PURCHASE AGREEMENT
by and among
KPR HOLDINGS, INC.
and
THE SHAREHOLDERS OF
RKR-GP, INC.
and
FOODBRANDS AMERICA, INC.
Dated as of November 14, 1995
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE; CLOSING . . . . . . . . . . . 1
1.01 Purchase and Sale of the Shares. . . . . . . . . 1
1.02 Purchase and Sale of Limited Partnership
Interest . . . . . . . . . . . . . . . . . . . . . .1
1.03 The Closing. . . . . . . . . . . . . . . . . . . . .2
ARTICLE II PURCHASE PRICE . . . . . . . . . . . . . . . . . . .2
2.01 Purchase Price . . . . . . . . . . . . . . . . . . .2
2.02 Allocation . . . . . . . . . . . . . . . . . . . . .2
2.03 Net Working Capital Adjustment . . . . . . . . . . .2
2.04 Release From Indebtedness. . . . . . . . . . . . . .3
2.05 Contingent Purchase Price. . . . . . . . . . . . . .3
(a) EBITDA Targets. . . . . . . . . . . . . . . . .3
(b) Determination of EBITDA . . . . . . . . . . . .3
(c) Foodbrands Share Option . . . . . . . . . . . .4
(d) Securities' Laws Conditions . . . . . . . . . .4
(e) KPR Litigation. . . . . . . . . . . . . . . . .4
2.06 Payment. . . . . . . . . . . . . . . . . . . . . . .6
(a) Closing Purchase Price. . . . . . . . . . . . .6
(b) Contingent Purchase Price . . . . . . . . . . .6
2.07 Business and Accounting Practices and Procedures . .7
(a) Financial Statements. . . . . . . . . . . . . .7
(b) Intercompany Adjustments. . . . . . . . . . . .7
(c) Sales to Company Customers. . . . . . . . . . .7
(d) Capital Expenditures. . . . . . . . . . . . . .8
(e) Operational Changes . . . . . . . . . . . . . .9
2.08 Closing Adjustments to EBITDA. . . . . . . . . . . 10
2.09 Pro Forma Adjustments. . . . . . . . . . . . . . . 11
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . 11
3.01 Ownership of Shares and LP Interest;
Equity Capital Structure . . . . . . . . . . . . . 11
3.02 Organization and Qualifications. . . . . . . . . . 12
3.03 Due Authorization. . . . . . . . . . . . . . . . . 12
3.04 No Violation . . . . . . . . . . . . . . . . . . . 12
3.05 Financial Statements . . . . . . . . . . . . . . . 13
(a) The Company . . . . . . . . . . . . . . . . . 13
(b) International Meat Ingredients, Ltd.. . . . . 14
3.06 No Undisclosed Liabilities . . . . . . . . . . . . 14
3.07 Absence of Certain Changes . . . . . . . . . . . . 15
3.08 Tax Matters. . . . . . . . . . . . . . . . . . . . 17
3.09 Title to Properties; Encumbrances. . . . . . . . . 19
3.10 Subsidiaries . . . . . . . . . . . . . . . . . . . 20
3.11 Inventory. . . . . . . . . . . . . . . . . . . . . 20
3.12 Receivables. . . . . . . . . . . . . . . . . . . . 21
3.13 Proprietary Rights . . . . . . . . . . . . . . . . 21
3.14 Litigation . . . . . . . . . . . . . . . . . . . . 22
3.15 Insurance. . . . . . . . . . . . . . . . . . . . . 22
3.16 Employee Benefit Plans . . . . . . . . . . . . . . 23
3.17 Contracts and Commitments. . . . . . . . . . . . . 26
3.18 No Breach. . . . . . . . . . . . . . . . . . . . . 27
3.19 Labor Relations. . . . . . . . . . . . . . . . . . 27
3.20 Compliance with Law. . . . . . . . . . . . . . . . 28
3.21 Hazardous Material . . . . . . . . . . . . . . . . 29
3.22 Environmental and Other Permits. . . . . . . . . . 30
3.23 Business Prospects . . . . . . . . . . . . . . . . 30
3.24 Bank Accounts. . . . . . . . . . . . . . . . . . . 31
3.25 Indebtedness of Affiliates . . . . . . . . . . . . 31
3.26 Disclosure . . . . . . . . . . . . . . . . . . . . 31
3.27 Brokers. . . . . . . . . . . . . . . . . . . . . . 31
3.28 Corporate Books and Records. . . . . . . . . . . . 31
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FOODBRANDS . . . 32
4.01 Organization . . . . . . . . . . . . . . . . . . . 32
4.02 Authorization. . . . . . . . . . . . . . . . . . . 32
4.03 Valid and Binding Agreement. . . . . . . . . . . . 32
4.04 No Violation . . . . . . . . . . . . . . . . . . . 32
4.05 Disclosure . . . . . . . . . . . . . . . . . . . . 32
4.06 Purchase for Investment. . . . . . . . . . . . . . 33
4.07 Brokers. . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE V CERTAIN OBLIGATIONS OF THE PARTIES . . . . . . . . 33
5.01 Conduct of Business Pending the Closing. . . . . . 33
5.02 Other Obligations of Sellers Pending the
Closing. . . . . . . . . . . . . . . . . . . . . . 35
(a) Access. . . . . . . . . . . . . . . . . . . . 36
(b) Other Transactions. . . . . . . . . . . . . . 36
(c) Insurance . . . . . . . . . . . . . . . . . . 36
(d) Interim Financial Statements. . . . . . . . . 36
5.03 Public Announcements . . . . . . . . . . . . . . . 36
5.04 HSR Act. . . . . . . . . . . . . . . . . . . . . . 37
5.05 Other Action . . . . . . . . . . . . . . . . . . . 37
5.06 Consents and Best Efforts. . . . . . . . . . . . . 37
5.07 Environmental Matters. . . . . . . . . . . . . . . 38
(a) Audit . . . . . . . . . . . . . . . . . . . . 38
(b) Remediation . . . . . . . . . . . . . . . . . 38
(c) Compliance. . . . . . . . . . . . . . . . . . 39
5.08 Confidentiality. . . . . . . . . . . . . . . . . . 39
5.09 Notification of Certain Matters. . . . . . . . . . 39
5.10 Accounts with Affiliates . . . . . . . . . . . . . 40
5.11 Lease Agreement. . . . . . . . . . . . . . . . . . 40
5.12 Employment Agreements. . . . . . . . . . . . . . . 40
5.13 Options. . . . . . . . . . . . . . . . . . . . . . 40
5.14 Agency Designation . . . . . . . . . . . . . . . . 40
5.15 Closing Date Balance Sheet . . . . . . . . . . . . 41
(a) Physical Inventory. . . . . . . . . . . . . . 41
(b) Balance Sheet . . . . . . . . . . . . . . . . 41
5.16 Arbitration. . . . . . . . . . . . . . . . . . . . 42
5.17 Release of Collateral. . . . . . . . . . . . . . . 43
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . 43
6.01 HSR Act. . . . . . . . . . . . . . . . . . . . . . 43
6.02 No Injunction or Litigation. . . . . . . . . . . . 43
ARTICLE VII CONDITIONS TO OBLIGATIONS OF FOODBRANDS. . . . . . 44
7.01 Representations and Warranties . . . . . . . . . . 44
7.02 Performance. . . . . . . . . . . . . . . . . . . . 44
7.03 Consents . . . . . . . . . . . . . . . . . . . . . 44
7.04 Officers' Certificates . . . . . . . . . . . . . . 44
7.05 Opinion of Counsel to Sellers. . . . . . . . . . . 44
7.06 Lease Agreement. . . . . . . . . . . . . . . . . . 45
7.07 Employment Agreements. . . . . . . . . . . . . . . 45
7.08 Other Agreement. . . . . . . . . . . . . . . . . . 45
7.09 Documents. . . . . . . . . . . . . . . . . . . . . 45
7.10 No Material Adverse Change . . . . . . . . . . . . 45
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLERS. . . . . . . 45
8.01 Representations and Warranties . . . . . . . . . . 45
8.02 Performance. . . . . . . . . . . . . . . . . . . . 45
8.03 Officers' Certificates . . . . . . . . . . . . . . 46
8.04 Opinion of Counsel to Foodbrands . . . . . . . . . 46
8.05 Consents . . . . . . . . . . . . . . . . . . . . . 46
8.06 Documents. . . . . . . . . . . . . . . . . . . . . 46
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . . . 46
9.01 Survival of Representations. . . . . . . . . . . . 46
9.02 Statements as Representations. . . . . . . . . . . 46
9.03 Agreement to Indemnify . . . . . . . . . . . . . . 47
9.04 Limitation of Liability. . . . . . . . . . . . . . 48
9.05 Conditions of Indemnification. . . . . . . . . . . 48
ARTICLE X TERMINATION; AMENDMENT AND WAIVER. . . . . . . . . 50
10.01 Termination of Agreement . . . . . . . . . . . . . 50
10.02 Effect of Termination. . . . . . . . . . . . . . . 50
10.03 Amendment, Extension and Waiver. . . . . . . . . . 50
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . . . 50
11.01 Expenses; Taxes. . . . . . . . . . . . . . . . . . 50
11.02 Governing Law; Submission to Jurisdiction
Waiver of Jury Trial . . . . . . . . . . . . . . . 51
11.03 Assignment . . . . . . . . . . . . . . . . . . . . 51
11.04 Entire Agreement . . . . . . . . . . . . . . . . . 51
11.05 Headings . . . . . . . . . . . . . . . . . . . . . 51
11.06 Notices. . . . . . . . . . . . . . . . . . . . . . 51
11.07 Counterparts . . . . . . . . . . . . . . . . . . . 53
11.08 Specific Performance . . . . . . . . . . . . . . . 53
11.09 Severability . . . . . . . . . . . . . . . . . . . 53
11.10 Certain Definitions. . . . . . . . . . . . . . . . 53
EXHIBITS
Exhibit A List of Shareholders
Exhibit B Promissory Note
Exhibit C Election Notice
Exhibit D Lease Agreement
Exhibit E-1 Employment Agreement
Exhibit E-2 Terms of Employees
Exhibit F-1 Management Employees
Exhibit F-2 Management Agreements
Exhibit G Opinion of Sellers' Counsel
Exhibit H Opinion of Foodbrands' Counsel
INDEX TO SCHEDULES
Schedule 2.02 Purchase Price Allocation
Schedule 2.07-1 Key Customers
Schedule 2.07-2 Kettle Xxxx Capital Improvements
Schedule 2.07-3 Capital Expenditures
Schedule 3.01 Agreements and Restrictions Relating to
Shares
Schedule 3.02 States Qualified to do Business
Schedule 3.04 Consents and Authorizations Required
Schedule 3.05-1 Financial Statements of the Company
Schedule 3.05-2 Financial Statements of IMI
Schedule 3.06 Additional Liabilities Not Disclosed in
Financial Statements
Schedule 3.07 Material Changes Since December 31, 1994
Schedule 3.08-1 Unpaid Taxes, Deficiencies and Other Tax
Matters
Schedule 3.08-2 List of Tax Returns
Schedule 3.09-1 Liens and Encumbrances on Property
Schedule 3.09-2 Real Property Leases
Schedule 3.12 Accounts Receivable Valuation and Reserve
Procedures
Schedule 3.13 Trademarks and Proprietary Rights
Schedule 3.14 Litigation
Schedule 3.15 Insurance
Schedule 3.16 Employee Benefit Plans
Schedule 3.17 Contracts and Commitments
Schedule 3.18 Defaults Under Contracts
Schedule 3.19 Collective Bargaining Agreements and Labor
Disputes
Schedule 3.21-1 List of Violations of Environmental Laws
Schedule 3.21-2 List of Environmental Reports
Schedule 3.21-3 Underground Storage Tanks
Schedule 3.22 Environmental and Other Permits
Schedule 3.24 Bank Accounts
Schedule 3.25 Indebtedness of Affiliates
Schedule 5.01 Conduct of Business Pending the Closing
Schedule 5.13 Foodbrands Options
Schedule 5.15-1 Inventory Valuation Method and Procedure
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (this "Agreement") has been
made and entered into this 14th day of November, 1995 by and
among Foodbrands America, Inc. ("Foodbrands"), KPR Holdings, Inc.
("KPR Holdings") and each of the shareholders of RKR-GP, Inc.
(who are identified on Exhibit A hereto and are hereinafter
referred to collectively as the "Shareholders"), with reference
to the following circumstances:
A. KPR Holdings is the sole limited partner and RKR-GP,
Inc. (the "General Partner") is the sole general partner of KPR
Holdings, L.P. (the "Company"), a Delaware limited partnership
primarily engaged in the production of pizza toppings, soups and
sauces used by restaurants throughout the United States and,
through a joint venture, in certain foreign countries. The
General Partner's interest in the Company is represented by a 1%
interest in its capital and profits and KPR Holdings interest
therein is represented by a 99% interest in its capital and
profits.
B. Foodbrands desires to acquire the Company and has
agreed to do so, under the provisions of this Agreement, by
purchasing all of the limited partnership interest in the Company
(the "LP Interest") and all of the issued and outstanding stock
(the "Shares") of the General Partner. KPR Holdings and the
Shareholders are sometimes referred to herein as the "Sellers" or
individually as a "Seller."
C. KPR Holdings has agreed to sell the LP Interest
and the Shareholders have agreed to sell the Shares (owned by
each of the Shareholders as set forth on Exhibit A attached
hereto) to Foodbrands under the provisions of this Agreement.
ACCORDINGLY, the parties have entered into this
Agreement for the purpose of prescribing the basis on which
Foodbrands will acquire the Shares and the LP Interest.
ARTICLE I
PURCHASE AND SALE; CLOSING
1.01 Purchase and Sale of the Shares. Subject to the
terms and conditions of this Agreement, at the Closing
(hereinafter defined), the Shareholders will sell, assign,
transfer and deliver to Foodbrands the Shares, and Foodbrands
agrees to purchase, receive, accept delivery of, and pay the
Shareholders for the Shares.
1.02 Purchase and Sale of Limited Partnership
Interest. Subject to the terms and conditions of this Agreement,
at the Closing, KPR Holdings agrees to sell, assign, transfer and
deliver to Foodbrands or its designee the LP Interest, and
Foodbrands agrees to purchase, receive, accept delivery of, and
pay KPR Holdings for the LP Interest.
1.03 The Closing. The sale and purchase of the LP
Interest and the Shares and the other transactions contemplated
by this Agreement shall take place at a closing (the "Closing")
to be held at the offices of McAfee & Xxxx A Professional
Corporation, 10th Floor, Two Leadership Square, 000 X. Xxxxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, at 11:00 a.m. Oklahoma City time
on the later to occur of (i) December 11, 1995 or (ii) three
business days after the parties have received notice that the
last of the conditions specified in Article VII and VIII have
been satisfied or waived, or at such other time and place as
Foodbrands and the General Partner mutually agree upon in
writing. The date of the Closing is referred to herein as the
"Closing Date."
ARTICLE II
PURCHASE PRICE
2.01 Purchase Price. The purchase price for the LP
Interest of KPR Holdings in the Company and the Shares shall be
(i) $75 million (the "Closing Purchase Price") less the sum of
the Company's revolving line of credit indebtedness and long-term
debt in excess of $18.2 million at Closing, and adjusted for Net
Working Capital pursuant to Section 2.03 below (the "Adjusted
Closing Purchase Price") plus (ii) an additional contingent
purchase price (payable only if certain conditions and future
financial targets are achieved as provided and adjusted in
Section 2.05 below) of 6.554 times the excess, if any, of the
earnings before interest, taxes, depreciation and amortization,
determined in accordance with generally accepted accounting
principles ("GAAP") consistently applied and as adjusted pursuant
to Section 2.07, 2.08 and 2.09 below ("EBITDA") of the Company
for the 13 four-week periods ending December 30, 1995 over the
EBITDA of the Company for the 13 four-week periods ending October
7, 1995 (the "Contingent Purchase Price").
2.02 Allocation. The Adjusted Closing Purchase Price
and the Contingent Purchase Price will be allocated 99% to KPR
Holdings and 1% to the Shareholders in proportion to their stock
ownership in the General Partner. Furthermore, any allocation of
the purchase price with respect to the assets of the Company
shall be allocated in accordance with Schedule 2.02 delivered by
Sellers to Foodbrands upon execution of this Agreement.
2.03 Net Working Capital Adjustment. The Closing
Purchase Price shall be increased by the amount that the
Company's Net Working Capital at Closing exceeds $6 million and
decreased by the amount that the Company's Net Working Capital at
Closing is less than $6 million. "Net Working Capital" shall
mean the excess of the Company's current assets over its current
liabilities, excluding the Company's revolving line of credit
indebtedness and the current portion of its long-term debt, as
determined by GAAP, consistently applied, and in accordance with
Section 5.15.
2.04 Release From Indebtedness. At the Closing,
Foodbrands shall pay or cause the Company to be released from all
of the Company's long-term debt, including the current portion
thereof.
