EXHIBIT 10.2
ASSET PURCHASE AGREEMENT
By and among
XXXXXX FOODS CORPORATION
BFC INVESTMENTS, L.P.
BF FOODS INTERNATIONAL CORPORATION
and
AMERICAN ITALIAN PASTA COMPANY
Dated as of June 1, 2001
TABLE OF CONTENTS
Page
ARTICLE I SALE OF ASSETS AND ASSUMPTION OF LIABILITIES.......................1
1.1. Sale of Assets..................................................1
1.2. Assets..........................................................2
1.3. Excluded Assets.................................................3
1.4. Assumed Liabilities.............................................3
1.5. Excluded Liabilities............................................4
ARTICLE II PURCHASE PRICE....................................................4
2.1. Purchase Price..................................................4
ARTICLE III REPRESENTATIONS AND WARRANTIES OF BFC............................7
3.1. Due Organization................................................7
3.2. Authorization and Validity of Agreement.........................7
3.3. No Conflicts....................................................7
3.4. Legal Proceedings...............................................8
3.5. Trademark Rights................................................8
3.6. No Other Material Intellectual Property.........................8
3.7. Books and Records...............................................8
3.8. Finders; Brokers................................................9
3.9. Closing Date Inventory..........................................9
3.10. No Liens on Assets.............................................9
3.11. Customers......................................................9
3.12. Preparation of 2001 Annual Business Plan.......................9
3.13. Contracts......................................................9
3.14. Securities Act Matters........................................10
3.15. No Other Representations or Warranties........................10
3.16. Survival of Representations and Warranties....................10
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER..........................10
4.1. Due Organization and Power of Buyer............................10
4.2. Authorization and Validity of Agreement........................11
4.3. No Conflict....................................................11
4.4. Finders; Brokers...............................................11
4.5. Financial Capacity.............................................11
4.6. Capitalization.................................................11
4.7. Buyer Common Stock.............................................12
4.8. SEC Reports....................................................12
4.9. No Other Representations or Warranties.........................12
4.10. Survival of Representations and Warranties....................12
ARTICLE V COVENANTS.........................................................13
5.1. Access; Information and Records; Confidentiality...............13
5.2. Conduct of the Business Prior to the Closing Date..............13
5.3. Transition Arrangements........................................14
5.4. Direct Trade Promotions........................................14
5.5. Antitrust Laws.................................................15
5.6. Non-Solicitation...............................................15
5.7. Further Actions................................................16
5.8. Trademark License Agreements...................................16
5.9. Access to Records and Personnel................................16
5.10. Inventory.....................................................17
5.11. Post-Closing Identification...................................18
5.12. "As Is" Condition.............................................18
5.13. Misapplied Deductions.........................................18
5.14. Services Agreement............................................19
5.15. No Sale Negotiations..........................................19
5.16. Reporting Requirements........................................19
5.17. Financing.....................................................19
ARTICLE VI CONDITIONS.......................................................19
6.1. Conditions Precedent to Obligations of Buyer and the
Sellers.......................................................19
6.2. Conditions Precedent to Obligation of the Sellers..............20
6.3. Conditions Precedent to Obligation of Buyer....................21
ARTICLE VII CLOSING.........................................................22
7.1. Closing Date...................................................22
7.2. Buyer Deliveries...............................................22
7.3. Seller Deliveries..............................................22
ARTICLE VIII INDEMNIFICATION................................................22
8.1. Indemnification by the Sellers.................................22
8.2. Indemnification by Buyer.......................................23
8.3. Indemnification Calculations...................................24
ARTICLE IX TERMINATION......................................................25
9.1. Termination Events.............................................25
9.2. Effect of Termination..........................................25
ARTICLE X ALTERNATIVE DISPUTE RESOLUTION....................................26
10.1. Alternative Dispute Resolution................................26
ARTICLE XI MISCELLANEOUS AGREEMENTS OF THE PARTIES..........................26
11.1. Notices.......................................................26
11.2. Bulk Transfers................................................27
11.3. Transaction Taxes.............................................27
11.4. Further Assurances; Asset Returns.............................27
11.5. Other Covenants...............................................28
11.6. Expenses......................................................28
11.7. Entire Agreement..............................................28
11.8. No Third Party Beneficiaries..................................28
11.9. Possible Adjustment to Purchase Price.........................28
11.10. Assignability................................................29
11.11. Amendment and Modification; Waiver...........................29
11.12. Public Announcements.........................................29
11.13. Schedules and Exhibits.......................................30
11.14. Section Headings; Table of Contents..........................30
11.15. Severability.................................................30
11.16. Counterparts.................................................30
11.17. Enforcement..................................................30
11.18. Governing Law................................................30
11.19. Certain Definitions..........................................30
Exhibits
EXHIBIT A ......- Cost of Inventory
EXHIBIT B ......- Terms and Provisions Relating to Stock Consideration
EXHIBIT C-1 ......- Form of Xxxxxx Trademark License Agreement
EXHIBIT C-2 ......- Form of R&F Trademark License Agreement
EXHIBIT C-3 ......- Form of Mrs. Grass Trademark License Agreement
EXHIBIT C-4 ......- Form of Ancillary Trademark License Agreement
EXHIBIT D-1 ......- Form of Contract Packaging Agreement
EXHIBIT D-2 ......- Form of Whole Wheat Packaging Agreement
