EXHIBIT 2.2
STOCK
PURCHASE AGREEMENT
by and among
TNT CRUST, INC.
and
THE SHAREHOLDERS OF
TNT CRUST, INC.
and
FOODBRANDS AMERICA, INC.
Dated as of November 22, 1995
TABLE OF CONTENTS
ARTICLE I PURCHASE AND SALE; CLOSING . . . . . . . . . . .
1.01 Purchase and Sale of the Shares. . . . . . . . .
1.02 The Closing. . . . . . . . . . . . . . . . . . . . .
ARTICLE II PURCHASE PRICE . . . . . . . . . . . . . . . . . . .
2.01 Purchase Price . . . . . . . . . . . . . . . . . . .
(a) The Closing Date Payment. . . . . . . . . . . .
(b) The Tax Refund Payment. . . . . . . . . . . . .
(c) The Earnout Payment . . . . . . . . . . . . . .
2.02 Certain Definitions. . . . . . . . . . . . . . . . .
2.03 Payment of the Indebtedness and First Option Payment
2.04 Payment of the Closing Date Payment, The Tax Refund
Payment and The Earnout Payment. . . . . . . . . . .
(a) Determination of The Closing Date Payment . . .
(b) The Tax Refund Payment. . . . . . . . . . . . .
(c) The Earnout Payment . . . . . . . . . . . . . .
(d) Foodbrands Share Option . . . . . . . . . . . .
(e) Securities' Laws Conditions . . . . . . . . . .
(f) Payment of Interest . . . . . . . . . . . . . .
2.05 Business and Accounting Practices and Procedures . .
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLERS. . . . . .
3.01 Ownership of Shares; Equity Capital
Structure. . . . . . . . . . . . . . . . . . . . . .
3.02 Organization and Qualifications. . . . . . . . . . .
3.03 Due Authorization. . . . . . . . . . . . . . . . . .
3.04 No Violation . . . . . . . . . . . . . . . . . . . .
3.05 Financial Statements - The Company . . . . . . . . .
3.06 No Undisclosed Liabilities . . . . . . . . . . . . .
3.07 Absence of Certain Changes . . . . . . . . . . . . .
3.08 Tax Matters. . . . . . . . . . . . . . . . . . . . .
3.09 Title to Properties; Encumbrances; Condition . . . .
3.10 Subsidiaries . . . . . . . . . . . . . . . . . . . .
3.11 Inventory. . . . . . . . . . . . . . . . . . . . . .
3.12 Receivables. . . . . . . . . . . . . . . . . . . . .
3.13 Proprietary Rights . . . . . . . . . . . . . . . . .
3.14 Litigation . . . . . . . . . . . . . . . . . . . . .
3.15 Insurance. . . . . . . . . . . . . . . . . . . . . .
3.16 Employee Benefit Plans . . . . . . . . . . . . . . .
3.17 Contracts and Commitments. . . . . . . . . . . . . .
3.18 No Breach. . . . . . . . . . . . . . . . . . . . . .
3.19 Labor Relations. . . . . . . . . . . . . . . . . . .
3.20 Compliance with Law. . . . . . . . . . . . . . . . .
3.21 Hazardous Material . . . . . . . . . . . . . . . . .
3.22 Environmental and Other Permits. . . . . . . . . . .
3.23 Business Prospects . . . . . . . . . . . . . . . . .
3.24 Bank Accounts. . . . . . . . . . . . . . . . . . . .
3.25 Indebtedness of Affiliates . . . . . . . . . . . . .
3.26 Disclosure . . . . . . . . . . . . . . . . . . . . .
3.27 Brokers. . . . . . . . . . . . . . . . . . . . . . .
3.28 Corporate Books and Records. . . . . . . . . . . . .
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF FOODBRANDS . . . .
4.01 Organization . . . . . . . . . . . . . . . . . . . .
4.02 Authorization. . . . . . . . . . . . . . . . . . . .
4.03 Valid and Binding Agreement. . . . . . . . . . . . .
4.04 No Violation . . . . . . . . . . . . . . . . . . . .
4.05 Disclosure . . . . . . . . . . . . . . . . . . . . .
4.06 Purchase for Investment. . . . . . . . . . . . . . .
4.07 Brokers. . . . . . . . . . . . . . . . . . . . . . .
ARTICLE V CERTAIN OBLIGATIONS OF THE PARTIES . . . . . . . . .
5.01 Conduct of Business Pending the Closing. . . . . . .
5.02 Other Obligations of Sellers Pending the
Closing. . . . . . . . . . . . . . . . . . . . . . .
(a) Access. . . . . . . . . . . . . . . . . . . . .
(b) Other Transactions. . . . . . . . . . . . . . .
(c) Insurance . . . . . . . . . . . . . . . . . . .
(d) Interim Financial Statements. . . . . . . . . .
5.03 Public Announcements . . . . . . . . . . . . . . . .
5.04 HSR Act. . . . . . . . . . . . . . . . . . . . . . .
5.05 Other Action . . . . . . . . . . . . . . . . . . . .
5.06 Consents and Best Efforts. . . . . . . . . . . . . .
5.07 Environmental Matters. . . . . . . . . . . . . . . .
(a) Audit . . . . . . . . . . . . . . . . . . . . .
(b) Remediation . . . . . . . . . . . . . . . . . .
(c) Compliance. . . . . . . . . . . . . . . . . . .
5.08 Confidentiality. . . . . . . . . . . . . . . . . . .
5.09 Notification of Certain Matters. . . . . . . . . . .
5.10 Accounts with Affiliates . . . . . . . . . . . . . .
5.11 Inventory. . . . . . . . . . . . . . . . . . . . . .
5.12 Agency Designation . . . . . . . . . . . . . . . . .
5.13 The Swap Payment and the First Option Payment. . . .
5.14 Update of the Schedules. . . . . . . . . . . . . . .
ARTICLE VI CONDITIONS TO OBLIGATIONS OF THE PARTIES . . . . . .
6.01 HSR Act. . . . . . . . . . . . . . . . . . . . . . .
6.02 No Injunction or Litigation. . . . . . . . . . . . .
ARTICLE VII CONDITIONS TO OBLIGATIONS OF FOODBRANDS. . . . .
7.01 Representations and Warranties . . . . . . . . . . .
7.02 Performance. . . . . . . . . . . . . . . . . . . . .
7.03 Consents . . . . . . . . . . . . . . . . . . . . . .
7.04 Agent's Certificate. . . . . . . . . . . . . . . . .
7.05 Opinion of Counsel to Sellers. . . . . . . . . . . .
7.06 Employment Agreement . . . . . . . . . . . . . . . .
7.07 Documents. . . . . . . . . . . . . . . . . . . . . .
7.08 Option Cancellation Agreement. . . . . . . . . . . .
7.09 Swap Transaction . . . . . . . . . . . . . . . . . .
7.10 No Material Adverse Change . . . . . . . . . . . . .
ARTICLE VIII CONDITIONS TO OBLIGATIONS OF SELLERS. . . . . . . .
8.01 Representations and Warranties . . . . . . . . . . .
8.02 Performance. . . . . . . . . . . . . . . . . . . . .
8.03 Officers' Certificates . . . . . . . . . . . . . . .
8.04 Opinion of Counsel to Foodbrands . . . . . . . . . .
8.05 Consents . . . . . . . . . . . . . . . . . . . . . .
8.06 Documents. . . . . . . . . . . . . . . . . . . . . .
ARTICLE IX SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION . .
9.01 Survival of Representations. . . . . . . . . . .
9.02 Statements as Representations. . . . . . . . . .
9.03 Agreement to Indemnify . . . . . . . . . . . . .
(a) Sellers' Indemnification. . . . . . . . . .
(b) Foodbrands' Indemnification . . . . . . . .
9.04 Limitation of Liability. . . . . . . . . . . . .
9.05 Conditions of Indemnification. . . . . . . . . .
ARTICLE X TERMINATION; AMENDMENT AND WAIVER. . . . . . . .
10.01 Termination of Agreement . . . . . . . . . .
10.02 Effect of Termination. . . . . . . . . . . . . .
10.03 Amendment, Extension and Waiver. . . . . . . . .
ARTICLE XI MISCELLANEOUS. . . . . . . . . . . . . . . . . .
11.01 Expenses; Taxes. . . . . . . . . . . . . . . . .
11.02 Governing Law; Submission to Jurisdiction
Waiver of Jury Trial . . . . . . . . . . . . . .
