any Person means any purchase or other acquisition of
any Interest in such Person, any capital contribution to such Person or any
other investment in such Person.
"Employees" means employees, officers or consultants of any Person.
"Material Adverse Change" with respect to any Person means a material
adverse change in the financial condition, business, assets, results of
operations or prospects of such Person.
"Material Adverse Effect" with respect to any Person means a material
adverse effect on the financial condition, business, assets, results of
operations or prospects of such Person.
"Noncompetition Agreement" means the Noncompetition Agreement dated as
of the Closing Date between Xxxxx X. Xxxx and WSMP, Inc., relating to the
limitations on Hash from engaging in the Business, substantially in the form
attached hereto as Exhibit A.
"Permits" means all licenses, permits, orders, consents, approvals,
registrations, authorizations, qualifications and filings under all federal,
state, local or foreign laws with governmental or regulatory bodies.
"Permitted Liens" mean (i) liens reflected in the WSMP Financial
Statement or Sellers Balance Sheet, as applicable, (ii) liens granted in
connection with the Convertible Note, (iii) liens consisting of zoning or
planning restrictions, easements, permits or other restrictions or limitations
on the use of the Real Estate or irregularities in title thereto which do not
materially detract from the value of, or impair the use of, such Real Estate in
the operation of the Business, (iv) unrecorded liens arising by operation of
law, and (v) liens for current property taxes and assessments which are not yet
due and payable.
"Person" means any individual, partnership, corporation, trust,
unincorporated organization, limited liability company, association, joint
venture or other entity or a government, agency, political subdivision,
instrumentality or division thereof.
"Prospectus" refers to the Prospectus included in the WSMP Registration
Statement when the WSMP Registration Statement is first declared effective under
the Securities Act.
"Real Estate" means real property, including roof tops, and
improvements, which is the subject of the Leases.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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"Restaurants" mean the F & H Restaurants, the Western Restaurants, the
Northwest Restaurants, the Davidson Restaurant, the Mocksville Restaurant and
the CFR Restaurant.
"F & H Restaurants" mean the following restaurants:
1. Unit 116
000 X. Xxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxxx 00000
(The "Elizabethton Restaurant")
2. Xxxx 000
000 Xxxxxxx Xxxxx Xxxx
Xxxxx, Xxxxxxxx 00000
(the "Galax Restaurant")
3. Xxxx 000
XX 0, Xxx 000-X
Xxxxxxxxxx, Xxxxxxxx 00000
(the "Wytheville Restaurant")
4. Unit 000
Xxxxx Xxxxxx Xxxxxx
Xxxxx, Xxxxx Xxxxxxxx 00000
(the "Elkin Restaurant")
5. Xxxx 000
000 X. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
(the "Jefferson Restaurant")
6. Xxxx 000
Xxxxxx X.X. 000 & X.X. 000
Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
(the "Yadkinville Restaurant")
7. Xxxx 000
Xxxx - Xxxxxxxxxxxx Xxxx
Xxxx, Xxxxx Xxxxxxxx 00000
(the "King Restaurant")
"Western Restaurants" mean the following restaurants:
1. Xxxx 000
000 Xxxxx Xxxx Xxxxxx
Xxxxxx, Xxxxx Xxxxxxxx 00000
(the "Graham Restaurant")
2. Xxxx 000
0000 Xxxxxxxx Xxxxxx
Xx. Xxxx, Xxxxx Xxxxxxxx 00000
(the "Mt. Airy Restaurant")
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"Northwest Restaurants" mean the following restaurants:
1. Xxxx 00
0000 Xxxxxxxxxx Xxxxxxx
Winston-Salem, North Carolina 27105
(the "Winston-Salem Restaurant")
2. Unit 74
000 Xxxxx Xxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxx Xxxxxxxx 00000
(the "Kernersville Restaurant")
"Davidson Restaurant" means the restaurant located at:
Xxxx 00
XX 00, Xxx 000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
"Mocksville Restaurant" means the restaurant located at:
Unit 000
Xxxxx 0, Xxx 000
Xxxxxxxxxx, Xxxxx Xxxxxxxx 00000
"CFR Restaurant" means the restaurant located at:
Xxxx 000
000 Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxx Xxxxxxxx 00000
"Assumed Liabilities" means the following:
1. That certain indebtedness incurred by F & H for the benefit
of the Galax Restaurant and the Wytheville Restaurant to First Century
Bank of Wytheville, Virginia in an amount not to exceed $205,000,
principal and interest (the "First Century Indebtedness");
2. That certain indebtedness incurred by F & H for the benefit
of the Elkin Restaurant to Riverview Enterprises in an amount not to
exceed $35,000, principal and interest (the "Riverview Indebtedness");
3. That certain indebtedness incurred by Northwest for the
benefit of the Kernersville Restaurant to Peoples Bank of Newton, North
Carolina in amount not to exceed $280,000, principal and interest (the
"Peoples Indebtedness")
4. That certain indebtedness incurred by all the Sellers, owed
by Xxxx, Xxxxxx and Associates to WSMP, in the total amount not to
exceed $125,000, principal and interest (the "WSMP Indebtedness"); and
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5. The current accounts payable of all of the Restaurants
which are owing at closing but are less than 90 days old, and accrued
liabilities, in the total amount not to exceed $309,500 (the "Current
Payables").
"Leases" shall mean the following:
1. Elizabethton - That certain lease dated February 17, 1982,
between Seville Development, lessor, and X. X. Xxx, Lessee, assigned to
F & H by Faw by assignment dated _______________, 1985.
2. Galax - That certain lease dated May 1, 1980, between EOS
Corporation, lessor, and Southwest Foods of Virginia, Inc., lessee,
assigned to F & H by Assignment dated ______________, 1985.
3. Wytheville - That certain lease dated January 16, 1980,
between Interstate Development, lessor and EOS Corporation, lessee,
assigned to F & H by addendum to lease dated December 3, 1993.
4. Elkin - That certain lease dated May 15, 1981, between X.X.
Xxx, lessor and WISCO Diversified of America, Inc., assigned to F & H
by assignment dated ________________, 1985.
5. Jefferson - That certain lease dated July 12, 1983, between
Jefferson/Ray Associates and X. X. Xxx, assigned to F & H from Faw by
assignment dated ________________, 1985.
6. Yadkinville - That certain lease dated March 26, 1984,
between Jefferson/Ray Associates, lessor, and Kansas City Family
Steakhouse, Inc., lessee, and assigned from Kansas City Family
Steakhouse, Inc. to F & H by assignment dated March 1, 1986.
7. King - That certain lease dated February __, 1986, between
X.X. Xxx and Xxxxx X. Xxxx, lessors and F & H.
8. Xxxxxx - That certain lease to be executed as part of the
transactions herein, to be between Xxxxx X. Xxxx as lessor and WSMP
as lessee, dated March 1, 1997.
9. Mt. Airy - That certain lease dated May 31, 1983, between
X.X. Xxxx, Xx. and Xxxx Xxxx, lessors and Western dated May 31, 1993.
10. Winston-Salem - That certain lease dated November 1, 1978,
by and between X.X. Enterprises, Inc., lessor, (subsequently assigned
to Xxxxxx X. Vlahes and Xxxx Vlahes) and Northwest as lessee.
11. Kernersville - That certain lease dated October 1, 1978,
between X.X. Xxx, lessor, and Northwest as lessee.
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12. Davidson - That certain lease dated March 21, 1978,
between Xxxxx X. Xxxxxxx, et al., lessors and Davidson as lessee.
13. Mocksville - That certain lease to be executed as
part of the transactions herein, to be between Xxxxx X. Xxxx as lessor
and WSMP as lessee, dated March 1, 1997.
14. CFR - That certain lease to be executed as part of
the transactions herein, to be between Xxxxx X. Xxxx as lessor and WSMP
as lessee, dated March 1, 1997.
"WSMP Financial Statements" are the consolidated financial statements
of WSMP as of February 23, 1996, and for the fiscal year then ended.
"WSMP Registration Statement" is the Registration Statement on Form S-3
covering offers and sales by the Sellers of the WSMP Stock.
"WSMP Stock" is the authorized but unissued common stock of WSMP which
is to be issued and delivered to the Sellers pursuant to Articles II and III of
this Agreement in consideration for purchase of the Restaurants.
ARTICLE II
THE SALE
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2.1 SALE. Effective as of Closing, the Sellers hereby sell, and WSMP
hereby purchases free of all liabilities and encumbrances except for the Assumed
Liabilities, certain assets of the Sellers associated with the operation of the
Restaurants, including all of the furnishings, furniture, fixtures, equipment,
leasehold improvements, smallwares, signage, supplies and food inventory, stock
in trade, merchandise; the Western Steer Business owned and operated by the
Sellers or any of them at the Restaurants, including Sellers' rights under and
to all contracts, Permits, and deposits, made by or granted to the Sellers in
connection with such business, including the Western Steer franchise; and all
other property owned and used by the Sellers in the Business.
2.2 ASSIGNMENT. Effective as of Closing, the Sellers hereby assign and
WSMP hereby accepts assignment of all right, title and interest of the Sellers
as lessee in and to the Leases, and the leasehold estates created thereby; and
all of Sellers' interest in and to Western Steer franchises for the Restaurants;
and any and all of the Sellers' interests in and to their Restaurant employees,
managers, and supervisors, including the right to continue their employment or
not as WSMP determines.