EXHIBIT E ......- Form of Services Agreement
EXHIBIT F ......- Form of Assumption Agreement
EXHIBIT G ......- Form of Xxxx of Sale Agreement
EXHIBIT H ......- Form of Intangible Property Assignment
SCHEDULES
Schedule 1.2(a)(i)(A) Books and Records
Schedule 1.2(a)(ii)(A) Brand Contracts
Schedule 1.2(a)(ii)(B) General Contracts
Schedule 1.2(b) BFC Investments Assets
Schedule 1.2(c) BFIC Assets
Schedule 1.4(iii) Open Purchase Orders
Schedule 1.4(iv) Trade Promotion Obligations and Liabilities
Schedule 2.1(c)(ii) List of Warehouses
Schedule 2.1(e) Allocation of Purchase Price
Schedule 3.3 Exceptions to No Conflicts
Schedule 3.4 Legal Proceedings
Schedule 3.5(a)(i) Trademark Rights
Schedule 3.5(a)(ii) Exceptions to Trademark Rights
Schedule 3.7 DCPDA Statement for Each Brand and Inventory
Statement
Schedule 3.11 Customers
Schedule 5.2 Conduct of Business
Schedule 11.19 Pasta Pounds
Index of Defined Terms
1060 Forms.........................7
affiliate.........................33
Agreement..........................1
Ancillary Trademark License
Agreement........................18
Antitrust Division................16
Antitrust Improvements Act.........8
Assets.............................2
Assumed Liabilities................3
Assumption Agreement..............22
Average Buyer Price................7
BFC................................1
BFC Assets.........................1
BFC Investments....................1
BFC Investments Assets.............2
BFC Investments Purchase Price.....4
BFC Investments Trademark Rights...3
BFC Purchase Price.................4
BFIC...............................1
BFIC Assets........................2
BFIC Purchase Price................4
BFIC Trademark Rights..............3
Books and Records..................2
Xxxxxx............................17
Xxxxxx Xxxx.......................33
Xxxxxx Trademark License Agreement17
Brand Contracts....................2
Brands.............................1
Business...........................1
Buyer..............................1
Buyer Losses......................24
Buyer's Inventory Estimate.........5
Closing...........................24
Closing Date......................24
Closing Date Inventory.............2
Closing Date Inventory Estimate....5
Code...............................7
Common Stock......................12
Contract Packaging Agreement......19
Contracts..........................2
Covered Product Recalls...........33
Customer Lists....................34
DPCDA.............................34
DPCDA Statement....................9
Excluded Assets....................3
Excluded Liabilities...............4
Facilities.........................5
Final Closing Date Inventory.......6
Final Closing Date Promotion
Liability.........................6
Finished Goods Inventory...........2
FTC...............................16
General Contracts..................2
Governmental Authority............34
Indemnity Claim...................26
Inventory..........................2
Inventory Cutoff...................5
Inventory Statement................9
Losses............................25
Material Adverse Change...........13
Material Adverse Effect............8
Materially Reduced................10
Misapplied Deductions.............34
Mrs. Grass Trademark License
Agreement........................18
Neutral Auditor....................6
NYSE...............................7
Permitted Liens...................34
person............................34
Potential Transaction.............20
Purchase...........................1
Purchase Price.....................5
R&F Trademark License Agreement...17
Relevant Transferee...............34
Required Consents.................21
SEC...............................12
SEC Reports.......................13
Sellers............................1
Sellers Losses....................25
Sellers' Inventory Estimate........5
Services Agreement................20
Shares.............................7
Stock Consideration................7
subsidiary or subsidiaries........34
Tax Benefit.......................27
the best knowledge of.............34
the knowledge of..................34
Trademark License Agreements......18
Trademark Rights...................3
Whole Wheat Packaging Agreement...19
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of June __, 2001 (this "Agreement"), by
and among XXXXXX FOODS CORPORATION, a Delaware corporation ("BFC"), BFC
INVESTMENTS, L.P., a Delaware limited partnership ("BFC Investments"), BF FOODS
INTERNATIONAL CORPORATION, a Delaware corporation ("BFIC") and AMERICAN ITALIAN
PASTA COMPANY, a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, The Sellers are engaged, in part, in the business (hereinafter
referred to as the "Business") of developing, manufacturing, marketing,
distributing and selling pasta and noodles under the names set forth in Schedule
1.2(b) (hereinafter referred to as the "Brands"); and
WHEREAS, Buyer desires to purchase from BFC, BFC Investments and BFIC
(collectively, the "Sellers") and Sellers desire to sell to Buyer, on the terms
and subject to the conditions of this Agreement, certain of the assets (subject
to certain liabilities) of the Sellers related to the Business (the "Purchase").
NOW, THEREFORE, in consideration of the premises and the mutual promises
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
SALE OF ASSETS AND ASSUMPTION OF LIABILITIES
1.1 Sale of Assets. (a) Sale of BFC Assets. Subject to the satisfaction or
waiver of the conditions set forth in this Agreement, at the Closing and as of
the Closing Date, the Sellers (other than BFC Investments and BFIC) shall sell,
assign, transfer, convey and deliver to Buyer free and clear of all liens and
encumbrances (other than Permitted Liens), and Buyer shall purchase or assume,
as the case may be, all of the assets, rights, properties, claims and contracts
described in Section 1.2(a) hereof (collectively, the "BFC Assets"). As of the
Closing, risk of loss as to the BFC Assets shall pass from such Sellers to
Buyer.
(b) Sale of BFC Investments Assets. Subject to the satisfaction or waiver
of the conditions set forth in this Agreement, at the Closing and as of the
Closing Date, BFC Investments shall sell, assign, transfer, convey and deliver
to Buyer free and clear of all liens and encumbrances (other than Permitted
Liens), and Buyer shall purchase or assume, as the case may be, the assets,
rights, properties, claims, and contracts set forth in Section 1.2(b) (the "BFC
Investments Assets"). As of the Closing, risk of loss as to the BFC Investments
Assets shall pass from BFC Investments to Buyer.
(c) Sale of BFIC Assets. Subject to the satisfaction or waiver of the
conditions set forth in this Agreement, at the Closing and as of the Closing
Date, BFIC shall sell, assign, transfer, convey and deliver to Buyer, free and
clear of all liens and encumbrances (other than Permitted
Liens) and Buyer shall purchase or assume, as the case may be, the assets,
rights, properties, claims and contracts set forth in Section 1.2(c) (the "BFIC
Assets"; and together with the BFC Assets and the BFC Investments Assets, the
"Assets"). As of the Closing, risk of loss as to the BFIC Assets shall pass from
BFIC to Buyer.
1.2. Assets. (a) BFC Assets. The BFC Assets to be purchased by Buyer at the
Closing shall include only the following:
(i) Intangible Property.