11.03 Arbitration. . . . . . . . . . . . . . . . . . .
11.04 Assignment . . . . . . . . . . . . . . . . . . .
11.05 Entire Agreement . . . . . . . . . . . . . . . .
11.06 Headings . . . . . . . . . . . . . . . . . . . .
11.07 Notices. . . . . . . . . . . . . . . . . . . . .
11.08 Counterparts . . . . . . . . . . . . . . . . . .
11.09 Specific Performance . . . . . . . . . . . . . .
11.10 Severability . . . . . . . . . . . . . . . . . .
11.11 Knowledge. . . . . . . . . . . . . . . . . . . .
11.12 Certain Definitions. . . . . . . . . . . . . . .
EXHIBITS
Exhibit A List of Shareholders
Exhibit B List of Option Holders
Exhibit C Option Cancellation Agreement
Exhibit D Election Notice
Exhibit E Opinion of Sellers' Counsel
Exhibit F Opinion of Foodbrands's Counsel
INDEX TO SCHEDULES
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 Financial Statements of the Company
Schedule 3.06 Additional Liabilities Not Disclosed in
Financial Statements
Schedule 3.07 Material Changes Since August 31, 1995
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 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
STOCK
PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") has
been made and entered into this 22nd day of November, 1995 by and
among Foodbrands America, Inc. ("Foodbrands"), TNT Crust, Inc.
("TNT" or the "Company"), Xxxxx XxXxxxx ("XxXxxxx"), Xxxxxx
Xxxxxxx Capital Partners III, L.P., MSCP III 892 Investors, L.P.
and Xxxxxx Xxxxxxx Capital Investors, L.P. (the "Partnerships"),
BT Investment Partners, Inc., JSS Management Company, Ltd., Xxxxx
X. Xxxxxxxxx, Trustee of the Living Trust of Xxxxx X. Xxxxxxxxx
dated May 24, 1985, or successor trustee and 780 Partners, a
Wisconsin general partnership, shareholders of TNT (hereinafter
referred to collectively as the "Shareholders"), with reference
to the following circumstances:
A. The Shareholders are the sole owners and shareholders
of all the capital stock of TNT, a corporation engaged in the
production of pizza crusts.
B. Foodbrands desires to acquire TNT and has agreed
to do so, under the provisions of this agreement, by purchasing
all of the issued and outstanding capital stock (the "Shares") of
the Company. The Shareholders are sometimes referred to herein
as the "Sellers" or individually as a "Seller."
C. 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.
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 The Closing. The sale and purchase of 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 10:00 a.m. Oklahoma City time on the later to occur of
(i) December 4, 1995 or (ii) three business days after the
parties have received notice that the requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvement Act of 1976, as amended
(the "HSR Act"), have been satisfied, or at such other time and
place as Foodbrands and the Shareholders, 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
Shares shall consist of three components, the "Closing Date
Payment," the "Tax Refund Payment" and the "Earnout Payment."
(a) The Closing Date Payment. The Closing Date
Payment shall be an amount payable on the Closing Date calculated
as follows: the sum of $55.5 million plus (i) the amount of cash
and cash equivalents (herein referred to as the "Cash") in excess
of $500,000 reflected on the books of account of the Company as
of November 30, 1995 (net of all outstanding checks) herein
referred to as the "Net Excess Cash" minus (ii) the sum of (a)
the Company's indebtedness (herein the "Indebtedness") to
Banker's Trust Company, as agent, under the Term and Revolving
Credit Loan Agreement dated September 16, 1994 (the "Loan
Agreement") as of November 30, 1995, and (b) the Company's
indebtedness under its 12.45% ten year subordinated notes, to the
Partnerships, dated September 16, 1994 (the "Subordinated Notes")
as of November 30, 1995, (c) any other funded debt of the
Company, whether or not incurred in repayment of the indebtedness
described in Sections 2.01(a)(ii)(a) and 2.01(a)(ii)(b) or
otherwise as of November 30, 1995, (d) the amount of the Swap
Payment (as herein defined), (e) the amount of the First Option
Payment (as herein defined), (f) the amount of the Company's
accrued interest on its funded debt as of November 30, 1995,
including PIK interest on the Subordinated Notes, (g) the amount,
if any, by which Net Working Capital is less than zero, as of
November 30, 1995, (h) the amount, if any, by which Cash is less
than $500,000 as of November 30, 1995, (i) all costs to be paid
by the Company in connection with the transaction contemplated by
this Agreement; and (j) any estimated Income Taxes paid by the
Company after November 30, 1995 and/or prior to the Closing Date
(the "Closing Date Payment").
(b) The Tax Refund Payment. The Tax Refund
Payment shall be a contingent payment equal to the total amount
of federal or State of Wisconsin (if any) income tax refunds,
including any interest paid by the respective Taxing Authority
(as defined in Section 3.08(a)) included with such refunds
received by the Company for any taxable period ending on or prior
to the Closing Date (a "Pre-Closing Tax Year").
Foodbrands will cause the Company to apply for all
refunds of United States Federal and Wisconsin corporate income
taxes ("Income Taxes") for the Pre-Closing Tax Years as soon as
shall be practical after the Closing Date but in no event later
than the dates the Tax Returns for the Pre-Closing Tax Year
Ending as of the Closing Date are due together with extensions
approved by the Agent, if any. The Agent shall have complete
control over preparation of the Tax Returns and amendments of Tax
Returns, relating to Income Taxes for which the Company is
entitled to refunds, and for which Shareholders and Option
Holders will be entitled to payments, if any, under this Section
2.01(b). Shareholders will cooperate with Foodbrands, the Agent
and the Company and its designee in all reasonable ways in
connection with the preparation or amendment of Tax Returns and
audits of Tax Returns relating to Income Taxes for which the
Company is entitled to refunds for which the Shareholders and the
Option Holders will be entitled to payments, under this Section
2.01(b). Except for the First Option Payment and the Swap
Payment, without the written approval of Foodbrands, Agent shall
not be entitled to take any position with respect to a Tax Return
for a Pre-Closing Tax Year which would have an adverse impact on
any taxable period of Foodbrands or the Company beginning after
the Closing Date.
The Shareholders shall bear all costs associated with
the filing of amended Tax Returns and/or claims for refunds that
may be necessary or appropriate in order to obtain any Tax
Benefit (as herein defined) pursuant to this Section 2.01(b)
including, in the Agent's sole discretion, that a suit for refund
in a district court or the Court of Claims is necessary to obtain
such Tax Benefit provided, however, Foodbrands shall be
responsible for all of such costs attributable to independent
third party counsel or advisors it shall have engaged to assist
it in connection with such filings. The Company and the Agent
shall jointly handle, prosecute, compromise or settle any suit
for a refund related to any Tax Benefit sought under this Section
2.01(b). The Agent for and on behalf of the Shareholders shall
pay the amount of any such costs associated with such suit not
later than ten (10) days after such costs are paid by the Company
and Foodbrands has made demand upon the Agent therefor. For the
purposes of this Section 2.01(b), the term Tax Benefit means the
sum of the amount by which the Company is entitled to a refund
for overpayment of Income Taxes plus interest, if any, for the
Pre-Closing Tax Years.
The Agent shall furnish Foodbrands with a non-foreign
person affidavit on behalf of each of the Shareholders required
by Section 1445 of the Code prior to the Closing.
If Shareholders and Foodbrands disagree as to any
matters in this Section 2.01(b), Shareholders and Foodbrands
shall promptly consult with each other in an effort to resolve
such dispute. If any such disagreement cannot be resolved within
fifteen (15) days of the date of consultation, Coopers and
Xxxxxxx, L.L.P., Tulsa, Oklahoma ("Coopers"), certified public
accountant to Foodbrands, shall act as an arbitrator to resolve
such disagreement. Any expenses of Coopers relating to their
engagement shall be paid by the non-prevailing party.
(c) The Earnout Payment. The Earnout Payment
shall be a contingent payment (payable only if certain future
financial targets are achieved as provided in Section 2.04(b)
below) equal to the sum of (i) the Net Sales (as herein defined)
of the Company to Papa John's International ("Papa John's") and
Mazzio's Corporation ("Mazzio's") and their successors or assigns
during the Applicable Period multiplied by the product obtained
by multiplying (x) seven times (y) the Applicable EBITDA
Percentage, provided, however, such amount shall not exceed
$6,500,000. The Company shall use reasonable good faith efforts
to maximize sales to Papa John's and Mazzio's.
2.02 Certain Definitions. For the purpose of this
Article II, the following terms shall have the indicated
definitions:
"Applicable EBITDA Percentage" means the Company's
EBITDA during the Applicable Period divided by total sales of the
Company during such period, determined in accordance with GAAP;
provided, however, in no event will the Applicable EBITDA
Percentage be less than 25%.
"Applicable Period" means any consecutive twelve (12)
month period during the twenty-four month period after the
Closing Date designated by the Agent as defined in Section 5.12
for purposes of determining net sales to Papa John's and
Mazzio's.
"Cash" shall have the meaning set forth in Section
2.01(a).
"Closing Date Payment" shall have the meaning set forth
in Section 2.01(a).
