ASSET PURCHASE AGREEMENT
AMONG
HEINZ PET PRODUCTS COMPANY,
a Division of Star-Xxxx Foods, Inc.
AND THE OTHER SELLERS AS DEFINED THEREIN
X. X. XXXXX COMPANY
and
XXXXX XXXX PET FOOD HOLDINGS, INC.
XXXXX XXXX PET FOOD COMPANY, INC.
APRIL 17, 1996
TABLE OF CONTENTS
Article I - Definitions ........................................ 1
Definitions ........................................ 1
Article II - Sale and Purchase of Assets ........................ 6
2.1 Transfer of Assets ................................. 6
2.2 Assumption of Liabilities .......................... 10
2.3 Purchase Price and Other Consideration;
Payment ........................................... 12
2.4 Non-Cash Working Capital ........................... 12
2.5 Allocation of the Purchase Price ................... 14
2.6 Closing ............................................ 14
2.7 Nonassignable Contracts; Real Property Leases
and Permits ....................................... 17
Article III - Representations and Warranties of Sellers and
Heinz ............................................. 17
3.1 Incorporation; Qualification ....................... 18
3.2 Authority .......................................... 18
3.3 Execution and Binding Effect ....................... 18
3.4 No Contravention ................................... 18
3.5 Divisional Financial Statements .................... 19
3.6 Title to Acquired Assets;
Owned Real Property and Leased Real Property ...... 20
3.7 Contracts .......................................... 22
3.8 Employee Benefit Plans ............................. 22
3.9 Absence of Certain Changes ......................... 23
3.10 Litigation ......................................... 24
3.11 Compliance with Laws ............................... 24
3.12 Intellectual Property .............................. 25
3.13 Taxes .............................................. 26
3.14 Inventory .......................................... 26
3.15 Brokers and Finders ................................ 26
3.16 Insurance .......................................... 26
3.17 Labor Matters ...................................... 27
3.18 Sufficiency of Assets .............................. 27
3.19 Accounts Receivable ................................ 27
3.20 Suppliers and Customers ............................ 27
3.21 Products ........................................... 27
3.22 Environmental Matters .............................. 28
3.23 No Other Representatives or Warranties .............
Article IV - Representations and Warranties of
Purchaser and Holdings ............................ 28
4.1 Incorporation ...................................... 28
4.2 Authority .......................................... 28
4.3 Execution and Binding Effect ....................... 28
4.4 No Contravention ................................... 29
4.5 Litigation ......................................... 29
4.6 Brokers and Finders ................................ 29
Article V - Covenants of the Sellers ........................... 30
5.1 Access; Confidential Information ................... 30
5.2 Conduct of Business ................................ 30
5.3 Reasonable Best Efforts; Notifications ............. 31
5.4 Trade Secret License; UPC .......................... 31
5.5 Preservation of Records ............................ 31
5.6 Capital Projects ................................... 32
5.7 Receivables ........................................ 32
Article VI - Covenants of the Purchaser and Holdings ............ 32
6.1 Preservation of Records ............................ 32
6.2 Reasonable Best Efforts; Notifications ............. 32
6.3 Uncollected Receivables ............................
Article VII - Employee Matters ................................... 33
7.1 Transferred Employees .............................. 33
7.2 Employee Benefit Transition ........................ 34
7.3 COBRA .............................................. 34
7.4 Vacation ........................................... 35
7.5 Qualified Plans .................................... 35
7.6 Disability and Workers' Compensation ............... 35
7.7 No Third Party Beneficiaries ....................... 35
7.8 Documents and Forms ................................ 36
7.9 WARN Requirements .................................. 36
Article VIII - Conditions to Purchaser's and Holdings' Obligations . 37
8.1 Accuracy of Representations and Warranties;
Performance of Agreements; Certificates
and Opinion of Counsel ............................. 37
8.2 Consents ............................................ 37
8.3 No Injunction ....................................... 37
8.4 HSR Act ............................................. 38
8.5 Closing Deliveries .................................. 38
8.6 No Material Adverse Change .......................... 38
8.7 Title Insurance ..................................... 38
8.8 Survey and Additional Conditions Relating
to Real Property Matters ............................
8.9 Financing ........................................... 38
Article IX - Conditions to Sellers' Obligations .................. 39
9.1 Accuracy of Representations and Warranties;
Performance of Agreements; Certificates
and Opinion of Counsel ............................. 39
9.2 Consents ............................................ 39
9.3 No Injunction ....................................... 40
9.4 Promissory Note and Intercreditor Arrangements ...... 40
9.5 Closing Deliveries .................................. 40
Article X - Indemnification ..................................... 40
10.1 Survival of Representations and Warranties
and Obligations .................................... 40
10.2 Indemnification by Seller ........................... 41
10.3 Indemnification by Purchaser ........................ 41
10.4 Indemnification Procedures .......................... 42
10.5 Limits on Indemnification ........................... 43
10.6 Adjustment of Liability ............................. 43
10.7 Exclusive Remedy .................................... 43
Article XI - Miscellaneous ....................................... 44
11.1 Termination of Agreement ............................ 44
11.2 Expenses ............................................ 44
11.3 Waiver .............................................. 44
11.4 Consents ............................................ 44
11.5 Assignment; Parties in Interest ..................... 44
11.6 Further Assurances .................................. 44
11.7 Entire Agreement .................................... 44
11.8 Amendment ........................................... 44
11.9 Limitations on Rights of Third Parties .............. 44
11.10 Captions ............................................ 45
11.11 Counterparts ........................................ 45
11.12 Notices ............................................. 46
11.13 Governing Law ....................................... 48
11.14 Bulk Sales Law ...................................... 48
11.15 Transfer Taxes; HSR Fees and Title Insurance ........ 48
11.16 Public Announcements ................................ 48
11.17 Schedules ........................................... 49
11.18 Heinz Guaranty ...................................... 49
11.19 No Offsets .......................................... 50
Article XII - Certain Environmental Costs .........................
List of Exhibits
Exhibit A - Form of Promissory Note
Exhibit B - Limited Warranty Deed
Exhibit C - Assignment of Real Property Leases
Exhibit C-1 - Form of Lease to Replace BN Leases
Exhibit D - Assignment of Trademarks
Exhibit E - General Assignment
Exhibit F-1 - Xxxx of Sale (Xxxxx Xxxx)
Exhibit F-2 - Xxxx of Sale (Holdings)
Exhibit G - Kozy Kitten License Agreement
Exhibit H - Vets' License Agreement
Exhibit I - Co-Pack Agreement
Exhibit J-1 - Transition Services Agreement
Exhibit J-2 - Transition Storage and Handling Agreement
Exhibit K - Assumption of Assumed Liabilities
Exhibit L - Tuffy's License Agreement
Exhibit M - Opinion of Counsel - Heinz
Exhibit N - Opinion of Counsel - Purchaser
LIST OF SCHEDULES
Schedule Subject
1.0 Calculation of Non-Cash Working Capital
1.1 Kozy Kitten Products
1.2 Tuffy's Products
1.3 Vet's Dog Food Products
2.1(a) Owned Real Property
2.1(a-1) Real Property Leases
2.1(vi) Excluded Assets
2.3 Acquired Assets to be Transferred to Holdings
2.4(a) Exceptions in Connection with Closing Statement
2.5 Allocation of Purchase Price
2.7(b) Assumed Contracts, Real Property Leases and Permits Requiring
Consent
3.1 States Where Qualified to do Business as Foreign Corporation
3.4 No Contravention (Seller)
3.5 Divisional Financial Statements and Exceptions to Such
Statements
3.6(a) Exceptions to Title to Acquired Assets and to Working Order of
Physical Assets
3.6(b) Disclosures relating to Owned Real Property or Leased Real
Property
3.7(a) Contracts
3.7(b) Exceptions to Validity, Force and Effect of Material Contracts
or Events of Default
3.8 Employee Benefit Plans
3.9 Absence of Certain Changes
3.10 Litigation
3.11(a) Compliance with Laws
3.12(a) Intellectual Property - Lists of Trademarks, Patents and
Copyrights
3.12(a)(i) Common Law Trademark/Variety Designators
3.12(b) Registered Trademarks - Exceptions to Title
3.12(c) Patents and Copyrights - Exceptions to Title
3.12(d) Intellectual Property - Licenses; Claims
3.13 Taxes
3.14 Inventory
3.17 Labor Matters
3.18 Assets and Properties Necessary to Produce the Products of
Acquired Businesses
3.19 Exceptions to Collectibility of Net Receivables
3.20 Suppliers and Customers
3.22 Environmental Matters
4.4 No Contravention (Purchaser)
5.6 Capital Projects
7.1 Compensation and Benefits to be Provided
8.2 Consents
8.7 Form of Owners Affidavit
8.9 Debt Term Sheets
XII Certain Environmental Costs
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT, dated April 17, 1996, among HEINZ PET
PRODUCTS COMPANY, a Division of Star-Xxxx Foods, Inc., a California
corporation ("Star-Xxxx"), PROMARK INTERNATIONAL, INC., an Idaho corporation
("ProMark"), PERK FOODS CO., INCORPORATED, a Delaware corporation ("Perk")
(Star-Xxxx, ProMark and Perk are hereinafter referred to as the "Sellers"),
X. X. XXXXX COMPANY, a Pennsylvania corporation and the direct or indirect
parent of each of the Sellers ("Heinz"), as to Sections 3.1, 3.2, 3.3, 3.4,
3.10, 3.15, 3.22 and 11.18 only, XXXXX XXXX PET FOOD HOLDINGS, INC., a
Delaware corporation ("Holdings"), and XXXXX XXXX PET FOOD COMPANY, INC., a
Delaware corporation and a wholly-owned subsidiary of Holdings ("Purchaser").
WITNESSETH:
WHEREAS, Sellers desire to sell and assign to Purchaser and Holdings,
and Purchaser and Holdings desire to purchase from Sellers, certain pet food
businesses owned and operated by Sellers, pursuant to the terms and subject
to the conditions set forth in this Agreement;
WHEREAS, Star-Xxxx owns all of the assets used in such pet food
businesses, except ProMark is the owner of the "Kozy Kitten" and "Tuffy's"
trademarks in the United States and Perk is the owner of the "Vets'"
trademark; and
WHEREAS, the portion of such assets to be purchased by Holdings will be
limited to those assets described on Schedule 2.3 which immediately following
the closing of such purchase will be transferred by Holdings to Purchaser.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements set forth herein, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
DEFINITIONS
"Acquired Assets" shall mean the property and assets to be conveyed by
Sellers to Purchaser as specified in Section 2.1.
"Acquired Businesses" is a collective reference to the Tuffy's Pet Food
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Business, the Kozy Kitten Pet Food Business and the Vets' Dog Food Business.
"Affiliate" means a person, firm or corporation, which directly or
indirectly, alone or through one or more intermediaries, controls, or is
controlled by, or is under common control with a specified person, firm or
corporation.
"Agreement" shall mean this Agreement among Star-Xxxx, ProMark, Perk,
Heinz, Holdings and Purchaser as originally executed and delivered, as the
same may be amended or supplemented in accordance with the provisions hereof,
together with all Exhibits and Schedules made a part hereof by the references
thereto.
"Applicable Environmental Laws" shall mean all federal, state, local
and foreign statutes, regulations, codes, licenses, orders, judgments,
decrees or injunctions from any governmental entity or agency (a) relating to
the protection of the environment (including air, water, soil and natural
resources) or (b) the use, storage, handling, release or disposal of
Hazardous Substances, including but not limited to, the Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C.
xx.xx. 9601 et seq.; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. xx.xx. 6901 et seq.; the Federal Water Pollution Control Act, 33
U.S.C. xx.xx. 1251 et seq.; the Clean Air Act, 42 U.S.C. xx.xx. 7401 et seq.;
the Hazardous Materials Transportation Act, 49 U.S.C. xx.xx. 1471 et seq.;
the Toxic Substances Control Act, 15 U.S.C. xx.xx. 2601 through 2629; and the
Safe Drinking Water Act, 42 U.S.C. xx.xx. 300f through 300j; and any other
Federal environmental laws, rules and regulations; as have been amended from
time to time and in effect as of the date of this Agreement; and any similar
Minnesota statute or rules and regulations in effect as of the date of this
Agreement.
"Assumed Contracts" shall have the meaning specified in Section 2.1(k).
"Assumed Liabilities" shall have the meaning specified in Section 2.2(a).
"Base Amount" shall have the meaning specified in Section 2.4(c).
"Basket" shall have the meaning specified in Section 10.5.
"BN Leases" shall have the meaning specified in Section 2.6(b)(ii).
"Closing" and "Closing Date" shall have the respective meanings
specified in Section 2.6.
"Closing Statement" shall have the meaning specified in Section 2.4(a).
"Contract" shall mean any contract, agreement, commitment or other
binding arrangement (including purchase orders), whether oral or written, but
excluding Plans and Permits.
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"Co-Pack Agreement" shall have the meaning specified in Section
2.6(b)(xi).
"DOJ" shall mean the United States Department of Justice, including any
division thereof.
"Environmental Claim" shall mean any notice alleging (i) the Sellers'
non-compliance with, or failure to perform any duty under, any Applicable
Environment Laws or (ii) potential liability of the Sellers (including,
without limitation, potential liability for investigatory costs, cleanup
costs, natural resource damages, property damages, personal injuries or
penalties) arising out of, based on or resulting from the presence, or
release into the environment, of any Hazardous Substance at any location,
whether or not owned by the Sellers.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder.
"Ernst & Young" refers to Ernst & Young L.L.P.
"Excluded Assets" shall have the meaning specified in Section 2.1.
"FTC" shall mean the Federal Trade Commission.
"GAAP" shall mean generally accepted accounting principles in the
United States as set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as may be
approved by significant segments of the accounting profession in the United
States, which are applicable to the circumstances as of the date of
determination.
"Hazardous Substance" shall mean any substance, chemical, or waste that
is listed as hazardous, toxic, or dangerous under Applicable Environmental
Laws, and any petroleum or petroleum products.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act
of 1976, as amended, and the rules and regulations promulgated thereunder.
"Indemnitee" and "Indemnitor" shall have the respective meanings
specified in Section 10.4(a).
"Intellectual Property" shall have the meaning specified in Section
3.12(a).
"Inventory" shall mean raw materials, ingredients, work-in-process,
finished goods and packaging materials.
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"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"IRS" shall mean the United States Internal Revenue Service.
"Joint Use Trade Secrets" shall have the meaning specified in Section
2.1(I).
"Joint Use Orders" shall have the meaning specified in Section 3.7(a).
"Knowledge", "best of knowledge" or words of similar import shall mean
actual knowledge as of the date of this Agreement (unless otherwise specified
herein) after reasonable inquiry of the following officers with respect to
Sellers: X.X. Xxxxxxx, X. Xxxxxx, S.D. Xxxxxxx, X.X. Xxxxxxx, X.X. Xxxxxxxx,
X. Xxxxxxx, and X. Xxxxxx, or the officers of Purchaser or Holdings as
applicable, and shall not include any facts or circumstances of which any
such person has constructive knowledge.
"Kozy Kitten License Agreement" shall have the meaning specified in
Section 2.1(i).
"Kozy Kitten Pet Food Business" means, and shall be limited to, the
business of manufacturing, distributing, marketing and/or selling the dry and
semi-moist Kozy Kitten Products as conducted by Star-Xxxx and ProMark on the
Closing Date, specifically excluding, without limitation, the manufacture,
distribution, marketing and/or sale of canned pet food products.
"Kozy Kitten Products" shall mean the various products set forth in
Schedule 1.1.
"Leased Real Property" shall mean the land, buildings and improvements
covered by the Real Property Leases.
"Liens" shall have the meaning specified in Section 3.6(a).
"Losses" shall have the meaning specified in Section 10.4(a).
"Material Adverse Effect" shall have the meaning specified in Section 3.1.
"Material Contracts" shall have the meaning specified in Section 3.7.
"Net Receivables" shall mean the Receivables net of applicable reserves
for bad debts, net of reserves for performance xxxx-backs at historic rates,
less a 2% cash discount off list price on prior month's sales and net of
reserves for returns and allowances for the 60 day period prior to the
Closing based upon applying Star-Xxxx'x historic rate to net monthly sales.
5
"Non-Cash Working Capital" shall mean the sum of the Net Receivables,
the Inventory described in Section 2.1(c) and prepaid accounts of the
Acquired Businesses less certain of the accrued expenses of the Acquired
Businesses all as described in Schedule 1.0.
"Non-Transferred Employees" shall have the meaning specified in Section
7.1.
"Notice of Claim" shall have the meaning specified in Section 10.4(b).