(A) Business Information. Subject to Section 5.9 and the terms of the
Services Agreement (as defined in Section 5.14), financial books and records
created since January 1, 2000 and currently used by the Sellers to the extent
related to the Brands and, to the extent related to the Brands, those other
books, records and additional business information currently used by the Sellers
listed on Schedule 1.2(a)(i)(A), including Customer Lists (collectively, "Books
and Records"); provided, however, that BFC shall be permitted to retain copies
of any Books and Records delivered to Buyer and BFC shall be permitted to
transfer such Books and Records to the Relevant Transferee (as defined in
Section 11.18) and thereafter, each of the Buyer and the Relevant Transferee
shall have a non-exclusive property right with respect to such Books and
Records.
(B) UPC Codes. All UPC Codes exclusively related to the Brands.
(ii) Selected Contracts and Purchase Orders. (A) All agreements, contracts,
contract rights, understandings, commitments and arrangements whether written or
oral exclusively related to the Brands listed on Schedule 1.2(a)(ii)(A)
(collectively, the "Brand Contracts"); (B) all agreements, contracts, contract
rights, understandings, commitments and arrangements set forth on Schedule
1.2(a)(ii)(B) (collectively, the "General Contracts"; together with the Brand
Contracts, the "Contracts") to the extent that the rights thereunder relate to
the Brands and (C) any and all open purchase orders described in Section
1.4(iii).
(iii) Inventories. The finished products (other than finished products that
have been billed and are being held for customers' accounts) exclusively related
to the Brands (collectively, the "Finished Goods Inventory") and all
Brand-specific packaging used in connection therewith (together with the
Finished Goods Inventory, the "Inventory") owned by the Sellers on the Closing
Date (such Inventory, the "Closing Date Inventory")
(b) BFC Investments Assets. The BFC Investments Assets to be purchased by
Buyer at the Closing are all of BFC Investments' right, title and interest in
(i) the Brands (other than "Globe & Design") and all related trademarks,
trademark registrations, trademark applications (including all documents or
files pertaining thereto), trade names and trade dress, domain names and all
related renewals and similar legal rights relating thereto (except to the extent
containing any Borden Marks) and (ii) any and all licenses or other rights to
use trademarks owned by others, in each case used exclusively in connection with
the Brands and described on Schedule 1.2(b) hereto solely in the territories set
forth on such Schedule (the "BFC Investments Trademark Rights");
(c) BFIC Assets. The BFIC Assets to be purchased by Buyer at the Closing
are all of BFIC's right, title and interest in (i) "Globe & Design" and all
related trademarks, trademark registrations, trademark applications (including
all documents or files pertaining thereto), trade names and trade dress, domain
names and all related renewals and similar legal rights relating thereto (except
to the extent containing any Borden Marks) and (ii) any and all licenses or
other rights to use trademarks owned by others, in each case used exclusively in
connection with "Globe & Design" and described on Schedule 1.2(c) hereto solely
in the territories set forth on such Schedule (the "BFIC Trademark Rights";
together with the BFC Investments Trademark Rights, the "Trademark Rights").
(d) Rights to Action. Buyer has the right to bring all actions at law or in
equity after the Closing Date arising out of the infringement or violation of
the BFC Investments Assets or the BFIC Assets prior to the Closing Date and to
retain all damages and proceeds therefrom.
1.3. Excluded Assets. It is expressly agreed that the Sellers will retain
and Buyer will not acquire any assets other than the Assets (the "Excluded
Assets").
1.4. Assumed Liabilities. On the Closing Date and as of the Closing, Buyer
assumes and agrees to pay, perform and discharge when due, the following debts,
liabilities and obligations related to the Brands, arising out of or pertaining
to the following (collectively, the "Assumed Liabilities"):
(i) all debts, obligations and liabilities of or relating to the Brands or
the other Assets incurred by Buyer on or after the Closing Date or which arise
on account of Buyer's use of the Brands and the other Assets, and/or sale of any
products manufactured and/or sold by Buyer on and after the Closing Date,
including, without limitation, (x) all liabilities and obligations for
commissions, fees or other payments, including expenses, due to brokers and
agents for sales and orders for products relating to the Brands shipped on and
after the Closing Date or any such agreements entered into after the date of
this Agreement in the ordinary course of business, (y) all liabilities and
obligations for non-coupon consumer promotions (including, without limitation,
sweepstakes) and other consumer marketing programs related to the Brands
implemented by Buyer on and after the Closing Date and (z) all liabilities and
obligations for consumer coupons for products relating to the Brands issued or
"dropped" by Buyer on and after the Closing Date;
(ii) all obligations and liabilities of the Sellers under the Brand
Contracts and, to the extent related to the Brands, under the General Contracts;
(iii) all obligations and liabilities of the Sellers under the open
purchase orders related to the Brands and in the amounts that are set forth on
Schedule 1.4(iii) and that have not been fulfilled as of the Closing Date and
all obligations and liabilities of the Sellers on all other open purchase orders
related to the Brands that are (x) of the same general type as those listed on
Schedule 1.4(iii) and (y) entered into in the ordinary course of business
(whether before or after the date of this Agreement) that have not been
fulfilled as of the Closing Date;
(iv) all obligations and liabilities for Sellers' trade promotion programs
(including, without limitation, slotting allowances, retailer ads, store display
allowances and similar items) related to the Brands that are set forth in
Schedule 1.4(iv) and all obligations and liabilities of the Sellers on all other
trade promotion programs related to the Brands that are (x) of the same general
type as those listed on Schedule 1.4(iv) and (y) entered into in the ordinary
course of business (whether before or after the date of this Agreement); and
(v) all obligations and liabilities for all consumer complaints, trade
complaints, written product guarantees set forth on the packaging therefor and
damaged or unsalable merchandise returned or received.
1.5. Excluded Liabilities. It is expressly agreed that the Sellers will
retain and Buyer shall not assume any liabilities of the Business other than the
Assumed Liabilities (the "Excluded Liabilities").
ARTICLE II
PURCHASE PRICE
2.1. Purchase Price. (a) The purchase price (less the price allocated to
BFC) for the BFC Investments Assets shall be $61,995,000 (the "BFC Investments
Purchase Price") and the purchase price for the BFIC Assets shall be $5,000 (the
"BFIC Purchase Price").