"EBITDA" means the Company's earnings before interest,
taxes, depreciation and amortization. In calculating EBITDA, no
deductions shall be included for services or goods purchased from
Foodbrands or any affiliate thereof at greater than fair value or
for any corporate charges or allocations from Foodbrands or any
affiliate thereof.
"First Option Payment" means the First Option Payment
as defined in the Option Cancellation Agreement.
"GAAP" means generally accepted accounting principles
consistently applied.
"Income Taxes" shall have the meaning set forth in
Section 2.01(b).
"Indebtedness" shall have the meaning set forth in
section 2.01(a).
"Loan Agreement" shall have the meaning set forth in
Section 2.01(a).
"Net Excess Cash" shall have the meaning set forth in
Section 2.01(a).
"Net Sales" means sales less credit memos, discounts,
advertising allowances and other similar credits offered in the
ordinary course of business.
"Net Working Capital" means the Company's current
assets using the value of the Inventory as determined in
accordance with Section 5.11 (excluding Net Excess Cash) less its
current liabilities (excluding the current maturities of
long-term debt and accrued interest on long-term debt) determined
by GAAP.
"Option Cancellation Agreement" means the Option
Cancellation Agreement substantially in the form attached hereto
as Exhibit C and made a part hereof.
"Option Holders" means those Company employees and
affiliates holding the Options listed on Exhibit B attached
hereto and made a part hereof.
"Option Holder Tax Refund Payment" means the product
obtained by multiplying (i) the Tax Refund Payment by (ii)
.0958739.
"Options" means the 93,193.7 outstanding stock options
awarded by the Company to be cancelled prior to the Closing Date
in accordance with the Option Cancellation Agreement.
"Second Option Payment" means the product obtained by
multiplying (i) the Earnout Payment by (ii) .0958739.
"Shareholder Earnout Payment" means the product
obtained by multiplying (i) the Earnout Payment by (ii) .9041261.
"Shareholder Tax Refund Payment" means the product
obtained by multiplying (i) the Tax Refund Payment by (ii)
.9041261.
"Subordinated Notes" shall have the meaning set forth
in Section 2.01(a).
"Swap Payment" means the amount paid by the Company to
terminate its interest rate swaps which hedge the Company's
interest rate exposure under the Indebtedness.
"Tax Refund Payment" means all payments received by the
Company as described in Section 2.01(b).
2.03 Payment of the Indebtedness, the Swap Payment and
the First Option Payment. At the Closing, Foodbrands shall pay
or cause the Company to pay and be released from all of the
Company's Indebtedness under the Loan Agreement and the
indebtedness under the Subordinated Notes. Prior to the Closing,
the Company shall (i) make the Swap Payment and (ii) pay the
First Option Payment to those Company employees and affiliates
who are entitled thereto (the "Option Holders") listed on Exhibit
B attached hereto and made a part hereof.
2.04 Payment of the Closing Date Payment, The Tax
Refund Payment and The Earnout Payment. The Closing Date
Payment, The Tax Refund Payment and The Earnout Payment shall be
paid by Foodbrands or the Company in the following manner:
(a) Determination of the Closing Date Payment.
The Closing Date Payment as defined in Section 2.01(a) shall be
determined by the Company on the Closing Date and certified by
the Company's president (the "Closing Date Payment Certificate").
The Closing Date Payment Certificate shall set forth the Closing
Date Payment and separately show the calculations each factor
considered in the Closing Date Payment as described in Section
2.01(a). The Closing Date Payment as set forth in the Closing
Date Payment Certificate shall be paid to the Shareholders in a
lump sum by wire transfer of readily available funds to an
account designated by the Agent prior to the Closing Date (the
"Payment Account"). Foodbrands and the Agent (on behalf of the
Shareholders) shall have twenty (20) business days from the
Closing Date and the receipt of the Closing Date Payment
Certificate in which to object to the calculations of the Closing
Date Payment by providing written notice to the other of its
objections to such calculations. The resolution of any dispute
regarding the calculations of the Closing Date Payment shall be
resolved by the accounting firm of Xxxxxx Xxxxxxxx, L.L.P.,
Milwaukee, Wisconsin ("Xxxxxx Xxxxxxxx"), whose decision shall be
final, within ten (10) business days after receipt of a written
request from either Foodbrands or the Agent. Xxxxxx Xxxxxxxx'x
costs associated with such determination shall be charged and
paid for by the non-prevailing party. If within five (5)
business days of receipt by Foodbrands and the Agent of Xxxxxx
Xxxxxxxx'x review of the Company's calculations of the Closing
Date Payment, there is any difference in the amount of the
Closing Date Payment as determined by Xxxxxx Xxxxxxxx from that
paid by Foodbrands at Closing, Foodbrands on the one hand, and
the Shareholders on the other hand, shall make appropriate
payment, each to the other, to reconcile any such difference.
(b) The Tax Refund Payment. Within five (5)
business days after receipt of any Tax Refund Payment, the
Company shall deliver to each Shareholder and Option Holder
its/his/her Shareholder Tax Refund Payment or Option Holder Tax
Refund Payment, as the case may be, by check, to the Agent.
(c) The Earnout Payment. Within thirty-five (35)
days after the end of each month, Foodbrands shall cause the
Company to furnish the Agent separate financial statements of the
Company for each of the twenty-four (24) consecutive months
following the Closing Date (the "Earnout Payment Statements").
The Earnout Payment Statements shall be prepared in accordance
with Section 2.05 and shall consist of a balance sheet and a
statement of operations, a listing of sales during the period to
Papa John's and Mazzio's, and a calculation of EBITDA during (i)
the current period and (ii) the previous eleven (11) periods once
twelve (12) periods have elapsed since the Closing Date. Within
five (5) days after the receipt of the final Earnout Payment
Statement the Agent shall advise Foodbrands of the twelve (12)
month period selected as the Applicable Period. Within twenty
(20) days after receipt of the final Earnout Payment Statement,
Foodbrands shall provide the Agent in writing (the "Earnout
Payment Certificate") with its calculation of the Earnout
Payment, if any, and if there is no Earnout Payment, an
explanation thereof. The Agent shall have twenty (20) business
days after receipt of the Earnout Payment Certificate and the
calculation of the Earnout Payment in which to object on behalf
of the Shareholders and the Option Holders to the calculation as
reflected on the Earnout Payment Certificate by providing written
notice to Foodbrands of its objections to such calculations. The
resolution of any dispute regarding the calculations of the
Earnout Payment shall be resolved by Coopers whose decision shall
be final, within ten (10) business days after receipt of a
written request from the Agent. The Coopers' cost associated
with such determination shall be charged and paid for by the
non-prevailing party. Within fifteen (15) business days after
receipt by the Agent of the Earnout Payment Certificate and the
Agent has not objected to the calculation of the amount of the
Earnout Payment or within fifteen (15) business days after
receipt by Foodbrands and the Agent of Coopers' calculations of
the Earnout Payment, each Shareholder and Option Holder shall
deliver to Foodbrands the "Election Notice" in the form of
Exhibit D hereto attached. On or before ten (10) business days
following receipt by Foodbrands of the Election Notice,
Foodbrands shall pay to each Shareholder its proportionate
percentage of the Shareholder Earnout Payment as reflected on
Exhibit A by check and each Option Holder his proportionate
percentage of the Second Option Payment as directed in writing by
the Agent;provided, however, if a Shareholder or Option Holder
gives the Election Notice that the stock option provision is
being exercised, then the payment shall not be made to the
electing Shareholder or Option Holder and the provisions of
Section 2.04(d) shall apply.
(d) Foodbrands Share Option. Subject to the
securities laws conditions set forth in Section 2.04(e) each of
the Shareholders and Option Holders shall have the option to
exchange his, her/its portion of the Earnout Payment for
Foodbrands common stock on the basis of the average of the
closing price per share of Foodbrands common stock as reported by
the National Markets System of NASDAQ in the Wall Street Journal
Southwest Edition for the three trading days following the first
public announcement after execution of this Agreement relating to
the transaction contemplated by this Agreement (the "Option
Price"). A Shareholder or Option Holder shall exercise the
option by executing and delivering to Foodbrands the Election
Notice within fifteen (15) days after the delivery by Foodbrands
of the Earnout Payment Certificate. Upon exercise and subject to
the provisions of Section 2.04(e), Foodbrands shall issue to the
electing Shareholder or Option Holder the number of shares
obtained by dividing the Option Price into the amount of the
Earnout Payment due the Shareholder or Option Holder, rounded
downward to the nearest whole share (the "Option Shares"). No
fractional shares shall be issued and Foodbrands shall pay the
Shareholder or Option Holder for any resulting fraction on the
basis of the Option Price by check.