2.05 Contingent Purchase Price. The entire Contingent
Purchase Price shall only be earned and payable as follows:
(a) EBITDA Targets. If the Company's EBITDA
equals or exceeds $16.75 million for Foodbrands' fiscal year
("FFY") 1996 (the "'96 Target"), $19.45 million for FFY 1997 (the
"'97 Target"), or $21.35 million for FFY 1998 (the "'98 Target"),
the Contingent Purchase Price shall be earned, subject to Section
2.05(e), on the following basis:
(1) FFY 1996 - one-third of the Contingent
Purchase Price shall be earned if the Company's '96 Target is
achieved. If the Company's EBITDA for FFY 1996 is less than the
'96 Target, the difference between the actual amount and the '96
Target amount shall be considered the "'96 Carryover Amount."
(2) FFY 1997 - one-third of the Contingent
Purchase Price shall be earned if the Company's '97 Target is
achieved. If the Company's EBITDA for FFY 1997 is less than the
'97 Target, the difference between the actual amount and the '97
Target amount shall be considered the "'97 Carryover Amount." In
addition to the amount earned by achieving the '97 Target, if
there is a '96 Carryover Amount and the Company's EBITDA for FFY
1997 equals or exceeds the '97 Target plus the '96 Carryover
Amount, then one-sixth of the Contingent Purchase Price shall be
earned.
(3) FFY 1998 - one-third of the Contingent
Purchase Price shall be earned if the Company's '98 Target is
achieved. In addition to the amount earned by achieving the '98
Target, if there is a '97 Carryover Amount and the Company's
EBITDA for FFY 1998 equals or exceeds the '98 Target plus the '97
Carry-over Amount, then one-sixth of the Contingent Purchase
Price shall be earned.
(b) Determination of EBITDA. Foodbrands shall
cause the Company to furnish to the Sellers financial statements
of the Company for FFY 1996, FFY 1997 and FFY 1998 as promptly as
they are available and in any event prior to March 15th following
each such fiscal year. The financial statements shall consist of
a balance sheet and income statement and shall be prepared in
accordance with Section 2.07, 2.08 and 2.09 below. Each year's
financial statements shall be accompanied by calculations of the
Company's EBITDA for the year calculated in accordance with
Section 2.07. Sellers shall have ten (10) days from receipt of
the financial statements of the Company and the calculation of
EBITDA in which to object to the calculation of EBITDA by
providing written notice to the Company and Foodbrands of its
objection to such calculation. The resolution of any dispute
regarding the calculation of EBITDA shall be resolved by the
accounting firm of Ernst & Young (Fort Worth), whose decision
shall be final. The costs associated with such determination
shall be charged against the nonprevailing party. If the
calculation of the Company's EBITDA indicates that a portion of
the Contingent Purchase Price is earned pursuant to Section
2.05(a), the financial statements shall be accompanied by an
"Election Notice" in substantially the form of Exhibit C (with
such modifications contemplated by subsection (d) below).
(c) Foodbrands Share Option. Subject to the
securities' laws conditions set forth in Section 2.05(d), each of
the Sellers shall have the option to reserve the portion of the
Contingent Purchase Price attributable to each such Seller in
Foodbrands' common stock on the basis of the Option Price (as
herein defined). A Seller shall exercise the option by executing
and delivering to Foodbrands an "Election Notice" in the form
attached hereto as Exhibit C prior to April 1st following the
year in which the EBITDA Target was met. Upon exercise and
subject to the provision of Section 2.05(d), Foodbrands shall
reserve to the electing Seller that number of shares obtained by
dividing the Option Price into the amount of the Contingent
Purchase Price payment otherwise due the Seller, rounded downward
to the nearest whole share (the "Option Shares"). No factional
share will be issued and Foodbrands shall pay the Seller for any
resulting fraction on the basis of the Option Price by check.
(d) Securities' Laws Conditions. Foodbrands
shall not be obligated to reserve or issue the Option Shares to
any Seller unless it can do so in reliance on an exemption from
the registration requirements of the Securities Xxx 0000, as
amended, and the regulations promulgated thereunder (the "1933
Act") and any applicable state securities law. It is currently
contemplated that exemptions will exist such as those presently
provided for by Regulation D of the 1933 Act. Each electing
Seller will be required to represent and warrant to Foodbrands
that the Option Shares are being acquired for investment and not
with a view to distribution or resale, will be required to make
representations and warranties regarding other factual matters to
satisfy the applicable securities laws exemption from
registration, and will be subject to holding periods as
prescribed by the 1933 Act.
(e) KPR Litigation. The lawsuit described in
item 3 to Schedule 3.14 (the "KPR Litigation") shall have been
finally resolved (by means of a settlement or the entry of a
final order by the court, which order has been affirmed on appeal
or all applicable periods for appeal have expired) before any
amount of the Contingent Purchase Price is earned and payable.
Any portion of the Contingent Purchase Price otherwise earned
shall be reduced by the aggregate amount of the Damages (as
defined herein) incurred by the Company or Foodbrands as a result
of the KPR Litigation to the extent such Damages exceed $1.6
million (the "Excess Damages"); provided, however, (i) the
Company's expenses and costs in the KPR Litigation (including
attorneys' fees and experts' fees) shall be treated as operating
expenses of the Company and shall not be included in Damages and
(ii) Damages (including expenses and costs) which are incurred by
Foodbrands or the Company, resulting from the Consent Decrees (as
defined herein), if any, shall be excluded. In no event will
Sellers be personally liable to Foodbrands or the Company for any
Damages resulting from the KPR Litigation. In the event the
Contingent Purchase Price is to be reduced pursuant to the
foregoing, the following provisions shall apply:
(1) The Contingent Purchase Price otherwise
earned shall be reduced by the Excess Damages on a
"first-in-first-out" basis; that is, any amount earned for FFY
1996 shall be applied first against the amount of the Excess
Damages, then any amount earned for FFY 1997 and then any amount
earned for FFY 1998.
(2) Any Option Shares reserved pursuant to
Section 2.05(d) shall be applied against the Excess Damages based
on the Option Price.
(3) No payment of the Contingent Purchase
Price shall be made until the amount of the Contingent Purchase
Price otherwise earned exceeds Excess Damages.
(4) The Excess Damages shall be applied pro
rata against the Contingent Purchase Price otherwise earned by
each Seller based on his respective interest in the Contingent
Purchase Price.
(5) The Company will provide to Agent
reasonable notice under the circumstances of the terms of any
settlement which the Company intends to accept. If the
settlement would result in Excess Damages, the Company will first
obtain the consent of the Agent (based on the consent of a
majority in interest of the Sellers) to such settlement, which
consent will not be unreasonably withheld. If Agent withholds
consent to such settlement, the Company may proceed with
settlement and reserve any dispute as to whether such withholding
was reasonable; in the event it is determined pursuant to Section
5.16 that such withholding was reasonable, there will be no
reduction of the Contingent Purchase Price for any Excess
Damages.
2.06 Payment. The purchase price for the Shares and
the LP Interest shall be allocated to each Seller as provided in
Section 2.02 and paid by Foodbrands in the following manner:
(a) Closing Purchase Price. The Closing Purchase
Price, adjusted for reasonable estimates of the adjustments for
the Company's revolving line of credit, long term debt and Net
Working Capital, shall be paid at Closing to KPR Holdings, as
agent for the Seller as provided in Section 5.14 hereof, by wire
transfer of readily available funds to an account of KPR Holdings
at Wilmington Trust, Wilmington, Delaware Account No. 2546-2572
(the "Payment Account") in the amount of $25.0 million of the
Closing Purchase Price plus deliver its promissory note to KPR
Holdings, as agent for the Sellers, in the principal amount of
the excess of the Closing Payment over $25.0 million of the
Closing Purchase Price (collectively, the "Closing Payment"),
which shall be payable on January 15, 1996, bearing interest at
the rate of 6% per annum and to be secured by a bank letter of
credit; provided, the foregoing interest rate will be reduced by
the actual rate per annum paid by Foodbrands to its Lender for
the issuance of such letter of credit but not to exceed two and
75/100 percent (2.75%) per annum. The Promissory Note shall be
in the form of Exhibit B attached hereto. On the fifth business
day after the Closing Date Balance Sheet (as defined in Section
5.15 hereof) has been approved by Foodbrands pursuant to Section
5.15 and the adjustments made to determine the Adjusted Closing
Purchase Price, the difference, if any, between the Closing
Payment and the Adjusted Closing Purchase Price shall be settled
either (i) by wire transfer of immediately available funds from
Foodbrands to KPR Holdings, for itself and as agent, if the
Closing Payment was less than the Adjusted Closing Purchase Price
or (ii) by wire transfer of immediately available funds from KPR
Holdings, for itself and as agent, to Foodbrands if the Closing
Payment was greater than the Adjusted Closing Purchase Price.
(b) Contingent Purchase Price. If the KPR
Litigation is finally resolved prior to April 1, 1999, any
portion of the Contingent Purchase Price which has been otherwise
earned and is in excess of the Excess Damages shall be paid, or
issued in the case of the Option Shares, to the Sellers within
ten (10) days after such final resolution, and, thereafter, in
any subsequent FFY that a portion of the Contingent Purchase
Price is earned, Foodbrands shall pay the amount due to the
Sellers by check on April 1st following the fiscal year of the
calculation; provided, however, if a Seller gives Foodbrands
notice prior to such date that the stock option provided for in
Section 2.05(c) is being exercised, then the payment shall not be
made to the electing Seller and the provisions of Section 2.05(d)
shall apply. In the event the KPR Litigation is finally resolved
after May 31, 1999, and the Excess Damages are less than the
Contingent Purchase Price otherwise earned, the balance of such
earned Contingent Purchase Price shall be paid, or issued in the
case of Option Shares, to the Sellers. In any event, to the
extent a Seller receives a cash portion of the Contingent
Purchase Price, such cash portion shall be increased by an
interest factor determined as follows: (i) the "interest rate"
shall be the rate of interest publicly announced by Chemical Bank
from time to time as its prime rate in effect at its principal
office in New York City; (ii) the interest rate shall be adjusted
quarterly; and (iii) the interest factor shall equal the amount
of interest which would have accrued at the interest rate on that
portion of the Contingent Purchase Price ultimately paid to
Seller from the date it would have been paid but for the absence
of a final resolution of the KPR Litigation, compounded annually.
2.07 Business and Accounting Practices and Procedures.
Beginning after the Closing and so long as the Contingent
Purchase Price is being earned the following covenants shall
apply:
(a) Financial Statements. Foodbrands shall (i)
maintain the Company and its business and properties as a
separate business entity (whether continued as a limited
partnership, reorganized as a subsidiary corporation or operated
as a division), (ii) maintain complete and accurate books and
records of the Company's business, properties and transactions
and (iii) cause monthly, quarterly and annual financial
statements to be prepared on a basis consistent with Foodbrands
consolidated financial statements, all in accordance with GAAP
(excluding footnotes and statements of cash flow), consistently
applied; provided that, to the extent the accounting practices of
Foodbrands would result in a change to the accounting practices
of the Company and the existing accounting practices of the
Company continue to be in accordance with GAAP, the accounting
practices of the Company will be followed.
(b) Intercompany Adjustments. For purposes of
calculating the EBITDA of the Company, with respect to
transactions between the Company and Foodbrands Subsidiaries (as
herein defined) relating to the purchase and sale of product, the
revenues and expenses and cost of product to be allocated to the
Company shall be as agreed between Foodbrands and Agent from time
to time. In the event Foodbrands and Agent are unable to reach
an agreement as to a reasonable allocation of revenues and
expenses or cost of product, all revenues and expenses will be
allocated such that the profit margins are shared between the
Company and the Subsidiaries 50% to the manufacturer of the
product and 50% to the seller of the product.
(c) Sales to Company Customers. With respect to
certain customers and potential customers of the Company
identified in Schedule 2.07-1 as "key customers", including any
purchasing agents and successors of such customers (the "Key
Customers"), all sales of KPR Product (as defined herein) to such
Key Customers will be made by the Company to the extent the
Facilities have the production capacity to service Key Customers
(not considering any unused capacity for which the Company is
already receiving pro forma credit pursuant to this Section 2.07
or Section 2.09), in the reasonable business judgment of
Foodbrands, subject to the provisions of Section 2.07(d) and (e),
below. With respect to certain customers and potential customers
of the Company identified in Schedule 2.07-1 as "kettle cooked
foods customers," including any purchasing agents and successors
of such customers (the "Kettle Customers"), all sales of KPR
Product which are soups, sauces or side dishes to such Kettle
Customers will be made by the Company to the extent the
Facilities have the production capacity to service such Kettle
Customers. Also, unless otherwise agreed by Agent on a case by
case basis, if a salesman employed by the Company is the
procuring cause of a sale of products to a Key Customer or a
Kettle Customer (collectively, an "Existing Customer") by a
Foodbrands Subsidiary other than the Company, the Company shall
be allocated a commission of 15% of the profit margin on the
product in question with the balance going to such other
Foodbrands Subsidiary.
(d) Capital Expenditures and Improvements.
Foodbrands acknowledges that the EBITDA Targets (as defined
herein) were established assuming that certain capital
expenditures would be made and certain operations would remain
unchanged. In this regard, Foodbrands agrees as follows:
(1) The Company will make the capital
improvements to the manufacturing facility
located at 0000 Xxxx Xxxxxx Xxxx., Xxxx
Xxxxx, Xxxxx (the "Fort Worth Facility")
described in Schedule 2.07-2. The timing and
specifications of such improvements will be
as determined by the Agent, subject to the
reasonable approval of Foodbrands; provided,
the aggregate cost of such improvements will
not exceed $3.7 million.
(2) During FFY 1996 the capital improvements
described in Schedule 2.07-3, (the "1996
Planned CapEx") will be made or commitments
for such 1996 Planned CapEx shall have been
entered into on such terms as are reasonably
approved by Agent; provided the 1996 Planned
CapEx shall not exceed the amounts set forth
in Schedule 2.07-3. In the event the 1996
Planned CapEx is not made or commitments
entered into for such 1996 Planned CapEx
during FFY 1996, the '96 Target will be
revised as set forth in Schedule 2.07-3. In
the event the 1996 Planned CapEx are not made
by the end of FFY 1997, the '97 Target and
the '98 Target will be revised as set forth
in Schedule 2.07-3.
(3) The Company will make additional capital
expenditures (not described in Schedules
2.07-2 or 2.07-3) of at least $2.0 million in
FFY 1997 (the "1997 CapEx Amount") and in FFY
1998, the sum of (i) $2.0 million, plus (ii)
the 1997 CapEx Shortfall (as defined below),
if any, and minus (iii) the 1997 CapEx Excess
(as defined below), if any (the "1998 CapEx
Amount"). In the event the Company's
additional capital expenditures exceed $2.0
million in FFY 1997, such excess shall be
referred to as the "1997 CapEx Excess." In
the event the additional capital expenditures
of the Company are less than $2.0 million in
FFY 1997, (i) the difference shall be
referred to as the "1997 CapEx Shortfall,"
and (ii) the '97 Target shall be reduced by
the product of the 1997 CapEx Shortfall
multiplied by .30 (30%). In the event the
additional capital expenditures of the
Company are less than the 1998 CapEx Amount
in FFY 1998, (i) the difference shall be
referred to as the "1998 CapEx Shortfall" and
(ii) the '98 Target shall be reduced by the
product of the 1998 CapEx Shortfall
multiplied by .30 (30%).
(4) The Company presently uses a Holac dicer to
prepare Italian sausage products for sale to
Pizza Hut, Inc. ("Pizza Hut"), using a
process approved by Pizza Hut. During the
period in which the Sellers may earn the
Contingent Purchase Price pursuant to Section
2.05, Foodbrands agrees that it will not
cause the Company to make any significant
change in the equipment used or the process
employed to produce the Italian sausage in
question unless (1) any such changes are
approved in advance by a majority in
interests of the Sellers or by Pizza Hut, or
(2) the Company is required to do so by order
of the court in the KPR Litigation.
(e) Operational Changes. The following pro forma
adjustments shall be made to the EBITDA of the Company:
(1) To the extent the Company participates in any
consolidated programs of Foodbrands, such as
insurance and health and welfare plans,
EBITDA of the Company shall be adjusted to
reflect any additional costs or savings to
the Company attributable to its participation
in such plans. EBITDA of the Company shall
also be increased by the amount of the salary
of any Key Employee who is an executive
officer of Foodbrands which is attributable
to his services to Foodbrands. It is
understood that the salaries reflected in
Schedule 5.01(f) and any ordinary increases
thereof are attributable to services to the
Company.
(2) In the event the production of any "KPR
Product" (as defined below) is moved from a
Facility to another facility of a Foodbrands
Subsidiary other than the Company the EBITDA
of the Company shall be pro forma adjusted as
if the production and sale had been made by
the Company. "KPR Product" shall mean the
products being produced by the Company at the
time, as well as any other products which
would otherwise have been produced by the
Company for Existing Customers at the
Facilities.
(3) In the event the Company enters into any
agreement with C&F Packing, Inc. to pay
royalties or other Damages as a result of the
Consent Decrees, the EBITDA of the Company
shall be adjusted on a pro forma basis such
that the EBITDA calculations of the Company
do not include such payments. The EBITDA of
the Company will also be adjusted to exclude
any adverse effect resulting from a breach of
Section 2.07(d)(4).
(4) EBITDA of the Company will be adjusted so as
to not include any liabilities resulting from
any judgment or settlement in the KPR
Litigation.