2.3 EXCLUSIONS. The following are hereby excluded from this Agreement:
a. The Sellers' Accounts Payable generated by the
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Restaurants, or otherwise, except as included in the Assumed
Liabilities;
b. The Sellers' Accounts Receivable, which shall remain the
property of the respective Seller; and
c. The xxxxx cash fund of each Restaurant, which shall remain
the property of the Seller owning the Restaurant.
2.4 PRICE. The purchase price for the Restaurants is Three Million
Seven Hundred Sixty-Seven Thousand Five Hundred Dollars ($3,767,500) payable as
follows:
- Cash $ 500
- Assumption of the Assumed Liabilities - 954,500
- Issuance of 223,611 shares of WSMP Stock
subject to subsequent registration under
Article XI, at $9.00 per share - 2,012,500
- The Promissory Notes, as described in
Section 2.6: - 800,000
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TOTAL $3,767,500
The parties agree that for purposes of this transaction, the WSMP Stock
is valued at $9.00 per share, irrespective of the market price of the WSMP Stock
at the Closing Date or upon sale of the WSMP Stock. The risk of gain or loss
shall be the Sellers'.
2.5 ALLOCATION AMONG SELLERS. The Purchase Price shall be paid over to
the Sellers in the following allocations:
a. F & H $ 874,800
b. Western $ 1,263,600
c. Northwest $ 324,500
x. Xxxxxxxx $ 338,000
e. Mocksville $ 461,600
f. CFR $ 505,000
TOTAL $ 3,767,500
2.6 ALLOCATION AMONG ASSETS. The Purchase Price to be paid to the
Sellers shall be allocated among its different elements to the Sellers as
follows:
a. F & H: Cash $ 300
Assumed Liabilities $ 394,783
WSMP Stock $ 479,917
TOTAL $ 874,800
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b. Western: Cash $ 100
Assumed Liabilities $ 44,371
WSMP Stock $ 519,129
Promissory Note $ 700,000
TOTAL $1,263,600
c. Northwest: Cash $ 100
Assumed Liabilities $ 324,400
TOTAL $ 324,500
x. Xxxxxxxx: Cash $ 100
Assumed Liabilities $ 22,233
WSMP Stock $ 215,667
Promissory Note $ 100,000
TOTAL $ 338,000
e. Mocksville: Cash $ 100
Assumed Liabilities $ 21,940
WSMP Stock $ 439,560
TOTAL $ 461,600
f. CFR: Assumed Liabilities $ 146,773
WSMP Stock $ 338,227
TOTAL $ 505,000
2.7 PROMISSORY NOTES. As partial consideration, WSMP shall issue its
Promissory Notes (the "Promissory Notes") to the Sellers. The Promissory Notes
shall be unsecured, shall be due and payable as to both accrued interest and
principal on the date two (2) years from the date of issuance, and shall bear
interest at the rate of five percent (5%) per annum until paid.
The Promissory Notes shall be issued in the following denominations to
the following Sellers:
Denomination Seller
------------ ------
$700,000 Western
$100,000 Davidson
The Promissory Notes shall be in substantially the form set out in Exhibit
B hereto.
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2.8 CURRENT PAYABLES. The Current Payables, which form part of the
Assumed Liabilities, are not to exceed $309,500. WSMP shall choose the Current
Payables it intends to pay, and inform the Sellers of those it does not intend
to pay. As used herein, Current Payables included any payable incurred on or
before February 28, 1997, or any current payment due on or before that date. It
shall also include any accrued liabilities that WSMP may pay on behalf of the
Sellers, such as accrued property taxes which are Sellers' responsibility under
a Lease, accrued payroll and accrued vacation pay.
The parties acknowledge that certain short-term assets of the Sellers,
such as pre-paid rent or gift certificates on hand, may be transferred from
Sellers to Buyer. If Sellers transfer such to WSMP and WSMP accepts them, then
WSMP shall increase the amount of Current Payables it shall assume by the fair
market value of such short-term assets.
The parties acknowledge that Sellers have currently accrued liability
for vacation pay totalling approximately $51,000. If WSMP should agree to assume
such liability on behalf of the Sellers, it shall also be considered as making
up a portion of the total Current Payables being assumed by WSMP.
Within six (6) months of the Closing Date, WSMP shall calculate the
total amount of Current Payables or Assumed Liabilities it has paid or assumed
on behalf of the Sellers. If such exceed $309,500, WSMP will give Sellers 30
days' written notice, to repay the excess amount. If Sellers fail to pay within
this period, WSMP may reduce the amount of the Promissory Notes by such amount.
If the Current Payables or the Assumed Liabilities are less than the amount
assumed, then the amount of the Promissory Note shall be increased by such
amount.
Should the Sellers or related parties fail or refuse to pay any sum
incurred or owing to WSMP, WSMP may offset such sum against any amount due under
the Promissory Notes, irrespective of the fact that the Seller which incurred
the debt may not be the Seller that holds the Promissory Note. The Sellers agree
to determine and settle among themselves any questions of offset among the
parties.
2.9 ASSUMED LIABILITIES. Other than the Assumed Liabilities and the
Leases, WSMP has assumed no other obligation, payment, debt, or contract of the
Sellers or affecting the Sellers, including but not limited to any obligation of
the Sellers to their employees, any health insurance obligation, or any workers
compensation liability.
In allocating the purchase price, the parties have attempted to
allocate among the Sellers that amount of Assumed Liabilities that WSMP shall
assume on behalf of each of them. Should this allocation become inaccurate for
any reason, including but not
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limited to assumptions or refusals to assume obligations under Section 2.8,
WSMP shall have no obligation as among the Sellers to pay anything further to
any Seller who may have received less than allocated, or who holds a Promissory
Note against which certain payments were offset. Sellers shall settle among
themselves all such discrepancies, and proof by WSMP, of having paid or assumed
Assumed Liabilities in an amount equal to $954,500 shall be a complete defense
to any such claim.
ARTICLE III
DELIVERY OF CONSIDERATION
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On the Closing Date, WSMP shall deliver to the appropriate Sellers
certificates representing 223,611 shares of WSMP, Inc. common stock. These
shares shall be restricted in the hands of the recipients.
The shares of WSMP Stock shall be distributed at the Closing as
follows:
F & H 53,324 Davidson 23,963
Western 57,681 Mocksville 48,840
Northwest -0- CFR 39,803
On the Closing Date, WSMP shall deliver to the appropriate Sellers cash
in the total sum of $500.00, and shall issue and deliver to the appropriate
Sellers Promissory Notes in the total face amount of $800,000.
ARTICLE IV
REPRESENTATIONS OF THE SELLERS
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Section 4 REPRESENTATIONS OF SELLERS. The Sellers represent, warrant
and agree, jointly and severally, as follows:
Section 4.1 CORPORATE EXISTENCE. Sellers are corporations duly
incorporated, validly existing and in good standing under the laws of North
Carolina and are duly qualified to do business as foreign corporations and are
in good standing in each jurisdiction in which the ownership or use of their
assets or properties, or the conduct or nature of their business, makes such
qualification necessary (except for jurisdictions in which the failure to so
qualify or be in good standing would not be reasonably likely to have a Material
Adverse Effect). The Sellers have all requisite corporate power
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and authority to conduct their businesses and own their properties as now
conducted and owned.
Section 4.2 POWER AND AUTHORITY. The Sellers have all requisite
corporate power and authority, and have taken all required corporate and other
action necessary, to execute, deliver and perform this Agreement and consummate
the transactions contemplated hereto. None of the foregoing actions will (i)
violate any provision of the Bylaws or Certificate of Incorporation of the
Sellers, (ii) result in the breach of or constitute under any contract,
agreement or instrument to which any of the Sellers is a party or by which it is
bound, (iii) result in the creation or imposition of any lien, claim or
encumbrance on any assets of the Sellers, (iv) give any Person rights to
terminate any contracts or agreement with the Sellers or otherwise to exercise
rights against the Sellers, or (v) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court, tribunal or
governmental entity applicable to or bearing upon the Sellers or any of their
assets or businesses, except, as to (ii), (iii), and (iv) above, as would not
have a Material Adverse Effect upon the Restaurants.
Section 4.3 ENFORCEABILITY. This Agreement and all agreements and
documents executed and delivered in connection herewith by the Sellers have
been, or will be as of the Closing Date, duly executed and delivered by the
Sellers and, assuming that this Agreement is duly executed and delivered by, and
is within the power and authority of WSMP, constitutes, or will constitute, the
legal, valid and binding obligation of the Sellers enforceable against each of
them in accordance with their respective terms, except as the enforceability
thereof may be limited by bankruptcy, insolvency, moratorium, reorganization or
other similar laws affecting creditors' rights generally and subject to general
principles of equity (regardless of whether considered in a proceeding in
equity or at law).
Section 4.4 SUBSIDIARIES AND INVESTMENTS. The Sellers do not own,
directly or indirectly, of record or beneficially, any capital stock or other
Interest in any Person.
Section 4.5 CONSENTS, APPROVALS AND NON-CONTRAVENTION. Neither the
execution, delivery and performance of this Agreement by the Sellers, nor the
consummation of any transaction contemplated hereunder, will:
(a) require any consent or approval of, filing or taking of
any other action with, or notice to, any Person;
(b) violate any contract, agreement, instrument or other
arrangement to which the Sellers are parties by which they are bound;
(c) violate (i) any order, writ, judgment, injunction or
decree or (ii) any statute, law, rule or regulation of any
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court, tribunal or governmental entity or authority applicable to or
bearing upon the Sellers or any of their assets or business.