(e) Securities Laws Conditions. Foodbrands shall
not be obligated to issue the Option Shares to any Shareholder
unless it can do so on reliance on an exemption from the
registration requirements of the Securities Act of 1933, 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 ("Reg. D") and all
parties to this Agreement hereby agree to use their respective
reasonable efforts to comply with Reg. D., as Reg. D applies to
such party. 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. Nothing in the
foregoing to the contrary, all holders of Option Shares shall be
entitled to those registration rights as provided in the Election
Notice.
(f) Payment of Interest. In the event all or any
portion of the Tax Refund Payment or Earnout Payment becomes the
subject of any dispute, the nonprevailing party, as determined by
Coopers, shall pay interest on any disputed amounts at an annual
interest rate of nine percent (9%) for the period from which the
Tax Refund Payment was received with respect to Tax Refund
Payments and the twenty-four (24) month anniversary of the
Closing Date with respect to Earnout Payments, until such time as
the disputed amounts are paid to the prevailing party.
2.05 Business and Accounting Practices and Procedures.
Beginning after the Closing and so long as the Earnout Payment is
being earned, Foodbrands shall (i) maintain the Company and its
business and properties as a separate business entity, although
nothing herein contained shall preclude Foodbrands from
liquidating the Company or merging the Company into it or a
subsidiary of Foodbrands as long as the business and properties
of the Company are separately accounted for, (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 except for statements of
cash flow, applicable footnotes and normal year-end adjustments,
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.
Notwithstanding the foregoing, for the purposes of calculating
the components of the Earnout Payment including EBITDA with
respect to intercompany transactions between the Company and
subsidiaries or divisions of Foodbrands and the relocation of
production facilities and capacities from or to the Company's
facilities, the revenues and expenses to be allocated to the
Company shall be as agreed between Foodbrands and Agent from time
to time. In the event Foodbrands and the Agent are unable to
reach an agreement as to the reasonable allocation of revenues
and expenses, then such dispute shall be submitted to Coopers in
accordance with the provisions of Section 2.04(b). Coopers shall
determine the reasonable allocation of revenue and expenses which
determination shall be conclusive on Foodbrands and the
Shareholders. Coopers' costs associated with such determination
shall be paid by the non-prevailing party.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally, except as to
Sections 3.01(a), 3.03, 3.04 and 3.27 as such Sections apply
severally to each Seller and not jointly as to each Seller,
represent and warrant to Foodbrands as of the date hereof and as
of the Closing as follows:
3.01 Ownership of Shares; 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 free and clear of all liens, claims, options, pledges,
security interests, charges, encumbrances, equities, agreements
and restrictions whatsoever except as provided in Section
180.0622(2)(b) of the Wisconsin Statutes and the cases decided
thereunder. Sellers also represent that the Shareholders or
their respective predecessors in interest paid the Company not
less than par value for the Shares.
(b) The authorized capital stock of the Company
consists solely of 1,240,000 shares of common stock, $.10 par
value, 878,850 of which shares are issued and outstanding and
10,000 shares of preferred stock, $.10 par value, of which none
is issued or outstanding. The Shares constitute all of the
issued and outstanding shares of capital stock of the Company and
are owned by Sellers as set forth opposite each Seller's name on
Exhibit A hereto.
(c) There are not now (except as set forth on
Schedule 3.01 delivered by Sellers to Foodbrands upon the
execution of this Agreement), and at the Closing there will not
be, any shares of capital stock of the Company 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
the Company, or otherwise obligating the Company to issue,
transfer or sell any of its respective securities or other
instruments convertible into or exchangeable or exercisable for
any securities of the Company. There are no (except as described
on Schedule 3.01), and at the Closing there will not be, any
voting trusts or other agreements or understandings to which
Sellers or the Company is a party or is bound with respect to the
voting or transfer of the capital stock of the Company other than
this Agreement. Except for the Option Cancellation Agreement,
there are not now, and at the Closing there will not be,
outstanding contractual or other obligations of the Company to
repurchase, redeem or otherwise acquire the Shares or any shares
of capital stock of the Company.
3.02 Organization and Qualification. The Company is a
corporation duly organized, validly existing and in good standing
under the laws of Wisconsin and has the requisite power and
authority to carry on its business as it is now being conducted.
The Company is duly qualified to do business and in good standing
as a foreign corporation in each state where the character of the
property owned by it or the nature of its activities makes such
qualifications necessary except where the failure to be so
qualified would not have a material adverse effect upon the
business, properties or results of operation of the Company.
Schedule 3.02 delivered by Sellers to Foodbrands upon the
execution of this Agreement sets forth each state where the
Company is qualified to do business.
3.03 Due Authorization. Each of the Sellers and the
Company has full 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 the Company of this Agreement have
been, and the execution, delivery and performance by the Company
of all other agreements and transactions contemplated hereby and
thereby have been duly authorized and approved by all requisite
corporate action on the part of the Company. 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. To the knowledge of Sellers,
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 will complete prior to the Closing
Date, 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 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 Articles of
Incorporation or Bylaws 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
the Company or any of its 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 the Company is a party or by which any of
its 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 the Company to be accelerated or
increase any such liability or obligation of 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 and the Company of this Agreement, or the consummation by
Sellers and the Company 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 and the Company of this Agreement and 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 Sellers or the Company with any contract
or business relationship to which Sellers or the Company is a
party.
3.05 Financial Statements - The Company. Attached
hereto as Schedule 3.05 delivered by Sellers to Foodbrands upon
the execution of this Agreement, are (i) the audited balance
sheets of the Company as of August 31, 1995, (the "Company
Balance Sheet") and August 31, 1994, (ii) the related statements
of operations, statements of changes in shareholders' equity and
statements of cash flows of the Company for the years then ended,
(iii) the unaudited balance sheet of the Company as of October
31, 1995 (the "Interim Balance Sheet") and (iv) the related
statements of operations (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 normal year-end adjustments. All such statements
of operations 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 normal year-end adjustments.
3.06 No Undisclosed Liabilities. To the knowledge of
Sellers, the Company has no 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 set forth in Schedule 3.06 delivered by Sellers to
Foodbrands upon the execution of this Agreement, or (iii)
liabilities and obligations incurred in the ordinary course of
business and consistent with past practices since the date of the
Company Balance Sheet. Except as provided in the preceding
sentence, Sellers know of no reasonable basis for the assertion
against the Company of any liability or obligation not fully
reflected or reserved against in the Company Balance Sheet or in
the Interim Balance Sheet or incurred in the ordinary course of
business and consistent with past practice since the dates
thereof.
3.07 Absence of Certain Changes. To the knowledge of
Sellers, except as set forth in Schedule 3.07 delivered by
Sellers to Foodbrands upon the execution of this Agreement, since
August 31, 1995 the business of the Company has 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 August 31, 1995, there has not
been:
(a) any material adverse change in the business,
operations or financial position of the Company from that
reflected in the Audited Financial Statements;
(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;
(c) any increase granted, promised or announced in the
wages, salaries, compensation, bonuses, incentives, pension or
other benefits payable by the Company to any of its employees;
(d) any disposition of any asset of the Company 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 related to the business,
operations, prospects or financial position of the Company;
(f) any incurrence of any liabilities or obligations
(whether absolute, accrued, contingent or otherwise and whether
due or to become due) by the Company 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 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, (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 August 31, 1995, 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 which individually per item exceeds
$10,000, or $50,000 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, 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 with,
Sellers or any of their affiliates or associates;
(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 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 the Company or otherwise;
(n) any issuance or sale of 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 (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 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, other than
such changes required by GAAP;
(r) any failure to maintain the material assets of the
Company 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
otherwise relates to any asset of the Company or any failure to
renew such Permit or any insurance policy that is scheduled to
terminate or expire within forty-five (45) calendar days after
the Closing Date;
(t) any express or deemed election or settlement or
compromise of any liability with respect to Taxes of the Company;
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 August 31, 1995, 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 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 prior to the date of this
Agreement and will file all Tax Returns which are required to be
filed by the Company with respect to all taxable periods which
have ended or end after the date of this Agreement and 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 has 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 (i)
referred to in this Section 3.08(a) or (ii) commencing after the
date of this Agreement but ending on or prior to the Closing
Date.
(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 could result in liability of the Company 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;
(iii) the Company is not 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) the Company is not 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 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, 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 has
been a member, or any trust in which the Company 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 for periods through the Closing
Date (without regard to the materiality thereof).
(e) No deficiency for Taxes has been assessed against
the Company which has not been paid in full.
(f) There are no liens for Taxes upon the assets of
the Company except for liens for Taxes not yet due.
(g) Notwithstanding the foregoing representations
regarding Taxes and Tax Returns described in this Section 3.08,
Sellers represent and warrant that with respect to all taxable
years ended on and prior to August 31, 1995 the Company shall owe
no additional Taxes under the Code and applicable state tax
statutes and regulations promulgated thereunder except those that
have been paid or as to which proper and adequate reserves and
allowances have been provided.
(h) 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.