(b) (i) The aggregate purchase price (the "BFC Purchase Price") for the BFC
Assets other than the Closing Date Inventory purchased from BFC shall be
$3,500,000, less the amount of the Closing Date Promotion Liability (as defined
below).
(ii) The "Closing Date Promotion Liability" shall be the amount of the
liabilities represented by the trade promotion programs that Buyer is assuming
pursuant to Section 1.4(iv) hereunder, such liability to be established in
accordance with the same methods and practices used by Sellers in preparing the
Trade Promotion Statement. The parties shall agree on the amount of the Closing
Date Promotion Liability no later than five (5) days prior to Closing. In the
event Sellers and Buyer cannot agree on the amount of such liability, the
Closing Date Promotion Liability shall, subject to later adjustment pursuant to
Section 2.1(d), be an amount equal to the mathematical midpoint (the "Closing
Date Promotion Liability Estimate") of the amount which Sellers have reasonably
proposed for the Closing Date Promotion Liability and the amount which Buyer has
reasonably proposed for the Closing Date Promotion Liability, and such midpoint
amount shall be used as the "Closing Date Promotion Liability" for the purposes
of the Closing.
(c) (i) The aggregate purchase price for the Closing Date Inventory shall
be the Cost (as determined in accordance with Exhibit A) of the Closing Date
Inventory, except for Finished Goods Inventory items which are unsalable or have
an expiration date less than 180 days from the Closing Date. The Cost of the
Closing Date Inventory together with the BFC Purchase Price,
the BFC Investments Purchase Price and the BFIC Purchase Price shall hereinafter
be referred to as the "Purchase Price".
(ii) During the weekend prior to Closing, representatives of Sellers and
Buyer shall conduct a physical counting of the Inventory at the BFC production
facilities in St. Louis, Missouri; Xxxxxxxx, Xxxxxx, Xxxxxx; Lethbridge,
Alberta, Canada; and Albadoro, Italy (collectively, the "Facilities") and at the
warehouses listed on Schedule 2.1(c)(ii) in an agreed-upon manner consistent
with Sellers' past practices (the "Inventory Cutoff"). The quantities and
valuation of Inventories observed and counted during such physical counting,
upon being agreed to, shall constitute the Closing Date Inventory and shall be
final and binding upon the parties. The Closing Date Inventory shall be
established in accordance with the same methods and practices used by Sellers in
preparing the Inventory Statement. The valuation of Inventories will be
determined in accordance with the definition of "Cost". Buyer will date finished
products produced after the Inventory Cutoff so as to allow the parties to
easily identify and distinguish products made prior to and after the Inventory
Cutoff.
(iii) In the event Sellers and Buyer cannot agree during the weekend prior
to the Closing upon the amount of Inventory constituting the Closing Date
Inventory, the Closing Date Inventory shall, subject to later adjustment, if and
to the extent required, pursuant to Section 2.1(d), be an amount equal to the
mathematical midpoint (the "Closing Date Inventory Estimate") of the amount
which Sellers have reasonably proposed for the Closing Date Inventory ("Sellers'
Inventory Estimate") and the amount which Buyer has reasonably proposed for the
Closing Date Inventory ("Buyer's Inventory Estimate") and such midpoint amount
shall be used as the "Closing Date Inventory" for the purposes of the Closing.
(d) (i) Subject to the last sentence of this paragraph, if Sellers and
Buyer have not agreed upon either or both of the amount of the Closing Date
Inventory or the amount of the Closing Date Promotion Liability, within five (5)
days after the Closing, the determination of the actual amount of the Closing
Date Inventory and/or Closing Date Promotion Liability shall be referred by BFC
and Buyer to Xxxxxx Xxxxxxxx LLP or such other national independent accounting
firm mutually acceptable to Buyer and BFC (the "Neutral Auditor" ). The Neutral
Auditor will deliver to Buyer and BFC a written determination of the amount of
the Closing Date Inventory and/or the Closing Date Promotion Liability (the
"Final Closing Date Inventory" and "Final Closing Date Promotion Liability",
respectively) within thirty (30) days of receipt of such referral, which
determination will be final, binding and conclusive. The Final Closing Date
Inventory and the Final Closing Date Promotion Liability shall be established in
accordance with the same methods and practices used by Sellers in preparing the
Inventory Statement and the Trade Promotion Statement, respectively. If the
Final Closing Date Inventory is greater than the Closing Date Inventory
Estimate, then the Purchase Price will be increased by an amount equal to the
difference between the Final Closing Date Inventory and the Closing Date
Inventory Estimate, and Buyer shall pay to Sellers an amount of Purchase Price
equal to such difference. If the Final Closing Date Inventory is less than the
Closing Date Inventory Estimate, then the Purchase Price will be decreased by
an amount equal to the difference between the Final Closing Date Inventory and
the Closing Date Inventory Estimate, and Sellers shall pay to Buyer an amount in
cash equal to such difference. If the Final Closing Date Promotion Liability is
greater than the Closing Date Promotion Liability Estimate, then the Purchase
Price will be decreased by an amount equal to the difference between the Final
Closing Date Promotion Liability and the Closing Date Promotion Liability
Estimate, and Sellers shall pay to Buyer an amount in cash equal to such
decrease. If the Final Closing Date Promotion Liability is less than the Closing
Date Promotion Liability Estimate, then the Purchase Price will be increased by
an amount equal to the difference between the Final Closing Date Promotion
Liability and the Closing Date Promotion Liability Estimate, and Buyer shall pay
to Sellers an amount in Purchase Price equal to such increase. Notwithstanding
the foregoing, if the Buyers' Inventory Estimate is greater than the product of
0.98 times the Sellers' Inventory Estimate, this Section shall not apply to the
determination of the Finished Goods Inventory and no adjustment shall be made.
(ii) All payments to be made pursuant to this Section will be made on the
second business day following the date on which the Neutral Auditor determines
the Final Closing Date Inventory and/or Final Closing Date Promotion Liability.
Any payment required to be made by Sellers or Buyer pursuant to this Section
shall bear interest from the Closing Date through the date of payment at a rate
of interest equal to the prime rate per annum publicly announced from time to
time by Citibank, N.A. at its principal office in New York City, and shall be
payable by wire transfer of immediately available funds to an account or
accounts designated by the party entitled to receive such funds prior to the
date when such payment is due.