(5) It is the intent of the parties that the
EBITDA of the Company be adjusted to
accurately reflect the EBITDA of the Company
which would have been produced had the
Company continued as a separate entity
without any operational changes by
Foodbrands. If Sellers object to any pro
forma adjustments or the calculation of
EBITDA pursuant to this Section 2.07 or
otherwise, such disputes shall be
resolved pursuant to Section 2.06(b).
2.08 Closing Adjustments to EBITDA. Any determination
of EBITDA pursuant to Section 2.01 shall be increased by any
deduction of the Company as a result of bonuses accrued or paid
to the employees of the Company as a result of the sale
contemplated in this Agreement as described in Schedule 2.08 or
as a result of the exercise of stock options by shareholders of
the General Partner and KPR Holdings.
2.09 Pro Forma Adjustments. All pro forma adjustments
to the EBITDA of the Company contemplated by Sections 2.07 and
2.08 shall be provided to Sellers at the time the financial
statements are provided pursuant to Section 2.05(b). Sellers
shall have the right to review and object to such pro forma
adjustments in accordance with Section 2.05(b).
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and
warrant to Foodbrands as of the date hereof and as of the Closing
as follows:
3.01 Ownership of Shares and LP Interest; Equity
Capital Structure.
(a) Sellers are the record and beneficial owners
of, and upon consummation of the transactions contemplated hereby
Foodbrands will acquire, good, valid and marketable title to, the
Shares and the LP Interest, free and clear of all liens, claims,
options, pledges, security interests, charges, encumbrances,
equities, agreements and restrictions whatsoever.
(b) The authorized capital stock of General
Partner consists solely of 200,000 shares of common stock, $.10
par value, 125,217 of which shares are issued and outstanding.
The Shares constitute all of the issued and outstanding shares of
capital stock of General Partner and are owned by Sellers as set
forth opposite each Seller's name on Exhibit A hereto. The LP
Interest constitutes all of the limited partnership interest of
the Company. General Partner is the sole general partner of the
Company. No person holds any partnership interest or any right
to receive any income, profits, distributions or assets of the
Company, other than the LP Interest and the general partnership
interest held by the General Partner.
(c) There are not now, and at the Closing there
will not be, any shares of capital stock of General Partner
issued or outstanding or any subscriptions, options, warrants,
calls, rights, convertible securities or other rights or other
agreements, arrangements or commitments of any character relating
to the issued or unissued capital stock or other securities of
General Partner, or otherwise obligating General Partner to
issue, transfer or sell any of its respective securities or other
instruments convertible into or exchangeable or exercisable for
any securities of General Partner. Except as set forth on
Schedule 3.01 delivered by Sellers to Foodbrands upon the
execution of this Agreement, there are no, and at the Closing
there will not be, any voting trusts or other agreements or
understandings to which Sellers or General Partner is a party or
is bound with respect to the voting or transfer of the capital
stock of General Partner other than this Agreement. There
are no outstanding contractual or other obligations of General
Partner to repurchase, redeem or otherwise acquire the Shares or
any shares of capital stock of General Partner.
3.02 Organization and Qualification. The Company is a
limited partnership and General Partner is a corporation each
duly organized, validly existing and in good standing under the
laws of Delaware and each has the requisite power and authority
to carry on its business as it is now being conducted. The
Company and General Partner is each duly qualified to do business
and in good standing as a foreign limited partnership or
corporation, as applicable, in each state where the character of
the property owned by it or the nature of its activities makes
such qualifications necessary, including in the state of Texas.
Schedule 3.02 delivered by Sellers, to Foodbrands upon the
execution of this Agreement sets forth each state where the
Company or General Partner is qualified to do business.
3.03 Due Authorization. KPR Holdings has full
corporate power and authority to enter into and perform this
Agreement and all other agreements and to consummate the
transactions contemplated hereby and thereby. The execution,
delivery and performance by KPR Holdings of this Agreement have
been, and the execution, delivery and performance by KPR Holdings
of all other agreements and transactions contemplated hereby and
thereby have been or duly authorized and approved by all
requisite corporate action on the part of KPR Holdings. This
Agreement has been, and the other agreements contemplated hereby,
when executed, will be, duly executed and delivered by Sellers
and, assuming the due authorization, execution and delivery
hereof and thereof by the other parties hereto or thereto, this
Agreement constitutes and, when executed, each of the other
agreements contemplated hereby will constitute, a valid and
binding obligation of each Seller, enforceable against each
Seller in accordance with its terms subject to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent
conveyance and similar laws affecting creditors' rights generally
from time to time and to general principles of equity.
3.04 No Violation. Except as set forth in Schedule
3.04 delivered by Sellers to Foodbrands upon the execution of
this Agreement, and except for compliance with the notice filing
requirements of the HSR Act, which Foodbrands and Sellers have
completed, neither the execution and delivery of this Agreement,
nor the consummation of the transactions contemplated hereby,
will (a) violate or conflict with any statute, law, ordinance,
rule, regulation, order, writ, injunction, judgment or decree
applicable to any of the Sellers, General Partner or the Company
or by which any of their respective properties may be bound or
affected, (b) violate or conflict with any provisions of the
Certificate of Incorporation or Bylaws of General Partner or the
Limited Partnership Agreement of the Company, (c) constitute a
violation of or a default or breach (or an event which, with
notice or lapse of time, or both, would constitute a default)
under, or result in the termination of, accelerate the
performance required by, or give rise to any right of
termination, acceleration, cancellation, or amendment under, or
result in the creation of any mortgages, pledges, liens, security
interests, conditional sale agreements, encumbrances,
restrictions, charges or claims of any kind (whether absolute,
accrued, contingent or otherwise) (collectively, "Liens") upon
General Partner, the Company or any of their assets or have any
other adverse effect under, any term or provision of any
contract, commitment, understanding, arrangement, agreement or
restriction of any kind or character to which General Partner or
the Company is a party or by which any of their assets or
properties may be bound, subject or affected, or (d) cause, or
give any person grounds to cause (with or without notice, the
passage of time, or both), the maturity of any debt, liability or
obligation of General Partner or the Company to be accelerated or
increase any such liability or obligation of General Partner or
the Company. Except for compliance with the notice filing
requirements of the HSR Act, and except as set forth in Schedule
3.04, no filing with, notification to, and no permit, consent,
approval, authorization or action by any federal, state, local,
foreign or other governmental agency, instrumentality,
commission, authority, board or body (collectively, a
"Governmental Agency") is required in connection with the
execution, delivery and performance by the Sellers of this
Agreement, or the consummation by Sellers of the transactions
contemplated hereby. Schedule 3.04 lists and describes all
consents, approvals, authorizations or orders of any Governmental
Agency or other third party necessary for the authorization,
execution and delivery by the Sellers of this Agreement and the
consummation of the transactions contemplated hereby. Neither
the execution of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a tortious
interference by Foodbrands with any contract or business
relationship to which any of the Sellers or the Company is a
party.
3.05 Financial Statements. (a) The Company. Attached
hereto as Schedule 3.05-1 delivered by Sellers to Foodbrands upon
the execution of this Agreement, are (i) the audited balance
sheets of the Company as of December 31, 1994 (the "Company
Balance Sheet") and January 1, 1994, (ii) the related statements
of income, statements of partners' capital and statements of cash
flows of the Company for the years then ended, (iii) the
unaudited balance sheet of the Company as of October 7, 1995 (the
"Interim Balance Sheet") and (iv) the related profit and loss
statements (the financial statements referred to in the preceding
clauses (i) and (ii) are collectively referred to as the "Audited
Financial Statements" and shall be presented together with all
related notes and schedules thereto, and accompanied by the
reports thereon of the Company's independent accountants; the
financial statements referred to in the preceding clauses (iii)
and (iv) are collectively referred to as the "Unaudited Financial
Statements"). All such balance sheets (and the footnotes and
schedules thereto) (x) fairly present the financial position of
the Company as of the respective dates thereof and (y) have been
prepared in accordance with GAAP applied on a consistent basis,
except in the case of the Unaudited Financial Statements for the
omission of all footnote disclosures and for normal year end
adjustments. All such statements of operations and retained
earnings and profit and loss statements fairly present the
results of operations of the Company for the respective periods
indicated, in accordance with GAAP applied on a consistent basis,
except in the case of the Unaudited Financial Statements for the
omission of all footnote disclosures and for normal year end
adjustments.
(b) International Meat Ingredients, Ltd.
Attached hereto as Schedule 3.05-2 delivered by Sellers to
Foodbrands upon the execution of this Agreement are (i) the
audited directors' report and financial statements for the year
ended December 31, 1994 of the International Meat Ingredients,
Ltd. ("IMI"), and (ii) the unaudited balance sheet of IMI as of
August 27, 1995, and the related profit and loss account and cash
flow statement for the period then ended (collectively, the "IMI
Financial Statements"). The IMI Financial Statements fairly
present the financial position of IMI as of the respective dates
thereof and have been prepared in accordance with the Companies
Acts 1963 to 1990 and the European Communities (Companies: Group
Accounts) Regulations 1992 applied on a consistent basis, except
in the case of the unaudited IMI Financial Statements for the
omission of all footnote disclosures and for all normal year-end
adjustments. All profit and loss account statements and cash
flow statements fairly present the results of operations for IMI
for the respective period indicated, in accordance with the
Companies Acts 1963 to 1990 and the European Communities
(Companies: Group Accounts) Regulations 1992 applied on a
consistent basis, except in the case of the unaudited IMI
Financial Statements for the omission of all footnote disclosures
and for normal year-end adjustments.
3.06 No Undisclosed Liabilities. Neither the Company
nor IMI has any liabilities or obligations, except (i) as and to
the extent of the amounts reflected or reserved against in the
Company Balance Sheet or in the Interim Balance Sheet, (ii) as
and to the extent of the amounts reflected or reserved against in
the IMI Financial Statements, (iii) as set forth in Schedule 3.06
delivered by Sellers to Foodbrands upon the execution of this
Agreement, or (iv) liabilities and obligations incurred in the
ordinary course of business and consistent with past practices
since the date of the Interim Balance Sheet. Except as provided
in the preceding sentence, Sellers know of no reasonable basis
for the assertion against the Company, General Partner or IMI of
any liability or obligation not fully reflected or reserved
against in the Company Balance Sheet, the IMI Financial Statement
or in the Interim Balance Sheet or incurred in the ordinary
course of business and consistent with past practice since the
date thereof. General Partner has not conducted any business and
does not have any assets or liabilities other than as general
partner of the Company.
3.07 Absence of Certain Changes. Except as set forth
in Schedule 3.07 delivered by Sellers to Foodbrands upon the
execution of this Agreement, since December 31, 1994 the
respective businesses of the Company and IMI have been operated
in the usual and ordinary course, consistent with past practices.
As amplification and not limitation of the foregoing, except as
set forth in Schedule 3.07, since December 31, 1994, there has
not been:
(a) any material adverse change in the business,
operations or financial position of the Company or IMI from that
reflected in the Audited Financial Statements or the Unaudited
Financial Statements or the IMI Financial Statements, as
applicable;
(b) any amendment, modification or termination of
any existing, or entry into any new, contract, agreement, plan,
lease, license, permit or franchise which is, either individually
or in the aggregate, material to the business, operations,
prospects or financial position of the Company or IMI;
(c) any increase granted, promised or announced
in the wages, salaries, compensation, bonuses, incentives,
pension or other benefits payable by the Company or IMI to any of
its employees;
(d) any disposition of any asset of the Company
or IMI not in the ordinary course of business which had a fair
market or net book value at the time of disposition of $100,000
or more or in the aggregate of $250,000;
(e) any labor dispute material to the business,
operations, prospects or financial position of the Company or
IMI;
(f) any incurrence of any liabilities or obliga-
tions (whether absolute, accrued, contingent or otherwise and
whether due or to become due) by the Company or IMI except to the
extent incurred in the ordinary course of business and consistent
with past practice; or any increase of, or any experience of any
change in any assumptions underlying or methods of calculating,
any bad debt, contingency or other reserves;
(g) any payment, discharge or satisfaction of any
material claims, liabilities or obligations (whether absolute,
accrued, contingent or otherwise and whether due or to become
due) of the Company or IMI other than the payment, discharge or
satisfaction in the ordinary course of business and consistent
with past practice, including liabilities and obligations (i)
reflected or reserved against in the Company Balance Sheet or IMI
Financial Statement, as applicable, (ii) incurred in the ordinary
course of business and consistent with past practice since the
date of the Company Balance Sheet, or (iii) incurred prior to the
date of the Company Balance Sheet in the ordinary course of
business and consistent with past practices;
(h) any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind, except
for liens for current taxes not yet due or other statutory liens
for obligations not yet due, placed, permitted or, if not in
existence on December 31, 1994, allowed to exist on any property
or assets (real, personal or mixed, tangible or intangible) of
the Company;
(i) any capital expenditure or commitment for
capital expenditures by the Company or IMI which individually per
item exceeds $10,000, or $100,000 in the aggregate, for
replacements of and additions to property, plant, equipment or
intangible capital assets;
(j) any payment, loan or advance of any amount by
the Company or IMI, to, or sale, transfer or lease of any
properties or assets (real, personal or mixed, tangible or
intangible) by the Company to, or any agreement or arrangement by
the Company or IMI with, Sellers or any of their affiliates or
associates (other than the Company);
(k) any failure to replace or replenish inventory
as such inventory may have been depleted from time to time,
collect accounts receivable, pay accounts payable or otherwise
manage its working capital accounts in the ordinary course of
business and in a manner consistent with past practices;
(l) any failure to pay any creditor any amount
owed to such creditor when due, other than in the ordinary course
of business consistent with past practice or except for matters
being contested in good faith;
(m) any redemption of any of the capital stock of
General Partner or partnership interest of the Company or any
declaration or payment of any dividends or distributions (whether
in cash, securities or other property) to the holders of capital
stock of General Partner or partnership interest of the Company
or otherwise;
(n) any issuance or sale of partnership interest,
capital stock, notes, bonds or other securities, or options,
warrants or other rights to acquire the same, of, or any other
interest in, the Company;
(o) any agreement, arrangement or transaction
with any directors, officers, employees or shareholders of the
Company, General Partner, or IMI (or with any relative,
beneficiary, spouse or affiliate of such person);
(p) any writedown or writeup of (or failure to
write down or write up in accordance with GAAP consistent with
past practice) the value of any inventories or receivables or
revaluation of any assets of the Company or IMI other than in the
ordinary course of business consistent with past practice and in
accordance with GAAP;
(q) any change in any method of accounting or
accounting practice or policy used by the Company or IMI, other
than such changes required by GAAP;
(r) any failure to maintain the material assets
of the Company or IMI in accordance with good business practice
and in good operating condition and repair, ordinary wear and
tear excepted;
(s) any lapse or termination of any material
Permit (as herein defined) that was issued or relates to the
Company or IMI or otherwise relates to any asset of the Company
or IMI or any failure to renew such Permit or any insurance
policy that is scheduled to terminate or expire within 45
calendar days after the Closing Date;
(t) any express or deemed election or settlement
or compromise of any liability with respect to Taxes (as defined
herein) of the Company or IMI; or
(u) any agreement, whether in writing or
otherwise, to take or refrain from taking any action which, if
taken or omitted to be taken subsequent to December 31, 1994,
would render any of the representations or warranties set forth
in this Section 3.07 untrue or incorrect.
3.08 Tax Matters.
(a) The Company and General Partner have properly
prepared and filed with the appropriate governmental or taxing
agency or authority ("Taxing Authority"), all Tax Returns (as
defined below) which are or were required to be filed by the
Company or General Partner prior to Closing with respect to all
taxable years or the taxable periods which have ended or end on
or prior to the Closing Date. Except as set forth in Schedule
3.08-1 delivered by Sellers to Foodbrands upon the execution of
this Agreement, the Company and General Partner have paid, or
shall cause to be paid, when due and payable, all Taxes (as
defined below) that are shown to be due and payable on the Tax
Returns described above. Except as set forth in Schedule 3.08-1,
the reserves and allowances for Taxes required by Section 3.08(d)
hereof shall include all Taxes payable with respect to any Tax
Returns of the Company or General Partner not due prior to the
Closing but relating to tax periods (i) ending on or prior to the
Closing, or (ii) commencing before but ending after the Closing.
(b) Except as set forth on Schedule 3.08-1: (i)
no adjustment or deficiency relating to any Tax Return described
in Section 3.08(a) hereof has been proposed by any Taxing
Authority (insofar as either relates to the activities or income
of the Company or General Partner or could result in liability of
the Company or General Partner on the basis of joint and/or
several liability); (ii) there are no pending or, to the
knowledge of Sellers, threatened actions or proceedings for the
assessment or collection of Taxes against the Company or General
Partner; (iii) neither the Company nor General Partner is a
United States real property holding corporation within the
meaning of Section 897(c)(2) of the Internal Revenue Code of
1986, as amended (the "Code") during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code; and (iv)
neither the Company nor General Partner is subject to any
accumulated earnings tax penalty or personal holding company tax.