(i) 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 August 31, 1995 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
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 manufacturing facility located at 0000 Xxxxx Xxxxxx, Xxxxx
Xxx, Xxxxxxxxx 00000 and the manufacturing facility located at
000 Xxxxxxxxx Xxxxxx, Xxxxx Xxx, Xxxxxxxxx 00000 (the
"Facilities") are 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. To the knowledge of the Sellers, neither of the
Facilities contains a material latent or other material defect
other than defects resulting from ordinary wear and tear.
(c) Schedule 3.09-2 contains a list of all material
real property leases and subleases to which the Company 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, corporations, partnerships, or joint ventures or
otherwise. Sellers have provided to Foodbrands a true and
complete copy of the Articles of Incorporation of the Company and
any amendments or addendums thereto (the "Articles"). The
Company has not waived or amended any provisions of the Articles.
3.11 Inventory. The inventory of finished product, raw
materials and supplies (the "Inventory) of the Company 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. 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 August 31, 1995 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. To the knowledge of Sellers,
all of the Inventory of the Company: (a) complies with the
Federal Food, Drug and Cosmetic Act, as amended (the "FDA Act"),
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 interstate
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 its business consistent with past practice. To the knowledge
of Sellers, except as reserved against on the Company Balance
Sheet or the Interim 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. To the knowledge of Sellers, all
receivables reflected on the Company Balance Sheet or arising
from the date thereof until the date of this Agreement or which
shall arise from the date of this Agreement to the Closing
(subject to the reserve for bad debts reflected on the books and
records of the Company as of the date of this Agreement and as of
the Closing Date which reserve shall be consistent with past
practice of the Company, and except as disclosed or which shall
be 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. To the
knowledge of Sellers, no Proprietary Rights used by the Company
conflict with or infringe any similar rights of any other person.
Except as set forth on Schedule 3.13, 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.
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 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"). The Company is
not subject to any order, judgment, decree or obligation which
would limit the ability of the Company 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) to the knowledge of Sellers, 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
consummation of the transactions contemplated by this Agreement.
3.16 Employee Benefit Plans. Except as otherwise set
forth on Schedule 3.16 delivered by Seller to Buyer upon the
execution of this Agreement:
(a) the Company does not currently sponsor, maintain
or participate in and are not 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"). For the
purpose of this Section 3.16, references to the Company shall
also include any entity affiliated with the Company under
Sections 414(b), (c) or (m) of the Code or Section 4001(b)(1) of
ERISA (excluding any foreign affiliate of the Company);
(b) all obligations of the Company, 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 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 on its books of account as of the date of this Agreement
and which shall be made from the date of this Agreement to 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 by the Company 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 Seller or the Company, threatened against any of the Benefit
Plans or against the assets of any of such Benefit Plans;
(e) the Benefit Plans and related trust agreements, if
any, are valid and in full force and effect. Other than in
respect of qualification requirements still subject to the
remedial amendment period under Section 401(b) of the Code, the
Internal Revenue Service has issued a favorable determination
with respect to each Benefit Plan (and all amendments thereto)
which may be and is intended to be qualified under Section 401(a)
of the Code and no event has occurred since such favorable
determinations which, to the knowledge of the Seller or the
Company, adversely affects any such prior determination;
(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) the Company does not participate in any
Multiemployer Plan or in any employee Benefit Plan which provides
health and welfare benefits, and the Company does not have any
withdrawal liability with respect to any such Benefit Plan or
Multiemployer Plan and neither the Sellers nor the Company has
any knowledge that would render such representation inaccurate.
Neither Sellers nor the Company has committed any act or acts or
will commit any act or acts prior to Closing which has effected
or will effect, 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) the Company (i) has not 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) to the knowledge of Sellers, has not had any tax
imposed on it by the Internal Revenue Service for any violation
under Section 4975 of the Code; or (iii) to the knowledge of
Sellers, has not engaged in any transaction which could
reasonably be expected to subject the Company or any such Benefit
Plan to any liability for any such tax under Section 4975 of the
Code;
(i) To the knowledge of Sellers, the terms of all
Benefit Plans comply with ERISA, the Code and all applicable
statutes, orders or governmental rules and regulations. To the
knowledge of Sellers, none of the Benefit Plans, nor any trust
created thereunder has engaged in any non-exempt material
"prohibited transaction" as such term is defined in Section 4975
of the Internal Revenue Code and Section 406 of ERISA which
involves the Company;
(j) as to each Benefit Plan for which an Annual Report
(IRS Form 5500), including schedules, was filed by the Company
under ERISA or the Code, no material 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 to the knowledge of Sellers, 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 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 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) to the knowledge of Sellers, 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) to the knowledge of
Sellers, 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) to the knowledge of Sellers, 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 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) To the knowledge of Sellers, no act, omission or
transaction has occurred which could result in imposition on the
Company 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 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) To the knowledge of Sellers, the Company does not
have any liabilities or other obligations, whether actual or
contingent, with respect to the Benefit Plans of any kind
whatsoever, 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 Buyer, or will make available to Buyer 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) substantially all former employees
who have elected as of June 1, 1994 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; and
(r) the Company is not 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.
3.17 Contracts and Commitments. To the knowledge of
Sellers, except as set forth on Schedule 3.17 delivered to
Foodbrands by Sellers upon the execution of this Agreement, and
except for employee benefit plans set forth in Schedule 3.16
hereto, the Company is not 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 and the
customers of the Company;
(e) any contracts between the Company and any
employee, consultant, broker or agent of the Company;
(f) any contracts which limit the matters or extent of
the business which may be conducted by the Company in any
material respects;
(g) any licensing, royalty, confidentiality,
consulting, administrative service or similar agreements; or
(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 and
materially affecting the Company'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. Each Contract is, except as specifi-
cally 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 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 respect of, the terms of any Contract by the
Company. To the 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, nor is any currently being negotiated
by the Company and, to the knowledge of Sellers, no attempt to
organize any group or all of the employees of the Company have
been made or proposed and is currently outstanding;
(b) there are no controversies, strikes, slowdowns or
work stoppages pending or, to the knowledge of Sellers or the
Company, threatened between the Company and any of its employees,
and the Company has not experienced such controversy, strike,
slowdown or work stoppage within the past three years;
(c) to the knowledge of Sellers, the Company is
currently 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 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 has paid in full to all its 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;
(f) the Company is not 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; 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 has employed or currently employs any person.
3.20 Compliance with Law. To the knowledge of
Sellers, the Company and each of the Facilities are in 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 an 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 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, disposal, discharge, release, emission, treatment or
usage of "Hazardous Material" (as defined below) that has
occurred or is occurring at any real property or lands now owned
by the Company or covered by any lease or sublease to which the
Company is a party (the "Lands"), has been and is in compliance
with all applicable statutes, codes, laws (including, without
limitation, common law), orders, rules, ordinances, and
regulations relating to the protection of the environment
(including, without limitation, ambient air, and surface and
subsurface soils and waters), natural resources, wildlife or
human health or safety as such statutes, codes, laws, orders,
rules, ordinances and regulations currently exist (the
"Environmental Laws"), (ii) any handling, transportation,
storage, disposal, discharge, release, emission, treatment or
usage of Hazardous Material that occurred at any real property or
lands heretofore owned or leased by or to the Company during the
Company's ownership or lease thereof (the "Former Lands") was in
compliance with all applicable Environmental Laws, (iii) no leak,
spill, release, discharge, emission or disposal of Hazardous
Material has occurred or is occurring which could subject
any of the Lands to any remedial, corrective or removal action
under any Environmental Laws or the Company to any fine, penalty
or corrective action under any Environmental Laws, (iv) no leak,
spill, release, discharge, emission or disposal of Hazardous
Material occurred at, or migrated from or to, any of the Former
Lands during or prior to the Company's ownership or lease of such
Former Lands which could subject any such Former Lands to any
remedial, corrective or removal action under any Environmental
Laws or the Company to any fine, penalty or corrective action
under any Environmental Laws, (v) the Lands and the Company's
operations thereon and usage thereof are in compliance with all
applicable Environmental Laws, and (vi) each aboveground and
underground storage tank located on any of the Lands has been
registered, maintained and operated in accordance and compliance
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, data,
assessments and other information in its possession or in the
possession of the Company (or under either's control) relating to
(i) the presence or suspected presence of any Hazardous Material
on any of the Lands or Former Lands or (ii) the existence of any
aboveground or underground storage tank thereon or thereat.