Section 4.6 BOOKS AND RECORDS. The Sellers have made and kept (and on
or before the Closing Date, have given WSMP access to) books and records and
accounts, which, in all material respects, accurately and fairly reflect the
activities of the Sellers concerning the Restaurants. To the best knowledge of
the Sellers, the signatures appearing on all documents contained therein are the
true signatures of the Persons purporting to have signed the same. All actions
reflected in said books and records were duly and validly taken in compliance
with applicable laws.
Section 4.7 MATERIAL ADVERSE CHANGE. Since January 1, 1997, concerning
the Restaurants (i) there has been no Material Adverse Change and (ii) there has
been no Material Adverse Effect on the business, prospects, financial condition,
operations, property or affairs of the Sellers, whether or not insured against.
Section 4.8 EVENTS SUBSEQUENT TO JANUARY 1, 1997. Since January 1, 1997
except as contemplated by this Agreement, the Sellers have not (i) borrowed any
amount or incurred or become subject to any liability (absolute, accrued or
contingent), except current liabilities incurred and liabilities under contracts
entered into in the ordinary course of business, (ii) mortgaged, pledged or
subjected to any lien or encumbrance any of its assets, tangible or intangible,
other than liens on current real property taxes not yet due and payable, (iii)
sold, assigned or transferred any of its tangible assets except in the ordinary
course of business, (iv) suffered any substantial loss of property or waived
any right of substantial value other than in the ordinary course of business,
(v) made any material change in the manner of business or operations of the
Sellers, (vi) changed the accounting methods or practices of the Sellers except
as required or permitted by GAAP, (vii) entered into any transaction except in
the ordinary course of business or as otherwise contemplated hereby or (viii)
entered into any commitment, obligation, understanding or other arrangement,
contingent or otherwise, to effect, directly or indirectly, any of the
foregoing.
Section 4.9 ABSENCE OF UNDISCLOSED LIABILITIES. Since January 1, 1997,
the Sellers have had no material liabilities (matured or unmatured, fixed or
contingent), which are not fully disclosed to WSMP and stated herein, or any
material loss contingency (as defined in Statement of Financial Accounting
Standards No. 5) whether or not required by GAAP to be shown on the Sellers'
Financial Statements, except (i) obligations to perform under commitments
incurred in the ordinary course of business, and (ii) tax and related
liabilities which have been disclosed pursuant to Section 4.10 below.
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Section 4.10 TAXES. The Sellers have accurately completed and filed or
will file within the time prescribed by law (including extensions of time
approved by the appropriate taxing authority) all tax returns and reports
required to be filed with the Internal Revenue Service, the State of North
Carolina, any other states or governmental subdivisions and all foreign
countries except, in the case of state, local and foreign tax returns, where the
failure to file would not have a Material Adverse Effect; have paid all taxes,
interest, penalties, assessments or deficiencies shown to be due (or, to the
knowledge of the Sellers, claimed by such authority or jurisdiction to be due)
on or in respect of such tax returns and reports; and has established adequate
reserves for all taxes accrued but not yet payable. Sellers know of (i) no
federal, state, county, municipal or foreign taxes (or other liabilities in
respect thereof) which are due and payable by Sellers which have not been so
paid, (ii) no federal, North Carolina, state, county, municipal or foreign tax
returns or reports which are required to be filed which have not been filed,
(iii) no unpaid assessment for, or any fact which would constitute grounds for
the assessment of, additional taxes or penalties for any fiscal period or any
basis, thereof and (iv) no material tax lien, whether imposed by any federal,
state, county, municipal or foreign taxing authority, outstanding against the
assets or business of any of the Sellers. Neither the federal nor state income
tax returns of the Sellers have been audited. Proper and accurate amounts have
been withheld by the Sellers from their employees for all periods in compliance
with the tax, social security and any employment withholding provisions of
applicable federal and state law, and proper and accurate federal and state
returns have been filed by all of the Sellers for all periods for which returns
were due with respect to employee income tax withholding, social security and
unemployment taxes, and the amounts shown thereon to be due and payable have
been paid in full or provision therefor included on the books of the Sellers in
accordance with and to the extent required by GAAP.
Section 4.11 LITIGATION. There are no actions, suits, proceedings,
orders, investigations or claims pending or, to the best of Sellers' knowledge,
threatened against or affecting their assets or businesses or any of their
directors or employees, at law or in equity, before any court, arbitration
panel, tribunal or governmental department, commission, board, bureau, agency or
instrumentality which could have a Material Adverse Effect. Sellers are not in
default with respect to any judgment, order writ, injunction or decree of any
court or governmental agency, except where such default will not have a Material
Adverse Effect, and there are no unsatisfied judgments against Sellers or the
business or activities of Sellers other than any as to which the time for
payment has not elapsed, including by reason of any appeal.
The parties acknowledge that Sellers and Hash Management, Inc. are in
litigation concerning the Sellers' workers' compensation
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Insurance coverage with Travellers, with the amount in dispute in excess of
$175,000. Sellers shall be solely responsible for this and any other litigation
concerning the Sellers or Hash Management, Inc., and shall hold WSMP harmless
from any liability thereunder.
Section 4.12 INSURANCE. Sellers hold valid policies in full force and
effect covering all of the insurance required to be maintained by it pursuant to
Section 6.17 hereof. There are currently no claims pending against Sellers under
any insurance policies currently in effect and covering the property business or
employees of Sellers, and all premiums with respect to the policies maintained
by Sellers have been maintained to date.
Section 4.13 CONFLICTS OF INTERESTS. Neither Sellers nor any officer,
employee, agent or any other person acting on behalf of them have, directly or
indirectly, given or agreed to give any money, gift or similar benefit (other
than legal price concessions to customers in the ordinary course of business) to
any customer, supplier, employee or agent of a customer or supplier, or official
or employee of any governmental agency or instrumentality of any government
(domestic or foreign) or other Person who was, is or may be in a position to
help or hinder the business of Sellers (or assist in connection with any actual
or proposed transaction) which (i) might subject Sellers to any damage or
penalty in any civil, criminal or governmental litigation or proceeding (ii) if
not given in the past, might have had a Material Adverse Effect on Sellers, or
(iii) if not continued in the future, might have a Material Adverse Effect.
Section 4.14 PERMITS; COMPLIANCE WITH LAWS; OTHER AGREEMENTS. All
material Permits which are necessary or required for the conduct of the business
of Sellers' Restaurants as currently conducted and as contemplated to be
conducted, are validly issued and in full force and effect, and no Seller is in
violation of any such Permit. The Sellers and the conduct of their businesses
are in compliance with all applicable laws, statutes, ordinances, rules,
regulations and orders of any federal, foreign, state or local government and
any other governmental department or agency, and any judgment, decision, decree
or order of any court or governmental department or authority except where the
failure to comply would not have a material Adverse Effect on Sellers. Sellers
have not received any written notice to the effect that it is not in compliance
with any such statute, regulation, order, ordinance or other law or judgments,
decisions or decrees where the failure to comply would have a Material Adverse
Effect on Sellers.
Section 4.15 INVESTMENT COMPANY ACT. None of the Sellers is an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
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Section 4.16 BROKERS. No Seller is obligated to pay any fee or
commission in connection with, any broker, finder or other similar Person in
connection with any of the transactions contemplated by this Agreement.
Section 4.17 DISCLOSURE. This Agreement and the other items delivered
in connection with this Agreement do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which they were made, not misleading. There is no fact which Sellers have not
disclosed to WSMP in writing and of which any of its officers, directors or
executive employees is aware (other than general economic conditions) and which
has had or would reasonably be expected to have a Material Adverse Effect upon
the existing or expected financial condition, operating results, assets,
customer or supplier relations, employee relations or business prospects of
Sellers.
Section 4.18 CONTRACTS AND COMMITMENTS.
(a) Sellers are not parties to, or otherwise bound by, (i) any
written or oral contract or instrument or other restriction which
individually or in the aggregate could have a Material Adverse Effect
on the Restaurants' business, financial condition, operations,
property or affairs of Sellers or (ii) any written or oral:
(1) agreement or indenture relating to the borrowing of money
or the mortgaging, pledging or otherwise placing a lien on any
material asset or material group of assets of Sellers
concerning the Restaurants;
(2) lease or agreement concerning the assets being sold as
part of this Agreement, under which Sellers are lessees of or
hold or operate any property, real or personal, owned by any
other party, except for the Leases;
(3) lease or agreement under which a Seller is lessor of or
permits any third party to hold or operate any property, real
or personal, owned or controlled by a Seller and being sold as
part of this Agreement;
(4) agreement concerning the Restaurants with a term of more
than six (6) months which is not terminable by Sellers upon
less than thirty (30) days' notice without penalty;
(5) contract for the future purchase of fixed assets or for
the future purchase of materials, supplies or equipment by the
Restaurants in excess of their normal operating requirements;
(6) guaranty of any obligation for borrowed money or
otherwise, voting trust or agreement, stockholders agreement,
pledge agreement, buy-sell agreement or first refusal or
preemptive rights agreement relating to any
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securities of Sellers;
(7) any other agreement which is material to the operations of
the Restaurants and the Restaurants' business prospects.