(c) Schedule 3.08-2 lists and describes: (i) all
Tax Returns filed with respect to the Company and General Partner
for the most recent taxable periods ended on or before Closing,
indicating (A) the jurisdictions to which the Tax Returns relate,
(B) the most recent Tax Return for each relevant jurisdiction
(excluding county) for which an audit has been completed or the
statute of limitations has lapsed, and (C) all Tax Returns that
currently are the subject of audit; (ii) the amount of any unused
net operating loss, net capital loss, foreign tax credit, other
tax credits, or excess charitable contribution allocable to the
Company or General Partner, and the tax periods to which those
losses, credits, and contributions relate in each case as shown
on any Tax Return; and (iii) any partnership or joint venture of
which the Company or General Partner has been a member, or any
trust in which the Company or General Partner has had a
beneficial interest, during any tax period for which the statute
of limitation for assessment of Taxes has not expired prior to
the Closing.
(d) Except as described in Schedule 3.08-1, on
the Company Balance Sheet, reserves and allowances have been
provided, and on the books of account and on the Interim Balance
Sheet and on any other balance sheet required to be delivered by
Sellers to Foodbrands hereunder reserves and allowances will be
provided, in each case adequate to satisfy all liabilities for
Taxes relating to the Company or General Partner for periods
through the Closing Date (without regard to the materiality
thereof).
(e) No deficiency for Taxes has been assessed
against the Company or General Partner which has not been paid in
full.
(f) There are no liens for Taxes upon the assets
of the Company General Partner except for liens for Taxes not yet
due.
(g) The term "Tax Return," as used in this
Agreement, shall include any report, return, rendition or other
document or information required to be supplied to a federal,
state, local or foreign Taxing Authority in connection with
Taxes.
(h) The term "Taxes," as used in this Agreement,
shall mean all taxes, charges, fees, levies or other assessments
including, without limitation, income, net worth, gross receipts,
excise, customs duties, withholding, Social Security (or similar
tax), disability, registrations, business and/or occupation,
personal property, real property transfer, use, service, license,
payroll, franchise, sales, withholding or employment taxes
imposed by the United States or any state, local or foreign
government or subdivision or agency thereof whether computed on a
separate, consolidated, unitary, combined or any other basis,
value added, alternative or add on minimum, estimated on other
tax of any kind whatsoever including all interest, additions, and
penalties thereon.
3.09 Title to Properties; Encumbrances; Condition.
(a) The Company has good, valid and marketable
title to all the assets, rights and property, real, personal or
mixed, tangible or intangible, owned, used or useful in the
operations of the Company, including, without limitation, (i) all
the assets reflected in the Company Balance Sheet (except for
assets disposed of since December 31, 1994 by the Company in the
ordinary course of business) and (ii) all tangible and intangible
assets, agreements, leases, licenses, and permits used by or
useful to the Company which exist or are in effect as of the date
hereof or at any time through the Closing, free and clear of all
Liens, except (w) as set forth in Schedule 3.09-1 delivered by
Sellers to Foodbrands upon the execution of this Agreement, (x)
Liens for current Taxes not yet delinquent and Taxes for which
adequate provision is made in the Company Balance Sheet, (y)
statutory liens for obligations not yet due and (z) minor
imperfections of title and encumbrances, if any, the total of
which is not substantial in amount and which do not materially
detract from the value of the property subject thereto and do not
impair the use of such properties and assets or the business and
operations of the Company (such Liens referred to in clauses (w),
(x), (y) and (z) of this sentence are hereinafter referred to as
"Permitted Liens").
(b) Except as set forth on Schedule 3.09-1, all
equipment of the Company used in connection with the operation of
the Fort Worth Facility or the manufacturing facility located at
0000 Xxxx Xxx, Xxxxxx, Xxxxx (each a "Facility" and,
collectively, the "Facilities") is owned by the Company and are
structurally sound, in good operating condition and repair,
ordinary wear and tear excepted, and not in need of repair, other
than ordinary and routine repairs. Each of the Facilities is
structurally sound and does not contain any latent or other
defects.
(c) Schedule 3.09-2 contains a list of all
material real property leases and subleases to which the Company
or IMI is a party all of which are in full force and effect and
are not in default and to the knowledge of Sellers or the Company
no event has occurred such that with the giving of notice or the
passage of time, or both, would give rise to an event of default.
(d) The assets of the Company, whether real or
personal, tangible or intangible, presently owned or leased by
the Company are sufficient for the operation of the business of
the Company as presently conducted.
3.10 Subsidiaries. The Company does not own,
directly or indirectly, legally or beneficially any interest in
any entities, partnerships or joint ventures other than IMI, a
foreign corporation in Ireland. The Company has provided to
Foodbrands a true and complete copy of the Articles of
Association, the addendums thereto and the governing documents
relating to IMI (the "Articles"). The Company has not waived or
amended any provisions of the Articles.
3.11 Inventory. The inventory of the Company of
finished product, raw materials, and supplies consists of a
quality and quantity usable and salable in the ordinary course of
business without discount or reduction except in the ordinary
course of business consistent with past practices and subject to
normal and customary allowances in the food industry for
spoilage, damage and outdated items. The quantities of the
Company's inventory are reasonable and warranted in the present
and anticipated circumstances of its business. The values at
which all inventories are carried on the Company Balance Sheet
reflect the historical inventory valuation policy of the Company
of stating such inventories at the lower of cost or market on a
first in, first out basis and all inventories are valued such
that the Company will earn their customary gross margins thereon.
The Company is not under any obligation or liability with respect
to accepting returns of inventory or merchandise in the
possession of their customers other than in the ordinary course
of business consistent with past practice. No clearance or
extraordinary sale of the inventories has been conducted since
December 31, 1994 other than in the ordinary course of business
consistent with past practices. The Company has not acquired or
committed to acquire inventory for sale which is not of a quality
and quantity usable in the ordinary course of business within a
reasonable period of time and consistent with past practice, nor
has the Company changed the price of any inventory except for (i)
price reductions to reflect any reduction in the cost thereof to
the Company, (ii) reductions and increases responsive to normal
competitive conditions and consistent with the Company's past
sales practices and (iii) increases to reflect any increase in
the cost thereof to the Company. All of the inventory of the
Company: (a) complies with the Federal Food, Drug and Cosmetic
Act, as amended (the "FDA Act"), and the Nutrition Labeling and
Education Act Amendments of 1993, (b) are not adulterated or
misbranded within the meaning of the FDA Act, (c) are not
prohibited from introduction into inter-state commerce under
Section 404 or 505 of the FDA Act and (d) do not contain a
misbranded hazardous substance or a banned hazardous substance.
3.12 Receivables. Schedule 3.12, delivered by Sellers
to Foodbrands upon the execution of this Agreement, sets forth
the basis on which the receivables of the Company are valued and
the reserve for uncollectible receivables are determined. Except
as disclosed in Schedule 3.12 or to the extent, if any, reserved
for on the Company Balance Sheet or the Interim Balance Sheet,
all receivables reflected on the Company Balance Sheet arose
from, and the receivables existing on the Closing Date will have
arisen from, the sale of inventory or services to persons not
affiliated with Sellers, or the Company and in the ordinary
course of their business consistent with past practice. Except
as reserved against on the Company Balance Sheet, the Interim
Balance Sheet or the Closing Date Balance Sheet, the receivables
referred to in the preceding sentence constitute or will
constitute, as the case may be, valid receivables, and not
subject to valid claims of set-off or other defenses or
counterclaims other than normal cash discounts accrued in the
ordinary course of business consistent with past practice. All
receivables reflected on the Company Balance Sheet or arising
from the date thereof until the Closing (subject to the reserve
for bad debts reflected on the books and records of the Company
as of the Closing Date, and except as disclosed in Schedule
3.12) are or will be good and have been collected or are or will
be collectible through the utilization of collection efforts in
the ordinary course of business consistent with past practice.
3.13 Proprietary Rights. The Company does not own or
use under licenses from others any trademarks, trade names,
assumed names, service marks, logos, patents, patent
applications, copyrights and copyright registrations, or
applications therefor, except as listed on Schedule 3.13
(collectively, the "Proprietary Rights") delivered by Sellers to
Foodbrands upon the execution of this Agreement; and no other
Proprietary Rights are used in or are necessary for the conduct
of the Company's business as presently conducted. No Proprietary
Rights used by the Company conflict with or infringe any similar
rights of any other person in the states where the Company does
business. Except as set forth on Schedule 3.13, to the knowledge
of Sellers and the Company, no claims have been asserted by any
person with respect to the ownership, validity, license, use of
the Proprietary Rights by the Company and, to the knowledge of
Sellers and the Company, there is no basis for any such claim.
The consummation of the transactions contemplated hereby will not
alter or impair any of the Proprietary Rights. The Company is
not in possession of and does not utilize in its business any
know-how, trade secrets or confidential information owned by any
third party, except pursuant to validly existing license
agreements listed in Schedule 3.17.
3.14 Litigation. Except as listed on Schedule 3.14
delivered to Foodbrands by Sellers upon the execution of this
Agreement, there is no action, suit, proceeding or, to the best
knowledge of the Sellers, investigation, pending or, to the best
knowledge of the Sellers, threatened against the Company or IMI
at law or in equity, or before any federal, state, municipal or
other governmental court, department, commission, board, bureau,
agency or instrumentality (the "Litigation Matters"). Neither
the Company nor IMI is subject to any order, judgment, decree or
obligation which would limit the ability of the Company or IMI to
operate its business in the ordinary course. Schedule 3.14 also
identifies those Litigation Matters which are covered by
insurance.
3.15 Insurance. (a) Schedule 3.15 delivered by
Sellers to Foodbrands upon the execution of this Agreement, sets
forth a complete description (name of the insurer, policy number,
premiums, type of insurance, etc.) with respect to all policies
of fire, liability, product liability, worker's compensation,
health, property, casualty and bond and surety arrangements and
other forms of insurance presently in effect with respect to the
Company (true and complete copies of policies with respect to the
Company have heretofore been delivered to Foodbrands) under which
the Company has been an insured, a named insured or otherwise the
principal beneficiary of coverage at any time within the past
three years.
(b) With respect to each insurance policy: (i)
the policy is legal, valid, binding and enforceable in accordance
with its terms and, except for policies that have expired under
their terms in the ordinary course, is in full force and effect;
(ii) the Company is not in breach or default (including any
breach or default with respect to the payment of premiums or the
giving of notice), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default
or permit termination or modification, under the policy; and
(iii) no party to the policy has repudiated, or given notice of
an intent to repudiate, any provision thereof.
(c) No insurance policy listed on Schedule 3.15
will cease to be legal, valid, binding, enforceable in accordance
with its terms and in full force and effect on terms identical to
those in effect as of the date hereof as a result of the consum-
mation of the transactions contemplated by this Agreement.
3.16 Employee Benefit Plans. Except as otherwise set
forth on Schedule 3.16:
(a) Neither the Company nor the General Partner
currently sponsor, maintain or participate in or are required to
contribute to any employee benefit plan, as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974 as
amended ("ERISA"), any multiemployer plan ("Multiemployer
Plans")as defined in Section 3(37)(A) or (D) of ERISA, any
incentive compensation plan, bonus plan, deferred compensation
agreement or arrangement, stock option, stock bonus and stock
purchase plan or to any other employee benefit plan (whether or
not subject to ERISA), program or arrangement of any kind
whatsoever which provides or is obligated to provide any kind of
benefit (such plans, benefit programs and agreements (excluding
Multiemployer Plans) are collectively referred to herein as the
"Benefit Plans").
(b) All obligations of the Company or the General
Partner, whether arising by operation of law, by contract or by
past custom, for payments to trusts or other funds or to any
governmental agency or to any Benefit Plans or Multiemployer
Plans have been paid, or adequate accruals for such payments have
been made by the Company or the General Partner on its books of
account as of August 31, 1995, except accruals for such payments
attributable solely to events occurring subsequent to August 31,
1995, all of which accruals will have been made by the Company
and each Subsidiary on its books of account as of October 7, 1995
and as of the Closing Date.
(c) All reports relating to the Benefit Plans
required to be filed with or furnished to any governmental body,
agency or court or to the participants or beneficiaries prior to
the date hereof have been timely filed or furnished in accordance
with applicable law.
(d) There are no actions, suits or claims pending
(other than routine claims for benefits), or to the knowledge of
the Company, threatened against any of the Benefit Plans or
against the assets of any of such Benefit Plans.
(e) The employee benefit plans, as defined in
Section 3(3) of ERISA, and related trust agreements, if any,
listed in Schedule 3.16, are valid and in full force and effect
and complies will the provisions of the Code and all other
applicable laws and regulations. The KPR Holdings, L.P. 401(k)
Profit Sharing Plan and Trust ("Plan") was adopted effective
April 1, 1991 and thereafter amended to comply with the
Unemployment Compensation Act of 1992 and the Revenue
Reconciliation Act of 1933. The Company has failed to timely
file the Plan with the Internal Revenue Service as required under
the Tax Reform Act of 1986. Further, the Company intends to file
the Plan with the Internal Revenue Service on or before November
28, 1995 and to request a determination letter that the Plan
complies with the applicable provisions of the Code. However,
the Sellers represent and warrant that the Plan complies with the
applicable provisions of the Code as to both form and operation
in all respects; and, the Sellers hereby agree to indemnify and
hold harmless Foodbrands, the Company, the General Partner and
any participants in the Plan with respect to any claim, damages,
liabilities, causes of actions, and expenses (including
attorney's fees) which may arise because of the failure of the
Plan to comply with the applicable provisions of the Code and all
other applicable laws and regulations.
(f) Each Benefit Plan which is a "welfare benefit
plan" (as defined in Section (3)(1) of ERISA) is either (i)
unfunded or (ii) funded through insurance contracts.
(g) Neither the Company nor the General Partner
participates in any Multiemployer Plan or in any employee Benefit
Plan which provides health and welfare benefits, any withdrawal
liability with respect to any such Benefit Plan or Multiemployer
Plan and neither the Sellers, the Company or the General Partner
has any knowledge that would render such representation
inaccurate. Neither Sellers, the Company nor the General Partner
has committed any act or acts prior to Closing which has
effected, or could be reasonably expected to effect a partial or
complete withdrawal as such terms are defined under ERISA from
any Multiemployer Plan or Benefit Plan.
(h) Neither the Company nor the General Partner
(i) has experienced any reportable event within the meaning of
ERISA or other event or condition which presents a material risk
of the termination of any pension Benefit Plan by the Pension
Benefit Guaranty Corporation ("PBGC"); (ii) has had any tax
imposed on it by the Internal Revenue Service for any violation
under Section 4975 of the Code; or (iii) has engaged in any
transaction which could reasonably be expected to subject the
Company, the General Partner or any such Benefit Plan to any
liability for any such tax under Section 4975 of the Code.
(i) The terms of all Benefit Plans comply with
ERISA, the Code and all applicable statutes, orders or
governmental rules and regulations. None of the Benefit Plans,
nor any trust created thereunder has engaged in any non-exempt
"prohibited transaction" as such term is defined in Section 4975
of the Code and Section 406 of ERISA which involves the Company,
the General Partner or any subsidiaries.
(j) As to each Benefit Plan for which an Annual
Report (IRS Form 5500), including schedules, was filed by the
Company or the General Partner under ERISA or the Code, no
liabilities with respect to any such Benefit Plan existed on the
date of the financial statements contained in the most recent
Annual Report except as disclosed therein, and no adverse change
has occurred with respect to the financial statements covered by
such Annual Report since the date thereof.
(k) There is no issue relating to any Benefit
Plan maintained or established for employees of the Company or
the General Partner which is pending before the Internal Revenue
Service, the Department of Labor or any other governmental agency
or court.
(l) As of the last day of the last plan year for
which the Company or the General Partner has received such
information, the aggregate fair market value of the assets of the
Benefit Plans which are defined benefit pension plans under ERISA
(excluding for these purposes any accrued but unpaid
contributions) equalled or exceeded the present value of all
benefits accrued under such employee pension plans determined on
an ongoing basis and on a termination basis using the assumptions
established by the PBGC as in effect on such date.
(m) As to any Benefit Plan subject to Title IV of
ERISA, (i) there has been no event or condition that presents the
risk of termination of any such Benefit Plan, (ii) no accumulated
funding deficiency, whether or not waived, within the meaning of
Section 302 of ERISA or Section 412 of the Code has been
incurred, (iii) no reportable event within the meaning of Section
4043 of ERISA (for which the disclosure requirements of
Regulation Section 2615.3 promulgated by the PBGC have not been
waived) has occurred, (iv) no notice of intent to terminate the
Benefit Plan has been given under Section 4041 of ERISA, (v) no
proceeding has been instituted under Section 4042 of ERISA to
terminate any such Benefit Plan, (vi) no liability to the PBGC
has been incurred (other than PBGC insurance premiums), and,
(vii) as to any such Benefit Plan intended to be qualified under
Section 401 of the Code, to the knowledge of Sellers, the General
Partner or the Company there has been no termination or partial
termination of any such Benefit Plan within the meaning of
Section 411(d)(3) of the Code.
(n) No act, omission or transaction has occurred
which could result in imposition on the Company or the General
Partner of (i) a breach of fiduciary duty liability under Section
409 of ERISA, or (ii) a civil penalty assessed pursuant to
subsections (c), (i) or (l) of Section 502 of ERISA.
(o) There have been no payments made or
agreements entered into with respect to any individual employed
by the Company or the General Partner which as a result of this
transaction would result in the imposition of the sanctions
imposed under Sections 280G and 4999 of the Code.