Sellers 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, data,
assessments and other information hereafter obtained by Sellers
or the Company on or prior to the Closing Date. The term
"Hazardous Material" means asbestos, petroleum (including without
limitation, oil, used oil, waste oil, gasoline, diesel and
petroleum based fuels), radioactive substances, materials or
wastes, 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, (i)
no Hazardous Material owned, generated or used by the Company has
been generated, used, treated, emitted, discharged, released,
disposed, handled, stored, or transported at, on, to or from the
Lands or the Former Lands in violation of any Environmental Law,
(ii) the Company has disposed of all wastes, including those
wastes constituting or containing any Hazardous Material, in
compliance with all applicable Environmental Laws and "Permits"
(as defined at Section 3.22), (iii) there are no past, pending or
threatened actions, proceedings (administrative or judicial),
claims or litigation against the Company relating to its or any
other person's or entity's failure to comply with Environmental
Laws or asserting any damage or injury to human health, natural
resources, wildlife or the environment, (iv) none of the Lands,
the Former Lands or any lands adjoining any of same is listed or
proposed for listing on the National Priorities List under
CERCLA, the Comprehensive Environmental Response, the
Compensation and Liability Act Information System ("CERCLIS"),
the Facility Index System ("FINDS"), RCRA, the Hazardous Waste
Registrations Listing Report, any leaking underground or
aboveground storage tank list or report, or any similar federal,
state or local listing, and (v) the Company has not transported
or arranged for the transportation of any Hazardous Materials to
any location that is listed or proposed for listing on any such
list or which is the subject of any environmental or health
claim.
(c) 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.
(d) Schedule 3.21-3 also contains a list of all
aboveground and underground storage tanks including the street
address, and the name of the operator and owner thereof which are
located on any of the Lands.
3.22 Environmental and Other Permits. To the
knowledge of Sellers, the Company currently holds 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 ownership use, occupancy and
operation of each material asset of the Company and the conduct
of its business. 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. To the knowledge
of Sellers, the Company has complied in all respects with the
terms of such Permits and the Company has not received any
notification of any violation or noncompliance with the terms
thereof.
3.23 Business Prospects. To the knowledge of Sellers
or the Company, since August 31, 1995 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. Without limiting the
generality of the foregoing, no customer who accounted for more
than 5% of the gross revenue of the Company during fiscal year
1995, or the most recent interim period ending prior to the date
of this Agreement has given the Company notice of any facts which
would lead Sellers or the Company to believe sales to or profit
margins on sales to such customer would be materially and
adversely affected.
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 to borrow money and list the persons
authorized to transact on behalf of the Company with respect to
each such account or borrowing resolution. Schedule 3.24 also
lists all powers of attorney granted by the Company 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 with respect to any of the Shareholders, officers,
directors, employees or agents of the Company.
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. Neither the Sellers nor any affiliate
of 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
the Company contain accurate records in all material respects of
all board of directors and shareholder meetings of the Company
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 the Company at such meetings.
Complete and accurate copies of all such minute books and of the
stock register of the Company 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 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
of the transactions contemplated hereby will (a) violate or
conflict with any Law applicable to Foodbrands or by which any of
its properties may be bound or affected, or (b) violate or
conflict with any provisions of the Certificate of Incorporation
or Bylaws of Foodbrands. 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 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 Sellers 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 is
purchasing the Shares 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 to conduct its business
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 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) except as required by Sections 7.07 and 7.08
of this Agreement, pay, discharge or satisfy or fail to 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, including the time and manner of payment of such Lien
or Liability;
(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 August 31, 1995;
(e) cancel or release any other debts or claims,
or waive any rights of value in excess of $5,000, 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 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,
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 capital stock;
(i) issue, authorize, or propose the issuance of
shares of the capital stock of the Company or securities
convertible into, or rights, warrants or options to acquire, any
such shares or other convertible securities;
(j) make any capital expenditure or commitment
for capital expenditures which individually per item exceeds
$25,000 or in the aggregate exceeds $100,000, 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 transac-
tion 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 thirty (30) days; or
(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 to conduct such examination of the
condition of the Company 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 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 business, (ii) any business
combination with the Company or (iii) any other extraordinary
business transaction involving or otherwise relating to the
Company or its assets. Should any of the Sellers or the Company
or any of its respective affiliates 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 monthly 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 monthly 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 Sellers, 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 (the "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.
5.07 Environmental Matters.
(a) Audit. Foodbrands has engaged GaiTech, Inc.
(the "Environmental Consultant") to conduct a "Phase I
Environmental Site Assessment" of the Facilities and to deliver
to Sellers and Foodbrands a report (the "Environmental Report")
of such assessments. If the Environmental Report indicates the
existence of Hazardous Materials in, on or under either of 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. If the cost of remediation as
reflected on the Remedial Plan exceeds an amount which in the
opinion of Foodbrands would or could be material to the business,
properties or results of operation of the Company, Foodbrands may
terminate this Agreement upon the earlier to occur of ten (10)
days after receipt by Foodbrands of the Remedial Plan or the
Closing Date.
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 "Sellers' 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.
Foodbrands agrees that it will notify Sellers in writing on or
before Closing of any fact it discovers during the course of its
due diligence which would, to the actual knowledge of Foodbrands,
constitute a breach of any representation, warranty or covenant
of Sellers hereunder. 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 or
agent of the Company or any affiliates of the foregoing shall be
satisfied in full.
5.11 Inventory. A physical inventory of the Inventory
of the Company shall be taken by one or more representatives of
Foodbrands and one or more representatives of Sellers in
accordance with procedures customary in the industry and mutually
agreed upon by the parties and shall be signed by at least one
representative of each party immediately upon completion. The
physical inventory will commence at 7:00 a.m. on November 30,
1995 or at some other mutually agreeable time. Such
representatives shall inventory all of the Inventory located at
(i) the Facilities and (ii) each of the outside storage
facilities associated with the operation of the Company as of
such date (Sellers will provide Foodbrands reasonable notice of
all such locations). For Inventory maintained in outside public
warehouses, test counts and other validation procedures will be
substituted for a total physical Inventory procedure where (i)
the public warehouse provides a certificate of the Inventory
which includes each product description, quantities and code
dates and (ii) the public warehouse guarantees the quantities on
hand as reflected in the certificate. The physical Inventory of
product shall include lot numbers and weight counts. Code dates
for lots shall be determined from the records of the Company.
The physical Inventory will also include an identification of all
product as to which an adjustment to cost is to be made, such as,
slow moving, damaged, obsolete, out-of-code, short-dated or
rework. All Inventory which is accounted for as Inventory in
transit and not received until on or after the Closing Date shall
be included in the Inventory of the location in question.
All inventory shall be valued at the lower of cost
(first-in, first-out) or market in accordance with the valuation
methods and principles used by the Company in the preparation of
the Company Balance Sheet, consistently applied. All items of
costs shall be determined from the books and records of the
Company. All inventory which is damaged, obsolete, slow-moving,
short-dated or rework will be valued based on its net realizable
value.
5.12 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 11.04, each of
the Shareholders, for himself and his successors, assigns, heirs
and administrators, hereby irrevocably appoints Xxxxxx Xxxxxxx
Capital Partners, III, L.P. as his lawful attorney in fact for
purposes of taking any action under this Agreement, including
without limitation (i) the review and approval of or objection to
the Closing Date Payment Certificate delivered by the Company
pursuant to Section 2.04(a), (ii) the review and approval of or
objection to the Earnout Payment Certificate delivered by
Foodbrands pursuant to Section 2.04(b), (iii) the agreement as to
the allocation of revenues, expenses and profits pursuant to
Section 2.05, and (iv) the settlement of any disputes under this
Agreement. The attorney in fact appointed from time to time
pursuant to this Section 5.12 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 notice of a change in the Agent
signed by all of the Sellers, Foodbrands may rely on all acts of
the Agent. The Agent shall maintain an accurate list of Sellers
and their respective successors and assigns. Foodbrands may act
in full reliance on the ownership interest of all such Sellers
and their respective successors and assigns as advised by the
Agent or the successor Agent from time to time.
5.13 The Swap Payment and The First Option Payment.
Sellers shall cause the Company to make the Swap Payment and the
First Option Payment prior to the Closing.
5.14 Updating of the Schedules. Between the date of
this Agreement and the Closing Date, Sellers shall have the duty
and the right to update by delivering to Foodbrands updated
Schedules to reflect any material changes in the Schedules
delivered to Foodbrands pursuant to this Agreement. On the
Closing Date, Sellers shall deliver to Foodbrands an Agent's
Certificate confirming the accuracy as of the Closing Date of
each of the Schedules delivered to Foodbrands pursuant to this
Agreement as may have been amended; provided, however, that if
Sellers have amended any of the Schedules of this Agreement,
Sellers shall not be in default of this Agreement, whether or not
such amendments are material, but Foodbrands shall not be
obligated to proceed with the closing of the transactions
contemplated by this agreement if there are material changes in
the Schedules initially delivered to Foodbrands. Such amendments
to a Schedule by Sellers shall not be considered a breach of this
Agreement by Sellers, Foodbrands shall have no cause of action
therefor, and Foodbrands' only remedy shall be to terminate this
Agreement by written notice to Sellers. The parties further
understand and agree that disclosure made in any Schedule shall
be deemed disclosure in all other Schedules as if set forth
therein, that is, information set forth in one Schedule
shall be construed as disclosure in all Schedules.