(b) Concerning the Leases and any other contracts assigned to
WSMP, all of the Leases, contracts, agreements and instruments are
valid, binding and enforceable against Sellers in accordance with their
respective terms; Sellers have performed all material obligations
required to be performed by them under such Leases, contracts,
agreements and instruments and Sellers are not in default under or in
breach of, nor in receipt of any claim of default or breach under, any
such Lease, contract, agreement or instrument to which Sellers are
subject. No event has occurred which with the passage of time or the
giving of notice or both would result in a material default, breach or
event of noncompliance under any such Lease, contract, agreement or
instrument; Sellers have no present expectation or intention of not
fully performing all such obligations; Sellers do not have any
knowledge of any breach or anticipated breach by the other parties to
any Lease, contract or commitment to which Sellers are parties;
and Sellers are not parties to any contract requiring any of them to
purchase or sell goods or services or lease property above or below (as
the case may be) prevailing market prices and rates.
Section 4.19 SUPPLIERS. As of the date hereof, no supplier to the
Restaurants which was significant to Sellers during the period ending December
31, 1996 or which has been significant to Sellers thereafter, has terminated,
materially reduced or threatened to terminate or materially reduce its provision
of products or services to Sellers' Restaurants as the case may be.
Section 4.20 COMPLIANCE WITH ENVIRONMENTAL LAWS.
(a) Definitions. The following terms, when used in this
Section 4.20, shall have the following meanings. Any of these terms
may, unless the context otherwise requires, be used in the singular or
the plural depending on the reference.
(i) "Sellers". For purposes of this Section, the term the
"Sellers" shall include (i) all affiliates and subsidiaries of
the Sellers, (ii) all partnerships, joint ventures and other
entities or organizations in which any of the Sellers were at
any time or are parties, joint venturers, members or
participants, (iii) all predecessor or former corporations,
partnerships, joint ventures, organizations, businesses or
other entities, whether in existence as of the date hereof or
at any time prior to the date hereof, the assets or
obligations of which have been acquired or assumed by any of
the Sellers or to which any of the Sellers have succeeded, and
(iv) all
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Real Estate which is the subject of the Leases operated by
such entities, either currently or in the past.
(ii) "Release" shall mean and include any spilling, leaking,
pumping, pouring, emitting, emptying, discharging, injecting,
escaping, leaching, dumping or disposing into the environment
or the workplace of any Hazardous Substance, and otherwise as
defined in any Environmental Law.
(iii) "Hazardous Substance" shall mean any quantity of
asbestos in any form, urea formaldehyde, PCBs, radon gas,
crude oil or any fraction thereof, all forms of natural gas,
petroleum products or by-products, any radioactive substance,
any toxic, carcinogenic, infectious, reactive, corrosive,
ignitible or flammable chemical or chemical compound and any
other hazardous substance, material or waste subject to
regulation, control or remediation under the Environmental
Laws.
(iv) "Environmental Laws" shall mean all federal, state, local
or foreign laws, statutes, ordinances, regulations, rules,
judgments, orders, notice requirements, court decisions,
agency guidelines or principles of law, restrictions, and
Permits which regulate or relate to the protection or
clean-up of the environment, the use, treatment, storage,
transportation, handling or disposal of Hazardous Substances,
the preservation or protection of waterways, groundwater,
drinking water, air, wildlife, plants or other natural
resources, or the health and safety of persons or property,
including, without limitation, protection of the health and
safety of employees.
(b) Compliance with Environmental Laws. Sellers are in
substantial compliance with all applicable Environmental Laws.
Environmental Laws shall include without limitation Hazardous Materials
Transportation Act (49 U.S.C. Section 1801 et seq.), Occupational
Safety and Health Act (29 U.S.C. Section 651 et seq.), Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), Resource
Conservation & Recovery Act (42 U.S.C. Section 6901 et seq.) ("RCRA"),
Safe Drinking Water Act (21 U.S.C. Section 349, 42 U.S.C. Section
201.300f), Toxic Substances Control Act (15 U.S.C. Section 2601 et
seq.), Clean Air Act (42 U.S.C. Section 7401 et seq.) and Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C.
Section 9601 et seq.)("CERCLA"), or any other similar federal, state or
local law of similar effect, each as amended.
(c) Permits Required. The consummation of any of the
transactions contemplated by this Agreement will not require an
application for issuance, renewal, transfer or extension of, or any
other administrative action regarding, any Permit required under any
Environmental Law.
(d) Notice of Violation. There is not now pending or
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threatened any action against the Sellers, nor have the Sellers
received any notice at any time, alleging that any of them are or were
responsible or potentially responsible for a Release of Hazardous
Substances pursuant to any Environmental Law.
(e) Judgments. There are no consent decrees, judgments,
judicial or administrative orders or agreements with, or liens by, any
governmental authority or quasi-governmental entity relating to any
Environmental Law which regulate, obligate or bind the Sellers or any
Real Estate or Real Estate formerly owned or leased by the Sellers.
(f) Environmental Conditions. There are no present or past
Environmental Conditions (as defined below) in any way relating to the
Sellers. "Environmental Conditions" means the Release or threatened
Release of any Hazardous Substance (whether or not upon the Real
Property which is the subject of the Leases which is owned or leased
by the Sellers or other property of the Sellers and whether or not
such pollution constituted at the time thereof a violation of any
Environmental Law) as a result of which the Sellers have or
reasonably may become liable to any person or by reason of which the
Real Property which is owned or leased by the Sellers or any of their
assets reasonably may suffer or be subjected to any lien.
(g) Environmental Audits or Assessments. True, complete and
correct copies of the written reports, and all parts thereof, including
any drafts of such reports if such drafts are in the possession or
control of the Sellers, of all environmental audits or assessments
which have been conducted on the Real Estate by the Sellers within the
past five years, either by the Sellers or any attorney, environmental
consultant or engineer engaged for such purpose, have been delivered to
WSMP.
(h) Indemnification Agreements. The Sellers are not parties,
whether as direct signatory or as successor, assign or third party
beneficiary, or otherwise bound, to any lease or other contract under
which the Sellers are obligated, directly or indirectly, by any
representation, warranty, indemnification, covenant, restriction or
other undertaking concerning any material Environmental Condition
concerning any of the Real Estate.
(i) Releases or Waivers. The Sellers have not released any
other Person from any claim under any Environmental Law or waived any
rights concerning any Environmental Condition.
Section 4.21 PROPERTIES. Sellers own their leasehold interests under
the Leases free and clear of any liens, claims, pledges, mortgages,
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charges, options or other encumbrances, and the right to possession of, all
of the Real Estate leased under the Leases of Sellers and the material tangible
and intangible property purchased and sold hereunder. The Leases and the
personal property owned or leased by Sellers constitutes all of the real or
personal property that is material to and necessary for the operation of the
business of the Restaurants purchased and sold hereunder. The Real Estate,
which is subject of the Leases, is in a state of repair and maintenance
sufficient for its intended use, reasonable wear and tear excepted.
Section 4.22 ACCREDITED INVESTORS.
(a) Each of the Sellers (i) is an "accredited investor" within
the meaning of Rule 501 under the Securities Act and was not organized
for the specific purpose of acquiring the WSMP Stock or (ii) has
sufficient knowledge and experience in investing in companies similar
to WSMP so as to be able to evaluate the risks and merits of its
investment in WSMP and it is able financially to bear the risks
thereof;
(b) Each of the Sellers is a resident of, and is domiciled in,
the State of North Carolina; the transactions contemplated by this
Agreement have been negotiated solely in the State of North Carolina;
and, without limiting the generality of the foregoing, WSMP's offer to
sell the WSMP Stock to the Sellers (i) originated within the State of
North Carolina, (ii) was directed to and received by each Seller within
the State of North Carolina, and (iii) has been accepted by
communications to WSMP made solely in the State of North Carolina.
(c) Each of the Sellers has had an opportunity to discuss the
business, management and financial affairs of WSMP with WSMP's
management and has received (or had made available to it) any financial
and business documents requested by it;
(d) The WSMP Stock being purchased by each of the Sellers is
being acquired for its own account, for investment, and not with a view
to or for sale in connection with any unregistered distribution thereof
in violation of the Securities Act or any state securities act;
(e) Each of the Sellers understands that unless sold pursuant
to Section 11.1 hereunder (i) the WSMP Stock must be held for two
years unless a subsequent disposition thereof is registered under the
Securities Act or is exempt from such registration, (ii) the WSMP
Stock will bear a legend to such effect and (iii) WSMP will make or
cause to be made a notation on its transfer books to such effect;
(f) None of the Sellers has any contract, arrangement or
understanding with any broker, finder or similar agent with respect to
the transactions contemplated by this Agreement.
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Section 4.23 EMPLOYEES.
(a) Hiring of Sellers' Employees. As part of this Agreement,
WSMP will become the employer of such of the employees involved in the
operation or supervision of the Restaurants that it desires to hire.
None of the employees of the Sellers involved in the operation or
supervision of the Restaurants has an employment agreement or
understanding, whether oral or written, with Sellers which is not
terminable on notice by Sellers without cost or other liability to
Sellers. The parties agree that Xxxx Xxxx and Xxx Xxxxxx will be
retained by WSMP. Although they are employees of Hash Management,
Inc., Sellers represent there are no employment agreements or
understandings, whether oral or written between those persons and
any employer. WSMP shall have no liability for any accrued or unpaid
benefits or vacation pay owed to the employees of Sellers of Hash
Management by their present employer.