(iii) All fees and expenses relating to the work to be performed by the
Neutral Auditor shall be paid by the party required to pay the other party the
greater amount under this Section; provided, that if no party is required to pay
the other party, the fees and expenses of the Neutral Auditor shall be paid
one-half by Buyer and one-half by Sellers.
(e) Buyer and the Sellers agree to allocate the Purchase Price in
accordance with the rules under Section 1060 of the Internal Revenue Code of
1986, as amended (the "Code") and the Treasury Regulations promulgated
thereunder. Such allocation is to be agreed upon by the Buyer and Sellers within
ninety (90) days after the Closing. Any such allocation shall be subject to the
general allocation of the Purchase Price set forth in Sections 2.1(a) and 2.1(b)
of this Agreement. Buyer and the Sellers recognize that the Purchase Price does
not include Buyer's acquisition expenses and that Buyer will allocate such
expenses appropriately. BFC and Buyer agree to act in accordance with the
computations and allocations contained in Schedule 2.1(e) (including any
modifications thereto reflecting any post-closing adjustments) in any relevant
tax returns or filings, including any forms or reports required to be filed
pursuant to Section 1060 of the Code, the Treasury Regulations promulgated
thereunder or any provisions of local, state and foreign law ("1060 Forms"), and
to cooperate in the preparation of any 1060 Forms and to file such 1060 Forms in
the manner required by applicable law.
(f) The Purchase Price shall be payable in immediately available federal
funds to such bank accounts, in the United States, as shall be designated by BFC
prior to Closing; provided, that if Buyer does not have funds on hand sufficient
to pay the Purchase Price, up to an amount equal to the Purchase Price minus $30
million may be payable in the form of shares Convertible Class A Common Stock,
par value $.001 per share (the "Shares"), of Buyer (the "Stock Consideration").
The Stock Consideration shall be issued by Buyer to the Sellers at the Closing
and shall be subject to the terms and provisions described on Exhibit B attached
hereto. Each of the parties hereto agrees to execute and deliver all documents
that may reasonably be necessary
or desireable to give effect to the terms and provisions described in Exhibit B.
The aggregate number of Shares that Buyer shall issue and deliver to the Sellers
shall be equal to (x) the Purchase Price minus the amount of cash delivered by
Buyer to the Sellers as part of the Purchase Price divided by (y) the Average
Buyer Price. The "Average Buyer Price" means the average of the daily closing
prices of the Shares as reported on the NYSE Composite Transactions Reporting
System (as reported in The Wall Street Journal or, if not reported therein, in
another authoritative source) for the twenty consecutive New York Stock Exchange
(the "NYSE") full trading days (in which such shares are traded on the NYSE)
ending at the close of trading on the second trading day prior to the date
hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BFC
BFC represents and warrants on behalf of itself and on behalf of the other
Sellers to Buyer as follows:
3.1. Due Organization. Each of the Sellers (other than BFC Investments) is
duly organized, validly existing and in good standing under the laws of the
jurisdiction of their incorporation, and BFC Investments is a limited
partnership duly organized, validly existing and in good standing under the laws
of the jurisdiction of its organization. Each of the Sellers has all requisite
power and authority to own the Assets and enter into this Agreement and to
perform its obligations hereunder.
3.2. Authorization and Validity of Agreement. The execution, delivery and
performance by BFC and the other Sellers of this Agreement and the consummation
by the Sellers of the transactions contemplated hereby have been duly authorized
by all necessary action on the part of BFC and the other Sellers, and no other
action on the part of the Sellers is necessary for the execution, delivery and
performance by BFC and the other Sellers of this Agreement and the consummation
by the Sellers of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by BFC and the other Sellers and is a legal, valid
and binding obligation of BFC and the other Sellers, enforceable against BFC and
the other Sellers in accordance with its terms, except to the extent that its
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting creditors' rights generally
and by general equity principles.
3.3. No Conflicts. (a) Except as set forth on Schedule 3.3 hereto, except
as specifically contemplated in this Agreement and except as would not have a
material adverse effect on the value of the Brands (a "Material Adverse
Effect"), the execution, delivery and performance by the Sellers of this
Agreement and the consummation by the Sellers of the transactions contemplated
hereby: (i) will not violate any provision of law, rule or regulation, order,
judgment or decree applicable to the Sellers; (ii) will not require any permit
from or any consent or approval of, or filing with or notice to, any
Governmental Authority (as defined below) under any provision of law applicable
to the Sellers, except for the requirements of the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "Antitrust
Improvements Act"), and except for any consent, approval, filing or notice
requirements that become applicable solely as a result of the specific
regulatory status of Buyer; (iii) will not violate any provision of the
organizational documents of the Sellers; and (iv) will not require any consent
or approval under, and will not conflict with, or result in the breach or
termination of, or constitute a default under, or result in the acceleration of
the performance by the Sellers under, any indenture, mortgage, deed of trust,
lease, license, franchise, contract, agreement or other instrument to which any
such Seller is a party or by which it, or any of its assets are bound. No permit
from any Governmental Authority is required for Sellers to sell the pasta and
noodles under the Brands in a manner consistent with Sellers' past practice
3.4. Legal Proceedings. Except as set forth on Schedule 3.4 and except as
would not, individually or in the aggregate, have a Material Adverse Effect:
(a) there are no actions, suits, claims, demands, investigations,
complaints, proceedings or orders pending or (to the knowledge of Sellers)
threatened against or affecting any of the Sellers at law or in equity, or
before or by any Governmental Authority; and
(b) none of the Sellers is subject to any order, writ, injunction,
judgment, garnishment, levy or decree of any court or any Governmental Authority
relating to the Brands.