(p) Neither the Company nor the General Partner
has any liabilities or other obligations of any kind whatsoever,
whether actual or contingent, with respect to the Benefit Plans,
including, without limitation, liability for post-retirement
medical benefits, post-retirement life insurance benefits or
severance benefits excluding routine premiums due under any
Benefit Plan that is an employee welfare benefit plan as defined
in Section 3(l) of ERISA.
(q) Sellers have listed in Schedule 3.16 and made
available to Foodbrands, or will make available to Foodbrands
prior to the Closing, true, complete and correct copies of (i)
all Benefit Plans (including amendments), (ii) all summary plan
descriptions (whether or not required to be furnished under
ERISA), (iii) all latest Annual Report forms filed with respect
to any such employee benefit plan, (iv) all former employees who
have elected COBRA continuation coverage, and (v) the most recent
actuarial valuation and determination letters received from the
Internal Revenue Service with respect to any such Benefit Plan.
(r) Neither the Company nor the General Partner
is a party to any written or oral deferred or incentive
compensation, employment, severance, consulting or other similar
contract, arrangement or policy or labor contracts or collective
bargaining agreements relating to its employees which would
result in any adverse effect on the Company or the General
Partner.
3.17 Contracts and Commitments. Except as set forth
on Schedule 3.17-1 delivered to Foodbrands by Sellers upon the
execution of this Agreement, and except for employee benefit
plans set forth in Schedule 3.16 hereto, neither the Company,
General Partner nor IMI is a party to any written or oral:
(a) commitment, contract, purchase order, letter
of credit or agreement, other than as described in subsections
(b) or (c) below, involving any obligation or liability on the
part of the Company in excess of $10,000 and not cancelable
(without liability) within 60 days, except for purchases for raw
materials made in the ordinary course of business in amounts not
substantially in excess of past practice;
(b) lease of real property involving an annual
expense in excess of $10,000 per year;
(c) lease of personal property involving an
annual expense in excess of $10,000 which lease is not cancelable
(without liability) within 60 days;
(d) any contracts between the Company or IMI and
the customers of the Company or IMI;
(e) any contracts between the Company or IMI and
any employee, consultant, broker or agent of the Company or IMI;
(f) any contracts which limit the matters or
extent of the business which may be conducted by the Company or
IMI in any material respects;
(g) any licensing, royalty, confidentiality,
consulting administrative service or similar agreement; and
(h) contracts and commitments not in the ordinary
course of business not otherwise described above or listed on
Schedule 3.17 relating to the business of the Company or IMI and
materially affecting the Company's or IMI's business.
The contracts, commitments, agreements, arrangements
and understandings referred to in this Section 3.17 and listed on
Schedule 3.17 are herein referred to as the "Contracts."
3.18 No Breach. To the knowledge of Sellers or the
Company, each Contract is, except as specifically indicated
herein or in Schedule 3.18 delivered by Sellers to Foodbrands
upon the execution of this Agreement describing such arrangement,
in full force and effect in all material respects. Except as
specified in Schedule 3.18, there are no outstanding disputes
under the Contracts, or, to the knowledge of Sellers and the
Company, threatened cancellations of the Contracts and the
Company has not breached any provision of, nor does there exist
any default in any material respect of, or event (including the
execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby) which with the giving of
notice or the passage of time or both would become a breach or
default in any material respect of, the terms of any Contract by
the Company or IMI. To the best knowledge of Sellers, no other
party is in material breach or violation of, or default under,
any of the Contracts.
3.19 Labor Relations. Except as and to the extent set
forth in Schedule 3.19 delivered by Sellers to Foodbrands upon
the execution of this Agreement:
(a) no collective bargaining agreement presently
covers (nor has any, in the past five years), covered, any
employees of the Company or IMI, nor is any currently being
negotiated by the Company or IMI and, to the knowledge of
Sellers, no attempt to organize any group or all of the employees
of the Company or IMI have been made or proposed and is currently
outstanding;
(b) to the knowledge of Sellers or the Company,
there are no controversies, strikes, slowdowns or work stoppages
pending or, to the knowledge of Sellers or the Company,
threatened between the Company or IMI and any of its employees,
and the Company and IMI have not experienced such controversy,
strike, slowdown or work stoppage within the past three years;
(c) to the knowledge of Sellers or the Company,
the Company and IMI are currently substantially in compliance
with all applicable laws relating to the employment of labor,
including those related to wages, hours, collective bargaining
and the payment and withholding of taxes and other sums as
required by the appropriate Governmental Authorities and has
withheld and paid to the appropriate Governmental Authorities or
is holding for payment not yet due to such Governmental
Authorities all amounts required to be withheld from employees of
the Company and IMI and are not liable for any arrears of wages,
taxes, penalties or other sums for failure to comply with any of
the foregoing;
(d) the Company and IMI have paid in full to all
their employees or adequately accrued for in accordance with GAAP
all wages, salaries, commissions, bonuses, benefits and other
compensation due to or on behalf of such employees;
(e) there is no claim with respect to payment of
wages, salary or overtime pay that has been asserted and is now
pending or, to the knowledge of Sellers or the Company,
threatened before any Governmental Authorities with respect to
any persons currently or formerly employed by the Company or IMI;
(f) neither the Company nor IMI is a party to, or
otherwise bound by, any consent decree with, or citation by, any
Governmental Authorities relating to employees or employment
practices;
(g) there is no charge or proceeding with respect
to a violation of any occupational safety or health standards
that has been asserted and is now pending or, to the knowledge of
Sellers or the Company, threatened with respect to the Company or
IMI; and
(h) there is no charge of discrimination in
employment or employment practices, for any reason, including,
without limitation, age, gender, race, religion or other legally
protected category, which has been asserted and is now pending
or, to the knowledge of Sellers or the Company, threatened before
the United States Equal Employment Opportunity Commission, or any
other Governmental Authorities in any jurisdiction in which the
Company or IMI has employed or currently employs any person.
3.20 Compliance with Law. The Company and IMI, and
each of the Facilities, are in substantial compliance with all
applicable laws, statutes, ordinances and regulations, zoning and
special use permits, whether federal, state or local, except
where the failure to comply would not have a material adverse
effect on the business or financial condition of the Company.
The Company has not received any written notice to the effect
that, or otherwise been advised that, it or IMI is not in
compliance with any of such statutes, regulations and orders,
ordinances or other laws where the failure to comply would have
an adverse effect on the business or financial condition of the
Company, and the Sellers have no reason to anticipate that any
presently existing circumstances are likely to result in
violations of any such regulations which would, individually or
in the aggregate, have a material adverse effect on the business
or financial condition of the Company.
3.21 Hazardous Material. (a) Except as set forth on
Schedule 3.21-1 delivered by Sellers to Foodbrands upon the
execution of this Agreement, (i) any handling, transportation,
storage, treatment or usage of Hazardous Material (as defined
below) that has occurred on any tract of real property owned by
the Company or IMI or covered by any real property lease to which
the Company or IMI is a party, has been in compliance with all
applicable laws relating to the protection of the environment
(including without limitation, ambient air and surface and
subsurface soil and water), natural resources, wildlife or human
health (the "Environmental Laws"), (ii) no leak, spill, release,
discharge, emission or disposal of any Hazardous Material has
occurred on any such tract which would subject the property to
remedial action under any Environmental Laws, (iii) each such
tract is in compliance with applicable Environmental Laws, and
(iv) each underground storage tank located on any such tract, has
been registered, maintained and operated in accordance with all
applicable Environmental Laws. Schedule 3.21-2 lists and Sellers
have provided Foodbrands with full, accurate and complete copies
of any and all reports, studies, tests and other information in
their possession or in the possession of the Company relating to
the presence or suspected presence of any Hazardous Material on
any such tract or relating to the existence of any underground
storage tank thereon and agree that they will, promptly following
any of their or the Company's receipt thereof, furnish to
Foodbrands full, accurate and complete copies of any such
reports, studies, tests and other information hereafter obtained
by Sellers or the Company on or prior to the Closing Date.
"Hazardous Material" means asbestos, petroleum (including without
limitation, oil, used oil, waste oil, gasoline, diesel and
petroleum based fuels), petroleum products and by-products,
petroleum wastes, petroleum contaminated soils, and any
substance, material or waste which is regulated as "hazardous",
"toxic" or under any other similar designation by any local,
state or federal governmental authority. Such term includes,
without limitation, (i) any material, substance or waste defined
as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act (42 U.S.C. Section 6901, et seq.)
("RCRA"), (ii) any material, substance or waste defined as a
"hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response Compensation and Liability
Act (42 U.S.C. Section 9601, et seq.) ("CERCLA") or (iii) any
material, substance or waste defined as a "regulated substance"
pursuant to Subchapter IX of the Solid Waste Disposal Act (42
U.S.C. Section 6991, et seq.).
(b) Except as disclosed in Schedule 3.21-1, to
the knowledge of Sellers or the Company (i) Hazardous Materials
have not been generated, used, treated, handled or stored on, or
transported to or from, or released or disposed on or from any
tract of real property owned by the Company or IMI or covered by
any real property lease to which the Company or IMI is a party in
violation of any Environmental Law, or, any property adjoining
any such tract; (ii) the Company has disposed of all wastes,
including those wastes containing Hazardous Materials, in
compliance with all applicable Environmental Laws and Permits;
(iii) there are no past, pending or threatened actions against
the Company or IMI relating to compliance with Environmental Laws
or asserting damages or injury to natural resources, wildlife or
the environment; (iv) no such tract or any property adjoining
such tract, is listed or proposed for listing on the National
Priorities List under CERCLA or on the Comprehensive
Environmental Response, Compensation and Liability Act
Information System ("CERCLIS"), the Facility Index System
("FINDS"), RCRA, Hazardous Waste Registrations Listing Report;
and (v) neither the Company nor IMI has transported or arranged
for the transportation of any Hazardous Materials to any location
that is listed or proposed for listing on the National Priorities
List under CERCLA or on the CERCLIS or FINDS or which is the
subject of any environmental claim.
(c) Schedule 3.21-3 also contains a list of all
underground storage tanks including the street address and owner
thereof located on real property owned or leased by the Company.
3.22 Environmental and Other Permits. The Company and
IMI currently hold all the health and safety, environmental and
other permits, licenses, authorizations, certificates, exemptions
and approvals of Governmental Authorities including without
limitation, those issued under Environmental Laws (collectively,
"Permits"), necessary or proper for the current use, occupancy
and operation of each material asset of the Company or IMI and
the conduct of their respective business and each Facility.
Schedule 3.22 delivered by Sellers to Foodbrands upon the
execution of this Agreement lists all such Permits and they are
in full force and effect.
3.23 Business Prospects. To the knowledge of Sellers
or the Company, since December 31, 1994 there has not occurred
any event or other occurrence which has had or could reasonably
be expected to have a material adverse effect on the business or
business prospects of the Company or IMI. Without limiting the
generality of the foregoing, no customer who accounted for more
than 2% of the gross revenue of the Company or IMI during
calendar year 1994, or the most recent interim period ending
prior to the Closing Date has given the Company or IMI notice of
any facts which would lead Sellers to believe sales to or profit
margins on sales to such customer would be adversely affected.
Provided, however, the Sellers and the Company make no
representation or warranty that the customers described in this
Section 3.23 will continue their relationship with the Company.
3.24 Bank Accounts. Schedule 3.24 delivered by
Sellers to Foodbrands upon execution of this Agreement sets forth
each bank account or borrowing resolution authorizing officers or
agents of the Company or General Partner to borrow money and list
the persons authorized to transact on behalf of the Company or
General Partner with respect to each such account or borrowing
resolution. Schedule 3.24 also lists all powers of attorney
granted by the Company or General Partner to any other person.
3.25 Indebtedness of Affiliates. Schedule 3.25
delivered by Sellers to Foodbrands upon execution of this
Agreement lists all indebtedness or obligations by or to the
Company or General Partner with respect to any of the
Shareholders, officers or directors of General Partner, employees
or agents of the Company, Winchester Food Processing, Inc.
("Winchester"), Standard Meat Company, L.P. ("Standard")
and any affiliates of the foregoing, other than trade receivables
of Winchester and Standard incurred in the ordinary course of
business.
3.26 Disclosure. No representation or warranty made
to Foodbrands contained in this Agreement, and no statement
contained in any of the Schedules or any certificate, document or
instrument delivered by Sellers or the Company pursuant hereto
contains any untrue statement of a material fact or omits 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.
3.27 Brokers. None of the Sellers nor any affiliate
of any of the Sellers, including the Company, have entered into
or will enter into any agreement, arrangement or understanding
with any person or firm which will result in the obligation of
the Company or Foodbrands or any of its subsidiaries to pay any
finder's fee, brokerage commission or similar payment in
connection with the transactions contemplated hereby.
3.28 Corporate Books and Records. The minute books of
General Partner contain accurate records in all material respects
of all board of directors and shareholder meetings of General
Partner and accurately reflect in all material respects all other
actions taken by the shareholders, boards of directors and all
committees of the boards of directors of General Partner at such
meetings. Complete and accurate copies of all such minute books
and of the stock register of General Partner have been made
available by Sellers to Foodbrands.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF FOODBRANDS
Foodbrands hereby represents and warrants to Sellers as
follows:
4.01 Organization. Foodbrands is a corporation duly
organized, validly existing and in good standing under the laws
of the State of Delaware. Foodbrands has the corporate power and
authority to enter into this Agreement and to consummate the
transactions contemplated hereby.
4.02 Authorization. Foodbrands has duly authorized
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby. No further corporate
actions on the part of Foodbrands or its designee are necessary
to authorize this Agreement or to consummate the transactions
contemplated hereby.
4.03 Valid and Binding Agreement. This Agreement
constitutes a valid and binding agreement of Foodbrands,
enforceable against Foodbrands in accordance with its terms
subject to applicable bankruptcy, reorganization, insolvency,
moratorium, and similar laws affecting creditors' rights
generally from time to time in effect and to general principles
of equity.
4.04 No Violation. Except for compliance with the
notice filing requirements of the HSR Act, neither the execution
and delivery of this Agreement nor the consummation by Foodbrands
or its designee of the transactions contemplated hereby will (a)
violate or conflict with any law applicable to Foodbrands or its
designee or by which any of its properties may be bound or
affected, or (b) violate or conflict with any provisions of the
Articles of Incorporation or Bylaws of Foodbrands or its
designee. Except for compliance with the notice filing
requirements of the HSR Act, no filing with, notification to, and
no permit, consent, approval, authorization or action by, any
Governmental Agency is required in connection with the execution,
delivery and performance by Foodbrands of this Agreement or the
consummation by Foodbrands of the transactions contemplated
hereby except where the failure to make such filing, give notice
to or obtain such permit, consent, approval, authorization or
action would not have a material adverse effect on the Foodbrands
and its material subsidiaries taken as a whole, or prevent or
delay the consummation of the transactions contemplated hereby.
Neither the execution and delivery of this Agreement nor the
consummation of the transactions contemplated hereby will
constitute a tortious interference by Seller with any contract or
business relationship to which Foodbrands is a party.
4.05 Disclosure. No representation or warranty made
to Sellers contained in this Agreement, and no statement
contained in any certificate, document or instrument delivered by
Foodbrands, pursuant hereto contains any untrue statement of a
material fact or omits 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.
4.06 Purchase for Investment. Foodbrands or its
designee is purchasing the Shares and LP Interest for investment
and not with a view toward distribution, except in compliance
with applicable securities laws.
4.07 Brokers. Neither Foodbrands nor any affiliate of
Foodbrands has entered into or will enter into any agreement,
arrangement or understanding with any person or firm which will
result in the obligation of Sellers or any affiliate of Sellers
to pay any finder's fee, brokerage commission or similar payment
in connection with the transactions contemplated hereby.
ARTICLE V
CERTAIN OBLIGATIONS OF THE PARTIES
5.01 Conduct of Business Pending the Closing. Sellers
agree that, except as provided in Schedule 5.01 delivered by
Sellers to Foodbrands upon the execution of this Agreement, from
the date hereof until the Closing, unless specifically herein
provided or otherwise consented to by Foodbrands in writing,
Sellers will cause the Company and IMI to conduct their
respective businesses in the ordinary course consistent with past
practice and to use commercially reasonable efforts to preserve
intact its business, operations, organization, goodwill and work
force in a manner consistent with past practices. Without
limiting the generality of the foregoing, and except as otherwise
expressly provided in this Agreement or with the prior written
consent of Foodbrands, from the date hereof to the Closing,
Sellers will not permit the Company or IMI to:
(a) Incur any obligations or liabilities
(whether absolute, accrued, contingent or otherwise and whether
due or to become due), except items incurred in the ordinary
course of business and consistent with past practice.
(b) Pay, discharge or satisfy any Lien or
liability (whether absolute, accrued, contingent or otherwise and
whether due or to become due), other than Liens or liabilities
discharged or satisfied in the ordinary course of business and
consistent with past practices.
(c) Permit or allow any of the properties or
assets (whether real, personal or mixed, tangible or intangible)
of the Company to be mortgaged, pledged or subjected to any lien,
encumbrance, restriction or charge of any kind except Permitted
Liens.
(d) Write off as uncollectible any of its notes
or accounts receivable or any portion thereof, except for write
offs in the ordinary course of business, consistent with past
practice and at a rate and amount no greater than during the
twelve months ended December 31, 1994.