(b) Health Insurance. Sellers presently maintain health
insurance for their employees. It is WSMP's intent to allow employees
who it hires to become covered under WSMP's health insurance policy;
however, Sellers shall be solely responsible for any claims made by
Sellers' employees at any time prior to their becoming covered under
WSMP's health insurance policy.
(c) 401(k) Plan. Sellers presently maintain a 401(k) plan for
the benefit of their employees. WSMP may, at WSMP's option, merge the
Sellers' Plan into its own plan, or may otherwise assimilate the
Sellers' plan into its own. WSMP shall have no liability for Sellers'
plan or for any employee contribution prior to such time, if any, as it
assimilates such plan, and shall have no liability for any
administration or trustee error or any payment, penalty or interest
associated therewith, if such occurred prior to the time of such
assimilation. WSMP may also choose not to merge the plans, and if so,
Sellers will terminate their 401(k) plan prior to the Closing, so that
Sellers' employees will be eligible to receive distributions hereunder
and rollover those proceeds into WSMP's plan.
(d) Workers' Compensation Benefits. WSMP shall have no
liability for any injury to any of Sellers' employees, or any Workers'
Compensation claim or benefit arising therefrom, for any event
occurring prior to the time of WSMP assuming such coverage.
Section 4.24 TAX CONSEQUENCES. Sellers are completely responsible for
determing the tax consequences to them of this sale. WSMP has not evaluated this
for the Sellers or their shareholders, either directly or indirectly through its
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accountants, and Sellers are solely responsible for determining their tax
consequences.
ARTICLE V
REPRESENTATIONS OF WSMP
-----------------------
Section 5 REPRESENTATIONS WITH RESPECT TO WSMP. WSMP represents,
warrants and agrees as follows:
Section 5.1 CORPORATE EXISTENCE. WSMP is a corporation duly
incorporated, validly existing and in good standing under the laws of North
Carolina and is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction in which the ownership or use of its assets
or properties, or the conduct or nature of its business, makes such
qualification necessary (except for jurisdictions in which the failure to so
qualify or be in good standing would not be reasonably likely to have a Material
Adverse Effect.) WSMP has all requisite corporate power and authority to conduct
its business and own its properties as now conducted and owned.
Section 5.2 POWER AND AUTHORITY. WSMP has all requisite corporate power
and authority, and has taken all required corporate and other action necessary,
to execute, deliver and perform this Agreement and consummate the transactions
contemplated hereto. WSMP has all requisite corporate power and authority, and
has taken all required corporate and other action necessary to issue and sell
the WSMP Stock to the Sellers as herein provided. None of the foregoing actions
will (i) violate any provision of the Bylaws or Certificate of Incorporation of
WSMP, (ii) result in the breach of or constitute a default under any contract,
agreement or instrument to which WSMP is a party or by which it is bound, (iii)
result in the creation or imposition of any lien, claim or encumbrance on any
assets of WSMP, (iv) give any Person rights to terminate any contracts or
agreements with WSMP or otherwise to exercise rights against WSMP, or (v)
violate any order, writ, judgment, injunction, decree, statute, rule or
regulation of any court, tribunal or governmental entity applicable to or
bearing upon WSMP or any of its assets or businesses, except, as to (ii), (iii)
and (iv) above, as would not have a Material Adverse Effect.
Section 5.3 ENFORCEABILITY. This Agreement and all agreements and
documents executed and delivered in connection herewith have been, or will be as
of the Closing Date, duly executed and delivered by WSMP and, assuming that this
Agreement is duly executed and delivered by, and is within the power and
authority of the Sellers, constitutes, or will constitute, the legal valid and
binding obligation of WSMP enforceable against WSMP in accordance with its
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respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, moratorium, reorganization or other similar laws
affecting creditors' rights generally and subject to general principles of
equity (regardless of whether considered in a proceeding in equity or at law).
Section 5.4 CAPITALIZATION. Upon issuance and delivery to the Sellers
hereunder, the WSMP Stock will be duly authorized, validly issued, fully paid
and non-assessable and will be free and clear of any liens, encumbrances,
preemptive rights, escrows, options, rights of first refusal or other
agreements, arrangements, commitments, understandings or obligations, whether
written or oral, or any other restrictions affecting rights and other incidents
of record and beneficial ownership, other than (i) as set forth herein and (ii)
restrictions on transferability imposed generally under the Securities Act and
under the securities laws of the several states and the rules and regulations
issued in respect thereto (such state laws, rules and regulations being,
collectively, ""Blue Sky Laws"). Assuming the accuracy of the representations
and warranties and the compliance with the covenants made by Sellers herein,
the issuance and delivery of the shares of WSMP Stock is exempt from the
registration requirements of the Securities Act and the Blue Sky Laws.
Section 5.5 CONSENTS, APPROVALS AND NON-CONTRAVENTION. Neither the
execution, delivery and performance of this Agreement by WSMP, nor the
consummation of any transaction contemplated hereunder, nor the issuance, sale
or delivery of the WSMP Stock to the Sellers as contemplated herein will:
(a) require any consent or approval of, filing or taking of
any other action with, or notice to, any Person;
(b) violate any contract, agreement, instrument or other
arrangement to which WSMP is a party or by which any of them
is bound;
(c) violate (i) any order, writ, judgment, injunction or
decree or (ii) any statute, law, rule or regulation of any
court, tribunal or governmental entity or authority applicable
to or bearing upon WSMP or any of their respective assets or
business;
except, as to clauses (a), (b) and (c)(ii) above, as would not
have a Material Adverse Effect.
Section 5.6 SEC FILINGS. The WSMP Registration Statement, the
Prospectus and any document incorporated by reference therein (i) will be, at
the time of filing with the SEC, and will conform, when it becomes effective or
is filed with the SEC, as the case may be, in all material respects with the
requirements of the Securities Act and (ii) did not at the time they were filed,
or will not, when it becomes effective or is filed with the SEC, as the case may
be, contain any untrue statement of a material fact or omit to state a
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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.
Section 5.7 MATERIAL ADVERSE CHANGE. Since December 31, 1996,
(i) there has been no Material Adverse Change and (ii) there has been no
Material Adverse Effect on the business, prospects, financial condition,
operations, property or affairs of WSMP, whether or not insured against.
Section 5.8 PERMITS; COMPLIANCE WITH LAWS; OTHER AGREEMENTS. All
material Permits which are necessary or required for the conduct of the business
of WSMP as currently conducted and as contemplated to be conducted (pursuant to
the WSMP Registration Statements) have been validly issued and are in full force
and effect, and WSMP is not in violation of any such Permit. WSMP and the
conduct of its businesses are in compliance with all applicable laws, statutes,
ordinances, rules, regulations and orders of any federal, foreign, state or
local government and any other governmental department or agency, and any
judgment, decision, decree or order of any court or governmental agency,
department or authority except where the failure to comply would not have a
Material Adverse Effect on WSMP. WSMP has not received any written notice to the
effect that it is not in compliance with any such statute, regulation, order,
ordinance or other law or judgments, decisions or decrees where the failure to
comply would have a Material Adverse Effect on WSMP.
Section 5.9 INTELLECTUAL PROPERTY RIGHTS. WSMP owns all material
trademarks, service marks, trade names, copyrights, rights or licenses to use
the same, and any and all applications therefore, presently held by WSMP or of
which WSMP is a licensor or licensee, and all intellectual property and similar
proprietary information (the "WSMP Intellectual Property") necessary to permit
WSMP to conduct its businesses as currently conducted and as contemplated to be
conducted pursuant to the WSMP Registration Statement. No claim is pending or,
to the best of WSMP's knowledge, threatened to the effect that the operations of
WSMP infringe upon or conflict with the asserted rights of any other Person
under the WSMP Intellectual Property, and there is no basis for any such claim
(whether or not pending or threatened). No claim is pending or threatened to the
effect that the WSMP Intellectual Property owned or licensed by WSMP, or which
WSMP otherwise has the right to use, is invalid or unenforceable by WSMP, and
there is no known basis for any such claim (whether or not pending or
threatened). To the best of WSMP's knowledge, all proprietary trade secrets
developed by or belonging to WSMP have been kept confidential.
Section 5.10 INVESTMENT COMPANY ACT. WSMP is not an "investment
company" or a company "controlled" by an "investment company" within the meaning
of the Investment Company Act of 1940, as amended.
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Section 5.11 BROKERS. WSMP is not obligated to pay any fee or
commission in connection with, any broker, finder or other similar Person in
connection with the offer or sale of the WSMP Stock to the Sellers as
contemplated herein or any of the transactions contemplated by this Agreement.
Section 5.12 NO INTEGRATION. WSMP has not, either directly or through
any agent, offered any equity securities of WSMP to, or solicited any offers to
acquire any equity securities of WSMP from, or otherwise approached, negotiated
or communicated in respect of any equity securities with, any Person in such a
manner as to require that the offer or sale of the WSMP Stock to the Sellers be
registered pursuant to the Securities Act or any Blue Sky Laws.
Section 5.13 DISCLOSURE. There is no fact which WSMP has not disclosed
to the Sellers in writing and of which any of their officers, directors or
executive employees are aware (other than general economic conditions) and which
has had or would reasonably be expected to have a Material Adverse Effect upon
the existing or expected financial condition, operating results, assets,
customer or supplier relations, employee relations or business prospects of WSMP
taken as a whole.