"Owned Real Property" shall have the meaning specified in Section 2.1(a).
"Perham Plant" shall mean the pet food processing plant owned and
operated by Star-Xxxx in connection with the Acquired Businesses and located
in Perham, Minnesota on the Owned Real Property and on a portion of the
Leased Real Property leased from the Burlington Northern Railroad, but shall
not include any of the Excluded Assets located at such facility.
"Permit" shall mean any certificate of occupancy, license, permit, order
or approval of any governmental authority.
"Permitted Liens" shall have the meaning specified in Section 3.6(a).
"Physical Assets" shall have the meaning specified in Section 2.1(b).
"Plans" shall have the meaning specified in Section 3.8(a).
"Products" is a collective reference to the Kozy Kitten Products, the
Tuffy's Products and the Vets' Dog Food Products.
"Purchase Price" shall have the meaning specified in Section 2.3.
"Purchase Price Reduction" shall have the meaning specified in Section
2.4(c).
"Purchaser's Defined Contribution Plan" shall have the meaning specified
in Section 7.5.
"Purchaser Loss" shall have the meaning specified in Section 10.2.
"Real Property" shall mean, collectively, the Owned Real Property and
Leased Real Property.
"Real Property Leases" shall have the meaning specified in Section 2.1(a).
"Reasonable best efforts" shall mean best efforts, provided that in
using such best efforts such party shall not be obligated to incur any
substantial financial
6
obligations, waive any rights or incur any onerous obligations.
"Reasonable efforts" shall not require the party performing such
efforts to expend any funds other than the payment of de minimus
out-of-pocket expenses, waive any rights or incur any onerous obligations.
"Receivables" shall mean all accounts receivable of the Tuffy's Pet
Food Business (excluding sales in Canada) and the Vets' Dog Food Business as
of the Closing Date.
"Schedules" are the schedules furnished by Sellers to Purchaser
pursuant to this Agreement.
"Seller Loss" shall have the meaning specified in Section 10.3.
"Tax" or "Taxes" shall mean all federal, state, local or foreign
income, profits, gross receipts, capital, windfall profits, value added, ad
valorem, severance, property, production, sales, use, license, excise,
franchise, transfer, employment, payroll, withholding, social security,
disability, occupation and other similar taxes, duties and similar
governmental charges and assessments together with any interest, additions or
penalties with respect thereto and any interest in respect of such additions
or penalties.
"Tax Returns" shall mean all reports and returns required by law to be
filed with respect to Taxes.
"Third Party Claims" shall have the meaning specified in Section 10.4(c).
"Trademarks" shall have the meaning specified in Section 3.12(a)(i).
"Trade Secrets" shall have the meaning specified in Section 2.1(h).
"Transferred Employees" shall have the meaning specified in Section 7.1.
"Tuffy's License Agreement" shall have the meaning specified in Section
2.1(vii).
"Tuffy's Pet Food Business" means, and shall be limited to, the
business of manufacturing, distributing, marketing and/or selling the Tuffy's
Products in the United States and Canada as conducted by Star-Xxxx and
ProMark on the Closing Date.
"Tuffy's Products" shall mean the various products set forth in
Schedule 1.2.
"Vets' Dog Food Business" means, and shall be limited to, the business
of manufacturing, distributing, marketing and/or selling the maintenance dry
Vets' Dog
7
Food Products as conducted by Star-Xxxx and Perk on the Closing Date.
"Vets' Dog Food Products" shall mean the various products set forth in
Schedule 1.3.
"Vets' License Agreement" shall have the meaning specified in Section
2.1(j).
ARTICLE II
SALE AND PURCHASE OF ASSETS
SECTION 2.1. Transfer of Assets. On the terms and subject to the
conditions set forth in this Agreement, Star-Xxxx and, with respect to the
relevant trademarks, ProMark and Perk, shall sell, assign, transfer, convey
and deliver to Purchaser and Holdings, as applicable, and Purchaser and
Holdings, as applicable, shall purchase and accept from such parties, as
applicable, on the Closing Date, the following assets (the "Acquired Assets"):
(a) all right, title and interest of Star-Xxxx in and to the real
property owned by Star-Xxxx and described in Schedule 2.1(a) and the
buildings, structures, fixtures or other improvements located thereon
(collectively, the "Owned Real Property"), together with all right, title
and interest, if any, of Star-Xxxx in and to all appurtenances of any
nature whatsoever existing with respect to such Owned Real Property and,
subject to Section 2.7, all of the leasehold estates under and interests
in the leases, subleases, licenses and other agreements under which
Star-Xxxx uses or occupies or has the right to use or occupy any real
property described in Schedule 2.1(a-1) (collectively, the "Real Property
Leases");
(b) all right, title and interest of Star-Xxxx in and to all
machinery, equipment, motor vehicles, furniture, office supplies and other
tangible personal property, including MRO but excluding Inventory and the
property described in Schedule 2.1(vi) wherever located, located on the
Owned Real Property and the Leased Real Property and all such property at
any other locations that is related solely to the Acquired Businesses and
those items which are acquired by Star-Xxxx for use solely in the Acquired
Businesses between the date hereof and the Closing Date, but excluding any
such items disposed of or consumed by Star-Xxxx in the ordinary course of
business between the date hereof and the Closing Date (collectively, the
"Physical Assets");
(c) all right, title and interest of Sellers in and to all Inventory
owned by Sellers as of the Closing Date relating solely to the Acquired
Businesses plus all Inventory (other than finished goods) located on the
Owned Real Property or the Leased Real Property for use in the manufacture
of products under the Co-Pack Agreement referred to in Section 2.6(b)(xi);
(d) all right, title and interest of Sellers in and to the
Receivables;
8
(e) all right, title and interest of Sellers in and to all of the
books and records of Sellers relating solely to the Acquired Businesses,
including without limitation, files and invoices, equipment maintenance
data, accounting records, audit reports, Inventory records, bills of
material, sales and sales promotional data, advertising materials,
customer lists, cost and pricing information, supplier lists, business
plans, engineering and environmental studies, personnel records (to the
extent the transfer of such records is permitted by law), machine readable
data, technical data, software, specifications, work standards and
manufacturing, assembling and process information, operating manuals,
operating data and plans, engineering drawings, working drawings,
schematics and blueprints, but excluding (i) any such items of Sellers
which incorporate or reflect information relating to any other business of
Sellers or their Affiliates and (ii) all original books of account, tax
returns, tax records, accounting records, medical records and personnel
records of Sellers not located at the Perham Plant, provided that Sellers
(to the extent permitted by law) shall provide Purchaser with access to
make copies of any of such records referred to in subclause (i) or (ii)
above, excluding any competitively sensitive information, reasonably
required by Purchaser pursuant to Section 5.5;
(f) all right, title and interest of Sellers in and to all Permits
held by or on behalf of Sellers and relating solely to the Acquired
Businesses or the operations of the Acquired Businesses at Perham,
Minnesota that are transferrable;
(g) all right, title and interest of Star-Xxxx and ProMark in and to
all Intellectual Property throughout the world (definition excludes Trade
Secrets, which are addressed in Sections 2.1(h) and 5.4) relating solely
to the Acquired Businesses, including without limitation the "Tuffy" and
"Tuffy's" trademarks but excluding: (i) the variety designators/common law
trademarks set forth in Schedule 3.12(a)(i) outside the United States and
Canada; (ii) the designator "Dinner Rounds"; (iii) the "Kozy Kitten" and
"Vets'") trademarks, (which are subject to the license arrangements set
forth in Sections 2.1(i) and 2.1(j); (iv) the "Vet's Choice" and Vet's
Choice Select Balance trademarks; (v) the "Meaty Meal" trademark outside
the United States and Canada; and (vi) the "Champion Valley Farms"
tradename and any other tradenames other than those listed on Schedule
3.12(a);
(h) all right, title and interest of Star-Xxxx in and to all trade
secrets, know-how, manufacturing processes, recipes, formulas, process
sheets, mixing instructions, specifications, drawings, technical
information and similar intangible property (collectively, "Trade
Secrets") owned by Star-Xxxx and relating solely to the Acquired
Businesses;
(i) an exclusive license from ProMark to use the "Kozy Kitten"
trademark, all word combinations incorporating the trademark "Kozy Kitten"
and trade dress and label designs associated with the "Kozy Kitten"
trademark on and in connection with the marketing, sale and distribution
of dry and semi-moist pet food products worldwide
9
for a period of ten years with an irrevocable option to purchase such
trademark in the form referenced in Section 2.6(b)(viii) (the "Kozy Kitten
License Agreement"); provided that concurrent with the exercise of such
option ProMark shall receive an exclusive license from Purchaser to use
the "Kozy Kitten" trademark, all word combinations incorporating the
trademark "Kozy Kitten" and trade dress and label designs associated with
the "Kozy Kitten" trademark on and in connection with the marketing, sale
and distribution of canned pet food products in the form set forth in
Exhibit A to the Kozy Kitten License Agreement;
(j) a nonexclusive royalty-free license from Perk to use the "Vets'"
trademark in connection with the marketing, sale and distribution of
maintenance dry dog food products for a term of three years, plus a period
to exhaust inventory not to exceed 90 days, in the form referenced in
Section 2.6(b)(ix) (the "Vets' License Agreement");
(k) subject to Section 2.7, all of the rights and interests of
Sellers under the Contracts listed in Schedule 3.7(a) which are not
identified as an Excluded Asset or a Joint Use Order, plus any other
Contracts relating primarily to the Acquired Businesses or the Acquired
Assets not required to be disclosed in Schedule 3.7(a), including any such
Contracts that have been entered into by Sellers between the date hereof
and the Closing Date in the ordinary course of business without violating
the provisions of this Agreement (collectively the "Assumed Contracts");
(l) a license to use certain Trade Secrets shared by the Acquired
Businesses and other businesses of Star-Xxxx, but specifically excluding
all Trade Secrets used for the production of or relating to Sellers'
Dinner Rounds product (the "Joint Use Trade Secrets") as is set forth in
Section 5.4 hereof;
(m) the ability and non-exclusive right to use the designator Dinner
Rounds in the United States and Canada without objection by Sellers or any
Seller taking any steps to prevent any such ability or right; and
(n) the goodwill of the Acquired Businesses;
provided, however, the Acquired Assets shall not include and Sellers will
retain and neither Holdings nor Purchaser will acquire the following assets
and property (the "Excluded Assets"):
(l) all assets and property of Sellers not specifically included in the
definition of Acquired Assets;
(ii) cash, cash equivalents and bank deposits;
(iii) all accounts, notes and advances receivable of the Kozy Kitten
Pet Food Business and Tuffy's Pet Food Business in Canada;
10
(iv) Tax refunds, Tax, insurance and other claims or rights to
recoveries and similar benefits of the Acquired Businesses
and any prepaid items with respect to the Acquired
Businesses except as prorated in accordance with Section
2.6(e);
(v) rights accruing to Sellers under this Agreement;
(vi) the assets described in Schedule 2.1(v);
(vii) subject to Sections 2.1(i), 2.1(j) and 2.1(m) the rights
excluded pursuant to Section 2.1(g)(i) through Section
2.1(g)(vi) and all word combinations incorporating the
trademarks related thereto; and
(viii) any and all assets used in or related to the manufacture,
distribution, marketing and/or sale of canned pet food
products.
SECTION 2.2. Assumption of Liabilities.
(a) Subject to Section 2.2(b), in partial consideration of the transfer
to Purchaser of the Acquired Assets, Purchaser, at the Closing, shall assume,
and thereafter pay, fulfill, perform or otherwise discharge when due, all of
the following liabilities and obligations of the Sellers relating to or
attributable to the Acquired Businesses or the Acquired Assets as of the
Closing Date, whether actual or contingent, liquidated or unliquidated, known
or unknown, and no others (collectively, the "Assumed Liabilities"):
(i) all liabilities and obligations relating to the period on and
after the Closing Date under the Assumed Contracts and the Real
Property Leases which are validly assigned to Purchaser whether or
not there are any written contracts or agreements with respect
thereto;
(ii) all liabilities and obligations relating to the period on and
after the Closing Date under the Permits held by or on behalf of
Sellers, which are validly assigned to Purchaser;
(iii) all liabilities and obligations relating to the period on and
after the Closing Date under or arising from the Permitted Liens;
(iv) those certain liabilities and obligations to or for the benefit of
the Transferred Employees provided in Article VII (including, to
the extent deducted in computing Non-Cash Working Capital, accrued
vacation);
(v) in respect of sales of Products on and after the Closing Date, all
obligations and liabilities with respect to billbacks, promotions,
coupons
11
or other marketing programs or initiatives instituted by Sellers
that are in effect at Closing (collectively, "Promotions");
(vi) subject to Purchaser's rights under Article X with respect to
Section 3.14, all refunds, returns, replacement, deductions,
warranty claims, obligations and liabilities (A) relating to
Products sold or manufactured by the Acquired Businesses prior to
the Closing, including without limitation, any such liabilities or
obligations deducted in computing Non-Cash Working Capital or (B)
which arise from Inventory held on the Closing Date;
(vii) subject to Purchaser's rights under Article X with respect to
Section 3.14, any liability or obligation relating to, resulting
from or arising out of claims for personal injury of any kind or
death or property damage related to the use of or exposure to
Products manufactured by the Acquired Businesses prior to the
Closing Date, including without limitation, any such liabilities
or obligations deducted in computing Non-Cash Working Capital;
(viii) subject to Purchaser's rights under Article X with respect to
Section 3.11 and Section 3.22, any liability or obligation
relating to, resulting from or arising out of claims (A) that the
Acquired Businesses were operated prior to the Closing in
violation of, or that the use, operation or condition of any of
the Acquired Assets failed to comply with, any statute, law, rule,
regulation, ordinance, decree or order applicable thereto or (B)
that are within the scope of the representations and warranties
set forth in Section 3.22; and
(ix) the accrued expenses described in Schedule 1.0 to the extent such
expenses are included in the computation of Non-Cash Working
Capital.
(b) Notwithstanding anything to the contrary in Section 2.2(a), neither
Purchaser nor Holdings shall assume, or in any way be liable or responsible
for, any of the following liabilities and obligations of Sellers, whether
actual or contingent, liquidated or unliquidated, known or unknown (the
"Excluded Liabilities"):
(i) any profit or loss of Sellers derived from the sale provided for
by this Agreement;
(ii) any liabilities or obligations of Sellers other than those
relating to the Acquired Businesses;
(iii) any liability or obligation under Contracts or Permits of Sellers
or Real Property Leases that are not validly assigned to
Purchaser;
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(iv) except to the extent deducted in computing Non-Cash Working
Capital as contemplated by Sections 2.2(a) (iv), (vi) and (vii),
any accounts payable or accrued expenses of, or relating to, the
Acquired Businesses for any period prior to the Closing Date;
(v) any intercompany debt or other liability or obligation between the
Acquired Businesses and any of the Sellers or any Affiliate of
Sellers;
(vi) subject to Article VII, any liability or obligation of Star-Xxxx
to Transferred Employees arising prior to the Closing Date which
is not deducted in computing Non-Cash Working Capital;
(vii) in respect of sales of Products prior to and including the Closing
Date, all obligations and liabilities with respect to Promotions
instituted by Sellers not deducted in computing Non-Cash Working
Capital;
(viii) except as provided in Sections 2.6(e) and 11.15, any liability of
Sellers or Heinz (including any obligation to contribute to the
payment of a Tax determined on a consolidated, combined or unitary
tax basis with respect to a group of persons that includes or
included Sellers or Heinz), for any Taxes, whether incurred,
accrued or assessed prior to, on, or after the Closing Date;
(ix) any liability of Sellers arising out of activities undertaken by
Sellers or incurred by Sellers subsequent to the Closing Date;
(x) all liabilities and obligations relating to the Excluded Assets;
(xi) all liability with respect to any of the matters set forth on
Schedule 3.10;
(xii) any liability pertaining to an event which occurred on or before
the Closing Date to the extent of payments actually received by
Sellers from Seller's insurance net of costs and expenses incurred
by Sellers in connection therewith; or
(xiii) except as provided in Section 2.6(e) and 11.15, any tax liability
of Sellers or their Affiliates whether or not relating to the use
or ownership of the Acquired Assets or the operation of the
Acquired Businesses for periods ending on or prior to the Closing
Date.
(c) After the Closing, Purchaser shall be solely responsible for (i)
except as is otherwise set forth in Article VII, any liability or obligation
to Transferred Employees arising from Purchaser's hiring or termination of
such employees and (ii) any other liability or obligation arising from its or
Holding's use or operation of the Acquired Businesses or the Acquired Assets.