(e) Cancel or release any other debts or claims,
or waive any rights of value in excess of $10,000, or sell,
transfer or convey any of the properties or assets (whether real,
personal or mixed, tangible or intangible) of the Company, except
in the ordinary course of business and consistent with past
practice.
(f) Grant any increase in the compensation of
any director, officer or employee of the Company (including,
without limitation, any increase pursuant to any bonus, pension,
profit sharing or other plan or commitment), institute or adopt
any new plan for directors, officers or employees of the Company
or IMI, or modify, amend or terminate any existing plan other
than increases in the ordinary course of business, consistent
with past practice or as required by law or agreements in effect
on the date hereof.
(g) Make any pension, retirement, profit
sharing, bonus, severance or other employee welfare or benefit
payment to any director, officer or employee of the Company or
IMI, except in the ordinary course of business and consistent
with past practice or as required by law or agreements in effect
on the date hereof.
(h) Declare, pay or make, or set aside for
payment or making, any dividend or other distribution, or
directly or indirectly redeem, purchase or otherwise acquire any
of its partnership interest.
(i) Issue, authorize, or propose the issuance of
any partnership interest or shares of the capital stock of
General Partner or securities convertible into, or rights,
warrants or options to acquire, any such interest or shares or
other convertible securities.
(j) Make any capital expenditure or commitment
for capital expenditures which individually per item exceeds
$100,000 or in the aggregate exceeds $250,000, for replacements
or additions to property, plant, equipment or intangible capital
assets.
(k) Make any change in any method of financial
or tax accounting or accounting practice for financial or tax
accounting purposes, or permit any change in any assumptions
underlying or methods of calculating any bad debt, contingency or
other reserves.
(l) Pay, loan or advance any amount to or in
respect of, or sell, transfer or lease any properties, assets
(whether real, personal or mixed, tangible or intangible) or
services to, or enter into any agreement, arrangement or
transaction with any of Sellers, the Company or any affiliate or
associate of any of Sellers, the Company or of any of the
Company's officers or directors, or any business or entity in
which Sellers or the Company, any officer or director of the
Company, or any affiliate or associate of any such persons, has
any direct or indirect interest, except for (A) compensation to
officers and employees of the Company at rates not exceeding the
rates of compensation in effect as of the date hereof, or (B)
advances made to employees of the Company for travel and other
business expenses in reasonable amounts consistent with past
practice or (C) transactions pursuant to agreements disclosed in
Schedule 3.17.
(m) Enter into any lease of real or personal
property.
(n) Terminate or amend or suffer the termination
or amendment of, or fail to perform in all material respects all
of its obligations or suffer or permit any default to exist,
under any contract, lease, agreement or license except for
defaults and failures to perform obligations which would not, in
the aggregate, have a material adverse effect on the business
operations or financial position of the Company.
(o) (i) Discontinue its advertising and
promotional activities or its pricing and purchasing policies, in
either case in any material respect; (ii) shorten or lengthen the
customary payment cycles for any of its payables or receivables;
(iii) exercise any rights of renewal pursuant to the terms of any
of the leases or subleases set forth on Schedule 3.09-2 which by
their terms would otherwise expire except only after notice to
Foodbrands and receipt of Foodbrands's prior written approval
(which approval shall not be unreasonable withheld or delayed);
and (iv) engage in any practice, take any action, fail to take
any action or enter into any transaction which could reasonably
be expected to cause any representation or warranty made by
Sellers to be untrue or result in a breach of any covenant made
by Sellers in this Agreement.
(p) Enter into any contract not in the ordinary
course of business or any contract in the ordinary course of
business for longer than one year.
(q) Agree, whether in writing or otherwise, to
take any action prohibited in this Section 5.01.
5.02 Other Obligations of Sellers Pending the Closing.
Sellers agree that from the date hereof until the Closing, unless
otherwise consented to by Foodbrands in writing:
(a) Access. Sellers and the Company shall allow
Foodbrands at its own expense, during regular business hours
through Foodbrands's employees, agents and representatives, to
make such investigation of the business, properties, books and
records of the Company and IMI, and to conduct such examination
of the condition of the Company and IMI as Foodbrands deems
necessary or advisable to familiarize itself further with such
business, properties, books, records, condition and other
matters, and to verify the representations and warranties of the
Company hereunder.
(b) Other Transactions. Sellers and their
affiliates will not, and will cause the Company and IMI, and its
directors, officers, employees, agents and affiliates not to,
directly or indirectly, solicit or initiate the submission of
proposals or offers from, or solicit, encourage, entertain or
enter into any agreement, arrangement or understanding with, or
engage in any discussions with, or furnish any information to,
any person or entity, other than Foodbrands or representatives of
Foodbrands (Foodbrands's officers, attorneys, accountants or
other persons designated by Foodbrands, herein "Foodbrands's
Representatives"), with respect to (i) the acquisition of all or
any part of the Company or IMI or their respective businesses
(excluding Winchester and Standard), (ii) any business
combination with the Company or IMI or (iii) any other
extraordinary business transaction involving or otherwise
relating to the Company or IMI or its assets. Should any of the
Sellers or the Company or any of its respective affiliates
(excluding Winchester and Standard) or representatives, during
such period, receive any offer or inquiry relating to such a
transaction, or obtain information that such an offer is likely
to be made, each of them will provide Foodbrands with immediate
notice thereof, which notice will include the identity of the
prospective offeror and the price and terms of any offer.
(c) Insurance. Sellers will maintain the
insurance coverage specified in Schedule 3.15, or policies
providing substantially equivalent coverage, in full force and
effect.
(d) Interim Financial Statements. As promptly
as practicable after the end of each four week accounting period
prior to the Closing, and including the period ending next before
the Closing Date, Sellers will make available to Foodbrands such
unaudited interim financial statements of the Company as of the
end of such four week accounting period as are prepared by the
Company consistent with past practice. Sellers will also
disclose in writing any adjustments which apply to prior periods
in excess of $25,000 in the aggregate and the reason for such
adjustments.
5.03 Public Announcements. Foodbrands, on the one
hand, and the General Partner, on the other hand, agree that they
will consult with each other before issuing any press releases or
otherwise making any public statements with respect to this
Agreement or the transactions contemplated hereby and shall not
issue any press release or make any public statement prior to
such consultation, except as may be required by law or any
listing agreements with a national securities exchange.
5.04 HSR Act. Foodbrands and Sellers agree to
cooperate each with the other and with the Federal Trade
Commission ("FTC") in the processing of their respective
applications filed with the FTC under the HSR Act.
5.05 Other Action. Each of the parties hereto shall
use its best efforts to cause the fulfillment at the earliest
practicable date of all of the conditions to their respective
obligations to consummate the transactions contemplated by this
Agreement.
5.06 Consents and Best Efforts. (a) Subject to the
terms and conditions herein provided, the parties hereto agree to
use their respective 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. In case at any time after the Closing any
further action is necessary or desirable to carry out the
purposes of this Agreement, each party to this Agreement shall,
at the expense of the requesting party, take all such necessary
action and will execute any additional instruments necessary to
consummate the transactions contemplated hereby.
(b) Foodbrands and Sellers shall, and Sellers
shall cause the Company to, as soon as practicable, commence to
use
their respective best efforts required to (i) obtain all waivers,
consents, estoppel certificates (as requested), approvals and
agreements of, and to give all notices and make all other filings
with, any third parties, including governmental authorities,
necessary and appropriate to authorize, approve or permit the
transaction contemplated by this Agreement and (ii) defend and
cooperate with each other in defending any lawsuits, including
appeals, whether individual or administrative and whether brought
derivatively or on behalf of third parties (including
governmental agencies or officials) challenging this Agreement or
the consummation of the transactions contemplated hereby.
Foodbrands will furnish to Sellers, and Sellers will furnish to
Foodbrands, such necessary information and reasonable assistance
as Sellers, or Foodbrands, as the case may be, may request in
connection with its or their preparation of all necessary filings
with any third parties, including governmental authorities.
Foodbrands will furnish to Sellers, and Sellers will furnish to
Foodbrands, copies of all correspondence, filings or
communications (or memoranda setting forth the substance thereof)
between Foodbrands, or Sellers or Foodbrands, or any of their
respective representatives, on the one hand, and any governmental
agency or authority, on the other hand, with respect to this
Agreement.
(c) Prior to the Closing Date, Sellers and
Foodbrands shall each use its respective best efforts to obtain
the consent or approval of each person whose consent or approval
shall be required in order to permit the Sellers and Foodbrands,
as the case may be, to consummate the transaction contemplated by
this Agreement, including, without limitation, consents or
waivers from the third parties identified on Schedule 3.04
hereof.
(d) Upon the terms and subject to the conditions
contained herein, each of the parties hereto covenants and agrees
to use its best efforts to take, or cause to be taken, all action
or 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 hereby.
(e) Notwithstanding anything to the contrary
contained herein, neither Sellers nor Foodbrands shall be
required to expend any significant sum of money or suffer a
significant economic detriment in the fulfillment of its
respective obligations under this Section 5.06, except that
Foodbrands shall be responsible for the HSR Act filing fee which
has been paid to the FTC. Upon Closing, Sellers shall reimburse
Foodbrands for one-half of the HSR Act filing fee.
5.07 Environmental Matters.
(a) Audit. Foodbrands has engaged GaiaTech,
Inc. (the "Environmental Consultant") to conduct a "Phase 1
Environmental Site Assessment" of the Facilities and to deliver
to Sellers and Foodbrands reports (the "Environmental Reports")
of such assessments. If the Environmental Reports indicate the
existence of Hazardous Materials in, on or under the Facilities
in violation of the Environmental Laws (herein referred to as the
"Environmental Conditions"), the Environmental Consultant shall
provide a proposed plan of remediation of the Environmental
Conditions and the estimated cost thereof (the "Remedial Plan")
which, after implementation and completion thereof, will result
in the Environmental Conditions being in compliance with the
Environmental Laws.
(b) Remediation. Sellers shall remediate the
Environmental Conditions, if any, in accordance with the Remedial
Plan and to the reasonable satisfaction of the Foodbrands and the
Environmental Consultant at Sellers' sole cost and expense;
provided, however, if at any time prior to Closing in the
reasonable opinion of the Environmental Consultant the cost to
implement and complete the Remedial Plan, including any
unforeseen contingencies, exceeds $1.0 million, Sellers may
terminate this Agreement. Upon completion of such remediation,
the Environmental Consultant shall furnish Sellers and Foodbrands
with its written certification of remediation of the
Environmental Conditions, including any unforeseen contingencies,
in accordance with the Remedial Plan (the "Certification"). If
Sellers elect prior to the Closing to agree to remediate the
Environmental Conditions and such remediation cannot reasonably
be completed prior to Closing, Foodbrands shall afford Sellers
and Sellers' agents with access to the Facilities following the
Closing in order to complete the remediation.
(c) Compliance. To Sellers' or the Company's
knowledge, except as disclosed in this Agreement, there is no
past or existing event, condition, circumstance or practice or
procedure involving or relating to environmental matters which,
if not corrected, changed or remediated, is likely to interfere
with or adversely affect the Company or any of its assets, or
which would require disclosure, reporting, monitoring, cleanup,
remediation or other action affecting the Company or any of its
assets, or which would result in the Company being in violation
of or in noncompliance with Environmental Laws.
5.08 Confidentiality. Sellers acknowledge that
Foodbrands would be irreparably damaged if confidential
information about the business of Foodbrands were disclosed to or
utilized on behalf of any person, firm, corporation or other
business organization which is in competition in any material
respect with any line or lines of business of Foodbrands.
Sellers covenant and agree that they will not and will cause
their respective agents, affiliates, investment bankers and legal
advisors (collectively, the "Seller's Representatives") not to,
at any time, without the prior written consent of Foodbrands, use
or disclose any such confidential information, except to
Foodbrands or Foodbrands's Representatives, for a period of two
(2) years from the Closing.
Foodbrands acknowledges that Sellers would be
irreparably damaged if confidential information about the
business of the Company were disclosed to or utilized on behalf
of any person, firm, corporation or other business organization
which is in competition in any material respect with any line or
lines of business of the Company and this transaction for any
reason is not closed. Therefore, in the event this transaction
is terminated and does not close for any reason, Foodbrands
covenants and agrees that it will not and will cause the
Foodbrands's Representatives not to, at any time, without the
prior written consent of the Company, use or disclose any such
confidential information, except to Sellers or Sellers'
Representatives, for a period of two (2) years from the Closing.
5.09 Notification of Certain Matters. Sellers and the
Company shall give prompt notice to Foodbrands, and Foodbrands
shall give prompt notice to Sellers and the Company, of (i) the
occurrence, or failure to occur, of any event which occurrence or
failure would be likely to cause any representation or warranty
of the notifying parties contained in this Agreement to be untrue
or inaccurate in any material respect any time from the date
hereof to the Closing Date, and (ii) any material failure of the
Company, Foodbrands or Sellers, as the case may be, to comply
with or satisfy any covenant, condition or agreement to be
complied with or satisfied by the notifying parties hereunder.
Any matters discovered by Foodbrands in the course of its due
diligence review or disclosed to Foodbrands by Sellers other than
through this Agreement or in a Schedule, will not be deemed to
cure any breach of any representation or warranty made in this
Agreement whether made herein or at Closing. For all purposes
(including but not limited to Sellers' indemnification
obligations under Article IX hereof) the accuracy of the
representations and warranties made by Sellers in this Agreement
shall be determined by reference to this Agreement and the
Schedules.
5.10 Accounts with Affiliates. At or prior to
Closing, all accounts and notes receivable and payable between
the Company and any Shareholder, officer, director or employee of
General Partner, employee or agent of the Company or any
affiliates of the foregoing (including, without limitation,
Winchester and Standard) shall be satisfied in full other than
trade payables with Winchester and Standard incurred in the
ordinary course of business.
5.11 Lease Agreement. Sellers shall cause the Company
to enter into a lease agreement with BAM Corporation ("BAM") in
the form attached hereto as Exhibit D (herein called the "Lease
Agreement"), effective as of and conditioned upon the Closing.
Xxxxxxx X. Xxxxxxxxx will cause BAM to enter into the Lease
Agreement.
5.12 Employment Agreements. The Company and Xxxxxxx
X. Xxxxxxxxx, Xxxx X. Xxxxxx, Xxxxxx X. Xxxxxxxx, Xxxxxx X. Xxxx
and Xxxxx XxXxxxx (the "Key Employees") shall enter into
employment agreements in the form of Exhibit E-1 (the "Employment
Agreements") on the terms set forth in Exhibit E-2 as of and
conditioned upon the Closing. Sellers will use their best
efforts to cause the Company and each of the employees listed in
Exhibit F-1 (the "Management Employees") to enter into an
employment agreement in the form of Exhibit F-2 (the "Management
Agreements").
5.13 Options. Foodbrands will cause to be granted to
the Key Employees and Management Employees nonqualified employee
stock options pursuant to the Foodbrands America, Inc. 1992 Stock
Incentive Plan in the aggregate of 153,000 shares of Foodbrands'
common stock. The exercise price under the foregoing options
will be equal to the Option Price. The options shall be
allocated among the Key Employees and Management Employees as set
forth in Schedule 5.13.
5.14 Agency Designation. By (i) entering or joining
into this Agreement or (ii) accepting the assignment of any right
under this Agreement in compliance with Section 11.03, each of
the Shareholders, for himself and his successors, assigns, heirs
and administrators, hereby irrevocably appoints KPR Holdings as
his lawful attorney in fact for purposes of taking any action
under this Agreement, including without limitation (i) the review
and approval of and obligation to prepare and provide the Closing
Date Balance Sheet and Statement of Net Working Capital, (ii) the
review and approval of and objection to the financial statements
and pro forma adjustments delivered by Foodbrands pursuant to
Sections 2.07 and 2.09, (iii) the approval of the allocation of
revenues, expenses and profits pursuant to Section 2.07, (iv) the
modification, waiver or extension of any of the covenants set
forth in Section 2.07, and (v) the settlement of any disputes
under this Agreement. In the event KPR Holdings is liquidated or
resigns as agent of the Shareholders, Xxxxxxx X. Xxxxxxxxx shall
succeed as the attorney in fact pursuant to this Section 5.14.
In the event Xx. Xxxxxxxxx is unable or unwilling to act as
attorney in fact, the Shareholders shall appoint a new attorney
in fact within thirty days after notice by Foodbrands. The
attorney in fact appointed from time to time pursuant to this
Section 5.14 is herein referred to as the "Agent." Foodbrands
may rely on all acts of the Agent as the acts of the
Shareholders, their successors and assigns. Upon receipt of any
payment or delivery of any documents by Foodbrands hereunder, it
will be the obligation of Agent to disburse same to the persons
entitled thereto and Foodbrands' obligation shall be satisfied by
the payment or delivery to the Agent. Until Foodbrands receives
written notification of a change in Agent, Foodbrands may rely on
all acts of the existing Agent. Agent shall maintain an accurate
list of Sellers and their respective successors or assignees of
any rights in accordance with this Agreement. Foodbrands may act
in full reliance on the ownership interest of all such Sellers
and their successors and assignees as advised by Agent from time
to time.