Section 5.14 OFFERING OF THE WSMP STOCK. Neither WSMP nor any person
authorized or employed by WSMP as agent, broker, dealer or otherwise in
connection with the offering or sale of the WSMP Stock or any security of WSMP
similar to the WSMP Stock has offered the WSMP Stock or any such similar
security for sale to or solicited any offer to buy the WSMP Stock or any such
similar security from, or otherwise approached or negotiated with respect
thereto with, any person or persons, and neither WSMP nor any person acting on
its behalf has taken or will take any other action (including, without
limitation, any offer, issuance or sale of any securities of WSMP under
circumstances which might require the integration of such security with the WSMP
Stock under the Securities Act or the rules and regulations of the SEC
thereunder), in either case so as to subject the offering, issuance or sale of
the WSMP Stock to the registration provisions of the Securities Act.
ARTICLE VI
COVENANTS
---------
Section 6.1 CONDUCT OF BUSINESS OF THE SELLERS. During the period from
the date of this Agreement to the Closing Date or the termination of this
Agreement, whichever first occurs, each of the Sellers shall conduct their
operations and business according to its ordinary and usual course of business
and use its reasonable best efforts to preserve intact its business
organizations and
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maintain satisfactory relationships with licensors, suppliers, distributors,
clients and others having material business relationships with it. Each of the
Sellers shall promptly notify (but in any event within two (2) business days)
WSMP of any emergency or other change in the normal course of any of their
businesses or in the operation of their Restaurants (including any default
under any material agreement) or of any other Material Adverse Change (or event
or occurrence reasonably expected to result in a Material Adverse Change)
affecting such Seller or Sellers (including, without limitation, governmental
complaints, investigations or hearings (or communications indicating that the
same may be contemplated), or adjudicatory proceedings involving any of the
parties, their businesses or any of their Restaurants or Restaurant assets).
Each of the Sellers shall give WSMP written notification of any material change
taking place after the delivery of this Agreement and other documents which
would have been reflected in such documents had such changes occurred prior to
the time such documents were first delivered.
Section 6.2 EXCLUSIVE DEALING. During the period from the date of this
Agreement to the earlier of the Closing Date or termination of this Agreement,
each of the Sellers shall refrain from taking any action to, directly or
indirectly, encourage, initiate or engage in discussions or negotiations with,
or provide any information to, any other Person, concerning any purchase of any
Interest in any of the Sellers or any merger, sale of substantial assets (other
than as contemplated by this Agreement) or similar transaction involving the
Sellers.
Section 6.3 RESTRICTIVE AGREEMENTS PROHIBITED. None of the Sellers
shall become a party to any Agreement, which by its terms restricts such party's
performance of this Agreement or the consummation of the transactions
contemplated hereunder.
Section 6.4 INDEBTEDNESS. Except as expressly permitted by the terms of
this Agreement, none of the Sellers shall create, incur, assume or permit to
exist any indebtedness for borrowed money having any effect whatsoever upon the
Restaurants, except (i) all deferred taxes, and (ii) the Assumed Indebtedness.
Section 6.5 DIVIDENDS AND DISTRIBUTIONS; ACQUISITION OF CAPITAL STOCK.
Except as contemplated by the WSMP Registration Statement, neither the Sellers
nor WSMP shall declare, pay or make any dividend or distribution with respect
to, or purchase, redeem, retire, decease or otherwise acquire for value any
Interest in any of the Sellers or WSMP, as the case may be.
Section 6.6 BYLAWS, CERTIFICATE OF INCORPORATION. Neither the Sellers
nor WSMP shall modify or amend in any respect their Bylaws or Certificate of
Incorporation.
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Section 6.7 ADDITIONAL NEGATIVE COVENANTS OF THE SELLERS. From the date
hereof until the Closing Date, the Sellers covenant and agree, jointly and
severally that they shall not:
(a) amend, modify, terminate, waive or otherwise alter the
contracts of Section 4.18;
(b) enter into any written employment agreement with any
Person;
(c) knowingly take any action or omit to take any action which
would result in the material violation by the Sellers of any
law applicable to this transaction or cause a breach in any
material respect by the Sellers of any of the representations
and warranties of the Sellers set forth in this Agreement;
(d) enter into any covenant or agreement other than such
agreements or contracts entered into in the ordinary course
that are reasonably required to preserve, protect, or advance
Sellers' rights or interests in the business of Sellers; or
(e) take any other action which would reasonably be expected
to cause a material decrease in the value of the Sellers'
Restaurants business.
Section 6.8 ADDITIONAL NEGATIVE COVENANTS OF WSMP. From the date hereof
until the Closing Date, WSMP covenants and agrees that it shall not:
(a) knowingly take any action or omit to take any action which
would result in the material violation of any law applicable
to this transaction or cause a breach in any material respect
of any of the representations and warranties of WSMP set forth
in this Agreement; or
(b) take any other action which would reasonably be expected
to cause a material decrease in the value of the businesses of
WSMP taken as a whole.
Section 6.9 CORPORATE EXISTENCE. The Sellers and WSMP shall maintain
their respective corporate existence, rights and franchises in full
force and effect.
Section 6.10 COMPENSATION. The Sellers shall not increase their
restaurant management and employees' compensation in excess of that compensation
customarily paid to management in companies of similar size, of similar
maturity, and in similar businesses.
Section 6.11 NONCOMPETITION AGREEMENT AND PERSONAL GUARANTEE. The
Sellers and WSMP shall obtain the Noncompetition Agreement from Xxxxx X. Xxxx.
Sellers and WSMP shall also obtain Hash's personal guaranty in favor of WSMP
concerning the obligations, representations, warranties, covenants, indemnities,
and liabilities of the Sellers and each of them in arising out of, or pursuant
to this Agreement, (the "Personal Guarantee"), in
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substantially the form attached hereto as Exhibit C.
Section 6.12 ADDITIONAL AFFIRMATIVE COVENANTS. Each of the Sellers
shall use its best efforts to:
(a) maintain and keep its properties in good repair, working
order and condition, reasonable wear and teat excepted, and
from time to time make all necessary repairs, renewals and
replacements, so that its Restaurants' businesses may be
properly conducted at all times, except where the failure to
maintain and preserve such properties would not have a
Material Adverse Effect;
(b) pay and discharge when payable all taxes, assessments and
governmental charges imposed upon the Real Estate or the
Restaurants or upon the income or profits therefrom (in each
case before the same becomes delinquent and before penalties
accrue thereon) and all claims for labor, materials or
supplies to the extent to which the failure to pay or
discharge such obligations would reasonably be expected to
have a Material Adverse Effect, unless and to the extent that
the same are being contested in good faith and by appropriate
proceedings;
(c) comply with all other material obligations which it incurs
pursuant to any contract or agreement as such obligations
become due to the extent to which the failure to so comply
would reasonably be expected to have a Material Adverse
Effect, unless and to the extent that the same are being
contested in good faith and by appropriate proceedings; and
(d) comply with all applicable laws, rules, regulations and
orders of all governmental authorities, the violation of which
would reasonably be expected to have a Material Adverse
Effect.
Section 6.13 BEST EFFORTS. Subject to the terms and conditions herein
provided, each of the parties hereto agrees to use its best efforts to take, or
cause to be taken, all action, and to do or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement.
Section 6.14 DISCLOSURE TO PARTIES. Sellers and WSMP covenant and agree
that if any party should become aware, prior to Closing, that any of its
representations, warranties or covenants is inaccurate or incapable of being
performed, written notice of such inaccuracy or incapability shall be promptly
given to the other parties. Nothing contained in this Section 7.14 shall relieve
the party bound by such representation, warranty or covenant from complying
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with all terms and conditions of this Agreement applicable to it.
Section 6.15 PUBLIC ANNOUNCEMENTS. The Sellers and WSMP will mutually
agree as to timing, form and content before issuing any press release or
otherwise making any public statements with respect to the transactions
contemplated herein and shall not issue any such press release or make any such
public statement prior to reaching such mutual agreement, except as may be
required by law (as determined by counsel to WSMP). In the event prior to the
Closing Date any party hereto is required by law or by obligations pursuant to
any listing agreement with any securities exchange on which their shares are
traded, after consultation with counsel, to make a statement with respect to the
transactions contemplated herein, such party shall notify in writing the other
party or parties hereto as to the timing, form and content of such statement.
Section 6.16 CONFIDENTIALITY. Whether or not the transactions
contemplated hereby are consummated, each of the parties hereto agrees to use
its best efforts to keep confidential this Agreement and any and all information
with respect to the other party which it has received as a result of any
investigation made in connection with this Agreement which is not otherwise
available to the parties. Notwithstanding the foregoing, however, each of the
Sellers and WSMP shall be entitled to disclose any such information (a) to their
respective existing lenders in connection with obtaining consents required in
order to consummate the transactions contemplated hereby; (b) to the extent
required by applicable law (as determined by counsel to WSMP), (c) as is
necessary to obtain consents to the consummation of the transactions
contemplated hereby, (d) as if necessary in connection with filings, approvals
or rulings to be obtained from any government agency, including, but not limited
to, the SEC and the Internal Revenue Service, and (e) during the course of or in
connection with any litigation, arbitration or other proceeding based upon or in
connection with the subject matter of this Agreement, including, without
limitation, the failure of the transactions contemplated hereby to be
consummated. If this Agreement is required to be filed as an exhibit to filings
made by WSMP with the SEC, it may be so filed without an application for an
order of confidential treatment. In the event that the transactions contemplated
hereunder are not consummated, the parties shall return all information received
from the other party upon such party's request.