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 Agent's Certificate. 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 Xxxxxxx & Xxxx, X.X.
Xxx 00000, Xxxxx Xxx, Xxxxxxxxx 00000-0000, counsel to the
Sellers, in form and substance reasonably satisfactory to
Foodbrands, substantially in the form of Exhibit E.
7.06 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.
7.07 Option Cancellation Agreement. The Company and
the Option Holders shall have executed and delivered the Option
Cancellation Agreement (Exhibit C) and the Company shall have
made the First Option Payment.
7.08 Swap Termination. Effective as of or prior to
the Closing Date the Company shall have terminated all interest
rate swap arrangements which hedge the Loan Agreement and shall
have made the Swap Payment.
7.09 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.
7.10 Employment Agreement. The Company and XxXxxxx
shall have terminated that certain employment agreement by and
between the Company and XxXxxxx dated September 16, 1994, and
mutually released any and all claims arising thereunder.
Closing of this transaction by Foodbrands shall
constitute acknowledgement by Foodbrands that the conditions
contained in this Article VII have been either satisfied or
waived by Foodbrands.
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 F.
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.
Closing of this transaction by Sellers shall constitute
acknowledgement by Sellers that the conditions contained in this
Article VIII have been either satisfied or waived by 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 as may have been updated in
accordance with Section 5.14 hereof (the "Surviving Sellers
Representations") and the representations and warranties made by
Foodbrands contained in this Agreement (the "Surviving Foodbrands
Representations") and the covenants and agreements of Sellers and
the Company (collectively, the "Sellers' Agreements", and the
covenants and agreements of Foodbrands ( the "Foodbrands's
Agreements" ), 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 except with respect to those representations and
warranties made severally and not jointly where indemnification
will be severally only, 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 all claims, actions or causes of action, suits,
proceedings, hearings, investigations, charges, complaints,
demands, injunctions, assessments, demands, losses, damages,
judgments, orders, decrees, settlements, liabilities, taxes,
liens, fees, costs and expenses, including, without limitation,
interest, penalties, fines 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 Seller's Representation or any Seller's Agreement, (y)
any Income Tax claim as defined below or (z) any action, event,
proceeding, or claim by any of the Option Holders, his successors
or assigns against Foodbrands or the Companyrelating in any way
to any act or failure to act of the Agent or any act of
Foodbrands in reliance on the information supplied by the Agent
under this Agreement or under any of the Exhibits hereto (the
"Option Holder Claims") (collectively, the "Foodbrands's
Claims").
(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 "Sellers Group"),
from and against all 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 "Sellers 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 representations,
warranties, covenants and agreements contained in Section 3.01,
the Option Holder Claims and claims or actions based upon the
Company's failure to pay federal or state of Wisconsin income
taxes during a Pre-Closing Tax Year ("Income Tax Claims"), 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 Damages resulting from the breach of the
representations, warranties, covenants and agreements contained
in Section 3.01, the Option Holder Claims and Income Tax Claims,
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 in which case Sellers shall be required to pay only the
amount by which such aggregate amount exceeds $500,000 (the
"Sellers' Cushion").
(b) Although Foodbrands shall be liable to the
Sellers Group for all Damages resulting from the breach of the
representations, warranties, covenants and agreements contained
in Section 4.01 and Foodbrands' Agreements (including without
limitation its obligations contained in Article II), which are
subject to no limitation, no indemnification shall be required
to be made by Foodbrands under this Article IX with respect to
any of the other Sellers' 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 in which case
Foodbrands shall be required to pay only the amount by which such
aggregate amount exceeds $500,000 (the "Foodbrands's Cushion").
(c) With the exception of Sellers'
representations, warranties, covenants and agreements in Sections
3.01 and 3.21, the Option Holder Claims and the Income Tax
Claims, all Seller's representations, warranties, covenants and
agreements and the Sellers' Agreements shall terminate as of
August 31, 1996. Seller's representations, warranties, covenants
and agreements contained in Section 3.01, relating to the Option
Holder Claims and those relating to Income Tax Claims shall
survive the Closing Date for the same period as the applicable
statute of limitations with respect to any claim based on a claim
or action by a third party. Sellers' representations,
warranties, covenants and agreements contained in Section 3.21
shall survive the Closing until the two (2) year anniversary date
of the Closing Date. Any claim for indemnification by Foodbrands
or any member of the Foodbrands Group under this Article IX with
respect to any breach of any of Sellers representations,
warranties, covenants and agreements which is made in writing in
accordance with Section 9.05 prior to the expiration of the
applicable survival period, and all rights of indemnity with
respect thereto, shall survive such expiration until resolved or
judicially determined. Any such claim not so made in writing
prior to the expiration of such applicable survival period shall
be deemed to have been waived by Foodbrands and the Foodbrands
Group.
(d) Foodbrands shall be obligated to indemnify
the Sellers Group only for (i) Sellers' Claims resulting from a
breach of any Surviving Foodbrands' Representation, as to which
the Sellers Group has given Foodbrands written notice thereof
prior to August 31, 1996 and (ii) Sellers' Claims resulting from
a breach of any Foodbrands Agreement or any action, event,
proceeding or investigation relating to the operation of the
Company after the Closing, as to which the Sellers Group has
given Foodbrands written notice thereof prior to termination of
the applicable statute of limitations period with respect to such
Sellers' Claims. Any claim for indemnification by Sellers or
any member of the Sellers Group under this Article IX with
respect to any breach of any of Foodbrands' representations,
warranties, covenants and agreements which is made in writing in
accordance with Section 9.05 prior to the expiration of the
applicable survival period, and all rights of indemnity with
respect thereto shall survive such expiration until resolved or
judicially determined. Any such claims not so made in writing
prior to the expiration of such applicable survival period shall
be deemed to have been waived by Sellers and the Sellers Group.
(e) Although Sellers shall be liable to
Foodbrands and the Foodbrands Group for any Damages for breach of
the covenants, representations, warranties and agreements
contained in Section 3.01, the Option Holder Claims and for
Income Tax Claims, in no event shall the liability of any
Seller, or the Sellers in the aggregate, with respect to
Foodbrands' Claims exceed the amount of the Earnout Payment in
respect to all other Foodbrands Claims. In respect to Foodbrands
claims other than those relating to Sections 3.01, the Option
Holder Claims and Income Tax Claims such recourse to the amount
of the Earnout Payment in accordance with the indemnification
provisions set forth in this Article IX shall be Foodbrands' and
the Foodbrands Group's sole remedy with respect to Foodbrands'
Claims or otherwise and in no event shall Foodbrands or the
Foodbrands' Group commence any action against or otherwise seek
or assert any recourse or claim against any Seller except as
aforesaid. Also, in no event shall the Sellers have any
liability for any breach of a representation, warranty, covenant
or agreement (excluding Section 3.01, the Option Holder Claims
and Income Tax Claims) based on any facts actually known to
Foodbrands for which Foodbrands breached its obligation to notify
Sellers pursuant to Section 5.09.
(f) For the purposes of the indemnity provided
in this Section 9.03, any Damages hereunder shall be determined
on the basis of the net effect after giving affect to any tax
savings or tax detriments actually realizable and any insurance
proceeds, cash payments, setoffs or recoupment or any payments in
each case actually received, realized or retained by Sellers or
the Sellers Group, Foodbrands or the Foodbrands' Group, as the
case may be, as a result of any event giving rise to a claim for
such indemnification.
9.05 Conditions of Indemnification. The obligations
and liabilities of Sellers to indemnify the Foodbrands Group and
Foodbrands to indemnify the Sellers Group under Section 9.03
hereof with respect to Foodbrands's Claims and Sellers' 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 29, 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;
(c) By Foodbrands in accordance with the
provisions of Section 5.07(b) of this Agreement; or
(d) 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 will pay all fees
and expenses incurred by it in connection with this Agreement.
The Company will pay all reasonable fees and expenses incurred by
Sellers or the Company in connection with this Agreement and the
transactions contemplated hereby.
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 WISCONSIN.
EACH OF SELLERS AND FOODBRANDS HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN
DISTRICT OF WISCONSIN SITTING IN MILWAUKEE FOR PURPOSES OF ALL
LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT;
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 WISCONSIN 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 Arbitration. The parties hereto agree that all
disputes between them relating to or arising out of 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 Wisconsin, 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.
From related transactions in connection with this
Agreement, the parties may be in a debtor/creditor relationship,
which may include the granting of security interests in goods
and/or fixtures. The parties recognize that these kinds of
relationships could give rise to the need by one or more of the
parties for emergency judicial relief to regain possession of
goods, or to prevent the sale or transfer of goods. The parties
agree that either shall be entitled to pursue such remedies for
emergency or preliminary injunctive relief in any court of
competent jurisdiction, provided that each party agrees that it
will consent to the stay of such judicial proceedings on the
merits of both this Agreement and the related transactions
pending arbitration of all underlying claims between the parties
immediately following the issuance of any such emergency or
injunctive relief.