3.5. Trademark Rights. Schedule 3.5(a)(i) lists all material Trademark
Rights. Except as set forth in Schedule 3.5(a)(ii) and except as would not,
individually or in the aggregate, have a Material Adverse Effect, (i) the
Sellers own, are licensed or have the right to use the Trademark Rights
described in Schedule 3.5(a)(i) free and clear of all liens and encumbrances;
(ii) there are no pending actions or proceedings challenging the validity or
ownership of such Trademark Rights or the Sellers' right to use such Trademark
Rights; (iii) the Trademark Rights described in Schedule 3.5(a)(i) constitute
the material Trademark Rights owned by the Sellers or used by the Sellers in
connection with the current operation of the Business; (iv) none of the issued
trademark registrations under such Trademark Rights has expired or been canceled
and, to the knowledge of Sellers', none is being materially infringed by others;
(v) there are no written licenses or sublicense agreements now in effect
regarding the Sellers' use of such Trademark Rights; and (vi) to the knowledge
of the Sellers, the Sellers are not materially infringing any U.S. or foreign
trademark owned by third parties in the current operation of the Business.
3.6. No Other Material Intellectual Property. The Assets, together with the
rights made available in the Trademark License Agreements, constitute all of the
material patents (if any), copyrights (if any) and trademarks and other
intellectual property rights used exclusively in connection with the Brands in
all material respects.
3.7. Books and Records. The Books and Records have been maintained in all
material respects in accordance with BFC's internal practices and policies and
good business practices. Schedule 3.7 hereto contains (i) the Brands' DPCDA
statement (the "DPCDA Statement") and related notes for the fiscal year ended
December 31, 2000; (ii) a statement setting forth the Inventory (the "Inventory
Statement ") and related notes for April 28, 2001; and
(iii) a statement setting forth the liability relating to Sellers' trade
promotion programs (including, without limitation, slotting allowances, retailer
ads, store display allowances and similar items) related to the Brands and
related notes at April 28, 2001 (the "Trade Promotion Statement"). The DPCDA
Statement, the Inventory Statement and the Trade Promotion Statement have been
prepared from the Books and Records related to the Brands and the DPCDA
Statement contains all transactions of the Brands consistent with BFC's internal
accounting practices.
3.8. Finders; Brokers. With the exception of fees and expenses payable to
Xxxxxxx, Xxxxx & Co., which shall be BFC's sole responsibility, BFC is not a
party to any agreement with any finder or broker, or in any way obligated to any
finder or broker for any commissions, fees or expenses in connection with the
origin, negotiation, execution or performance of this Agreement.
3.9. Closing Date Inventory. The Finished Goods Inventory included in the
Closing Date Inventory, except for Finished Goods Inventory items which are
unsalable or have an expiration date less than one hundred and eighty (180) days
from the Closing Date, will be merchantable, usable and salable at customary
prices and discounts in the ordinary course of business on the Closing Date.
3.10. No Liens on Assets. The Assets are free and clear of all liens other
than Permitted Liens.
3.11. Customers. Schedule 3.11 lists certain major customers of the
Business and the cumulative sales of the products of the Business to said
customers for the periods described thereon. Since January 1, 2001 none of the
customers listed on Schedule 3.11 has ceased to do business with BFC and since
January 1, 2001 BFC has not received any written notice that any customer listed
on Schedule 3.11 intends to terminate its business with BFC. In addition, none
of the customers listed on Schedule 3.11 has Materially Reduced (as defined
below) its business with BFC. For purposes of this Section 3.11, "Materially
Reduced" shall mean that the sales attributed to such customer have decreased in
the twelve (12) months ended December 31, 2000 compared to the twelve (12)
months ended December 31, 1999 by more than 20%.
3.12. Preparation of 2001 Annual Business Plan. The 2001 Annual Business
Plan delivered to Buyer is based on assumptions that when made were made in good
faith by the Sellers. No other express or implied representation is made as to
the 2001 Annual Business Plan, including, without limitation, any express or
implied representation that the assumptions underlying the 2001 Annual Business
Plan are still valid, and under no circumstances shall the failure to achieve
the targets set forth in the 2001 Annual Business Plan be considered a breach of
this representation.
3.13. Contracts. Except as would not reasonably be expected to have a
Material Adverse Effect, (a) each Contract is valid, binding and enforceable
against the applicable Seller; (b) each of the Sellers has performed all
obligations under the Contracts required to be performed by it and none of the
Sellers has received any claim of default under any Contract;
and (c) BFC does not have knowledge of any breach or anticipated breach by any
other party to any Contract. There are no oral contracts or agreements relating
to the Brands involving receivables or payments in excess of $100,000.
3.14. Securities Act Matters. Each of BFC, BFC Investments and BFIC is an
"accredited investor" as defined under the Securities Act of 1933, as amended
(the "Securities Act"). Each of BFC, BFC Investments and BFIC is acquiring the
Shares hereunder solely for investment purposes for its own account and not with
a view to resale or distribution except pursuant to an effective registration
statement filed under the Securities Act or an applicable exemption from such
registration. Each of BFC, BFC Investments and BFIC agrees that it will not
directly or indirectly offer, transfer, sell, pledge, hypothecate or otherwise
dispose of any of the Shares (or solicit any offer to buy, purchase or otherwise
acquire, or to take a pledge of, any such shares) except in compliance with the
Securities Act and applicable state securities laws and regulations.
3.15. No Other Representations or Warranties. Except for the
representations and warranties contained in this Agreement, neither BFC, nor any
other person makes any other express or implied representation or warranty on
behalf of BFC, including, without limitation, as to the probable success or
profitability of the ownership, use or operation of the Assets by Buyer after
the Closing.
3.16. Survival of Representations and Warranties. The representations and
warranties of BFC contained in this Agreement shall survive until the date which
is eighteen (18) months after the Closing Date; provided that the representation
contained in Section 3.12 shall survive only until January 31, 2001 and the
representations and warranties contained Sections 3.1, 3.2 and 3.15 shall
survive indefinitely. The Buyer shall be entitled to rely on the representations
and warranties contained in this Agreement notwithstanding any due diligence
investigation by the Buyer. Any claims made with specificity and in writing by a
party under Section 8.1(a)(ii) in accordance with the terms of Article VIII
prior to the expiration of the survival period with respect to an applicable
representation or warranty shall survive the expiration of the representations
and warranties until finally and conclusively resolved pursuant to Article VIII.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants that:
4.1. Due Organization and Power of Buyer. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to enter into this Agreement and perform its obligations hereunder.