Section 6.17 LIABILITY INSURANCE. Each of the Sellers will maintain in
full force and effect a policy or policies of standard comprehensive general
liability insurance underwritten by a U.S. insurance company (having an A.M.
Best rating of A-XII or better at the time of issuance of any such policy)
insuring its Restaurants, Real Estate and properties, business against such
losses and risks, and in such amounts, as are adequate for its business and as
are customarily carried by entities of similar size engaged in the same
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or similar business. Such policies shall include property loss insurance
policies, with extended coverage, sufficient in amount to allow the replacement
of any of its tangible properties which might be damaged or destroyed by the
risks or perils normally covered by such policies. Sellers shall not allow or
permit any assignment or change in beneficiary and shall not borrow against
such policy or policies.
ARTICLE VII
CONDITIONS TO SELLERS' OBLIGATIONS
----------------------------------
Section 7 CONDITIONS TO SELLERS' OBLIGATIONS. Each and every obligation
of the Sellers under this Agreement shall be subject to the satisfaction, at or
before the Closing Date, of each of the following conditions:
Section 7.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of WSMP contained in this Agreement shall be true
and correct in all material respects on and as of the Closing Date with the same
effect as though such representations and warranties had been made on and as of
such date.
Section 7.2 PERFORMANCE. Each and all of the agreements, obligations,
covenants, or conditions required by this Agreement to be performed or complied
with by WSMP on or before the Closing Date pursuant to the terms hereof shall
have been duly performed or complied with in all material respects.
Section 7.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date and
except as otherwise permitted or required by this Agreement, there shall not
have occurred any Material Adverse Change with respect to WSMP, including,
without limitation, whether as a result of any revocation of any Permit or right
to do business, fire, explosion, accident, casualty, flood, drought, riot,
storm, condemnation or act of God or otherwise.
Section 7.4 NO LITIGATION THREATENED. No action or proceedings shalL
have been instituted or, to the knowledge of WSMP, shall have been threatened
before a court or other government body or by any public authority to restrain
or prohibit any of the transactions contemplated hereby.
Section 7.5 WSMP APPROVALS. This Agreement and the transactions
contemplated hereby shall have been duly approved by the Board of Directors of
WSMP in accordance with North Carolina law.
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ARTICLE VIII
CONDITIONS TO WSMP'S OBLIGATIONS
--------------------------------
Section 8 CONDITIONS TO THE WSMP OBLIGATIONS. Each and every obligation
of WSMP under this Agreement shall be subject to the satisfaction, at or before
the Closing Date, of each of the following conditions:
Section 8.1 TRUTH OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of the Sellers contained in this Agreement shall
be true and correct in all material respects on and as of the Closing Date with
the same effect as though such representations and warranties had been made on
and as of such date.
Section 8.2 PERFORMANCE. Each and all of the agreements, obligations,
covenants, or conditions required by this Agreement to be performed or complied
with by Sellers on or before the Closing Date pursuant to the terms hereof shall
have been duly performed or complied with in all material respects.
Section 8.3 NO MATERIAL ADVERSE CHANGE. Prior to the Closing Date and
except as otherwise permitted or required by this Agreement, there shall not
have occurred any Material Adverse Change with respect to the Sellers,
including, without limitation, whether as a result of any revocation of any
Permit or right to do business, fire, explosion, accident, casualty, flood,
drought, riot, storm, condemnation or act of God or otherwise.
Section 8.4 NO LITIGATION THREATENED. No action or proceeding shall
have been instituted or, to the best of the Sellers' knowledge, information and
belief shall have been threatened before a court or other governmental body or
by any public authority to restrain or prohibit any of the transactions
contemplated hereby, except for the Xxxxxx slip and fall action made known to
WSMP.
Section 8.5 SELLERS' APPROVALS. This Agreement and the transactions
contemplated hereby shall have been duly approved by the Board of Directors and
shareholders of each of the Sellers in accordance with North Carolina law.
Section 8.6 NONCOMPETITION AGREEMENT AND PERSONAL GUARANTEE. Xxxxx X.
Xxxx shall have executed and delivered at Closing the Noncompetition Agreement
and the Personal Guarantee.
Section 8.7 DUE DILIGENCE REVIEW. By the Effective Date, WSMP shall
have completed a due diligence review of the business, operations and financial
statements of the Sellers and the Restaurants, and the results of such review
shall not reveal any Material Adverse Change with respect to the Sellers or the
Restaurants from that
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disclosed in the WSMP Registration Statement.
Section 8.8 EQUITY OFFERING. The WSMP Registration Statement shall have
been filed with the SEC; no stop order shall have been ordered by the SEC; and
no proceedings for that purpose shall have been commenced or threatened.
ARTICLE IX
INDEMNIFICATION
---------------
Section 9.1 INDEMNIFICATION BY WSMP.
(a) WSMP agrees, in accordance with the procedures set forth
in this Article IX, to indemnify and hold each of Sellers and each of
their respective directors, officers and Affiliates harmless from and
against any and all demands, claims, actions, suits, liabilities,
damages, losses, judgments, costs and expenses (including reasonable
attorneys' fees) (collectively, the "Indemnifiable Damages") relating
to, resulting from or arising out of (i) any breach or inaccuracy of
the representations or warranties of WSMP set forth in this Agreement,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in the WSMP Registration Statement, the Prospectus or
any amendment or supplement thereto, (iii) the omission or alleged
omission to state in the WSMP Registration Statement, the Prospectus or
any amendment or supplement thereto a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided, however, that WSMP shall not be liable pursuant
to Section 9.1(a)(ii) or (iii) above to the extent that such
Indemnifiable Damages arise out of, or are based upon, any untrue
statement or alleged untrue statement or omission or alleged omission
made in the WSMP Registration Statement or the Prospectus or in any
such amendment or supplement in reliance upon and in conformity with
information furnished to WSMP by or on behalf of the Sellers or any of
them.
(b) The indemnification obligations of WSMP under Section
9.1(a) above shall expire and terminate one year after the Effective
Time, unless prior to such termination Sellers shall have provided
written notice to WSMP of an assertion by Sellers of a right to
indemnification under such Section 9.1(a) above (an "Indemnification
Claim"). The Indemnification Claim shall set forth a brief description
of the facts giving rise to such claim and the amount (or a reasonable
estimate) of the Indemnifiable Damages suffered, or which may be
suffered, by the Sellers. If the Sellers provide such Indemnification
Claim prior to the expiration of the applicable period, the obligations
of WSMP with respect to the
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asserted right to indemnification under Section 9.1(a) above shall
continue until the appropriate amount of indemnification, if any, is
determined, paid and satisfied in full.
Section 9.2 INDEMNIFICATION BY SELLERS.
(a) Each of the Sellers agrees, jointly and severally, in
accordance with the procedures set forth in this Article IX, to
indemnify and hold WSMP and its directors, officers and Affiliates
harmless from and against any and all Indemnifiable Damages relating
to, resulting from or arising out of (i) any breach or inaccuracy of
the representations or warranties of the Sellers set forth in this
Agreement, and any additional costs to WSMP that arise in any matter
from this sale, (ii) any untrue statement or alleged untrue statement
of a material fact contained in the WSMP Registration Statement, the
Prospectus or in any amendment or supplement thereto, (iii) the
omission or alleged omission to state in the WSMP Registration
Statement, the Prospectus or any amendment or supplement thereto a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that each of
Sellers shall only be liable pursuant to Section 9.2(a)(ii) and (iii)
above to the extent that such Indemnifiable Damages arise out of or,
are based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in the WSMP Registration Statement,
the Prospectus or any such amendment or supplement in reliance upon and
in conformity with information furnished by any Seller specifically for
inclusion therein.
(b) The indemnification obligations of each of the Sellers
under Section 9.2(a) above shall expire and terminate one year after
the Effective Time, unless prior to such termination WSMP shall have
provided written notice to each of the Sellers of an assertion by WSMP
of an Indemnification Claim under such Section 9.2(a) above. The
Indemnification Claim shall set forth a brief description of the
facts giving rise to such claim and the amount (or a reasonable
estimate) of the Indemnifiable Damages suffered, or which may be
suffered, by WSMP. If WSMP provides such Indemnification Claim prior
to the expiration of the applicable period, the obligations of each of
the Sellers with respect to the asserted right to indemnification
under Section 9.2(a) above shall continue until the appropriate amount
of indemnification, if any, is determined, paid and satisfied in full.
Section 9.3 THIRD PARTY CLAIMS.
(a) If any claim, action, suit or proceeding (an
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"Action") shall be instituted or asserted against a party hereto
(an "Indemnified Party") in respect of which either the Sellers, on
the one hand, or WSMP, on the other hand (the "Indemnifying Party"),
shall have an obligation of indemnification hereunder, then the
Indemnified Party may, prior to the expiration date of such
obligation of indemnification, give prompt written notice of such
Action to the Indemnifying Party by an Indemnification Claim.
Upon receipt of such Indemnification Claim, the Indemnifying Party
shall be entitled at its expense to defend such Action by counsel of
its own choosing, either in the Indemnifying Party's name, or in the
Indemnified Party's name, and the Indemnified Party agrees to
cooperate with such counsel. If the Indemnifying Party shall not,
within thirty (30) days after the date of the Indemnification Claim,
serve a return notice indicating or stating that the Indemnifying
Party shall take over the defense of such Action as hereinabove
provided, such failure to give notice within the time specified shall
be deemed an election by the Indemnifying Party not to take over the
defense of such Action. The Indemnified Party shall be entitled at any
time to participate, at its own expense, in any and all aspects of
such Action (regardless of the parties named therein) with counsel of
its own choosing, and the Indemnifying Party agrees to cooperate with
such counsel. The Indemnifying Party shall keep the Indemnified Party
reasonably apprised of the course of any negotiations or proceedings
with respect to such Action and, without regard to the Indemnified
Party's participation therein, will notify the Indemnified Party prior
to the submission to the claiming party of any proposed settlement or
compromise of such Action.