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SECTION 2.3. Purchase Price and Other Consideration; Payment. The
aggregate purchase price (the "Purchase Price") for the Acquired Assets is
fifty-two million five hundred thousand dollars ($52,500,000) subject to
possible adjustment after the Closing as provided in Section 2.4 and Section
2.6(e), and the execution and delivery of assumption agreement pursuant to
which Purchaser shall assume the Assumed Liabilities.
(a) On the Closing Date, Holdings shall acquire the tangible
personal property shown on Schedule 2.3 included among the Acquired
Assets from Star-Xxxx in consideration of the payment of $10,990,000
as follows: (i) delivery to Star-Xxxx of a promissory note in the
amount of $10,500,000 substantially in the form attached hereto as
Exhibit A (the "Promissory Note") and (ii) $490,000 by wire transfer
of immediately available U.S. funds to an account designated in
writing by Star-Xxxx to Holdings not less than three business days
prior to the Closing.
(b) On the Closing Date, Purchaser shall acquire all the
Acquired Assets, other than those Acquired Assets shown on Schedule
2.3, in consideration of the payment of $41,510,000 to the Sellers
as follows: (i) $37,010,000 to Star-Xxxx by wire transfer of
immediately available U.S. funds to an account designated in writing
by Star-Xxxx to Purchaser not less than three business days prior to
the Closing and (ii) $4,500,000 to ProMark by wire transfer of
immediately available U.S. funds to an account designated in writing
by ProMark to Purchaser not less than three business days prior to
the Closing.
SECTION 2.4. Non-Cash Working Capital.
(a) Within ninety (90) days after the Closing Date, Star-Xxxx shall
deliver to Purchaser a statement reviewed by Star-Xxxx'x accountants,
Xxxxxx'x & Xxxxxxx L.L.P. ("C&L"), showing the calculation of Non-Cash
Working Capital as of the Closing Date (the "Closing Statement"). The
Closing Statement shall be prepared in accordance with GAAP applied on the
same basis and in accordance with the same practice standards and
procedures utilized by Star-Xxxx for prior accounting periods except that
the value of all grain in the Inventory shall be valued at the average
actual cost for the month of April 1996 rather than standard costs and
except as set forth in Schedule 2.4(a). The procedures and methods used to
prepare the Closing Statement and the scope and conduct of the review of
the Closing Statement shall be mutually satisfactory to C & L and
Purchaser's accountants, KPMG Peat Marwick L.L.P. ("KPMG"). KPMG may
perform such procedures as it deems necessary in connection with
Star-Xxxx'x preparation of the Closing Statement and C & L's review of the
Closing Statement including (i) observing the taking of the physical count
of the Inventory included in the computation of Non-Cash Working Capital
and (ii) a review of all work papers and procedures used to prepare the
Closing Statement. The fees charged by C & L in connection with the review
of the Closing Statement shall be paid by Star-Xxxx. All of
14
KPMG's fees shall be paid by Purchaser. Each party shall bear its own
expenses incurred in connection with the above procedures.
(b) Unless Purchaser, within thirty (30) days after delivery to
Purchaser of the Closing Statement, notifies Star-Xxxx in writing that it
objects to the Closing Statement, and specifies the basis for such
objection, such Closing Statement shall become final, binding and
conclusive upon the parties for purposes of this Agreement. If Purchaser
and Star-Xxxx are unable to resolve any objections to the Closing
Statement within ten (10) days after any such notification has been given,
the dispute shall be referred to Ernst & Young. Ernst & Young will make a
determination as to each of the items in dispute, which determination
shall be final, conclusive and binding upon each of the parties hereto.
Purchaser and Star-Xxxx shall cooperate with each other and with each
other's authorized representatives in order to resolve any and all matters
in dispute under this Section 2.4(b) as soon as practicable and shall
share equally the fees and expenses of Ernst & Young.
(c) If the Non-Cash Working Capital as shown on the Closing
Statement is less than $2,710,000 (the "Base Amount"), then the Purchase
Price shall be decreased dollar for dollar by the difference (the
"Purchase Price Reduction") between the Base Amount and the Non-Cash
Working Capital as shown on the Closing Statement. Star-Xxxx shall remit
the amount of such Purchase Price Reduction to Purchaser, with interest
from the Closing Date to the date of payment, within five (5) days after
delivery to Purchaser of the Closing Statement as provided in Section
2.4(b) above; provided, however, that acceptance by Purchaser of such
payment shall not constitute a waiver of Purchaser's right to object to
the Closing Statement during the thirty (30) day period following its
delivery. If Purchaser does raise an objection and if resolution of such
objection results in a further Purchase Price Reduction, payment of such
additional amount, with interest, from the Closing Date to the date of
payment, shall be made to Purchaser within five (5) days following final
resolution of the objection.
(d) If the Non-Cash Working Capital as shown on the Closing
Statement exceeds the Base Amount, Purchaser shall no later than five (5)
days after the expiration of the thirty (30) day period referred to above,
remit to Star-Xxxx the amount of such excess, plus interest thereon from
the Closing Date to the date of payment. If Purchaser contests the Closing
Statement, the amount not in dispute shall be remitted to Star-Xxxx with
its notice of objection, plus interest thereon from the Closing to the
date of payment.
(e) Any amounts being contested shall be payable within five (5)
days of the date such amount is determined to be undisputed or resolved,
with interest from the Closing Date to the date of payment, even if other
amounts continue to be disputed and unresolved. Interest for purposes of
this Section 2.4 shall be at the rate of 8% per annum. All amounts payable
under this Section 2.4 shall be paid by wire transfer of immediately
available funds.
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SECTION 2.5. Allocation of the Purchase Price. Of the $4,500,000
payable to ProMark at Closing, $2,300,000 shall be allocated to the purchase
of the "Tuffy's" trademark and $2,200,000 shall be paid as a licensing fee
under the Kozy Kitten License Agreement. The balance of the Purchase Price
and the Assumed Liabilities shall be allocated among the Acquired Assets in
accordance with Schedule 2.5 and the Sellers, Holdings and Purchaser shall
make all appropriate tax filings on a basis consistent with such allocation.
SECTION 2.6. Closing.
(a) The sale and purchase of the Acquired Assets contemplated hereby
(the "Closing") shall take place at 10 a.m. on April 29, 1996 at the
offices of Xxxxx & Xxxxxxx, P.C., Pittsburgh, Pennsylvania, or as soon
thereafter as practicable, but not later than April 30,1996. The day on
which the Closing actually takes place is referred to herein as the
"Closing Date".
The Closing shall be deemed to have occurred on the opening of business
on the Closing Date.
(b) At the Closing, the appropriate Seller(s) shall deliver to
Purchaser or Holdings, as applicable:
(i) a duly executed limited warranty deed to convey the Owned Real
Property to Purchaser in the form attached hereto as Exhibit
B, subject only to the Permitted Liens referenced in Section
3.6;
(ii) duly executed assignments transferring the leasehold estates
under and interests of Star-Xxxx in the Real Property Leases
in the form attached hereto as Exhibit C, subject to the
Permitted Liens referenced in Section 3.6, together with any
consents, with respect to certain of the Real Property Leases
to the extent such consents, are received prior to Closing;
provided however, that in the case of the five Real Property
Leases between Star-Xxxx (or its predecessors in interest) and
Burlington Northern Railroad (the "BN Leases") such
assignments shall not be required and in lieu thereof
Purchaser shall apply for and enter into a new lease replacing
and superseding all five of such leases in substantially the
form attached hereto as Exhibit C-1, whereupon the existing BN
Leases shall be terminated;
(iii) duly executed assignments of all trademarks that are included
in the Acquired Assets in the form attached hereto as Exhibit
D;
(iv) a duly executed assignment of all rights and interests under
Contracts, Permits, Trade Secrets, the Receivables and the
items of Intellectual Property (other than the Trademarks)
that are included in the Acquired
16
Assets, in the form attached hereto as Exhibit E;
(v) duly executed bills of sale transferring to Purchaser and
Holdings all of the remaining Acquired Assets not transferred
pursuant to the instruments and documents referred to above in
the forms attached hereto as Exhibits Fl and F2, respectively;
(vi) the officer's certificate, the opinion of counsel and the
documents referred to in Sections 8.1(c) and 8.1(d);
(vii) subject to Section 2.7, all authorizations, waivers, consents
and approvals necessary to transfer to Purchaser the Assumed
Contracts and the Permits relating solely to the Acquired
Businesses;
(viii) a duly executed Kozy Kitten License Agreement in the form
attached hereto as Exhibit G;
(ix) a duly executed Vets' License Agreement in the form attached
hereto as Exhibit H;
(x) a duly executed counterpart of the Tuffy's License Agreement;
(xi) a duly executed co-pack agreement in the form attached hereto
as Exhibit I (the "Co-Pack Agreement") pursuant to which
Purchaser shall manufacture for Star-Xxxx at the Xxxxxx Plant
certain pet food products;
(xii) with respect to the Owned Real Property (A) a Certificate of
Real Estate Value, (B) a Well Certificate (or a sealed well
certificate) in the form required by Minn. Stat. 101 I.235 or
Minn. Stat. 101 I.325 and (C) an affidavit with respect to
storage tanks pursuant to Minn. Stat. 116.48;
(xiii) a duly executed Transition Services Agreement, and Transition
Storage and Handling Agreement in the forms attached hereto as
Exhibits J-1 and J-2;
(xiv) a duly executed agreement between ProMark and Star-Xxxx
pursuant to which Star-Xxxx has expressly waived any and all
rights to the Kozy Kitten trademark on dry and/or semi-moist
pet food products, and, upon exercise of the option provided
in the Kozy Kitten License Agreement, all rights to the Kozy
Kitten trademark with respect to any product, the Tuffy and
Tuffy's trademarks and the Meaty Meals trademark in the United
States and amended the same to provide that these marks are no
longer included in the intellectual property
17
covered by the License Agreement, dated June 20,1995 between
ProMark and Star-Xxxx; and
(xv) a duly executed termination agreement between Star-Xxxx and
Star-Xxxx Canada pursuant to which any rights of Star-Xxxx
Canada under the registered user agreements relating to
Canadian Trademark Registration Nos. 205,343 and 183,128 are
terminated.
(c) At the Closing, Purchaser shall deliver to the appropriate
Seller(s):
(i) the cash portion of the Purchase Price referred to in Section
2.3(b) in the amount ($41,510,000) in the manner set forth
therein;
(ii) Intentionally Omitted.
(iii) a duly executed assumption of the Assumed Liabilities in the
form attached hereto as Exhibit K;
(iv) the officer's certificate, the opinion of counsel and the
documents referred to in Sections 9.1(c) and 9.1(d);
(v) a duly executed Tuffy's License Agreement in the forms
attached hereto as Exhibit L;
(vi) duly executed counterparts of the Kozy Kitten License
Agreement and the Vets' License Agreement;
(vii) a duly executed counterpart of the Co-Pack Agreement; and
(viii) duly executed counterparts of the Transition Services
Agreement and the Transition Storage and Handling Agreement.
(d) At the Closing, Holdings shall deliver to the appropriate
Seller(s):
(i) $490,000 of the Purchase Price referred to in Section
2.3(a) in the manner set forth therein;
(ii) the Promissory Note; and
(iii) the officer's certificate, the opinion of counsel and
the documents referred to in Sections 9.1(c) and 9.1(d).
18
(e) All items listed below relating to the Acquired Businesses and
the Acquired Assets which are not reflected in the computation of Non-Cash
Working Capital will be prorated as of the Closing Date, with Sellers
liable to the extent such items relate to any time period up to and
including the day prior to the Closing Date, and Purchase liable to the
extent such items relate to the Closing Date and all periods subsequent
thereto other than any income tax liability arising as a result of the
sale of the Acquired Assets: personal property, real estate, occupancy and
water taxes and installments of special assessments, if any, which are due
and payable in the year of Closing on or with respect to the Acquired
Businesses or the Acquired Assets, it being agreed that Purchaser shall be
fully responsible for all such taxes and assessments which shall become
due and payable in all subsequent years, regardless of the date of levy of
such taxes or assessments; rents, taxes and other items due to Sellers or
payable by Sellers under any Contract or Real Property Lease to be
assigned to or assumed by Purchaser hereunder; the amount of any license
or registration fees with respect to any licenses or registrations which
are being assigned or transferred hereunder; the amount of sewer rents and
charges for water, telephone, electricity and other utilities and fuel;
and any other items which are normally prorated in connection with similar
transactions. Sellers' computation of such proration shall be delivered to
Purchaser simultaneously with the delivery of the Closing Statement
pursuant to Section 2.4 (a). Sellers agree to furnish Purchaser with such
documents and other records as Purchaser reasonably requests in order to
confirm all adjustment and proration calculations made pursuant to this
Section 2.6(e). The net aggregate amount of such prorations shall be
treated as an adjustment to the Purchase Price paid by Purchaser to
Sellers on the Closing Date pursuant to Section 2.3. If current payments
with respect to items to be prorated pursuant to this Section 2.6(e) are
not ascertainable within 90 days following the Closing Date, such payments
shall be prorated on the basis of the most recently ascertainable xxxx
therefor and shall be reprorated between Sellers and Purchaser when the
current bills with respect to such items have been issued and a cash
settlement shall be made promptly thereafter on an item by item basis.
SECTION 2.7. Nonassignable Contracts, Real Property Leases and Permits.
(a) To the extent that any Assumed Contract, Real Property Lease or
Permit to be assigned hereunder is not capable of being assigned or
transferred without the consent or waiver of the other party thereto or
any third party (including a government or governmental unit), or if such
assignment or transfer or attempted assignment or transfer would
constitute a breach thereof or a violation of any law, decree, order,
regulation or other governmental edict, this Agreement shall not
constitute an assignment or transfer thereof, or an attempted assignment
or transfer of any such Assumed Contract, Real Property Lease or Permit
until such time as such written consent or waiver has been obtained.
(b) Anything in this Agreement to the contrary notwithstanding,
Sellers are not obligated to transfer to Purchaser any of their rights and
obligations in and to any of
19
the Assumed Contracts, Real Property Leases or Permits to be assigned
hereunder without first having obtained all necessary consents and
waivers. Prior to the Closing Date, Sellers shall use their reasonable
efforts to obtain consents and waivers to allow the assignment of those
Assumed Contracts, Real Property Leases and Permits listed in Schedule
2.7(b). For a reasonable period of time after the Closing Date, not to
exceed one hundred twenty (120) days, Sellers shall cooperate with
Purchaser to assist Purchaser in obtaining any such consents and waivers
not obtained as of the Closing and upon receipt thereof, the applicable
Assumed Contract, Real Property Lease or Permit shall be assigned or
transferred to Purchaser by appropriate instruments of transfer.
(c) To the extent that consents or waivers are not obtained by
Purchaser, Sellers and Purchaser shall cooperate with each other to
establish, to the extent practicable, arrangements that are reasonable and
lawful as to both Sellers and Purchaser, and which result in the benefits
and obligations under such Assumed Contracts, Real Property Leases and
Permits being apportioned in a manner that is in accordance with the
purpose and intention of this Agreement as if such consents or waivers had
been obtained.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS AND XXXXX
Xxxxxxx and Heinz (with respect to Sections 3.1, 3.2, 3.3, 3.4, 3.10,
3.15 and 3.22), as applicable, represent and warrant to Purchaser as follows:
SECTION 3.1. Incorporation; Qualification. Star-Xxxx, ProMark, Perk and
Heinz are corporations duly organized, validly existing and in good standing
under the laws of the State of California, the State of Idaho, the State of
Delaware and the Commonwealth of Pennsylvania, respectively. Each Seller has
the corporate power and authority to carry on the Acquired Businesses as
presently conducted by it and to own, operate and lease the Acquired Assets
that it owns, operates or leases. Heinz has the corporate power and authority
to carry on its business as presently conducted and to own or lease and to
operate the properties and assets it owns or leases. Each of the Sellers is
duly qualified to do business and is in good standing in each jurisdiction in
which its conduct of the Acquired Businesses or its ownership or operation of
the Acquired Assets requires such qualification, except where the failure to
be so qualified or in good standing would not be reasonably likely to have a
material adverse effect on the Acquired Businesses or the Acquired Assets,
each taken as a whole ("Material Adverse Effect"). The jurisdictions in which
each of Sellers is qualified to do business as a foreign corporation with
respect to Acquired Businesses are set forth in Schedule 3.1 hereto.
SECTION 3.2. Authority. Each of the Sellers and Heinz has all requisite
power and authority to execute, deliver and perform its obligations under
this Agreement and to
20
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by the Board of Directors of each of the
Sellers and Heinz and the Special Committee appointed by the Board of
Directors of Heinz, and no other corporate act or proceeding on the part of
the Sellers or Heinz is necessary to approve the execution and delivery of
this Agreement or the consummation of the transactions contemplated hereby.