4.2. Authorization and Validity of Agreement. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of Buyer, and no other action on the part of Buyer is or will
be necessary for the execution, delivery and performance by Buyer of this
Agreement and the consummation by Buyer of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by Buyer and is a legal,
valid and binding obligation of Buyer, enforceable against Buyer in accordance
with its terms, except to the extent that enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to or
affecting creditors' rights generally and by general equity principles.
4.3. No Conflict. Except for any consent, approval, filing or notice that
would not, if not given or made, or any violation, conflict, breach,
termination, default or acceleration which does not materially impair the
ability of Buyer to consummate the transactions contemplated hereby, the
execution, delivery and performance by Buyer of this Agreement and the
consummation by Buyer of the transactions contemplated hereby: (i) will not
violate any provision of law, rule or regulation, order, judgment or decree
applicable to Buyer; (ii) will not require any consent or approval of, or filing
or notice to, any Governmental Authority under any provision of law applicable
to Buyer, except for the requirements of the Antitrust Improvements Act, and
except for any consent, approval, filing or notice requirements which become
applicable solely as a result of the specific regulatory status of BFC or which
BFC or any of its affiliates are otherwise required to obtain; (iii) will not
violate any provision of the Certificate of Incorporation or Bylaws of Buyer;
and (iv) will not require any consent or approval under, and will not conflict
with, or result in the breach or termination of, or constitute a default under,
or result in the acceleration of the performance by Buyer under, any indenture,
mortgage, deed of trust, lease, license, franchise, contract, agreement or other
instrument to which Buyer is a party or by which it or any of its assets is
bound or encumbered.
4.4. Finders; Brokers. Buyer is not a party to any agreement with any
finder or broker, or in any way obligated to any finder or broker for any
commissions, fees or expenses, in connection with the origin, negotiation,
execution or performance of this Agreement.
4.5. Financial Capacity. Buyer has at least $30,000,000 of funds on hand or
available under committed bank facilities sufficient to contribute to the
Purchase Price as contemplated by Article II.
4.6. Capitalization. Buyer's authorized capital stock consists of (i)
75,000,000 shares of Convertible Class A Common Stock, par value $.001 per
share, of which, as of the date hereof, 17,497,699 shares were issued and
outstanding, (ii) 25,000,000 shares of Class B Convertible Common Stock, par
value $.001 per share (collectively, with the Class A Convertible Common Stock,
the "Common Stock"), of which no shares are issued and outstanding and (iii)
10,000,000 shares of Preferred Stock, par value $.001 per share, of which no
shares are issued and outstanding. All of the issued and outstanding shares of
Common Stock have been duly authorized and are validly issued, fully paid and
nonassessable and none have been issued in violation of any person's preemptive
rights. Except as disclosed in Buyer's Form 10-Q filed with the Securities and
Exchange Commission (the "SEC") on May 14, 2001 and for
employee stock options issued in the ordinary course of business, there are no
outstanding or authorized options, rights warrants, calls convertible
securities, rights to subscribe, conversion rights or other agreements or
commitments to which Buyer is a party or which are binding upon Buyer providing
for the issuance or transfer by Buyer of additional shares of capital stock of
Buyer.
4.7. Buyer Common Stock. Each Share, if any, to be issued as contemplated
by this Agreement has been duly authorized and, when issued in accordance with
this Agreement, will be validly issued, fully paid and nonassessable, free and
clear of any and all liens and encumbrances, and the issuance of the shares of
Stock Consideration will not be in violation of any persons' preemptive rights
or any applicable law.
4.8. SEC Reports. Buyer's forms, reports and documents filed with the SEC
(collectively, the "SEC Reports") have been prepared in accordance with the
applicable requirements of the Securities Act and the Securities Exchange Act of
1934, as amended, and contain all material facts with respect to finances,
operations and management of Buyer, as of their respective dates and as of the
date hereof, and do not omit to state any material fact required to be stated
therein or necessary to make the statement therein not misleading in light of
the circumstances in which they were made. Other than as disclosed in Buyer's
SEC Reports filed since December 22, 2000 and prior to the date hereof, since
December 22, 2000, there has not been any fact, event, change, development,
circumstance or effect that is materially adverse to the business, condition
(financial or otherwise), results of operations, assets, liabilities, properties
or prospects of the Buyer (a "Material Adverse Change") or any fact, event,
change, development, circumstance or effect which, individually or in the
aggregate, could reasonably be expected to have a Material Adverse Change.
4.9. No Other Representations or Warranties. Except for the representations
and warranties contained in this Agreement, neither Buyer nor any other person
makes any other express or implied representation or warranty on behalf of
Buyer.
4.10. Survival of Representations and Warranties. The representations and
warranties of Buyer contained in this Agreement shall survive until the date
which is eighteen (18) months after the Closing Date; provided that the
representations and warranties contained in Sections 4.1, 4.2 and 4.9 shall
survive indefinitely. The Sellers shall be entitled to rely on the
representations and warranties contained in this Article IV notwithstanding any
due diligence investigation by the Sellers. Any claims made with specificity and
in writing by the Sellers under Section 8.2(a)(i) in accordance with the terms
of Article VIII prior to the expiration of the survival period with respect to
an applicable representation or warranty shall survive the expiration of the
representations and warranties until finally and conclusively resolved pursuant
to Article VIII.
ARTICLE V
COVENANTS
5.1. Access; Information and Records; Confidentiality. (a) During the
period commencing on the date hereof and ending on the Closing Date, BFC shall
and shall cause the other Sellers to, upon reasonable request and notice, afford
to Buyer, its counsel, accountants and other authorized representatives
reasonable access during normal business hours, in a manner not disruptive to
the Business, to the properties, management and Books and Records of the
Business in order that Buyer may have the opportunity to make such reasonable
investigations as it shall desire to make of the Assets; provided that initial
contacts with any member of management regarding agreed-upon issues shall be
approved in advance by Xxxxx Xxxxxxxx. For avoidance of doubt, any subsequent
contacts by the Buyer with any member of management regarding issues which have
been previously discussed with such member of management shall not require
advance approval. BFC will cause its officers, employees, accountants and other
agents to furnish to Buyer such additional financial and operating data and
information with respect to the Brands as Buyer may from time to time reasonably
request.