5.15 Closing Date Balance Sheet.
(a) Physical Inventory. A physical inventory of
the inventory of the Company shall be taken by representatives of
Foodbrands and Sellers on the weekend immediately preceding the
Closing Date. The physical inventory shall be taken in
accordance with the procedures set forth in Schedule 5.15-1
hereto.
(b) Balance Sheet. Within forty-five (45) days
following Closing, Agent shall prepare and furnish to Foodbrands
a balance sheet as of the Closing Date (the "Closing Date Balance
Sheet") for the Company, which balance sheet shall reflect:
(1) The inventory shall be valued based on
the results of the physical inventory taken pursuant to Section
5.15(a), and
(2) Accounts receivable, and the applicable
reserves, shall be valued and determined in accordance with the
procedures set forth in Schedule 3.12; provided, the review shall
be performed as of the Closing Date and accounts will be written
off to the extent they are determined to be less then 100%
collectible.
(3) All employee bonuses, dividends and
distributions whether paid or payable before or after the Closing
and the settlement of accounts with affiliates shall be reflected
in the balance sheet.
(4) All normal and customary accruals shall
be determined in accordance with GAAP, consistently applied.
Seller shall deliver with the Closing Date Balance Sheet (i) an
accounting reflecting the calculation of the Adjusted Closing
Purchase Price, and (ii) a detailed statement of Net Working
Capital (the "Statement of Net Working Capital") prepared from
the Closing Date Balance Sheet. The Statement of Net Working
Capital shall be audited and confirmed by the Company's current
certified public accountant as to its accuracy and compliance
with this Agreement, at Seller's expense. Foodbrands shall then
have a period of time not exceeding thirty days after its receipt
of the Closing Date Balance Sheet in which to examine such
accounting, during which time Foodbrands and Agent shall fully
cooperate each with the other to resolve disputes, if any. In
the event that Foodbrands and Agent are unable to resolve any
dispute involved in the determination of the Adjusted Closing
Purchase Price, the payment required to be made with respect to
the Adjusted Closing Purchase Price as herein described shall be
delayed until such dispute shall have been settled by arbitration
in accordance with Section 15.16.
5.16 Arbitration. The parties hereto agree that all
disputes between them arising under this Agreement are to be
resolved by binding arbitration as provided herein. This
agreement to arbitrate shall survive the rescission or
termination of this Agreement. All arbitration shall be
conducted pursuant to the Commercial Arbitration Rules of the
American Arbitration Association except as herein may be
provided. The panel used will be selected from, if available,
the "Food Industry Panel" employed by the American Arbitration
Association and the decision of the arbitrators will be final and
binding on all parties. All arbitration will be undertaken
pursuant to the Federal Arbitration Act, where applicable, and
the decision of the arbitrators will be enforceable in any court
of competent jurisdiction.
In any dispute where a party seeks $50,000 or more in
damages, three arbitrators will be employed. All costs attendant
to the arbitration, excluding attorney's and expert's fees, will
be borne equally by the parties. Each party will bear its own
attorney's and expert's fees. The arbitrators will not award
punitive, consequential or indirect damages. Each party hereby
waives the right to such damages and agrees to receive only those
actual damages directly resulting from the claim asserted. In
resolving all disputes between the parties, the arbitrators will
apply the law of the State of Oklahoma, except as may be modified
by this Agreement. The arbitrators are by this Agreement
directed to conduct the arbitration hearing no later than three
(3) months from the service of the statement of claim and demand
for arbitration unless good cause is shown establishing that the
hearing cannot fairly and practically be so convened.
Except as needed for presentation in lieu of a live
appearance, depositions will not be taken. Parties will be
entitled to conduct document discovery by requesting production
of documents. Responses or objections will be served twenty days
after receipt of a request. The arbitrators will resolve any
discovery disputes by such prehearing conferences as may be
needed. All parties agree that the arbitrators and any counsel
of record to the proceeding will have the power of subpoena
process as provided by law.
5.17 Release of Collateral. Foodbrands shall use its
best efforts to obtain a release of the lien held by First
Interstate Bank of Texas ("BAM's Lender") on the Xxxx Xxx
Corporation common stock pledged by X. X. Xxxxxxxxx to secure the
loan of BAM's Lender related to the Facility which is the subject
of the Lease Agreement; provided, Foodbrands shall not be
required to pledge any assets, post a letter of credit or pay any
sums to BAM's Lender and, provided further, Foodbrands'
obligation is conditioned on BAM granting a leasehold deed of
trust on the Facility in question to BAM's Lender.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF THE PARTIES
The respective obligations of Foodbrands and Sellers
hereunder are subject to the fulfillment, prior to the Closing,
of each of the following conditions, neither of which may be
waived:
6.01 HSR Act. All waiting periods applicable to this
Agreement and the transactions contemplated hereby under the HSR
Act shall have expired.
6.02 No Injunction or Litigation. There shall not be
in effect on the Closing Date any judgment, order, injunction or
decree of any court enjoining, prohibiting or otherwise making
illegal consummation of the transaction (or any material portion
thereof) contemplated by this Agreement or any pending litigation
with respect to which there is a substantial likelihood that such
litigation could have a material adverse effect on the business,
operation or financial position of any of Sellers, Foodbrands or
the Company.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF FOODBRANDS
The obligations of Foodbrands hereunder are subject to
the fulfillment, prior to or at the Closing, of each of the
following conditions (all or any of which may be waived in whole
or in part by Foodbrands):
7.01 Representations and Warranties. The representa-
tions and warranties made by Sellers in this Agreement and the
statements of Sellers contained in the Schedules, or in any other
agreement, instrument or certificate delivered by Sellers
pursuant to this Agreement shall be true and correct when made
and at and as of the Closing Date as though made at and as of the
Closing Date, and all other representations and warranties made
by Sellers shall be true and correct in all material respects
when made and at and as of the Closing Date as though such
representations and warranties were made at and as of such date.
7.02 Performance. Sellers shall have performed and
complied with, in all material respects, all agreements,
covenants, obligations and conditions required by this Agreement
to be so performed or complied with by Sellers prior to or at the
Closing.
7.03 Consents. Foodbrands shall have received copies
of all consents, approvals, authorizations and orders necessary
to consummate the transactions contemplated hereby, including
those listed in Schedule 3.04, all of which shall be in form and
substance satisfactory to Foodbrands and shall continue to be in
full force and effect, unless the failure to obtain such consent,
approval, authorization or order, other than those listed on
Schedule 3.04, would not have a materially adverse effect on the
Company or would not prevent or materially delay consummation of
the transactions contemplated hereby.
7.04 Officers' Certificates. Sellers shall have
delivered to Foodbrands a certificate, dated the Closing Date and
executed by Agent, certifying as to the fulfillment of the
conditions set forth in Sections 7.01, 7.02 and 7.03 hereof.
7.05 Opinion of Counsel to Sellers. The Company shall
have delivered to Foodbrands an opinion of Gresham, Varner,
Xxxxxx, Xxxxx & Xxxxxx, Riverside, California, counsel to
Sellers, in form and substance reasonably satisfactory to
Foodbrands, substantially in the form of Exhibit G.
7.06 Lease Agreement. The Company and BAM shall have
executed and delivered each to the other the Lease Agreement.
7.07 Employment Agreements. The Company, on the one
hand, and the Key Employees, on the other hand, shall have
executed and delivered the Employment Agreements.
7.08 Other Agreements. The Company and the Management
Employees shall have executed and delivered the Management
Agreements.
7.09 Documents. All documents, including, without
limitation, assignment documents to be delivered by Sellers to
Foodbrands at the Closing shall be in form and substance
reasonably satisfactory to Foodbrands.
7.10 No Material Adverse Change. Since December 31,
1994, there shall not have occurred a material adverse change in
the business, operations, prospects or financial position of the
Company. Without limiting the foregoing, Foodbrands shall have
received reasonable assurances from Pizza Hut that Pizza Hut will
continue as a customer of the Company after Closing consistent
with its past relationship with the Company.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF SELLERS
The obligations of Sellers hereunder are subject to the
fulfillment, prior to or at the Closing, of each of the following
conditions (all or any of which may be waived in whole or in
part by Sellers):
8.01 Representations and Warranties. The representa-
tions and warranties made by Foodbrands in this Agreement, and
the statements of Foodbrands contained in any agreement,
instrument or certificate delivered by Foodbrands pursuant to
this Agreement shall be true and correct when made and at and as
of the Closing Date as though made at and as of the Closing Date,
and all other representations and warranties made by Foodbrands
shall be true and correct in all material respects when made and
at and as of the Closing Date as though such representations and
warranties were made at and as of such date.
8.02 Performance. Foodbrands shall have performed and
complied with, in all material respects, all agreements,
covenants, obligations and conditions required by this Agreement
to so be performed or complied with by it prior to or at the
Closing.
8.03 Officers' Certificates. Foodbrands shall have
delivered to Sellers a certificate, dated the Closing Date and
executed by Foodbrands' President, or one of its Vice Presidents
and Secretary, certifying as to the fulfillment of the conditions
set forth in Sections 8.01, 8.02 and 8.05 hereof.
8.04 Opinion of Counsel to Foodbrands. Foodbrands
shall have delivered to Sellers an opinion of McAfee & Xxxx A
Professional Corporation, Xxxxx Xxxxx, Xxx Xxxxxxxxxx Xxxxxx,
Xxxxxxxx Xxxx, Xxxxxxxx 00000, counsel to Foodbrands, in form and
substance reasonably satisfactory to the Sellers, in
substantially the form of Exhibit H.
8.05 Consents. Sellers shall have received copies of
all consents, approvals, authorizations and orders necessary to
consummate the transactions contemplated hereby, including those
listed in Schedule 3.04, all of which shall be in form and
substance satisfactory to Sellers and shall continue to be in
full force and effect; provided, however, that the failure to
obtain any such consent, approval, authorization or order shall
not be a condition to Sellers' obligations hereunder unless
Sellers have not used their best efforts to obtain such consent,
approval, authorization or order.
8.06 Documents. All documents to be delivered by
Foodbrands to Sellers at the Closing shall be in form and
substance reasonably satisfactory to Sellers.
ARTICLE IX
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
9.01 Survival of Representations. Subject to Section
9.04 hereof, the representations and warranties made by Sellers
contained in this Agreement (the "Surviving Sellers Representa-
tions") and the representations and warranties made by Foodbrands
contained in this Agreement (the "Surviving Foodbrands
Representations") and the covenants and agreements of each of
Sellers and Foodbrands (the "Seller's Agreements" and the
"Foodbrands's Agreements" respectively), which have not been
fully executed or waived at or prior to the Closing of this
Agreement, shall survive the Closing and any investigation at
any time made by or on behalf of any party. The representations
and warranties herein shall be deemed to be remade as of the
Closing, as if made on the date thereof.
9.02 Statements as Representations. All statements
contained in this Agreement, the Schedules, or any other
agreement, instrument or certificate delivered pursuant to this
Agreement, shall be deemed representations and warranties for all
purposes of this Agreement, including, without limitation, the
references to representations and warranties in Sections 7.01 and
8.01 hereof.
9.03 Agreement to Indemnify.
(a) Sellers' Indemnification. Subject to the
terms and conditions of this Article IX, each of Sellers jointly
and severally hereby agree to indemnify, defend and hold harmless
Foodbrands and its subsidiaries and each officer and director and
affiliate of Foodbrands, and their successors and assigns
(collectively, the "Foodbrands Group"), from and against (i) all
Adverse Consequences (as herein defined) and (ii) all claims,
actions or causes of action, assessments, demands, losses,
damages, judgments, settlements, liabilities, costs and expenses,
including, without limitation, interest, penalties and reasonable
attorneys', accountants' and consultants' fees and expenses of
any nature whatsoever (collectively, "Damages"), asserted
against, resulting to, imposed upon or incurred by any member of
the Foodbrands Group, by reason of or resulting from (x) a breach
of any Surviving Sellers Representation or any Sellers Agreement
or (y) any action, event, proceeding, or investigation relating
in any way to operation of the business of the Company prior to
the Closing, whether filed before or after the Closing, excluding
the KPR Litigation (collectively, the "Foodbrands's Claims").
Foodbrands acknowledges that its sole and exclusive remedy for
any Damages arising out of the KPR Litigation is the adjustment
of the Contingent Purchase Price pursuant to Section 2.05(e).
For purposes of this indemnification, any Adverse Consequence and
Damage to the Company shall be deemed an Adverse Consequence and
Damage to the Foodbrands Group. "Adverse Consequences" means all
actions, suits, proceedings, hearings, investigations, charges,
complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, dues, penalties, fines, costs, amounts
paid in settlement, liabilities (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due), obligations, Taxes, liens,
losses, expenses and fees, including court costs and attorneys'
fees and expenses.
(b) Foodbrands' Indemnity. Subject to the terms
and conditions of this Article IX, Foodbrands agrees to
indemnify, defend and hold harmless Sellers and each of them and
their successors and assigns (collectively, the "Seller Group"),
from and against all Adverse Consequences or Damages, asserted
against, resulting to, imposed upon or incurred by any member of
the Seller Group, by reason of or resulting from a breach of any
Surviving Foodbrands Representation or any Foodbrands Agreement
or any action, event, proceeding, or investigation relating to
the operation of the Company after the Closing (collectively, the
"Seller Claims").
9.04 Limitation of Liability. The obligations and
liabilities of Sellers with respect to Foodbrands Claims under
Section 9.03 hereof to the Foodbrands Group (excluding those
relating to claims made for a breach of Sections 3.01, 3.08 or
3.12, which are subject to no limitations) and Foodbrands with
respect to Sellers Claims under Section 9.03 hereof to the
Sellers Group (excluding those relating to claims made for a
breach of Section 4.01, which is subject to no limitation) shall
be subject to the following limitations:
(a) Although Sellers shall be liable to the
Foodbrands Group for all Adverse Consequences resulting from the
breach of the representations, warranties and covenants contained
in Sections 3.01, 3.08 and 3.12 no indemnification shall be
required to be made by Sellers under this Article IX with respect
to other Foodbrands's Claims, except to the extent that the
aggregate amount of Damages with respect to all of such claims
incurred by the Foodbrands Group exceeds $500,000 (the "Seller's
Cushion").
(b) Although Foodbrands shall be liable to the
Seller Group for all Adverse Consequences resulting from the
breach of the representations and warranties contained in Section
4.01, no indemnification shall be required to be made by
Foodbrands under this Article IX with respect to any Seller's
Claims, except to the extent that the aggregate amount of Damages
with respect to all such claims incurred by the Sellers group
exceeds $500,000 (the "Foodbrands's Cushion"), excluding any
Foodbrands Claim arising from clause (2) of Section 9.03(a).
(c) Sellers shall be obligated to indemnify the
Foodbrands Group only for those Foodbrands's Claims as to which
the Foodbrands Group has given Sellers written notice thereof on
or prior to three (3) years following the Closing, except those
Foodbrands's Claims relating to the covenants, representations,
warranties and agreements set forth in Sections 3.01, 3.08, 3.16
and 3.21 hereof as to which no limitation period shall apply.
(d) Foodbrands shall be obligated to indemnify
the Seller Group only for the Seller's Claims, as to which the
Seller Group has given Foodbrands written notice thereof prior to
three (3) years following the Closing.
(e) Without limiting any other rights Foodbrands
may have under this Agreement, Foodbrands may, at its option,
offset the amount of Foodbrands' Claim against any Contingent
Purchase Price due to Sellers.
9.05 Conditions of Indemnification. The obligations
and liabilities of Sellers to indemnify the Foodbrands Group and
Foodbrands to indemnify the Seller Group under Section 9.03
hereof with respect to Foodbrands's Claims and Seller's Claims,
respectively, resulting from the assertion of liability by third
parties shall be subject to the following terms and conditions:
(a) The indemnified party shall give the
indemnifying party prompt notice of any such claim, and the
indemnifying party shall undertake the defense, compromise or
settlement thereof by representatives selected by the indemnified
party, provided that failure to provide such notice will not
relieve the indemnifying party of its obligations hereunder
unless it is actually prejudiced by such failure to receive such
notice. If the indemnifying party, within ten (10) Business Days
after notice of any such claim, fails to commence the defense of
such claim, the indemnified party will (upon further notice to
the indemnifying party) have the right to undertake the defense,
compromise or settlement of such claim on behalf of and for the
account and risk of indemnifying party; provided that the defense
of any such claim by the indemnifying party shall not be deemed
an admission that such party has an obligation to indemnify the
indemnified party pursuant to Section 9.03; provided that the
indemnified party shall not settle any such claim as to which the
indemnifying party has failed to undertake the defense thereof
without the consent of the indemnifying party, the consent shall
not be unreasonably withheld or delayed, unless the indemnified
party waives its rights under Section 9.03 with respect to such
claim.
(b) Anything in this Section 9.05 to the
contrary notwithstanding, (i) an indemnified party shall have the
right, at its own cost and expense, to participate in the
defense, compromise or settlement of such claim, (ii) the
indemnifying party shall not, without the written consent of the
indemnified party, settle or compromise any claim or consent to
the entry of any judgment (x) which does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a release from all liability
in respect of such claim or (y) as a result of which injunctive
or other equitable relief would be imposed against the
indemnified party and (iii) the indemnified party shall have the
right, at its own cost and expense, to control the defense or
settlement of that portion of any claim which seeks an order,
injunction or other equitable relief against the indemnified
party which, if successful, could materially interfere with the
business, operations, assets, financial condition or prospects of
the indemnified party; provided, however, that in connection with
the defense or settlement of the portion of such claim which
seeks equitable relief, the indemnified party shall cooperate
with the indemnifying party and use its reasonable best efforts
to limit any liability that may arise from the damages portion of
such claim.