SECTION 3.3. Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by each of the Sellers and Heinz,
constitutes the legal, valid and binding obligation of each of them and will
be enforceable against each of them in accordance with its terms, except as
such enforceability may be limited by bankruptcy, moratorium, insolvency,
reorganization, liquidation or other laws relating to or affecting creditors'
rights or by equitable principles.
SECTION 3.4. No Contravention. Except as set forth in Schedule 3.4, the
execution, delivery and performance of this Agreement by Sellers and Heinz
and the consummation by Sellers and Heinz of the transactions contemplated
hereby and the fulfillment of and compliance with the terms and conditions
hereof, do not and will not:
(a) conflict with or violate any provisions of such parties'
Articles of Incorporation, Certificate of Incorporation or By-Laws as
applicable;
(b) require any consent, approval or notice under or conflict with,
result in a termination or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or accelerate or permit
the acceleration of any performance required by, any Contract, Real
Property Lease, Permit or Plan to which any of the Sellers or Heinz is a
party or by which any of the Sellers or Heinz or any of the Acquired
Assets is bound or subject;
(c) violate any law, statute or ordinance or any rule, regulation,
order, writ, injunction or decree of any court or of any public,
governmental or regulatory body, agency or authority applicable to any of
the Sellers or Heinz in respect of the Acquired Businesses, or by which
any of the Acquired Assets may be bound or subject; or
(d) require any filing, declaration or registration with, or permit,
consent or approval of, or the giving of notice to, any public,
governmental or regulatory body, agency or authority; excluding from the
foregoing Sections 3.4(a) through (d):
(i) any consents or waivers required in connection with the
Assumed Contracts, the Real Property Leases, Plans or Permits
which in each case are not material,
(ii) any local filings or recordings that may be necessary to
transfer any of the Acquired Assets, and
21
(iii) the filing required under the HSR Act and expiration of the
applicable waiting periods under the HSR Act.
SECTION 3.5. Divisional Financial Statements. Star-Xxxx has delivered
to Purchaser unaudited divisional statements of income and results of
operations for the Acquired Businesses, for the fiscal years of Star-Xxxx
ended 1992 through 1995 (the "Divisional Annual Financial Statements"), and
for the eight month period ended December 23, 1995 (the "Divisional Interim
Financials") The Divisional Annual Financials and the Divisional Interim
Financials, are referred to herein collectively as the "Divisional Financial
Statements". The Divisional Financial Statements were reviewed by C & L and
are attached to and made a part of Schedule 3.5. Except as set forth in
Schedule 3.5 and in the last four sentences of this Section 3.5, The
Divisional Financial Statements were prepared in all material respects in
accordance with the books, records and accounts of Sellers and on the same
basis, and consistent with the principles utilized by Star-Xxxx in the
preparation of such divisional accounts for inclusion in Star-Xxxx'x
consolidated financial statements for such periods and present fairly the
financial information purported to be reflected thereby. Except as set forth
in Schedule 3.5, the entries for net sales, costs to arrive at gross return,
marketing expense, and fixed expenses were determined in accordance with GAAP
consistently applied throughout the periods covered thereby. The books,
records and accounts relating to the Acquired Businesses were accurate and
complete in all material respects, except for specific corporate allocations
that were excluded (general and administrative, trade bad debts, swells,
Tuffy's brokerage, depreciation of the Xxxxxx Plant allocated to the Tuffy's
Pet Food Business) and the exclusion of premiums related to the closure of
Star-Xxxx'x Biloxi, Mississippi plant and/or acquisition of The Quaker Oats
pet food business.
Each of the Divisional Financial Statements were based on various
assumptions regarding the basis of presentation and include certain allocated
charges and credits, all of which are more fully set forth in such financial
statements. Such financial statements are qualified to the extent that the
Acquired Businesses were not operated as separate businesses. The allocated
charges and credits are not necessarily indicative of the amounts which would
have been incurred as a result of arms-length transactions.
SECTION 3.6. Title to Acquired Assets; Owned Real Property and Leased
Real Property.
(a) Star-Xxxx has fee simple title to the Owned Real Property, free
and clear of any liens, charges, pledges, mortgages, deeds of trust,
claims, security interests or other encumbrances (collectively, "Liens")
created, suffered or agreed to by Star-Xxxx other than Permitted Liens and
Star-Xxxx has (i) valid leasehold interests as to the Leased Real
Property; and (ii) good and valid title to all of the other tangible
assets and properties included in the Acquired Assets, other than the
Owned Real Property, free and clear of any Liens, other than in each case
Permitted Liens. For purposes of this Agreement, "Permitted Liens" shall
mean (i) liens securing taxes, assessments, governmental charges or
levies, or the claims of contractors, materialmen, carriers, landlords,
warehousemen, workmen, repairmen, customers, employees and similar
22
persons, which are not yet due and payable or are being contested in good
faith, so long as such contest does not involve any substantial danger of
the sale, forfeiture or loss of such properties or assets which are
material to the Acquired Businesses taken as a whole, (ii) Liens and
imperfections of title which are not reasonably likely to, singly or in
the aggregate, have a Material Adverse Effect or materially interfere with
the use, occupancy or operation of the Xxxxxx Plant as currently used,
occupied or operated, (iii) those Liens and imperfections of title which
are described in Schedule 3.6(a), (iv) with respect to the other tangible
assets and properties referred to above, those items disposed of after the
date hereof in the ordinary course of business, (v) with respect to the
Leased Real Property, all underlying mortgages, deeds of trust, leases,
grants of term or other estates in or interests affecting the landlord's
or fee owner's interest in the applicable portion of such property which
are superior to the interests of Star-Xxxx as tenant under the applicable
Real Property Lease, and any imperfections of title which are not
reasonably likely to, singly or in the aggregate, materially interfere
with the use, occupancy, or operation of the applicable portion of such
property as currently used, occupied or operated, and (vi) with respect to
the Owned Real Property and the Leased Real Property all applicable
building and zoning ordinances, any Liens or imperfections of title which
are matters of record and any encroachments or other facts or conditions
that would be revealed by an accurate survey or careful physical
inspection thereof. Except as set forth in Schedule 3.6, all major and
material Physical Assets are in working order as of the date hereof and
are adequate for the uses to which they are being put in the ordinary
course of the Acquired Businesses, other than items currently under or
scheduled for repair or which will be replaced or repaired under the
construction programs described in such Schedule.
(b) Except as disclosed in Schedule 3.6(b):
(i) There are no adverse or other parties in possession of
the Owned Real Property or the property subject to the
BN Leases or any part thereof. Star-Xxxx has not granted
any license, right of first refusal, right of purchase
or other right relating to the ownership, use or
possession of any of the Owned Real Property or the
Leased Real Property or any part thereof;
(ii) There is direct access between the Xxxxxx Plant and
public streets and utilities necessary for the operation
of the Xxxxxx Plant as it is currently being operated
and, to the knowledge of Star-Xxxx, no fact or condition
exists that would result in the termination of such
access;
(iii) All utilities (including, without limitation, water,
gas, steam, sewer, electricity, trash removal and
telephone service) required by law or necessary for the
operation of the Xxxxxx Plant as it is currently being
operated are currently available to the Xxxxxx Plant in
sufficient quantities to adequately service its current
needs;
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(iv) Star-Xxxx has not received any notice from any
governmental authority (A) requiring it to correct any
condition with respect to the Owned Real Property or the
Leased Real Property, or any part thereof, by reason of
a violation of any applicable laws, codes, ordinances,
rules, regulations or orders of governmental authorities
that have not been corrected or (B) regarding a
condemnation action with respect to the Owned Real
Property or the Leased Real Property;
(v) Star-Xxxx has not received any notice from an insurance
company or board of fire underwriters requesting the
performance of any work or alteration with respect to
the Owned Real Property or the Leased Real Property that
has not been performed, or requiring an increase in the
current insurance rates applicable to the Owned Real
Property or the Leased Real Property;
(vi) Star-Xxxx has not claimed with respect to the Owned Real
Property the benefit of any law permitting a special use
valuation (such as an "agricultural", "clean and green"
or "open space") for the purpose of obtaining an ad
valorem tax rate lower than the normal rate;
(vii) Star-Xxxx is not a "foreign person" as that term is
defined in Section 1445 of the IRC, and any applicable
regulations promulgated thereunder;
(viii) to Star-Xxxx'x knowledge, no portion of the Owned Real
Property or the Leased Real Property upon which the
Xxxxxx Plant is situated is located in a special flood
hazard area designated by any state or federal
governmental authority;
(ix) subject to proration in accordance with Section 2.6(e),
Star-Xxxx, with respect to the Owned Real Property, has
paid, and will continue to pay all taxes, assessments,
charges, fees, levies and impositions as the same became
due and payable prior to Closing;
(x) to Star-Xxxx'x knowledge, all components of all
buildings and other improvements included within the
Owned Real Property arid the BN Leases, excluding roofs
but including the structural elements thereof and the
heating, ventilation, air conditioning, plumbing,
electrical, mechanical, sewer and waste water systems
and facilities included therein, are in working order as
of the date hereof;
(xi) all material certificates of occupancy, permits,
licenses, franchises, approvals and authorizations of
all governmental authorities having jurisdiction over
the Owned Real Property and the Leased Real Property,
and from all insurance companies and fire rating and
other
24
similar boards and organizations, required to have been
issued to enable such properties to be lawfully occupied
and used for all of the purposes for which they are
currently occupied and used have been lawfully issued
and are in full force and effect; and
(xii) no portion of the Xxxxxx Plant has suffered any material
damage by fire or other casualty within the past 24
months which has not heretofore been repaired.
SECTION 3.7. Contracts.
(a) Schedule 3.7(a) discloses all written and oral Contracts
relating primarily to the Acquired Businesses or the Acquired Assets of
the following types: (i) Contracts which involve the payment or receipt by
any of Sellers of in excess of $50,000 during the remaining term thereof
or which have an unexpired remaining term of more than one year, (ii)
employment agreements, (iii) non-competition, confidentiality and secrecy
agreements, (iv) collective bargaining agreements, (v) loan agreements,
notes, mortgages, indentures, security agreements and other agreements and
instruments relating to the borrowing of money, (vi) franchise, broker or
license agreements, (vii) powers of attorney, or (viii) partnership or
joint venture agreements,; but excluding (i) purchase or supply orders
(other than orders for packaging materials, yellow corn, poultry meal and
corn gluten meal that relate solely to the Acquired Businesses all of
which shall be disclosed as Material Contracts) arising in the ordinary
course of business and (ii) Contracts required to be listed in another
Schedule (collectively, the "Material Contracts"). In addition, Schedule
3.7(a) discloses separately all outstanding purchase orders and
commitments for packaging materials, yellow corn, poultry meal and corn
gluten meal that are used in the Acquired Businesses or provide for the
delivery of all or a portion of the quantities subject thereto to the
Xxxxxx Plant that in each case relate to other businesses of Seller(s)
(the "Joint Use Orders"). Except as otherwise indicated in Schedule
3.7(a), true and complete copies of each written Material Contract, true
and complete written summaries of each oral Material Contract and true and
complete copies of each Joint Use Order (together with any and all
modifications, amendments or supplements thereto) have been delivered to
Purchaser prior to execution of this Agreement.
(b) Except as set forth in Schedule 3.7(b), all Material Contracts
are valid and in full force and effect. Except as set forth in Schedule
3.7(b), (i) no default exists by any Seller, and to the applicable
Seller's knowledge any other party, under any Material Contract and (ii)
with respect to any Seller, and to the applicable Seller's knowledge any
other party, there does not exist any event that, with notice or lapse of
time or both, would constitute an event of default or result in a right to
accelerate, or loss of rights under any Material Contract.
SECTION 3.8. Employee Benefit Plans.
25
(a) Schedule 3.8 hereto contains a true and complete list of each
plan, contract, program and arrangement, including, but not limited to,
pension, bonus, deferred compensation, incentive compensation, stock
purchase, supplemental retirement, severance or termination pay,
employment contract, stock option, hospitalization, medical, life
insurance, dental, disability, salary continuation, vacation, supplemental
unemployment benefits, profit-sharing, retirement and each other employee
benefit plan, program, policy or arrangement, maintained, contributed to,
or required to be contributed to, by Star-Xxxx for the benefit of any
Transferred Employee described in Article VII (collectively, "Plans").
Star-Xxxx has delivered to Purchaser copies of the X.X. Xxxxx Company
Saver Plan and the X.X. Xxxxx Company Employees Retirement and Savings
Plan.
(b) All Plans which are "employee pension benefit plans" within the
meaning of Section 3(2) of ERISA are intended to be qualified under
Section 401(a) of the IRC and have received determination letters from the
IRS stating that such Plans are qualified with respect to the provisions
of law as in effect prior to the enactment of the Tax Reform Act of 1986,
copies of which letters have been delivered to Purchaser, and each trust
created under any such Plan is exempt from tax under Section 501(a) of the
IRC. Star-Xxxx has amended each such Plan to be in compliance with current
law and intends to submit such Plans to the IRS for a determination of
their qualified status as amended within the remedial amendment period
applicable to such Plans, and further intends to make any changes required
by the IRS necessary to maintain the qualified status of such Plans.
(c) None of the Plans is a "multiemployer plan" as defined in ERISA
Section 3(37).
SECTION 3.9. Absence of Certain Changes. Except as set forth in
Schedule 3.9, with respect to the Acquired Businesses and the Acquired
Assets, each of the Sellers has not since December 23,1995 and up to the date
of this Agreement:
(a) permitted or allowed any of the Acquired Assets to be mortgaged,
pledged or subjected to any Lien, other than Permitted Liens;
(b) materially written down or materially written up the value of
any of the Inventory other than in the ordinary course of business;
(c) sold, transferred or leased any of the Acquired Assets other
than sales of Inventory (including disposal of obsolete, damaged or
defective Inventory) or other Acquired Assets in the ordinary course of
business;
(d) granted increases in the compensation of any Transferred
Employee which increases singly or in the aggregate are material, other
than in the ordinary course of business and consistent with past practice;
26
(e) adopted, entered into or agreed to enter into, or amended or
agreed to amend any Plan which singly or in the aggregate are material to
the Acquired Businesses taken as a whole, other than in the ordinary
course of business and 4 consistent with past practice;
(f) disposed of or permitted to lapse any rights to the use of any
Intellectual Property;
(g) otherwise operated the Acquired Businesses other than in the
ordinary course
(h) suffered any changes in the assets, liabilities, business or
financial condition which have resulted in a Material Adverse Effect; or
(i) agreed, whether in writing or otherwise, to take any of the
actions set forth in this Section 3.9.
SECTION 3.10. Litigation. Except as set forth in Schedule 3.10, (a)
there is no claim, action, suit, proceeding or investigation pending or, to
Sellers' knowledge, threatened by or against any of Sellers or Heinz with
respect to (i) the Acquired Businesses, (ii) the Acquired Assets or (iii) the
transactions contemplated hereby, at law or in equity or before or by any
Federal, state, municipal, foreign or other governmental department,
commission, board, agency, instrumentality or authority, and (b) there is no
order, decree or judgment pending or in effect against any of Sellers with
respect to (i) the Acquired Businesses, (ii) the Acquired Assets or (iii) the
transactions contemplated hereby.
SECTION 3.11. Compliance with Laws.
(a) Except as set forth in Schedule 3.11(a), each of the Sellers is
conducting the Acquired Businesses in compliance in all material respects
with all statutes, laws, rules, regulations, ordinances, decrees and
orders applicable to its use and operation or the condition of the
Acquired Assets and its operation of the Acquired Businesses which are in
effect as of the date hereof and as of the Closing and has not received
any notice that it is in noncompliance with any such statutes, laws,
rules, regulations, ordinances, decrees or orders.
(b) Schedule 3.11(a) hereto sets forth all material Permits required
by Sellers for the operation of the Acquired Businesses and the use and
ownership or leasing of the Acquired Assets as currently operated, used,
owned or leased, as applicable, and all of such Permits are valid and in
full force and effect. Except as set forth in Schedule 3.11(a), each of
the Sellers is in compliance in all material respects with such Permits,
as applicable, and there is no proceeding pending or threatened that
disputes the validity of any such Permit or that is likely to result in
the revocation, cancellation or suspension, or any adverse modification of
any such Permit.
27
SECTION 3.12. Intellectual Property.