(b) If the Indemnifying Party elects or is deemed to have
elected not to take over the defense of such Action, the Indemnified
Party shall have the right to defend, compromise and settle such Action
on such terms as the Indemnified Party in its discretion may determine,
subject to the prior consent of the Indemnifying Party, which consent
shall not be unreasonably withheld, and the Indemnifying Party
as the case may be shall continue to be bound to indemnify the
Indemnified Party in accordance with the terms of this Article IX.
Notwithstanding the foregoing, to the extent that the Action involves
or could result in claims against, or potential liability of, the
Indemnifying Party the extent or nature of which were not known by the
Indemnifying Party as of the date it elects or is deemed to have
elected not to take over the defense of such Action, the Indemnified
Party shall promptly notify the Indemnifying Party and the procedure
described in Section 9.3(a) above shall once again apply to the
Action.
Section 9.4 NOTICE OF DIRECT CLAIMS. In the event an Indemnified Party
should have a direct claim under this Agreement against the Indemnifying Party
which does not involve a claim or demand being asserted against or sought to be
collected from the Indemnified
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Party by a third party, the Indemnified Party shall give prompt written notice
thereof to the Indemnifying Party by an Indemnification Claim.
Section 9.5 PERSONAL GUARANTEE. Sellers' sole shareholder, Xxxxx X.
Xxxx, in order to induce WSMP to enter into this Agreement, will personally
guarantee to WSMP the obligations, representations, warranties, covenants,
indemnity and liability of the Sellers and each of them arising in, out of, or
pursuant to this Agreement. This Personal Guarantee shall be in substantially
the form attached hereto as Exhibit C.
ARTICLE X
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
------------------------------------------
Section 10 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Subject tO the
provisions of Article IX hereof, each and every representation and warranty
contained in this Agreement shall expire on the date, that is three years after
the Closing Date, and not be terminated and extinguished by the Closing or the
termination of this Agreement pursuant to Section 12.10 hereof, and thereafter,
except and to the extent expressly provided in Article IX hereof. After the
expiration of three years from the Closing Date, none of WSMP, the Sellers or
any partner, officer, director or representative thereof shall be under any
liability whatsoever with respect to any such representation and warranty.
ARTICLE XI
OFFER, SALE AND RESALE OF WSMP STOCK
------------------------------------
Section 11.1 REGISTRATION. WSMP covenants and agrees with each of the
Sellers that, upon execution and delivery of this Agreement, it will (i) take
all necessary steps promptly to file the WSMP Registration Statement so as to
permit a public offering of the WSMP Stock by Sellers as and to the extent
contemplated by this Agreement; (ii) file promptly with the SEC any amendment or
amendments to the WSMP Registration Statement, the Prospectus or any supplement
or supplements thereto, as in any such case may, in the judgment of WSMP,
required by the Securities Act or requested by the SEC; (iii) prior to filing
any such amendment or supplement with the SEC, furnish a copy thereof to Sellers
and obtain the consent of Sellers to the filing (which consent shall not be
unreasonably withheld); (iv) utilize its best efforts to
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have the Registration Statement, as the same may be amended, declared effective
at the earliest practicable date under the Securities Act by the SEC and under
all applicable Blue Sky Laws; and (v) maintain the effectiveness of the WSMP
Registration Statement for one year following its initial effective date
thereof.
ARTICLE XII
MISCELLANEOUS
-------------
Section 12.1 EXPENSES. WSMP shall pay all expenses incurred on its
behalf in connection with the transaction contemplated by this Agreement,
including, without limitation, all fees and expenses of its counsel and
financial advisors. Sellers shall pay, or after Closing reimburse, all of the
expenses of Sellers relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of Xxxxx Xxxxxxxx of
Deloitte & Touche, financial advisor.
Section 12.2 GOVERNING LAW. The interpretation and construction of
this Agreement, and all matters relating hereto, shall be governed
by the laws of the State of North Carolina.
Section 12.3 CAPTIONS. The Article and Section captions used herein are
for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 12.4 NOTICES. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or
sent by facsimile transmission or by registered or certified mail, postage
prepaid, addressed as follows (or such other address for a party as shall be
specified by like notice; provided that notice of change of address shall be
effective only upon receipt thereof):
If to WSMP: WSMP, Inc.
P. X. Xxx 000
Xxx XXXX Xxxxx
Xxxxxxxxx, X. X. 00000
Attention: Xxxxx X. Xxxxx, President
and a copy to: Xxxxx X. Xxxxxxx XX
Xxxxxxx Xxxxxx, P.A.
P. O. Drawer 1329
Morganton, N. C. 28680
If to Sellers: F & H Companies, Inc.
Western Steer of North Carolina, Inc.
Northwest Food Systems, Inc.
Davidson Food Systems, Inc.
Mocksville Food Systems, Inc.
CFR Foods, Inc.
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c/o Xxxxx X. Xxxx
0000 Xxxx Xxxx Xxxx
Xxxxxxx-Xxxxx, X.X. 00000
All such notices and communications shall be deemed to have been duly
given at the time delivered by hand, if personally delivered; when receipt
confirmed, if sent by facsimile; and the next business day after timely delivery
to the courier, if sent by an overnight air courier service guaranteeing next
day delivery.
Section 12.5 PARTIES IN INTEREST. Neither this Agreement nor any of the
rights of the parties hereunder, may be transferred, assigned, pledged or
hypothecated by any party hereto, in whole or in part, other than by operation
of law, and any attempted assignment prohibited hereunder shall be void. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective heirs, executors, administrators, successors and
permitted assigns.
Section 12.6 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 12.7 ENTIRE AGREEMENT. This Agreement, including the other
documents referred to herein which form a part hereof, contains the entire
understanding of the parties hereto with respect to the subject matter
contained herein and therein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
Section 12.8 AMENDMENTS. No provision of this Agreement may be waived,
amended, supplemented or modified orally, but only by an agreement in writing
signed by each of WSMP and the Sellers.
Section 12.9 THIRD PARTY BENEFICIARIES. Each party hereto intends that
this Agreement shall not benefit or create any right or cause of action in or on
behalf of any Person other than the parties hereto.
Section 12.10 TERMINATION AND ABANDONMENT.
(a) Notwithstanding any other provision contained to the
contrary, this Agreement may be terminated at any time prior to the
Effective Time (i) by the mutual consent of WSMP and each of the
Sellers; (ii) by the Sellers, if the covenants set forth in this
Agreement shall not have been complied with or performed by WSMP and
such noncompliance and nonperformance shall not have been cured or
eliminated (or by its nature cannot be cured or eliminated) by WSMP on
or before the twentieth (20th) day following written notice thereof
from the Sellers; provided that the Sellers shall not have defaulted in
any material respect with respect to any of the obligations hereunder;
(iii) by WSMP, if the covenants set forth in this Agreement shall not
have been complied with or performed by Sellers, and such noncompliance
and nonperformance shall not
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have been cured or eliminated (or by its nature cannot be cured or
eliminated) by Sellers on or before the twentieth (20th) day following
written notice thereof from WSMP; provided that WSMP shall not have
defaulted in any material respect with respect to any of their
obligations hereunder; or (iv) by Sellers or by WSMP if, without fault
of such terminating party, the Closing shall not have occurred on or
before the later of (i) nine (9) months after the date of this
Agreement and (ii) ten (10) business days after the expiration of any
cure period then in effect.
(b) In the event of termination and abandonment of the
transactions contemplated by this Agreement pursuant to this Section
12.10, written notice thereof shall forthwith be given to the other
parties hereto and this Agreement shall terminate and such transactions
shall be abandoned without further action. In the event of such
termination and abandonment pursuant to Section 12.10(a)(i) or 12.10
(a)(iv), no party hereto (or any of their respective directors,
officers, or management) shall have any liability or further obligation
to any other party to this Agreement.
(c) In the event of termination and abandonment of the
transactions contemplated by this Agreement pursuant to Section
12.10(a)(ii) or (a)(iii) above, the terminating party shall be entitled
to recover from the other party hereto all damages, losses, costs and
expenses (including reasonable attorneys' fees) provided by law.
IN WITNESS WHEREOF, each of the Sellers and WSMP has caused this
Agreement to be executed in its name by one of its duly authorized officers, all
as of the day and year first above written.
WSMP, INC.
BY: /s/ Xxxxx X. Xxxxxxxxxx, Xx.
-------------------------------
ATTEST:
/s/ Xxxxxxx X. Xxxxxxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
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SELLERS:
F & H COMPANIES, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
WESTERN STEER OF NORTH CAROLINA,
INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
NORTHWEST FOOD SYSTEMS, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
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DAVIDSON FOOD SYSTEMS, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
MOCKSVILLE FOOD SYSTEMS, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
CFR FOODS, INC.
By: /s/ Xxxxx Xxxx
-------------------------------
President
ATTEST:
/s/ Xxxxxxx X. Xxxxxx
----------------------------------
Asst. Secretary
(corporate seal)
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