ARTICLE X
TERMINATION; AMENDMENT AND WAIVER
10.01 Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) By mutual written agreement of Foodbrands
and Agent for and on behalf of Sellers:
(b) By either Foodbrands or Sellers if the
Closing shall not have occurred on or before December 15, 1995,
unless such failure to close shall be due to a material breach of
this Agreement by the party seeking to terminate the Agreement
pursuant to this Section; or
(c) If a United States court of competent
jurisdiction shall permanently enjoin the consummation of the
transactions contemplated hereby and such injunction shall be
final and nonappealable.
10.02 Effect of Termination. In the event of
termination of this Agreement as provided above, this Agreement
shall forthwith become void and there shall be no liability on
the part of any party hereto (or any of their respective officers
or directors), except based upon obligations set forth in
Sections 5.08, 11.01 and 11.02 hereof. Nothing contained in
this Section 10.02 shall relieve any party from liability for any
breach of this Agreement.
10.03 Amendment, Extension and Waiver. Foodbrands and
Sellers may amend this Agreement at any time by an instrument in
writing signed on behalf of such parties. Any agreement on the
part of a party hereto to any waiver of compliance with any of
the agreements or conditions contained herein shall be valid only
if set forth in an instrument in writing signed by the party to
be bound thereby.
ARTICLE XI
MISCELLANEOUS
11.01 Expenses; Taxes. Foodbrands, on the one hand,
and the Sellers, on the other hand, will pay all fees and
expenses incurred by it in connection with this Agreement.
Except as provided in Section 5.06(e), all sales and transfer
taxes and fees (including all sales, transfers, stamp, real
estate transfer and recording fees, if any), incurred in
connection with this Agreement and the transactions contemplated
hereby shall be borne by Foodbrands.
11.02 Governing Law; Submission to Jurisdiction,
Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OKLAHOMA.
WITH RESPECT TO ALL ARBITRATION PROCEEDINGS PURSUANT TO SECTION
5.16, EACH OF SELLERS AND FOODBRANDS AGREE THAT SUCH PROCEEDINGS
WILL BE HELD IN DALLAS, TEXAS AND EACH HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS SITTING IN DALLAS FOR PURPOSES OF
ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO SUCH
ARBITRATION PROCEEDINGS; PROVIDED, HOWEVER, THAT SUCH CONSENT TO
JURISDICTION IS SOLELY FOR THE PURPOSE REFERRED TO IN THIS
SECTION AND SHALL NOT BE DEEMED TO BE A GENERAL SUBMISSION TO THE
JURISDICTION OF SAID COURTS OR IN THE STATE OF TEXAS OTHER THAN
FOR SUCH PURPOSE. EACH OF SELLERS AND FOODBRANDS IRREVOCABLY
WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH EITHER OF THEM MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH COURT AND ANY
CONTENTION THAT ANY SUCH PROCEEDING BROUGHT IN SUCH COURT HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF THE PARTIES
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN
ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR TO THE TRANSACTIONS CONTEMPLATED HEREBY.
11.03 Assignment. This Agreement and all the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns. Neither this Agreement nor any of the rights
hereunder shall be assigned by any of the parties hereto without
the prior written consent of the other party, except that (i)
Foodbrands may assign this Agreement to a wholly-owned
subsidiary, (ii) upon liquidation of KPR Holdings, the rights
under this Agreement may, subject to Section 5.14, be assigned to
the shareholders of KPR Holdings; and (iii) consent will not be
unreasonably withheld. No assignment by a Seller shall be
effective until written notice is provided to Agent and
Foodbrands.
11.04 Entire Agreement. This Agreement and the
Schedules and the other agreements, instruments and writings
referred to herein or delivered pursuant hereto contain the
entire understanding of the parties with respect to its subject
matter. This Agreement supersedes all prior agreements and
understandings between the parties with respect to its subject
matter, including the Letter of Intent dated October 12, 1995.
11.05 Headings. The Article and Section headings
contained in this Agreement are for reference purposes only and
will not affect in any way the meaning or interpretation of this
Agreement.
11.06 Notices. All notices, claims, certificates,
requests, demands and other communications hereunder will be in
writing (whether by letter, telecopy, telex or other commercially
reasonable means of written communication) and will be deemed to
have been duly given upon receipt as follows:
(a) If to Foodbrands:
Foodbrands America, Inc.
0000 X.X. Xxxxxxxxxx, Xxxxx 0000X
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: R. Xxxxxxxx Xxxxxxxx
Chairman, President and Chief Executive
Officer
FAX: 405/000-0000
with a copy to:
McAfee & Xxxx A Professional Corporation
Tenth Floor
Two Leadership Square
000 Xxxxx Xxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
W. Xxxxx Xxxxxxx, Esq.
FAX: 405/000-0000
(b) If to Sellers:
KPR Holdings, Inc.
c/o Delaware Corporate Management, Inc.
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxxxx
FAX: 302/000-0000
with a copy to:
Xxxxxxx X. Xxxxxxxxx
0000 Xxxxxxx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
FAX: 817/000-0000
and
Gresham, Varner, Xxxxxx, Xxxxx & Xxxxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
FAX: 909/000-0000
and
Xxxxxxxx, Xxxxx & Xxxxx
000 Xxxxxxxxxxxx, 00xx Xxxxx
Xxxx Xxxxx, Xxxxx 00000
Attention: Xxx Xxxxx
FAX: (000) 000-0000
or to such other address as the person to whom notice is to be
given may have previously furnished to the other in writing in
the manner set forth above.
11.07 Counterparts. This Agreement may be executed
simultaneously in counterparts, each of which will be deemed an
original, but all of which together will constitute one and the
same instrument.
11.08 Specific Performance. Sellers and Foodbrands
each acknowledge that Foodbrands and Sellers would not have an
adequate remedy at law for money damages in the event that this
Agreement were not performed in accordance with its terms, and
therefore agree that Foodbrands and Sellers each shall be
entitled to specific enforcement of the term hereof in addition
to any other remedy to which it may be entitled, at law or in
equity.
11.09 Severability. If any term, provision, covenant
or restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void or unenforceable, the remainder
of the terms, provisions, covenants and restrictions of this
Agreement shall remain in full force and effect and shall in no
way be affected, impaired or invalidated.
11.10 Certain Definitions. As used in this Agreement:
"Adjusted Closing Purchase Price" shall have the
meaning set forth in Section 2.01
"Adverse Consequences" shall have the meaning set forth
in Section 9.03(a).
"Agent" shall have the meaning set forth in Section
5.14.
"Agreement" shall mean this Purchase Agreement by and
among Foodbrands, KPR Holdings and the Shareholders, including
any exhibits, schedules and amendments hereto.
"Articles" shall have the meaning as set forth in
Section 3.10.
"Audited Financial Statements" shall have the meaning
set forth in Section 3.05.
"BAM" shall have the meaning set forth in Section 5.11.
"BAM's Lender" shall have the meaning set forth in
Section 5.16.
"Benefit Plans" shall have the meaning set forth in
Section 3.16(a).
"CERCLA" shall have the meaning set forth in Section
3.21(a).
"CERCLIS" shall have the meaning set forth in Section
3.21(b).
"Certification" shall have the meaning set forth in
Section 5.07(b).
"Closing" shall mean the sale and purchase of the LP
Interest and the Shares and the consummation of the other
transactions contemplated by this Agreement.
"Closing Date" shall mean the date on which the Closing
occurs.
"Closing Payment" shall have the meaning set forth in
Section 2.06(a).
"Closing Purchase Price" shall have the meaning set
forth in Section 2.01.
"Code" shall have the meaning set forth in Section
3.08.
"Company" shall mean KPR Holdings, L.P., a Delaware
limited partnership.
"Company Balance Sheet" shall have the meaning set
forth in Section 3.05(a).
"Consent Decrees" shall mean the two Consent Judgment
Orders dated April 30, 1991 in Civil Action No. 89-C-0600 and
dated May 3, 1991 in Civil Action No. 88-C-4031, each in the
United States District Court for the Northern District of
Illinois, Eastern Division.
"Consulting Agreements" shall have the meaning set
forth in Section 5.12.
"Contingent Purchase Price" shall have the meaning set
forth in Section 2.01.
"Contracts" shall have the meaning set forth in Section
3.17(g).
"Damages" shall have the meaning set forth in Section
9.03(a).
"EBITDA Targets" shall mean the '96 Target, the '97
Target and the '98 Target.
"Election Notice" shall have the meaning set forth in
Section 2.06(b).
"Employee pension benefit plans" shall have the meaning
set forth in Section 3.16.
"Employee welfare benefit plans" shall have the meaning
set forth in Section 3.16.
"Employment Agreements" shall have the meaning set
forth in Section 5.12.
"Environmental Conditions" shall have the meaning set
forth in Section 5.07(a).
"Environmental Consultant" shall have the meaning set
forth in Section 5.07(a).
"Environmental Laws" shall have the meaning set forth
in Section 3.21(a).
"Environmental Reports" shall have the meaning set
forth in Section 5.07(a).
"ERISA" shall have the meaning set forth in Section
3.16(a).
"Excess Damages" shall have the meaning set forth in
Section 2.05(a).
"Existing Customers" shall have the meaning set forth
in Section 2.07(c).
"Facility" and, collectively, the "Facilities" shall
have the meaning set forth in Section 3.09(b).
"FDA Act" shall have the meaning as set forth in
Section 3.11.
"FFY" shall have the meaning set forth in Section 2.05.
"FINDS" shall have the meaning set forth in Section
3.21(b).
"Foodbrands" shall mean Foodbrands America, Inc.
"Foodbrands's Claims" shall have the meaning set forth
in Section 9.03(a).
"Foodbrands's Cushion" shall have the meaning set forth
in Section 9.04(b).
"Foodbrands Group" shall have the meaning set forth in
Section 9.03(a).
"Foodbrands's Representatives" shall have the meaning
set forth in Section 5.02(b).
"Foodbrands Subsidiaries" shall mean the subsidiaries
and divisions of Foodbrands as they may exist from time to time.
A "Subsidiary" means any corporation, partnership,
joint venture, joint stock association, business trust or other
entity of which such person or another subsidiary of such person
directly or indirectly own 50% or more of the outstanding capital
stock or other equity interest.
"Food Industry Panel" shall have the meaning set forth
in Section 5.15(c).
"FTC" shall have the meaning set forth in Section 5.04.
"Fort Worth Facility" shall have the meaning set forth
in Section 2.07(d).
"GAAP" shall have the meaning set forth in Section
2.01.
"General Partner" shall mean RKR-GP, Inc., a Delaware
corporation.
"Governmental Agency" shall have the meaning set forth
in Section 3.04.
"Hazardous" shall have the meaning set forth in Section
3.21(a).
"Hazardous Material" shall have the meaning set forth
in Section 3.21(a).
"Hazardous Substance" shall have the meaning set forth
in Section 3.21(a).
"Hazardous Waste" shall have the meaning set forth in
Section 3.21(a).
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvement Act of 1976, as amended.
"IMI" shall have the meaning set forth in Section
3.05(b).
"IMI Financial Statements" shall have the meaning set
forth in Section 3.05(b).
"Interim Balance Sheet" shall have the meaning set
forth in Section 3.05(a).
"Key Customers" shall have the meaning set forth in
Section 2.07(c).
"Kettle Customers" shall have the meaning set forth in
Section 2.07(c).
"Key Employees" shall have the meaning set forth in
Section 5.12.
"Key Officers" shall have the meaning set forth in
Section 5.12.
"Knowledge" shall mean the actual knowledge of the
person in question after reasonable inquiry.
"KPR Holdings" shall mean KPR Holdings, Inc., a
Delaware Corporation.
"KPR Litigation" shall have the meaning set forth in
Section 2.05(c).
"KPR Product" shall have the meaning set forth in
Section 2.07(e).
"Lease Agreement" shall have the meaning set forth in
Section 5.11.
"Liens" shall have the meaning set forth in Section
3.04.
"Litigation Matters" shall have the meaning set forth
in Section 3.14.
"LP Interest" shall mean all of the limited partnership
interest in the Company.
"Management Employees" shall have the meaning set forth
in Section 5.12.
"Multiemployer Plans" shall have the meaning set forth
in Section 3.16(a).
"Net Working Capital" shall have the meaning set forth
in Section 2.03.
"Option Price" shall mean $13.125 dollars ($13 per
share. In case Foodbrands shall at any time subdivide the
outstanding shares of common stock into a greater number of
shares, the Option Price in effect immediately prior to such
subdivision shall be proportionately reduced, and conversely, in
case the outstanding shares of common stock of Foodbrands shall
be combined into a smaller number of shares, the Option Price in
effect immediately prior to such combination shall be
proportionately increased.
"Option Shares" shall have the meaning set forth in
Section 2.06(c).
"Payment Account" shall have the meaning set forth in
Section 2.06(a).
"PBGC" shall have the meaning set forth in Section
3.16(h).
"Plans" shall have the meaning set forth in Section
3.16(e).
"Permits" shall have the meaning set forth in Section
3.22.
"Permitted Liens" shall have the meaning set forth in
Section 3.09(a).
"Phase 1 Environmental Site Assessment" shall have the
meaning set forth in Section 5.07(a).
"Pizza Hut" shall have the meaning set forth in Section
2.07(d).
"PHI" shall have the meaning set forth in Section 7.10.
"Plans" shall have the meaning set forth in Section
3.16.
"Proprietary Rights" shall have the meaning set forth
in Section 3.13.
"RCRA" shall have the meaning as set forth in Section
3.21(a).
"Regulated Substance" shall have the meaning set forth
in Section 3.21(a).
"Remedial Plan" shall have the meaning set forth in
Section 5.07(a).
"Seller" and "Sellers" shall mean KPR Holdings and
Shareholders.
"Seller Claims" shall have the meaning set forth in
Section 9.03(b).
"Seller's Cushion" shall have the meaning set forth in
Section 9.04(a).
"Seller Group" shall have the meaning set forth in
Section 9.03(b).
"Seller's Agreements" and the "Foodbrands's Agreements"
shall have the meaning set forth in Section 9.01.
"Seller's Representatives" shall have the meaning set
forth in Section 5.08.
"Shares" shall mean all of the issued and outstanding
capital stock of the General Partner.
"Shareholders" shall mean each of the persons
identified on Exhibit A hereto or their successors and assigns,
if applicable.
"Standard" shall have the meaning set forth in Section
3.25.
"Statement of Net Working Capital" shall have the
meaning set forth in Section 5.15(b).
"Surviving Foodbrands Representations" shall have the
meaning set forth in Section 9.01.
"Surviving Sellers Representations" shall have the
meaning set forth in Section 9.01.
"Taxes" shall have the meaning set forth in Section
3.08(h).
"Taxing Authority" shall have the meaning set forth in
Section 3.08(a).
"Tax Return" shall have the meaning set forth in
Section 3.08(g).
"Toxic" Shall have the meaning set forth in Section
3.21(a).
"Unaudited Financial Statements" shall have the meaning
set forth in Section 3.05(a).
"Welfare Plans" shall have the meaning set forth in
Section 3.16.
"Winchester" shall have the meaning set forth in
Section 3.25.
"1933 Act" shall have the meaning set forth in Section
2.06(d).
"1996 Planned Cap Ex" shall have the meaning set forth
in Section 2.07(d).
"1997 Cap Ex Amount" shall have the meaning set forth
in Section 2.07(d).
"1997 Cap Ex Shortfall" shall have the meaning set
forth in Section 2.07(d).
"1997 Cap Ex Excess" shall have the meaning set forth
in Section 2.07(d).
"1998 Cap Ex Amount" shall have the meaning set forth
in Section 2.07(d).
"1998 Cap Ex Shortfall" shall have the meaning set
forth in Section 2.07(d).
"96 Carryover Amount" shall have the meaning set forth
in Section 2.05(a).
"97 Carryover Amount" shall have the meaning set forth
in Section 2.05(a).
IN WITNESS WHEREOF, this Agreement has been duly
executed
and delivered by the duly authorized officers of Sellers and
Foodbrands as of the date first above written.
"FOODBRANDS" FOODBRANDS AMERICA, INC.
By: /s/ R. Xxxxxxxx Xxxxxxxx
R. Xxxxxxxx Xxxxxxxx,
Chairman, President and
Chief Executive Officer
"KPR Holdings" KPR Holdings, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx,
President
"SHAREHOLDERS"
/s/ Xxxxxxx X. Xxxxxxxxx
Xxxxxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxx
Xxxxxx X. Xxxx
/s/ Xxxx X. Xxxxxx
Xxxx X Xxxxxx
/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. XxXxxxx
Xxxxx X. XxXxxxx
/s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
/s/ Xxxx X. Xxxxxx
Xxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
Xxxxxx Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx, Xx.
/s/ Xxxx Xxxx
Xxxx Xxxx
/s/ Xxx Xxx
Xxx Xxx