(a) Schedule 3.12(a) and 3.12(a)(i) sets forth a complete and
accurate list of:
(i) all fictitious business names, brand names, brand name
applications, trade names, trade name applications and
registrations, foreign trademark and service xxxx
applications, registrations and common law trademarks and
service marks and United States federal, state and common law
trademarks, service marks and variety designators, trademark
applications and registrations owned, licensed or otherwise
held or used by any of the Sellers that relate solely to the
Acquired Businesses but specifically excluding: (A) the
variety designators/common law trademarks set forth in
Schedule 3.12 (a)(i) outside the United States and Canada; (B)
the descriptor "Dinner Rounds"; (C) "Vets'", "Vet's Choice"
and "Vet's Choice Select Balance" trademarks; (D) the "Meaty
Meal" trademark outside the United States and Canada; and (E)
all trade names used by the Acquired Businesses except those
listed on Schedule 3.12[a] (collectively, the "Trademarks");
(ii) all United States and foreign patents, patent applications
provisionals, divisions, continuations and substitutes
thereof, and all other patent rights owned, licensed or
otherwise held by any of the Sellers that relate solely to the
Acquired Businesses (collectively, the "Patents"); and
(iii) all copyright registrations and pending applications for
copyright registrations filed by or on behalf of Sellers that
relate solely to the Acquired Businesses (collectively, the
"Copyrights").
The foregoing, together with all rights, benefits and privileges
pertaining thereto, all goodwill associated therewith, and all rights to
causes of action or remedies related thereto (including the right to xxx
for past infringement or violation of rights associated therewith), shall
be referred to herein as the "Intellectual Property".
(b) Except as set forth in Schedule 3.12(b), the applicable Seller
owns all of the Intellectual Property and Reg. No.730,530 for Kozy Kitten
free and clear of any Liens (except claims). Except as set forth in
Schedule 3.12(b), each of the applicable U.S. and Canadian registered
Trademarks (collectively, the "Registered Trademarks") and pending
application Serial No.75-045,257 for Tuffy's and Reg. No.730,530 for Kozy
Kitten are valid and subsisting and the applicable Seller has the
exclusive right to use, sell, license and dispose of or bring actions for
infringement of its rights. None of the Registered Trademarks and pending
application Serial No.75-045,257 for Tuffy's and Reg. No.730,530 for Kozy
Kitten are now involved in any opposition,
28
invalidation or cancellation proceeding, nor to Sellers' knowledge, is any
such action threatened. Except as set forth in Schedule 3.12(d), Sellers
represent that the non-U.S. and Canadian Registrations (other than the
International Registration of the xxxx Xxxxx (Reg. No.403,256)) and U.S.
applications for Canine Prime and Feline Prime, Serial No.74-580,337 and
No.74-580,336, respectively, are subsisting and Sellers have no knowledge
of infringement claims with respect thereto by any third parties. No other
representations are made by any of the Sellers or Heinz as to the
ownership, the validity or as to the exclusive rights to use foreign
registered or common law Trademarks or variety designators set forth in
3.12 (a)(i) including without limitation, the right to own, use, license,
dispose of or bring actions for infringement of rights to such Trademarks.
(c) Except as set forth in Schedule 3.12(c), Star-Xxxx owns free and
clear of any Liens and has the exclusive right to use, offer for sale,
sell, import, license and dispose of or bring actions for infringement of
its rights to the Patents and the Copyrights.
(d) Except as set forth in Schedule 3.12(d), none of the Registered
Trademarks or pending application Serial No.75-045,257 for Tuffy's and
Kozy Kitten Reg. No.730,530 is infringing on the rights of any third
party. Except as set forth in Schedule 3.12(d), none of the Sellers has
received written notice from any third party nor have any of the Sellers
any knowledge of any third party alleging that its use of any other item
of Intellectual Property is infringing on the rights of any third party.
Except as set forth in Schedule 3.12(d), none of the Sellers has granted
any licenses or other similar rights and none of the Sellers has any
obligation to grant licenses or other similar rights to any of the
Intellectual Property. No third party consent will be required for the use
of any of the Registered Trademarks or pending application No.75-045,257
for Tuffy's and Registration number 730,530 for Kozy Kitten as a
consequence of the consummation of the transactions contemplated hereby.
Except as set forth in Schedule 3.12(d), in the last five years, none of
the Sellers has made any claim of any violation or infringement by others
of its rights to any of the Intellectual Property and none of the Sellers
has knowledge of any basis for making any such claim.
SECTION 3.13. Taxes. Except as set forth in Schedule 3.13, there are no
pending or, to any Seller's knowledge, threatened claims, investigations,
actions or proceedings, assessments or collections of Taxes of any kind with
respect to the Acquired Businesses that could subject Purchaser to any
liability for such Taxes for the period prior to and including the Closing
Date or could impair any of the Acquired Assets.
SECTION 3.14. Inventory. Except as set forth in Schedule 3.14, the
Inventory to be sold to Purchaser hereunder shall on the Closing Date,
consist of items that are usable or salable in the normal and ordinary course
of the Acquired Businesses. The quantities of each type of Inventory to be
sold to Purchaser hereunder will be maintained at normal levels adequate for
the continuation of each of the Acquired Businesses as it is presently being
29
conducted. The Inventory will not be, and no Products manufactured by the
Acquired Businesses prior to the Closing Date were, adulterated, misbranded,
mispackaged or mislabeled within the meaning of, or manufactured, processed
or packaged in violation of any applicable local, state or federal food and
drug laws or regulations. All Inventory will meet and all Products have met
all requirements of applicable statutes, rules and regulations of the United
States and any state or local government. All Products of the Acquired
Businesses sold prior to the Closing Date were products that may be lawfully
shipped and sold in interstate commerce and conform in all respects to the
requirements of such laws, and the rules and regulations promulgated
thereunder.
SECTION 3.15. Brokers and Finders. None of the Sellers nor Heinz has
employed any broker or finder or incurred any liability for any brokerage
fees or commissions or finders fees in connection with the transactions
contemplated by this Agreement.
SECTION 3.16. Insurance. Star-Xxxx has maintained a reasonable and
customary program of casualty insurance (which may include self-insurance by
Heinz) with respect to the Acquired Assets. Star-Xxxx has provided Purchaser
with a three-year loss history under the various casualty policies applicable
to the Acquired Businesses.
SECTION 3.17. Labor Matters. With respect to the operation of the
Acquired Businesses at the Xxxxxx Plant, except as set forth on Schedule
3.17, there (a) currently is no unfair labor practice complaint against
Star-Xxxx pending before the National Labor Relations Board, (b) currently
is, and during the last twenty-four months there has been, no labor strike,
slowdown or stoppage pending against, or involving the employees of,
Star-Xxxx, (c) is no labor union representing the employees of Star-Xxxx, and
(d) is no collective bargaining agreement currently being negotiated by
Star-Xxxx with respect to its employees.
SECTION 3.18. Sufficiency of Assets. Except as set forth in Schedule
3.18 hereto, the Acquired Assets constitute substantially all of the assets
and properties that are necessary to produce the products of the Acquired
Businesses substantially in the manner conducted by Sellers.
SECTION 3.19. Accounts Receivable. Except as set forth in Schedule 3.19
hereto, the Net Receivables will be collectible in the ordinary course of
business.
SECTION 3.20 Suppliers and Customers. Schedule 3.20 lists the ten
largest suppliers and customers to the Acquired Businesses by volume shipped
for the eight months ending December 23 , 1995 together with the approximate
dollar volume by supplier and customer and a general description of the goods
or services provided, and describes any substantial change in the identity
of, or the nature of the business conducted with, such suppliers that has
occurred since such date. Since December 23, 1995, there has not been any
material change in the relationship or course of dealing between Star-Xxxx or
its agents in respect of the Acquired Businesses and any suppliers to the
Acquired Businesses which, individually or in the aggregate, has had or would
have a Material Adverse Effect. Sellers have not, since December 23, 1995,
received written notice from any of the above listed
30
customers that it will reduce the quantity of product purchased from Sellers
by any amount greater than two-thirds of that purchased from such customer
during the previous twelve-month period.
SECTION 3.21 Products. The Kozy Kitten Products set forth in Schedule
1.1 represent all of the dry and semi-moist cat food products bearing the
Kozy Kitten name which are currently manufactured, distributed, marketed
and/or sold by Star-Xxxx and ProMark. The Tuffy's Products set forth in
Schedule 1.2 represent all of the products bearing the Tuffy's name which are
currently manufactured, distributed, marketed and/or sold by Star-Xxxx and
ProMark in the United States and Canada. The Vets' Dog Products set forth in
Schedule 1.3 represent all of the maintenance dry dog food products bearing
the Vets' name which are currently manufactured, distributed, marketed and/or
sold by Star-Xxxx and Perk.
SECTION 3.22. Environmental Matters.
(a) Except as set forth in Schedule 3.22, with respect to Sellers' use,
operation or ownership of the Acquired Assets and their operation of the
Acquired Businesses, no Environmental Claim has been received by the Sellers
or, to the Sellers' knowledge, any person or entity whose liability for such
Environmental Claim the Sellers have or may have retained or assumed either
contractually or by operation of law, nor, to the knowledge of Sellers, is
any such Environmental Claim threatened.
(b) Except as set forth in Schedule 3.22 or except as otherwise
qualified in other subsections of this Section 3.22, there are no present or
past actions, activities, circumstances, conditions, events or incidents,
that would result in any Environmental Claim against the Sellers with respect
to Sellers' use, operation or ownership of the Acquired Assets and their
operation of the Acquired Businesses or against any person or entity whose
liability for such Environmental Claim the Sellers have or may have retained
or assumed either contractually or by operation of law.
(c) Except as set forth in Schedule 3.22, the business of the Sellers
at the Xxxxxx Plant complies in all material respects with all Applicable
Environmental Laws.
(d) Except as set forth in Schedule 3.22, none of the Sellers have
generated at or transported from the Xxxxxx Plant any Hazardous Substances
which have been transported to or disposed of in any offsite disposal or
other facility, except for any such transportation or disposal which would
not reasonably be expected to result in a liability to any of the Sellers.
(e) Except as set forth in Schedule 3.22, to the knowledge of the
Sellers, there are not present in, on or under the Owned Real Property or the
property subject to the BN Leases any Hazardous Substances in such quantities
as to create any liability or obligation under any Applicable Environment Law
or any other liability for either Purchaser or the Sellers.
(f) The Sellers have delivered to Purchaser all environmental reports
of which the Sellers are aware with respect to the Owned Real Property.
31
(g) Except as set forth in Schedule 3.22, the Sellers have not, in
connection with the Xxxxxx Plant installed, used, generated, treated,
disposed of, or arranged for the disposal of any Hazardous Substances in any
matter so as to create any liability or obligation under any Applicable
Environmental Law for either Purchaser or the Sellers.
(h) Without in any way limiting the generality of the foregoing but
except as set forth on Schedule 3.22, (i) all underground storage tanks or
other containment facilities of any kind located or formerly located on the
Owned Real Property or the property subject to the BN Leases are identified
in Schedule 3.22, (ii) all xxxxx or other borings on the Owned Real Property
or the property subject to the BN Leases (regardless of whether such xxxxx or
borings are in use) are identified on Schedule 3.22, (iii) there is no
friable asbestos contained in or forming any part of any building, building
component, structure or office space constituting a part of the Owned Real
Property or the property subject to the BN Leases, and (iv) no
polychlorinated biphenyl are used or stored on the Owned Real Property or the
property subject to the BN Leases or contained in any of the tangible
personal property on such properties.
SECTION 3.23. No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, none of the
Sellers, Heinz nor any other person or entity makes any other express or
implied representation or warranty on behalf of Sellers, Heinz or their
Affiliates with respect to the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby or the Acquired Assets
or the Acquired Businesses. Each of the Sellers and Heinz hereby disclaims
any such representation or warranty, notwithstanding the delivery or
disclosure to Purchaser, any of its officers, directors, employees, agents or
representatives of any documentation or other information by or on behalf of
any of the Sellers, Heinz or any Affiliate of Heinz, including without
limitation any projections or forecasts (the "Projections"). There can be no
assurance that the Projections provide an accurate forecast of future
results. Purchaser and Holdings each acknowledges that it has not relied upon
the Projections in any manner.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER AND HOLDINGS
Purchaser and Holdings, as applicable, represent and warrant to Sellers
as follows:
SECTION 4.1. Incorporation. Holdings and Purchaser each are
corporations duly organized, validly existing and in good standing under the
laws of Delaware.
SECTION 4.2. Authority. Each of Purchaser and Holdings has all
requisite power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this
32
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by the Board of Directors of each of Purchaser and
Holdings, and no other corporate act or proceeding on the part of either
Purchaser or Holdings is necessary to approve the execution and delivery of
this Agreement or the consummation by Purchaser and Holdings of the
transactions contemplated hereby.
SECTION 4.3 Execution and Binding Effect. This Agreement has been duly
and validly executed and delivered by each of Purchaser and Holdings and
constitutes the legal, valid and binding obligation of each of Purchaser and
Holdings and will be enforceable against each of Purchaser and Holdings in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, moratorium, insolvency, reorganization, liquidation or other laws
relating to or affecting creditors' rights or by equitable principles.
SECTION 4.4. No Contravention. Except as set forth in Schedule 4.4, the
execution, delivery and performance of this Agreement by each of Purchaser
and Holdings and the consummation by each of Purchaser and Holdings of the
transactions contemplated hereby and the fulfillment of and compliance with
the terms and conditions hereof, do not and will not:
(a) conflict with or violate any provisions of either of the
Purchaser's or Holdings' charter documents;
(b) require any consent, approval or notice under or conflict with,
result in a termination or breach of, or constitute (with or without
notice or lapse of time or both) a default under, or accelerate or permit
the acceleration of any performance required by, any note, bond, mortgage,
indenture, license, franchise, permit, contract, lease or other instrument
or obligation to which either Purchaser or Holdings is a party or by which
either Purchaser or Holdings or any of its assets or properties is bound
or subject;
(c) violate any law, statute or ordinance or any rule, regulation,
order, writ, injunction or decree of any court or of any public,
governmental or regulatory body, agency or authority applicable to either
Purchaser or Holdings or by which any of its assets or properties may be
bound or subject; or
(d) require any filing, declaration or registration with, or permit,
consent or approval of, or the giving of notice to, any public,
governmental or regulatory body, agency or authority; excluding from the
foregoing Sections 4.4(a) through (d):
(i) any local filings or recordings that may be necessary to
transfer any of the Acquired Assets; and
(ii) the filing required under the HSR Act and expiration of the
applicable waiting periods under the HSR Act.
SECTION 4.5. Litigation. There is no claim, action, suit, proceeding or
investigation pending or, to either Purchaser's or Holdings' knowledge,
threatened by or against either
33
Purchaser or Holdings with respect to the transactions contemplated hereby,
at law or in equity or before or by any Federal, state, municipal, foreign or
other governmental department, commission, board, agency, instrumentality or
authority. There is no order, decree or judgment pending or in effect against
either Purchaser or Holdings with respect to the transactions contemplated
hereby.
SECTION 4.6. Brokers and Finders. Neither Holdings nor Purchaser has
employed any broker or finder or incurred any liability for any brokerage
fees or commissions or finders' fees in connection with the transactions
contemplated by this Agreement.
ARTICLE V
COVENANTS OF THE SELLERS
Each of the Sellers, as applicable, covenants and agrees with Purchaser
as follows:
SECTION 5.1. Access; Confidential Information. From the date hereof
until the Closing Date, Sellers shall furnish to Purchaser and its
representatives all information relating solely to the Acquired Businesses
reasonably requested by Purchaser and provide access to any Acquired Assets
that Purchaser may reasonably request at such times as shall be mutually
agreed upon; provided, however, that nothing contained herein shall require
Sellers to furnish to Purchaser or provide Purchaser with access to any Trade
Secrets or, unless approved for release by counsel, any marketing, cost
and/or pricing information until Closing. Any confidential information
furnished to Purchaser or made available for visual inspection shall be
subject to the terms of the Confidentiality Agreement entered into between
Star-Xxxx and Purchaser dated August 10,1995. The provisions of such
Confidentiality Agreement shall survive any termination of this Agreement.
SECTION 5.2. Conduct of Business.