11.04 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
Foodbrands may assign this Agreement to a wholly-owned
subsidiary.
11.05 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.
11.06 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.
11.07 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. Xxx, Esq.
W. Xxxxx Xxxxxxx, Esq.
FAX: 405/000-0000
(b) If to the Company and/or Sellers:
TNT Crust, Inc.
0000 Xxxxx Xxxxxx
Xxxxx Xxx, Xxxxxxxxx 00000
Attention: Xx. Xxxxx XxXxxxx, President
FAX: 414/000-0000
and
Xxxxxx Xxxxxxx Capital Partners
1221 Avenue of the Americas
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xx. Xxxxx Xxxxxx
Fax: 212/000-0000
with a copy to:
Xxxxxxx & Xxxx, S.C.
000 Xxxx Xxxxxx
Xxxxx 000
Xxxxx Xxx, Xxxxxxxxx
Attention: Xxxxxxx Xxxxxxx, Esq.
FAX: 414/000-0000
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.
11.08 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.
11.09 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 terms hereof in addition
to any other remedy to which it may be entitled, at law or in
equity.
11.10 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.
11.11 Knowledge. For all purposes under this
Agreement, the terms "To the knowledge of Sellers," "Sellers'
knowledge," "To the knowledge of Sellers or the Company" or like
or similar phrases shall be deemed to include the knowledge, or
information or lack of knowledge or information which is known or
which should be or should have been known after reasonable
inquiry and investigation or unknown, as the case may be, by each
of the Shareholders, XxXxxxx, Xxxxx Xxxxxxxxxx, Xxxx Xxxxxxx, Xxx
Xxxxx, or any of them. For all purposes under this Agreement,
the terms "to the knowledge of Foodbrands," "Foodbrands'
knowledge," or like or similar phrases shall be deemed to include
the knowledge, or information or lack of knowledge or information
which is known or unknown, as the case may be, by each of R.
Xxxxxxxx Xxxxxxxx, Xxxxx X. Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxxx
McCanley or Xxxxxx X. Xxxxx, or any one of them.
11.12 Certain Definitions. As used in this Agreement:
"Agent" shall have the meaning set forth in Section
5.12.
"Applicable EBITDA Percentage" shall have the meaning
set forth in Section 2.02.
"Applicable Period" shall have the meaning set forth in
Section 2.02.
"Xxxxxx Xxxxxxxx" shall have the meaning set forth in
Section 2.04(a).
"Articles" shall have the meaning set forth in Section
3.10.
"Benefit Plans" shall have the meaning set forth in
Section 3.16(a).
"Cash" shall have the meaning set forth in Section
2.01(a).
"Closing Date Payment" shall have the meaning set forth
in Section 2.01(a).
"Closing Date Payment Certificate" shall have the
meaning set forth in Section 2.04(a).
"Code" shall have the meaning set forth in 3.08(b).
"Company Balance Sheet" shall have the meaning set
forth in Section 3.05.
"Coopers" shall have the meaning set forth in Section
2.01(b).
"Damages" shall have the meaning set forth in Section
9.03(a).
"Earnout Payment Certificate" shall have the meaning
set forth in Section 2.04(c).
"Earnout Payment Statements" shall have the meaning set
forth in Section 2.04(c).
"EBITDA" shall have the meaning set forth in Section
2.02.
"Election Notice" shall have the meaning set forth in
Section 2.04(d).
"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.
"Environmental Report" shall have the meaning set forth
in Section 5.07(a).
"ERISA" shall have the meaning set forth in Section
3.16(a).
"Facilities shall have the meaning set forth in Section
3.09 (b).
"FDA Act" shall have the meaning set forth in Section
3.11.
"First Option Payment" shall have the meaning set forth
in Section 2.02.
"Foodbrands's Agreements" shall have the meaning set
forth in Section 9.01.
"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).
"Former Lands" shall have the meaning set forth in
Section 3.21.
"GAAP" shall have the meaning set forth in Section
2.02.
"Governmental Agency" shall have the meaning set forth
in Section 3.04.
"Hazardous Materials" shall have the meaning set forth
in Section 3.21.
"Income Tax Claims" shall have the meaning set forth in
Section 9.04.
"Income Taxes" shall have the meaning set forth in
Section 2.01(b).
"Indebtedness" shall have the meaning set forth in
Section 2.01(a).
"Interim Balance Sheet" shall have the meaning set
forth in Section 3.05.
"Inventory" shall have the meaning set forth in Section
3.11.
"Lands" shall have the meaning set forth in Section
3.21.
"Liens" shall have the meaning set forth in Section
3.04.
"Litigation Matters" shall have the meaning set forth
in Section 3.14.
"Loan Agreement" shall have the meaning set forth in
Section 2.01(a).
"Multiemployer Plans" shall have the meaning set forth
in Section 3.16(a).
"Net Sales" shall have the meaning set forth in Section
2.02.
"Net Excess Cash" shall have the meaning set forth in
Section 2.01(a).
"Net Working Capital" shall have the meaning set forth
in Section 2.02.
"1933 Act" shall have the meaning set forth in Section
2.04(e).
"Option Cancellation Agreement" shall have the meaning
set forth in Section 2.02.
"Option Holders" shall have the meaning set forth in
Section 2.02.
"Option Holder Tax Refund Payment" shall have the
meaning set forth in Section 2.02.
"Option Price" shall have the meaning set forth in
Section 2.04(d).
"Option Shares" shall have the meaning set forth in
Section 2.04(d).
"Options" shall have the meaning set forth in Section
2.02.
"Payment Account" shall have the meaning set forth in
Section 2.04(a).
"PGBC" shall have the meaning set forth in Section
3.16(h).
"Pre-Closing Tax Year" shall have the meaning set forth
in Section 2.01(b).
"Proprietary Rights" shall have the meaning set forth
in Section 3.13.
"Remedial Plan" shall have the meaning set forth in
Section 5.07(a).
"Second Option Payment" shall have the meaning set
forth in Section 2.02.
"Sellers' Agreements" shall have the meaning set forth
in Section 9.01.
"Sellers' Claims" shall have the meaning set forth in
Section 9.03(b).
"Sellers' Cushion" shall have the meaning set forth in
Section 9.04(a).
"Sellers Group" shall have the meaning set forth in
Section 9.03(b).
"Sellers' Representatives" shall have the meaning set
forth in Section 5.08.
"Shareholder Earnout Payment" shall have the meaning
set forth in Section 2.02.
"Shareholder Tax Refund Payment" shall have the meaning
set forth in Section 2.01(a).
"Shares" shall have the meaning set forth in Recital B.
"Subordinated Notes" shall have the meaning set forth
in Section 2.02.
"Surviving Foodbrands's Representations" shall have the
meaning set forth in Section 9.01.
"Surviving Sellers' Representations" shall have the
meaning set forth in Section 9.01.
"Swap Payment" shall have the meaning set forth in
Section 2.02.
"Tax Refund Payment" shall have the meaning set forth
in Section 2.02.
"Tax Return" shall have the meaning set forth in
Section 3.08(h).
"Taxes" shall have the meaning set forth in Section
3.08(i).
"Taxing Authority" shall have the meaning set forth in
Section 3.08.
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
"THE COMPANY" TNT CRUST, INC.
By: /s/ Xxxxx X. XxXxxxx
Xxxxx X. XxXxxxx,
President
"SHAREHOLDERS"
/s/ Xxxxx XxXxxxx
Xxxxx XxXxxxx
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx Capital
Partners III, L.P.*
/s/ Xxxxxxxx X. Xxxxxx
MSCP III 892 Investors, L.P.*
/s/ Xxxxxxxx X. Xxxxxx
Xxxxxx Xxxxxxx Capital
Investors, L.P.*
BT INVESTMENT PARTNERS, INC.
By: /s/ Xxxxxx Xxxx MD
JSS MANAGEMENT COMPANY, LTD.
By: /s/ Xxxxx X. Xxxxxxxxxxx
XXXXX X. XXXXXXXXX, TRUSTEE OF
THE LIVING TRUST OF XXXXX X.
XXXXXXXXX DATED MAY 24, 1985,
OR SUCCESSOR TRUSTEE
By: /s/ Xxxxx X. Xxxxxxxxx
780 PARTNERS, A WISCONSIN
GENERAL PARTNERSHIP
By: /s/ Xxxxx Xxxxxxxxxxxx
*Xxxxxxxx X. Xxxxxx, Vice
President Xxxxxx Xxxxxxx
Capital Partners III, Inc.
General Partner of MSCP III,
L.P., its General Partner