From the date hereof until the Closing Date, without the written
consent of Purchaser none of the Sellers shall:
(a) operate the Acquired Businesses other than in the ordinary
course of business or unreasonably defer any repairs or maintenance to the
Physical Assets, the Owned Real Property or the property subject to the
Xxxxxx Leases;
(b) make any sale, transfer, lease or other disposition of any
Acquired Assets other than in the ordinary course of business or mortgage,
pledge or otherwise create a security interest in any of the Acquired
Assets other than Permitted Liens;
(c) grant any increase in compensation to Transferred Employees or
any increase in the rate of commission, bonus or other variable
compensation or any increase in any other direct or indirect renumeration
(including benefits) payable or to
34
become payable to any such employees, which increases singly or in the
aggregate
(d) fail to maintain the books, accounts and records of the Acquired
Businesses on a basis consistent with past practice;
(e) dispose of or permit to lapse any rights to the use of any
Intellectual Property;
(f) enter into, amend or cancel any Material Contract, Real Property
Lease, Plan or Permit in respect of the Acquired Assets or the Acquired
Businesses other than in the ordinary course of business; or
(g) perform, take any action or incur or permit to exist any of the
acts, transactions, events or occurrences of the type described in Section
3.9, other than Section 3.9(h).
SECTION 5.3. Reasonable Best Efforts: Notifications. Sellers shall use
their best reasonable efforts to fulfill their conditions to Closing and
otherwise to consummate the transactions contemplated by this Agreement.
Prior to the Closing Date, Sellers shall deliver to Purchaser in writing
information that it acquires knowledge of which arises from an event which
occurs on or after the date hereof, or from an event which occurred prior to
the date hereof but which was not and could not have been a matter of
Sellers' knowledge as of the date hereof supplementing or amending the
representations, warranties or disclosures (including the Schedules) made in
or delivered pursuant to Article Ill in order to make such information
therein accurate. This covenant shall expire on the date which is 18 months
following the Closing Date (except with respect to environmental matters such
expiration date shall be two years following the Closing Date) and any claim
by Purchaser for breach or failure to comply with such covenant shall be
subject to the Basket.
SECTION 5.4. Trade Secret License; UPC. To the extent not transferred
to Purchaser pursuant to Section 2.1(h), Star-Xxxx hereby grants to Purchaser
an irrevocable, perpetual, royalty-free license to use the Joint Use Trade
Secrets, but makes no representations as to the ownership, the right to use,
the right, to grant such license or bring actions for infringement with
respect to the Joint Use Trade Secrets. Purchaser shall have the right to
assign freely such license in connection with a sale of all or substantially
all of all or any of the Acquired Businesses. Star-Xxxx shall permit
Purchaser to use the uniform product codes currently assigned to the Products
but only to the extent and for so long as Star-Xxxx is permitted to do so.
SECTION 5.5. Preservation of Records. Sellers shall preserve and,
during regular business hours and upon reasonable notice, make available to
Purchaser and its representatives for inspection and copying all agreements,
records, books and other documents pertaining to the Acquired Businesses or
the Acquired Assets for periods prior to
35
and including the Closing Date retained by Sellers pursuant to the provisions
of Section 2.1(e), wherever located for a period of six (6) years from the
Closing Date, for (a) the purposes of preparing tax returns and financial
statements and responding to tax audits, (b) the purposes of prosecuting or
defending any claim, litigation, proceeding or investigation which arises out
of or relates to the Acquired Businesses, the Acquired Assets or this
Agreement and (c) any other reasonable business purpose. Sellers may redact
from any such agreements, records, books or other documents any information
relating to any other business of Sellers or their Affiliates. If Purchaser
determines that it does not want Sellers to destroy such agreements, records,
books and other documents, Purchaser shall give written notice to the
applicable Seller ninety (90) days prior to the expiration of such retention
period that Purchaser desires to take possession of such agreements, records,
books and other documents. The applicable Seller shall deliver (subject to
any redactions) such agreements, records, books and other documents to
Purchaser within sixty (60) days after the date of Purchaser's notice to the
applicable Seller hereunder.
SECTION 5.6. Capital Projects. Star-Xxxx shall pay directly to the
vendor upon receipt of invoices and other appropriate documentation, all
amounts due for completion of the work described in Schedule 5.6 pursuant to
the purchase orders referenced in such Schedule not to exceed the amounts
designated for each order or $508,000 in the aggregate.
SECTION 5.7. Receivables. Except as set forth in Section 6.3, to the
extent any Seller receives payment in respect of the Receivables, such Seller
shall promptly forward such amount to Purchaser.
ARTICLE VI
COVENANTS OF THE PURCHASER AND HOLDINGS
Each of Purchaser and Holdings, as applicable, covenants and agrees
with Sellers as follows:
SECTION 6.1. Preservation of Records. Purchaser and Holdings shall
preserve and, during regular business hours and upon reasonable notice, make
available to Sellers and their representatives for inspection and copying all
agreements, records, books and other documents delivered to Purchaser and
Holdings by Sellers pursuant to this Agreement pertaining to the Acquired
Businesses or the Acquired Assets for periods prior to and including the
Closing Date, wherever located for a period of six (6) years from the Closing
Date, for (a) the purposes of preparing tax returns and financial statements
and responding to tax audits, (b) the purposes of prosecuting or defending
any claim, litigation, proceeding or investigation which arises out of or
relates to the Acquired Businesses, the Acquired Assets or this Agreement and
(c) any other reasonable business purpose. If the applicable Seller
determines that it does not want Purchaser or Holdings to destroy such
agreements, records,
36
books and other documents, it shall give written notice to Purchaser or
Holdings, as applicable, ninety (90) days prior to the expiration of such
retention period that it desires to take possession of such agreements,
records, books and other documents. Purchaser or Holdings, as applicable
shall deliver such agreements, records, books and other documents to the
applicable Seller within sixty (60) days after the date of the Seller's
notice hereunder.
SECTION 6.2. Reasonable Best Efforts: Notifications. Purchaser and
Holdings each shall use best reasonable efforts to fulfill its conditions to
Closing and otherwise to consummate the transactions contemplated by this
Agreement. Prior to the Closing Date, Purchaser and Holdings shall deliver to
Sellers in writing information that it acquires knowledge of which arises
from an event which occurs on or after the date hereof, or from an event
which occurred prior to the date hereof but which was not and could not have
been a matter of Purchaser's or Holdings' knowledge as of the date hereof,
supplementing or amending the representations, warranties or disclosures
(including the Schedules hereto) made in or delivered pursuant to Article IV
in order to make such information therein accurate. This covenant shall
expire on the date which is 18 months following the Closing Date and any
claim by Sellers for breach or failure to comply with such covenant shall be
subject to the Basket.
SECTION 6.3 Uncollected Receivables. To the extent Sellers are required
to pay to Purchaser any amounts hereunder in respect of the Net Receivables,
Purchaser shall immediately upon receipt of such payment assign the
uncollected Net Receivables to Sellers and reasonably cooperate with Sellers
in the collection thereof for the account of Sellers. Any amount collected by
Purchaser in excess of the amount of the Net Receivables shall be promptly
remitted to Star-Xxxx.
ARTICLE VII
EMPLOYEE MATTERS
SECTION 7.1. Transferred Employees. Schedule 7.1 contains a true and
complete list of the names of all employees of the Acquired Businesses, the
annual wages or salaries, as the case may be, and other compensation of each
such employee, paid or payable for services rendered during calendar year
1995. Promptly following the Closing, Purchaser shall offer employment to all
employees of the Acquired Businesses who are in active employment on the
Closing Date. For purposes of this paragraph, an employee shall be considered
to be in "active employment" if he or she performs services or is on vacation
on the Closing Date or received vacation pay in the pay period which includes
the Closing Date. All such employees who accept such offer of employment of
the Purchaser shall become employees of the Purchaser as of the Closing Date
(the "Transferred Employees"). Employees of the Acquired Businesses who do
not become Transferred Employees are collectively referred to herein as the
"Non-transferred Employees." Sellers may retain as employees all Non-
37
transferred Employees, or may terminate the employment of any or all such
employees. Purchaser shall have no liabilities or obligations with respect to
the Non-transferred Employees, which liabilities and obligations shall be
borne by Star-Xxxx.
Star-Xxxx will be responsible for and pay any and all severance claims
made by the Non-transferred Employees. Purchaser shall pay severance benefits
to all Transferred Employees who are terminated by Purchaser in accordance
with Purchaser's practices and policies. $308,266 shall be accrued as of the
opening of business on the Closing Date for severance benefits which will be
included as an accrued expense in the Non-Cash Working Capital calculation
referred to in Section 2.4.
SECTION 7.2. Employment Benefit Transition. With respect to each
Transferred Employee:
(a) Purchaser shall waive preexisting condition requirements,
evidence of insurability provisions, waiting period requirements or any
similar provisions under any group health or life insurance plan maintained
or sponsored by or contributed to by Purchaser for all Transferred Employees
as of the Closing Date. In the event that Purchaser shall within 60 days
following the Closing Date, identify (or cause its group health plan
administrator to identify) to Star-Xxxx in writing one or more Transferred
Employees or their eligible dependents whose group health claims relate to a
condition that existed prior to the Closing Date and are reasonably expected
to exceed $25,000 per individual, then Star-Xxxx shall be responsible for the
payment of up to $75,000 of such claims per Transferred Employee that are
filed during the one year period following the Closing and up to $300,000 of
such claims in the aggregate for all such Employees and their eligible
dependents. Star-Xxxx shall discharge such responsibility through
reimbursement of Purchaser or Purchaser's group health plan.
(b) Star-Xxxx shall be responsible for the payment of any health,
accident and other employee welfare benefit claims of the Transferred
Employees and their eligible dependents that are incurred before the Closing
Date, regardless of when any such claim is submitted for payment. Purchaser
shall be responsible for the payment of health, accident and other employee
welfare benefit claims of Transferred Employees and their eligible dependents
to the extent such claims are incurred on or after the Closing Date. For
purposes of this Section 7.2(b), a health or accident claim shall be deemed
to have been incurred when the services relating to the event or condition
that is the subject of the claims are performed or the supplies relating to
any such event are furnished.
(c) With regard to pension, savings, vacation, health and
welfare, disability benefits, executive compensation, incentive and bonus
arrangements, Purchaser shall recognize the service of any Transferred
Employee with Star-Xxxx for purposes of participation and vesting, but not
for purposes of benefit accrual.
SECTION 7.3 COBRA. Star-Xxxx shall be responsible for satisfying
obligations under Section 601 et seq. of ERISA and Section 4980B of the IRC,
to provide continuation coverage to or with respect to any Non-transferred
Employee and Purchaser shall be responsible for satisfying obligations under
Section 601 et seq. of ERISA and Section 4980B of the IRC to
38
provide continuation coverage with respect to any Transferred Employee.
SECTION 7.4. Vacation. Purchaser shall not assume any obligations to
Transferred Employees for any vacation pay entitlements for periods prior to
the Closing Date, except to the extent that such obligations have been
accrued on the books of Star-Xxxx and are included as an accrued expense in
the calculation of Non-Cash Working Capital in accordance with Section 2.4 of
this Agreement. Except as provided in the preceding sentence, Star-Xxxx shall
pay Transferred Employees any vacation entitlement and/or vacation pay
entitlement that accrued prior to the Closing Date. Vacation benefits of
Transferred Employees for periods commencing on the Closing Date shall be
provided in accordance with the vacation policy of Purchaser.
SECTION 7.5. Qualified Plans. Prior to the Closing Date, Transferred
Employees are covered under one or more Pension Plans for salaried and hourly
employees consisting of defined benefit plans and defined contribution plans
("Star-Xxxx'x Qualified Plans"). Purchaser maintains a defined contribution
plan ("Purchaser's Qualified Plan"). Purchaser agrees that Purchaser's
Qualified Plan will accept rollovers (including direct rollovers pursuant to
section 401(a)(31)) of the IRC) by any Transferred Employee who continues to
be employed by Purchaser of any "eligible rollover distribution" (within the
meaning of section 401 (a)(31)) of the IRC) from any of Star-Xxxx'x Qualified
Plans at any time after the Closing, subject to Star-Xxxx providing Purchaser
with satisfactory evidence that the distributing plan meets the requirements
for qualification under Section 401(a) of the IRC. In the case of a direct
rollover, Purchaser shall provide the distributing plan with satisfactory
evidence that Purchaser's Qualified Plan meets the requirements for
qualification under Section 401(a) of the IRC. Except as provided above,
Purchaser and Purchaser's Qualified Plan shall assume no responsibility for
accrued benefits or accounts under Star-Xxxx'x Qualified Plans.
SECTION 7.6. Disability and Workers' Compensation. Star-Xxxx shall
retain responsibility for all disability benefits payable on and after the
Closing Date with respect to all Non-transferred Employees. Purchaser shall
assume responsibility for all disability benefits payable on and after the
Closing Date with respect to Transferred Employees who subsequently qualify
for short-term or long-term disability benefits. Star-Xxxx shall be
responsible for all workers' compensation benefits, occupational diseases
claims and employer liability claims payable to Transferred Employees with
respect to claims incurred before the Closing Date, except Star-Xxxx shall
have no responsibility for cumulative trauma type claims (e.g., carpal tunnel
syndrome) that are unfiled as of the Closing. Purchaser shall be responsible
for all workers' compensation benefits, occupational diseases claims and
employer liability claims payable to Transferred Employees with respect to
claims incurred on or after the Closing Date and any cumulative trauma type
claims filed after the Closing.
SECTION 7.7. No Third Party Beneficiaries. Neither Purchaser nor any of
the Sellers intends this Article VII to create any rights or interest, except
as between Purchaser and Sellers and no present or future employees of either
party (or any dependents of such employees) will be treated as third party
beneficiaries in or under this Agreement.
39
SECTION 7.8. Documents and Forms. Star-Xxxx and Purchaser agree to use
their reasonable efforts to execute all necessary documents, file all
required forms with any governmental agencies and to undertake all actions
that may be necessary or desirable to implement expeditiously any actions
contemplated herein.
SECTION 7.9. WARN Requirements. Star-Xxxx shall be liable for any
liability under WARN (or any similar state law) with respect to the
termination of the Non-Transferred Employees. If any such notices are
required, Star-Xxxx shall deliver to Purchaser a copy of the draft notices to
be issued in accordance with WARN (or any similar state law) for Purchaser's
review and comment. Purchaser shall be liable for any liability under WARN
(or any similar state law) with respect to Purchaser's termination of any
Transferred Employee after the Closing Date. For a period of not less than
sixty-one days following the Closing, Purchaser agrees not to cause any
"employment loss", as such term is defined in WARN affecting more than
thirty-two percent of the Transferred Employees.
ARTICLE VIII
CONDITIONS TO PURCHASER'S AND HOLDINGS' OBLIGATIONS
The obligations of Purchaser and Holdings under this Agreement are
subject to the fulfillment, prior to or on the Closing Date, of each of the
following conditions, any of which may be waived in whole or in part by
Purchaser or Holdings:
SECTION 8.1. Accuracy of Representations and Warranties; Performance of
Agreements: Certificates and Opinion of Counsel.
(a) The representations and warranties of Sellers and Heinz
contained in this Agreement shall be true and correct in all material
respects on the date hereof and as of the Closing Date with the same
effect as though such representations and warranties had been made or
given again at and as of the Closing Date (except for any representation
or warranty expressly stated to have been made or given as of a specified
date, which, at the Closing Date, shall be true and correct in all
material respects as of the date expressly stated).
(b) Each of Sellers and Heinz shall have performed and complied in
all material respects with all of its agreements, covenants and conditions
required by this Agreement to be performed or complied with by it prior to
or at the Closing Date.
(c) Star-Xxxx shall have delivered to Purchaser (i) certificates of
the Chairman, President or any Vice President of Star-Xxxx and Heinz dated
the Closing Date and certifying the fulfillment of the conditions
applicable to it as set forth in this Section 8.1 and (ii) an opinion of
the General Counsel or an Associate or Assistant General Counsel of Heinz
dated the Closing Date in the form attached hereto as
40
Exhibit M.
(d) Star-Xxxx shall have delivered to Purchaser (i) an incumbency
certificate from the Secretary or an Assistant Secretary of each Seller
and Heinz and (ii) a copy of the Board of Directors' resolutions of each
Seller and Heinz and the resolution of the Special Committee appointed by
the Board of Directors of Heinz, each certified by the Secretary or an
Assistant Secretary, authorizing and approving the transaction
contemplated herein.
SECTION 8.2. Consents. Any notices to, and declarations, filings and
registrations with, and consents, approvals and waivers from governmental and
regulatory agencies necessary in order to consummate the transactions
contemplated hereby, other than those relating to the transfer of a Permit or
the obtaining of a new Permit in lieu thereof shall have been obtained. With
respect to the lease between Star-Xxxx (or its predecessors in interest) and
Burlington Northern Railroad dated March 30,1971, Purchaser shall have
received (a) a memorandum of lease for such leased property, in recordable
form and containing such information as shall be required to allow the
Purchaser's lender to obtain a valid first leasehold mortgage on such leased
property and (b) the written consent of the Burlington Northern Railroad to
the granting of a leasehold mortgage in favor of Purchaser's lender secured
by Purchaser's interest in such leased property. Agri-data shall have
executed and delivered to Purchaser a license agreement in the form delivered
to Star-Xxxx on April 11, 1996.
SECTION 8.3. No Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court of competent jurisdiction, or
by any governmental or regulatory body, which prevents the consummation of
the transactions contemplated in this Agreement.
SECTION 8.4. HSR Act. [Intentionally Omitted]
SECTION 8.5. Closing Deliveries. Sellers shall have delivered to
Purchaser or Holdings, as applicable, all deliveries to be made to it
pursuant to Section 2.6(b).
SECTION 8.6. No Material Adverse Change. From the date hereof through
the Closing, Sellers shall not have suffered any changes in the assets,
liabilities, business or financial condition of the Acquired Businesses or
the Acquired Assets which have, or would be reasonably likely to have, a
Material Adverse Effect.
SECTION 8.7. Title Insurance. Purchaser shall have received a title
insurance policy or a marked-up title binder requiring the issuance of such
policy issued by Old Republic National Title Insurance Company (the "Title
Company") with respect to the Owned Real Property insuring the Purchaser's
ownership of fee title with respect to the Owned Real Property in an amount
reasonably requested by Purchaser subject only to the matters excepted by or
excluded from coverage as set forth in the title commitment attached to
Schedule 3.6(a), except Items 7(f), 7(g) and 9 listed on Schedule B, Section
2 all of which
41
shall be removed as a condition of Purchaser's obligation to close hereunder.
Items 7(c), (e) and (h) listed on Schedule B Section 2 shall remain as an
exception, but as a condition of Purchaser's obligation to close hereunder,
the Title Company shall insure against forced removal of such encroachments.
Items 7(a), (b) and (d) on Schedule B Section 2 shall remain as exceptions,
but as a condition of Purchaser's obligation hereunder, the Title Company
shall insure against forced removal of such encroachments so long as the
property on which the encroachments are located is subject to a lease to be
entered into between Purchaser and Burlington Northern Railroad.
In addition, it is understood that requirements 1, 2, 3 and 5 as listed on
Schedule B, Section 1 shall be required to be complied with in order for each
such policy or binder to be issued in the form specified, and in connection
therewith, Star-Xxxx shall deliver to the Title Company (a) an owners
affidavit in the form attached hereto as Schedule 8.7, (b) if required by the
Title Company, an indemnity regarding settled and unsettled taxes which may
be assessed by the State of Minnesota against Star-Xxxx, and (c) if required
by the Title Company, a "gap" indemnity in customary form. If such policy or
a marked-up title binder requiring the issuance of such policy is not
delivered at the Closing in the amount or in the form specified above,
Star-Xxxx at its option may satisfy this condition by agreeing to indemnify
Purchaser against all losses incurred by Purchaser as a result of any such
exceptions which are required to be removed but are not removed or any
reduction of coverage to the same extent Purchaser would have been insured
against such losses by the Title Company had the policy or binder been issued
in the amount and in the form so specified. If Star-Xxxx indemnifies
Purchaser as aforesaid, the parties for a reasonable time after the Closing
shall use their reasonable efforts to remove such exceptions or provide such
coverage. Star-Xxxx'x indemnity would be terminated or reduced as appropriate
upon removal of such exceptions or providing such coverages. The costs of the
policies, the binder and the required survey shall be borne by Purchaser.
SECTION 8.8. Survey and Additional Conditions Relating to Real Property
Matters.
(a) Purchaser shall have received an as built survey of the Owned
Real Property certified to the Purchaser and the Title Company; and any
party or parties providing financing to the Purchaser secured by the Owned
Real Property ("Lender") by an independent professional licensed land
surveyor, which survey shall be sufficient to delete any standard printed
survey exceptions contained in the applicable title policy being obtained
by Purchaser and/or Lender and shall be certified as having been made in
accordance with the Minimum Standard Detail Requirements for Land Title
Surveys Jointly Established and Adopted by the American Land Title
Association and The American Congress on Surveying and Mapping in 1992.
(b) Purchaser shall have received certification from a registered
engineer or land surveyor or other evidence reasonably acceptable to the
Purchaser and its Lender that no portion of the Perham Plant is located
within any area designated by
42
the director of the Federal Emergency Management Agency as a "special
flood hazard" area.
(c) Purchaser shall have received a statement issued by the City
of Xxxxxx planning administrator or the Otter Tail County planning
administrator, as applicable, stating the zoning designation for the real
property upon which the Perham Plant is situated and the permitted uses
thereof under such zoning designation which shall be consistent with the
present use thereof.
(d) If the survey referred to in subsection (a) above is not
sufficient to delete the standard printed survey exceptions contained in
the title insurance policy or if a portion of the Perham Plant may be
located within a "special flood hazard" area, Star-Xxxx at its option may
satisfy the conditions of subsections (a) and/or (b) above by agreeing to
indemnify Purchaser against all losses incurred by Purchaser as a result
of such matter(s).
SECTION 8.9. Financing. Coincidentally with the closing of the purchase
and sale of the Acquired Businesses and the Acquired Assets, Purchaser shall
have received not less than [$60,700,000] in cash from the proceeds of debt
and equity financings on terms and conditions not materially less favorable
to Purchaser than those set forth in the term sheets attached hereto as
Schedule 8.9. Purchaser agrees to use its best efforts to obtain such debt
financing and equity contributions and shall provide Star-Xxxx with frequent
status reports concerning these matters.
ARTICLE IX
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers under this Agreement are subject to the
fulfillment, prior to or on the Closing Date, of each of the following
conditions, all or any of which may be waived in whole or in part by
Star-Xxxx:
SECTION 9.1. Accuracy of Representations and Warranties; Performance of
Agreements; Certificates and Opinion of Counsel.
(a) The representations and warranties of Purchaser and Holdings
contained in this Agreement shall be true and correct in all material
respects on the date hereof and as of the Closing Date with the same
effect as though such representations and warranties had been made or
given again at and as of the Closing Date (except for any representation
or warranty expressly stated to have been made or given as of a specified
date, which, at the Closing Date, shall be true and correct in all
material respects as of the date expressly stated).
(b) Purchaser and Holdings each shall have performed and complied in
all material respects with all of its agreements, covenants and conditions
required by this
43
Agreement to be performed or complied with by it prior to or at the
Closing Date.
(c) Purchaser shall have delivered to Star-Xxxx (i) a certificate
of its President or any Vice President of each of Purchaser and Holdings
dated the Closing Date and certifying the fulfillment of the conditions
set forth in this Section 9.1 and (ii) an opinion of Xxxxxxxx & O'Neil,
LLP dated the Closing Date in the form attached hereto as Exhibit N.
(d) Purchaser shall have delivered to Star-Xxxx (i) an incumbency
certificate from the Secretary or an Assistant Secretary of each of
Purchaser and Holdings and (ii) a copy of the resolutions of the Board of
Directors of each of Purchaser and Holdings, each certified by the
Secretary or an Assistant Secretary, authorizing and approving the
transaction contemplated herein.
SECTION 9.2. Consents. Any notices to, and declarations, filings and
registrations with and consents, approvals and waivers from governmental and
regulatory agencies necessary in order to consummate the transactions
contemplated hereby shall have been obtained.
SECTION 9.3. No Injunction. No preliminary or permanent injunction or
other order shall have been issued by any court of competent jurisdiction, or
by any governmental or regulatory body, which prevents the consummation of
the transactions contemplated in this Agreement.
SECTION 9.4. Promissory Note and Intercreditor Arrangements. The final
terms and conditions of the Promissory Note and the agreements and other
documents relating to the intercreditor arrangements and subordination issues
among the creditors of Holdings and Purchaser shall be acceptable to
Star-Xxxx in its sole discretion.
SECTION 9.5. Closing Deliveries. Purchaser and Holdings shall have
delivered to Sellers all deliveries to be made to it pursuant to Section
2.6(c) and 2.6(d), respectively.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Survival of Representations and Warranties and
Obligations. All representations, warranties, agreements, covenants and
obligations made or undertaken by the parties in this Agreement or in any
document or instrument executed and delivered pursuant hereto (including the
exceptions to any representations or warranties) shall survive the Closing
hereunder and shall not merge in the performance of any obligation by any
party hereto, and will remain in full force and effect unless, in respect of
any agreement or covenant, some specified period is set forth in this
Agreement or in any document or
44
instrument executed and delivered pursuant hereto; provided that only with
respect to the representations and warranties (but not any agreement,
covenant or obligation) made by Sellers and/or Heinz and contained herein or
in any exhibit, schedule or certificate delivered under this Agreement , such
representations and warranties shall remain in effect only until the date
which is 18 months following the Closing Date, except for the representations
and warranties set forth in Section 3.11(b) as it relates to environmental
matters and Section 3.22, which shall remain in effect until the second
anniversary of the Closing Date. If written notice of a claim for breach of a
representation or warranty has been given by Purchaser prior to the
applicable cut-off date, then the relevant representation or warranty shall
survive as to such claim until the claim has been finally resolved.
Notwithstanding the foregoing, in the event that, prior to the Closing,
either party has knowledge (including material information delivered pursuant
to Sections 5.3 or 6.2, as applicable) that any representation or warranty
made by the other party is incorrect as of the date hereof or will be
incorrect as of the Closing, the party with such knowledge shall have as its
sole remedy hereunder the option (i) if such misrepresentation or breach of
warranty is material within the meaning of Section 8.1(a) or 9.1(a) as
applicable, to terminate this Agreement (on ten business days' notice during
which period the other party may cure such misrepresentation or breach of
warranty) or (ii) to proceed with the Closing and, upon the Closing, such
party shall be conclusively deemed to have waived all claims hereunder
relating to such misrepresentation or breach of warranty.
SECTION 10.2. Indemnification by Seller. Except as otherwise limited by
this Article X, Purchaser and Holdings and their officers, directors,
employees, shareholders, successors and assigns shall be indemnified and held
harmless by Star-Xxxx from any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable legal costs and expenses), after taking into
account any tax benefit with respect thereto, actually suffered or incurred
by it (hereinafter a "Purchaser Loss"), actually arising out of or resulting
from:
(a) the breach of any representation or warranty by any of the
Sellers or Heinz contained herein;
(b) the breach of any covenant or agreement by any of the Sellers or
Heinz contained herein or in any document delivered hereunder at the
Closing; or
(c) the liens referred to in clause (i) of Permitted Liens; or
(d) the failure of Sellers to pay or otherwise discharge the
Excluded Liabilities.
SECTION 10.3. Indemnification by Purchaser. Except as otherwise limited
by this Article X, Sellers and their respective officers, directors,
employees, shareholders, successors and assigns shall be indemnified and held
harmless by Purchaser from any and all liabilities, losses, damages, claims,
costs and expenses, interest, awards, judgments and penalties (including,
without limitation, reasonable legal costs and expenses), after taking into
account any tax benefit with respect thereto, actually suffered or incurred
by any of them (hereinafter a "Seller Loss") actually arising out of or
resulting from:
45
(a) the breach of any representation or warranty by Purchaser or
Holdings contained herein;
(b) the breach of any covenant or agreement by Purchaser or Holdings
contained herein or in any document delivered hereunder at the Closing;
(c) any act, or failure to act, by Purchaser or Holdings after the
Closing with respect to the Inventory purchased hereunder; or
(d) the failure of Purchaser to pay or otherwise discharge the
Assumed Liabilities or any other liability or obligations asserted from
and after the Closing Date in connection with the Acquired Assets or
operation of the Acquired Businesses, except to the extent Star-Xxxx is
obligated to indemnify Purchaser pursuant to Section 10.2.
SECTION 10.4. Indemnification Procedures.
(a) For the purposes of this Section 10.4, the term "Indemnitee"
shall refer to the person indemnified, or entitled, or claiming to be
entitled to be indemnified, pursuant to the provisions of Section 10.2 or
10.3, as the case may be; the term "Indemnitor" shall refer to the person
having the obligation to indemnify pursuant to such provisions; and
"Losses" shall refer to the "Seller Losses" or the "Purchaser Losses", as
the case may be.
(b) An Indemnitee shall give written notice (a "Notice of Claim") to
the Indemnitor within ten (10) business days after the Indemnitee has
knowledge of any claim (including a Third Party Claim, as hereinafter
defined) which an Indemnitee has determined has given or could give rise
to a right of indemnification under this Agreement. No failure to give
such Notice of Claim within ten (10) business days as aforesaid shall
affect the indemnification obligations of the Indemnitor hereunder, except
to the extent Indemnitor can demonstrate such failure materially
prejudiced such Indemnitor's ability to successfully defend the matter
giving rise to the claim. The Notice of Claim shall state the nature of
the claim, the amount of the Loss, if known, and the method of computation
thereof, all with reasonable particularity and containing a reference to
the provisions of this Agreement in respect of which such right of
indemnification is claimed or arises.
(c) The obligations and liabilities of an Indemnitor under this
Article X with respect to losses arising from claims of any third party
that are subject to the indemnification provisions provided for in this
Article X ("Third Party Claims") shall be governed by and contingent upon
the following additional terms and conditions: The Indemnitee at the time
it gives a Notice of Claim to the Indemnitor of the Third Party Claim
shall advise the Indemnitor that it shall be permitted, at its option, to
assume and control the defense of such Third Party Claim at its expense
and through counsel of its choice if it gives prompt notice of its
intention to do so to the Indemnitee and confirms
46
that the Third Party Claim is one with respect to which the Indemnitor is
obligated to indemnify. In the event the Indemnitor exercises its right to
undertake the defense against any such Third Party Claim as provided
above, the Indemnitee shall cooperate with the Indemnitor in such defense
and make available to the Indemnitor all witnesses, pertinent records,
materials and information in its possession or under its control relating
thereto as is reasonably required by the Indemnitor and the Indemnitee may
participate by its own counsel and at its own expense in defense of such
Third Party Claim. Similarly, in the event the Indemnitee is, directly or
indirectly, conducting the defense against any such Third Party Claim, the
Indemnitor shall cooperate with the Indemnitee in such defense and make
available to it all such witnesses, records, materials and information in
its possession or under its control relating thereto as is reasonably
required by the Indemnitee and the Indemnitor may participate by its own
counsel and at its own expense in the defense of such Third Party Action.
Except for the settlement of a Third Party Claim which involves the
payment of money only, no Third Party Claim may be settled by the
Indemnitor without the written consent of the Indemnitee, which consent
shall not be unreasonably withheld or delayed. No Third Party Claim may be
settled by the Indemnitee without the written consent of the Indemnitor,
which consent shall not be unreasonably withheld or delayed.
SECTION 10.5. Limits on Indemnification. No claim may be made against
the Sellers for indemnification hereunder unless and only to the extent the
aggregate of all Purchaser Losses incurred with respect to breaches of
representations and warranties exceed $350,000 (the "Basket") and then only
with respect to that portion of Purchaser Losses which exceed the Basket.
Sellers shall not be required to indemnify for Purchaser Losses for breaches
of representations and warranties which in the aggregate exceed $15,000,000.
SECTION 10.6. Adjustment of Liability. Any indemnifiable Seller Loss or
Purchaser Loss, as the case may be, shall be reduced by the amounts actually
recovered by the indemnified party from its insurance carriers in respect of
such loss and any amounts recovered by such party subsequent to the payment
by the indemnifying party hereunder with respect to the same claim shall be
remitted to such indemnifying party, except that such remittance shall not
exceed the amount of the indemnification payment made by such indemnifying
party.
SECTION 10.7. Exclusive Remedy. The indemnity remedies provided in this
Article X, subject to the limitations set forth herein, shall be a party's
exclusive remedy for the recovery of Losses resulting from, relating to, or
arising out of any misrepresentation or breach of any representation or
warranty made by or on behalf of another party in this Agreement, any
Schedule hereto, or in any certificate delivered by such party pursuant
hereto. In furtherance of the foregoing, each party hereto hereby waives, to
the fullest extent permitted under applicable law, any and all rights, claims
and causes of action (including rights of contribution, if any) with respect
to a breach of any representation or warranty such party may have against
another party arising under or based upon any federal, state or local
statute, law, ordinance, rule, regulation or judicial decision (including,
without limitation, any such relating to environmental matters or arising
under or based upon any securities law, common law or
47
otherwise).
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Termination of Agreement. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written consent of Purchaser and Star-Xxxx; or
(b) by any party if the Closing shall not have occurred by April
30, 1996, provided however, that the right to terminate this Agreement
under this Section 11.1(b) shall not be available to any party whose
failure to perform any obligation under this Agreement has been the cause
of, or resulted in, the failure of the Closing to occur on or before such
date;
(c) by either Purchaser or Star-Xxxx, as provided in Section 10.1;
or
(d) by any party upon the occurrence of any of the adverse events
described in Section 8.3 or Section 9.3.
In the event of termination of this Agreement by a party pursuant to
this Section 11.1, written notice thereof shall forthwith be given to the
other parties specifying the provision hereof pursuant to which such
termination is made, and this Agreement shall forthwith become void and there
shall be no liability on the part of the parties hereto (or their respective
officers, directors or affiliates) except (a) as set forth in Section 11.2
hereof and (b) nothing herein shall relieve any party from liability for any
willful breach hereof.
SECTION 11.2. Expenses. All costs and expenses, including, without
limitation, fees and disbursements of counsel, financial advisors and
accountants, incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Closing shall have occurred.
SECTION 11.3. Waiver. The accuracy of any representation or warranty,
the performance of any covenant or agreement or the fulfillment of any
condition of this Agreement by Purchaser and Holdings on the one hand or
Sellers and Heinz on the other, may be expressly waived in writing by
Purchaser and Holdings or Sellers and Heinz, as appropriate. Any waiver
hereunder shall be effective only in the specific instance and for the
purpose for which given. No failure or delay on the part of Purchaser or
Sellers and Heinz in exercising any right, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
privilege.
48
SECTION 11.4. Consents. Whenever this Agreement requires a permit or
consent by or on behalf of a party hereto, such consent shall be given in
writing in a manner consistent with the requirements for a waiver of
compliance as set forth in Section 11.3.
SECTION 11.5. Assignment; Parties in Interest. This Agreement and all
of the provisions hereof shall be binding upon and inure to the benefit of,
and be enforceable by, the parties hereto and their respective successors and
permitted assigns, but neither this Agreement nor any of the rights,
interests or obligations herein shall be assigned, including by operation of
law or otherwise, by any party hereto without the prior written consent of
the other parties; provided, that Sellers may freely assign the Promissory
Note and Purchaser may freely assign this Agreement (except the Promissory
Note which shall be nonassignable,) to an Affiliate of Purchaser on the
condition that Purchaser remain obligated to Sellers hereunder or grant a
security interest to its lenders if required.
SECTION 11.6. Further Assurances. Each of the parties hereto agrees
that, from and after the Closing, upon the reasonable request of any other
party hereto and without further consideration, such party will execute and
deliver to such other party such documents and further assurances and will
take such other actions (without cost to such party) as such other party may
reasonably request in order to carry out the purpose and intention of this
Agreement.
SECTION 11.7. Entire Agreement. This Agreement and the Schedules, the
Confidentiality Agreement referred to in Section 5.1 and the other writings
referred to herein or delivered pursuant hereto which form a part hereof
contain the entire understanding of the parties with respect to the subject
matter hereof. This Agreement and the Confidentiality Agreement supersede all
prior agreements relating to the transactions contemplated hereunder.
SECTION 11.8. Amendment. This Agreement may be amended or modified in
whole or in part only by a duly authorized written agreement that refers to
this Agreement and is signed by the parties hereto or by their duly appointed
representatives or successors.
SECTION 11.9. Limitations on Rights of Third Parties. Nothing expressed
or implied in this Agreement is intended or shall be construed to confer upon
or give any person other than the parties hereto any rights or remedies under
or by reason of this Agreement or any transaction contemplated hereby,
including but not limited to the Transferred or Non-Transferred Employees
referred to herein.
SECTION 11.10. Captions. The captions in this Agreement are inserted
for convenience of reference only and shall not be considered a part of or
affect the construction or interpretation of any provision of this Agreement.
SECTION 11.11. Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. It shall not be
necessary in making proof of this Agreement to produce
49
or account for more than one such counterpart.
SECTION 11.12. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder shall be in writing and will be
deemed to have been duly given if personally delivered or telecopied or on
the date of receipt indicated on the return receipt if delivered or mailed
(registered or certified mail, postage prepaid, return receipt requested) as
follows:
50
(a) If to any of the Sellers:
Star-Xxxx Foods, Inc.
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Telecopy Number: 000-000-0000
Attention: President
With copies to:
X. X. Xxxxx Company
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy Number: 000-000-0000
Attention: Senior Vice President and General Counsel
(b) if to Heinz:
X. X. Xxxxx Company
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxx 00000
Telecopy Number: 000-000-0000
Attention: Senior Vice President and General Counsel
51
(c) If to Purchaser or Holdings:
Xxxxx Xxxx Pet Food Company, Inc.
Xxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxx, Xxxxxxxxx 00000
Telecopy Number: 000-000-0000
Attn: President
with a copy to:
Xxxxxxxx & O'Neil, LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy Number: 000-000-0000
Attn: Xxxxxx Xxxxxxx, Esq.
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.
SECTION 11.13. Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of New York without
regard to its provisions concerning conflicts or choice of law.
SECTION 11.14. Bulk Sales Law. Purchaser and Holding each waives
compliance by Sellers with the provision of any applicable bulk sales laws.
Star-Xxxx shall promptly pay and discharge when due or contest or litigate
all claims of creditors that are asserted against Purchaser or Holdings by
reason of non-compliance with such laws and shall indemnify and hold
Purchaser and Holdings harmless from and against any and all such claims,
except with respect to any such claims that relate to the Assumed Liabilities.
SECTION 11.15. Transfer Taxes; HSR Fees and Title Insurance. All
excise, sales, value added, use, registration, stamp, transfer and similar
taxes, levies, charges and fees incurred in connection with the transfer of
the Acquired Assets to Purchaser or Holdings pursuant to this Agreement and
the transactions contemplated hereby, together with the fees for the HSR
filing, shall be shared equally by Star-Xxxx and Purchaser, except that
Purchaser shall be solely responsible for the payment of any transfer or
similar taxes in connection with the transfer of any of the Acquired Assets
between Purchaser and Holdings, or to or among any other Affiliates of
Purchaser. Purchaser and Sellers shall cooperate in providing each other
appropriate resale exemption certificates and other appropriate tax
documentation. Purchaser shall be responsible for the costs of title
insurance.
SECTION 11.16. Public Announcements. All public announcements relating
to this
52
Agreement or the transactions contemplated hereby shall be made at such time
and in such manner as the parties hereto shall mutually agree, except that
nothing in this Agreement shall prevent a party hereto from making any
disclosure in connection with the transactions contemplated by this Agreement
to the extent required by law or to the extent required by any securities
exchange on which a party has listed its securities provided that prior
notice of such disclosure is given to the other party.
SECTION 11.17. Schedules. Any item disclosed in the Schedules or in any
of the Exhibits attached hereto, under any specific Section or Schedule
number hereof, shall be deemed to have been disclosed for all purposes of
this Agreement in response to every Section of this Agreement in respect of
which such disclosure is permitted or required. In no event shall Sellers
have any liability by virtue of their failure to disclose in response to any
Section of this Agreement items which are disclosed herein in response to
another Section of this Agreement.
SECTION 11.18. Heinz Guaranty. Heinz hereby guarantees the prompt
performance by Sellers of their covenants and obligations hereunder. In the
event of nonperformance by any of the Sellers of any such covenants or
obligations, Heinz shall promptly perform or cause the applicable Seller to
promptly perform such covenants and obligations. Heinz shall be entitled to
the benefit of all defenses to and limitations on the guaranteed covenants
and obligations to the same extent the applicable Seller would have had such
benefit, except that in no event shall the validity of this guarantee or the
obligations of any of the Sellers be in any way terminated, affected or
impaired by its dissolution or the rejection of such obligations under any
bankruptcy, insolvency or similar laws, now or hereafter enacted.
SECTION 11.19. No Offsets. Under no circumstances whatsoever may
Purchaser, Holdings or Sellers be entitled to offset any amounts payable
pursuant to this Agreement against any amounts payable pursuant to, or with
respect to any claims of whatsoever nature between Purchaser, Holdings and
Sellers and any of their respective affiliates under, any agreement or
arrangement between Purchaser, Holdings and Sellers or any of their
respective affiliates, including, without limitation, the Kozy Kitten License
Agreement, the Promissory Note or the Co-Pack Agreement and any other
agreement contemplated by or executed in connection with this Agreement.
ARTICLE XII
CERTAIN ENVIRONMENTAL COSTS
Purchaser has caused to be conducted an investigation of certain areas
on or near the Xxxxxx Plant (the "Xxxxxx Site") by X. Xxxxxxx Alley &
Associates Incorporated, which prepared a letter describing the results of
such investigation, a copy of which is attached
53
hereto as Schedule XII (the "Alley Report"). Purchaser shall be solely
responsible for the payment of any and all costs associated with any
additional investigation, monitoring, or other such activities, at the Xxxxxx
Site, as Purchaser desires or may be required, during the two year period
following the Closing.
Notwithstanding any other provision to the contrary in this Agreement
(including without limitation, in Article X hereof), Star-Xxxx and Purchaser
each shall pay one-half of any and all physical remediation costs and
expenses actually incurred by either party in connection with any demand,
claim, inquiry or request made by the Minnesota Pollution Control Agency,
and/or any other federal, state or local agency, related to the matters
described in the Alley Report. Seller and Purchaser further agree that any
request or requests for payment under the previous sentence must be made on
or before the second anniversary of the Closing Date. Thereafter, all costs
associated with any investigation, monitoring, and physical remediation of
the Xxxxxx Site shall be borne solely by Purchaser.
Seller and Purchaser agree to cooperate with each other with regard to
the investigation, monitoring and physical remediation activities
contemplated in this Article XII. Notwithstanding such agreement to
cooperate, Seller and Purchaser agree that Purchaser shall have exclusive
control over any and all such investigation, monitoring, and physical
remediation of the Xxxxxx Site. Seller and Purchaser further agree to
cooperate with each other with regard to any reimbursement applications filed
with applicable agencies by either party, and further agree to share pro rata
any costs attendant thereto or reimbursements received therefrom.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of Star-Xxxx, ProMark, Perk, Heinz, Holdings
and Purchaser as of the date first above written.
HEINZ PET PRODUCTS X. X. XXXXX COMPANY, as to
Division of Star-Xxxx Foods, Inc. Sections 3.1, 3.2, 3.3, 3.4, 3.10
3.15, 3.22 and 11.18 only
By: /s/ Xxxxxxx Xxx Xxxxxxxx By:
---------------------------- ----------------------------
Name: Xxxxxxx Xxx Xxxxxxxx Name:
Title: Chief Cost Officer Title:
PROMARK INTERNATIONAL, INC. XXXXX XXXX PET FOOD
HOLDINGS, INC.
By: By: /s/ Xxxxxx X. Xxxx
---------------------------- ----------------------------
Name: Name: Xxxxxx X. Xxxx
Title: Title: President
PERK FOODS CO., INCORPORATED XXXXX XXXX PET FOOD
COMPANY, INC.
By: /s/ Xxxx Xxxxxx By: /s/ Xxxxxx X. Xxxx
---------------------------- ----------------------------
Name: Xxxx Xxxxxx Name: Xxxxxx X. Xxxx
Title: Vice President Title: President
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of Star-Xxxx, ProMark, Perk, Heinz, Holdings
and Purchaser as of the date first above written.
HEINZ PET PRODUCTS X. X. XXXXX COMPANY, as to
Division of Star-Xxxx Foods, Inc. Sections 3.1, 3.2, 3.3, 3.4, 3.10
3.15, 3.22 and 11.18 only
By: By: /s/ Xxxxx X. Xxxxxxxx
---------------------------- ----------------------------
Name: Name: Xxxxx X. Xxxxxxxx
Title: Title: Senior Vice President-
Chief Financial Officer
PROMARK INTERNATIONAL, INC. XXXXX XXXX PET FOOD
HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxx By:
---------------------------- ----------------------------
Name: Xxxx X. Xxxxxxx Name:
Title: President Title:
PERK FOODS CO., INCORPORATED XXXXX XXXX PET FOOD
COMPANY, INC.
By: By:
---------------------------- ----------------------------
Name: Name:
Title: Title:
The following list briefly identifies the contents of the Schedules to
the Asset Purchase Agreement, dated as of April 17, 1996, among Heinz Pet
Products Company, a division of Star-Xxxx Foods, Inc., X.X. Xxxxx Company, Perk
Foods Co., Incorporated, ProMark International, Inc., Xxxxx Xxxx Pet Food
Holdings, Inc. and Xxxxx Xxxx Pet Food Company, Inc. (Terms used but not defined
have the meanings assigned to them in the Asset Purchase Agreement.) In
accordance with Regulation S-K under the Securities Act of 1933 the actual
Schedules have not been filed with the Securities and Exchange Commission (the
"Commission"). The Company hereby agrees to furnish supplementally a copy of
any omitted Schedule to the Commission upon request.
1. Schedule 1.0 Calculation of Non-Cash Working Capital
2. Schedule 1.1 Kozy Kitten Products -- List of Kozy Kitten products
3. Schedule 1.2 Tuffy's Products -- List of Tuffy's products
4. Schedule 1.3 Vet's Dog Food Products -- List of Vet's dog food products
5. Schedule 2.1(a) Owned Real Property -- Descriptions of owned real property
6. Schedule 2.1(a-1) Real Property Leases -- List of Real Property leases
7. Schedule 2.1(vi) Excluded Assets -- Description of excluded assets
8. Schedule 2.3 Acquired Assets to be Transferred to Holdings
9. Schedule 2.4(a) Exceptions in Connection with Closing Statement --
Indicates that no such exceptions were taken
10. Schedule 2.5 Allocation of Purchase Price -- Provides allocations of
purchase price
11. Schedule 2.7(b) Assumed Contracts, Real Property Leases and Permits
Requiring Consent
12. Schedule 3.1 States Where Qualified to do Business as Foreign Corporation
-- List of jurisdictions where Acquired Business is qualified to do
business as a foreign corporation
13. Schedule 3.4 No Contravention (Seller) -- List of items which require
consent of third parties
14. Schedule 3.5 Divisional Financial Statements and Exceptions to Such
Statements -- List of divisional financial statements
15. Schedule 3.6(a) Exceptions to Title to Acquired Assets and to Working Order
of Physical Assets
16. Schedule 3.6(b) Disclosures relating to Owned Real Property or Leased Real
Property -- List of disclosures regarding status of real and leased
property
17. Schedule 3.7(a) Contracts -- List of all written and oral contracts
relating to the Acquired Business
18. Schedule 3.7(b) Exceptions to Validity, Force and Effect of Material
Contracts or Events of Default
19. Schedule 3.8 Employee Benefit Plans -- List of employee benefit plans
including pension, dental, bonus, etc.
20. Schedule 3.9 Absence of Certain Changes -- List of changes in the Acquired
Business since December 23, 1995
21. Schedule 3.10 Litigation -- List of pending litigation or claims,
threatened or possible litigation or claims and orders, decrees or
judgments in effect
22. Schedule 3.11(a) Compliance with Laws
23. Schedule 3.12(a) Intellectual Property -- List of Trademarks, Patents and
Copyrights
24. Schedule 3.12(a)(i) Common Law Trademark/Variety Designators
25. Schedule 3.12(b) Registered Trademarks -- Exceptions to Title
26. Schedule 3.12(c) Patents and Copyrights -- Exceptions to Title
27. Schedule 3.12(d) Intellectual Property -- Licenses; Claims
28. Schedule 3.13 Taxes -- List of pending, threatened claims, investigations,
actions or proceedings
29. Schedule 3.14 Inventory -- List of unusable or unsalable inventory
30. Schedule 3.17 Labor Matters -- List of unfair labor practices of which
there were none
2
31. Schedule 3.18 Assets and Properties Necessary to Produce the Products of
Acquired Businesses
32. Schedule 3.19 Exceptions to Collectibility of Net Receivables
33. Schedule 3.20 Suppliers and Customers -- List of ten largest suppliers and
customers
34. Schedule 3.22 Environmental Matters -- List of information regarding
environmental matters
35. Schedule 4.4 No Contravention (Purchaser) -- List of consents needed by
Purchaser
36. Schedule 5.6 Capital Projects -- List of capital projects Star-Xxxx is
responsible for payment
37. Schedule 7.1 Compensation and Benefits to be Provided -- Lists names of all
employees of the Acquired Business the annual wages or salaries, and
compensation paid or payable for services rendered during calendar year
1995
38. Schedule 8.2 Consents -- Lists of consents necessary for completion of
transaction
39. Schedule 8.7 Form of Owners Affidavit
40. Schedule 8.9 Debt Term Sheets -- List of term sheets for Purchasers'
financing
41. Schedule XII Certain Environmental Costs -- Letter of X. Xxxxxxx
Alley & Associates Incorporated describing results of investigation
of certain areas on or near the Xxxxxx plant.
3