(b) Buyer will hold, and will cause its respective directors, officers,
employees, accountants, counsel, financial advisors and other representatives
and affiliates to hold, any nonpublic information of the Sellers in confidence
to the extent required by, and in accordance with, the provisions of the letter
dated November 27, 2000, between Buyer and BFC.
5.2. Conduct of the Business Prior to the Closing Date. (a) Except as
otherwise contemplated by this Agreement or as set forth in Schedule 5.2, BFC
covenants that until the Closing it will, and it will cause the other Sellers
to, use all reasonable efforts to continue, in a manner consistent with past
practices, to maintain and preserve the value of the Brands and to maintain the
ordinary and customary relationships relating to the Brands with its suppliers,
customers and others having business relationships with it with a view toward
preserving for Buyer to and after the Closing Date the value of the Brands, the
Assets and the goodwill associated therewith; provided, however, that nothing
contained herein shall prevent the sale of BFC or any of its subsidiaries,
affiliates or assets (other than the Assets).
(b) Without limiting the foregoing, except as otherwise contemplated by
this Agreement or as set forth in Schedule 5.2 and except to the extent that
Buyer consents in writing (which consent will not be unreasonably withheld or
delayed), with respect to the Brands, BFC shall, in all material respects:
(i) continue to conduct marketing, product pricing, promotional and
advertising activities in the ordinary course of business consistent with
historical practices;
(ii) maintain its sales force in a manner sufficient to support the
commercially reasonable requirements of the Business;
(iii) continue to purchase and maintain inventories in such quantities and
quality as necessary to operate the Business in the ordinary course of business
in accordance with the Sellers' historical practice;
(iv) refrain from shipping finished goods ahead of normally maintained
schedules or shipping dates or otherwise accelerating sales in a manner not in
the ordinary course of business;
(v) continue to provide customer service and maintain shelf space and
promotional displays in the ordinary course of business;
(vi) continue to operate the Business in compliance with all applicable
local, state and federal laws and regulations;
(vii) notify Buyer within five (5) business days of any termination or
material limitation of, or any materially adverse modification or change in, the
business relationship of any Seller with any customer listed on Schedule 3.11;
(viii) other than in the ordinary course of business, change in any
material manner the ownership of the Assets;
(ix) other than in the ordinary course of business, terminate or decrease
the rate of compensation or benefits of, any salesperson responsible for the
sale and/or distribution of products within the Business;
(x) other than in the ordinary course of business, enter into or commit to
enter into any material contract, agreement or commitment; or
(xi) other than in the ordinary course of business, cancel, terminate or
materially modify any performance under any material Contract, amend or
otherwise modify any of the material terms or take any other action in
connection with any material Contract that would materially impair the interests
or rights of the Sellers to be transferred to Buyer hereunder.
5.3. Transition Arrangements. (a) Within fifteen (15) days of the date
hereof Buyer will advise the Sellers of its plan to establish its own broker and
agent arrangements and during the period commencing on the Closing Date and
ending ninety (90) days after the Closing Date, Buyer and the Sellers shall
cooperate in order to effectuate an orderly transition.
(b) Buyer shall provide assistance to BFC to facilitate the collection of
BFC's receivables relating to the Business in a manner consistent with Buyer's
collection policies and practices.
5.4. Direct Trade Promotions. Buyer shall honor all obligations for trade
promotion programs (including, without limitation, slotting allowances, retailer
ads, store display allowances and similar items) in effect on the Closing Date
applicable to the Brands in accordance with their respective terms.
5.5. Antitrust Laws. (a) Each party hereto shall (i) make the filings
required of it or any of its affiliates under the Antitrust Improvements Act in
connection with this Agreement and the transactions contemplated hereby as
promptly as practicable following the date hereof, (ii) comply at the earliest
practicable date and after consultation with the other party hereto with any
request for additional information or documentary material received by it or any
of its affiliates from the Federal Trade Commission (the "FTC"), the Antitrust
Division of the Department of Justice (the "Antitrust Division") or any other
Governmental Authority, (iii) cooperate with one another in connection with any
filing under applicable Antitrust Improvements Act and in connection with
resolving any investigation or other inquiry concerning the transactions
contemplated by this Agreement initiated by the FTC, the Antitrust Division or
any other Governmental Authority and (iv) cause the waiting periods under the
Antitrust Improvements Act to terminate or expire at the earliest possible date.
(b) Each party hereto shall promptly inform the other parties of any
material communication made to, or received by such party from, the FTC, the
Antitrust Division or any other Governmental Authority regarding any of the
transactions contemplated hereby.
5.6. Non-Solicitation. (a) Except as set forth in Schedule 5.6, Buyer will
not, from and after the date hereof and for a period of one (1) year following
the earlier to occur of the Closing Date or any termination of this Agreement
pursuant to Section 9.1, directly or indirectly, solicit, encourage, entice or
induce any person who is an employee of BFC or any of the Sellers, to terminate
his or her employment with BFC or any of the Sellers, as the case may be;
provided that Buyer may take any action which would breach this Section 5.6(a)
if Buyer obtains the prior written approval of BFC; and provided, further, that
nothing contained herein shall prevent Buyer from employing any person who
responds to a general media advertisement or non-directed search inquiry or who
makes an unsolicited contact to Buyer for employment. Buyer agrees that any
remedy at law for any breach by it of this Section 5.6(a) would be inadequate,
and BFC would be entitled to injunctive relief in such a case. If it is ever
held that the restriction placed on Buyer by this Section 5.6(a) is too broad to
permit enforcement of such restriction to its fullest extent, Buyer agrees that
a court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and Buyer hereby consents and agrees that such scope
may be judicially modified accordingly in any proceeding brought to enforce such
restriction.
(b) BFC and its subsidiaries will not, from and after the date hereof and
for a period of one (1) year following the earlier to occur of the Closing Date
or any termination of this Agreement pursuant to Section 9.1, without the prior
written approval of Buyer, directly or indirectly, solicit, encourage, entice or
induce any person who is an employee of Buyer or its affiliates to terminate his
or her employment with Buyer or such affiliates; provided that BFC may take any
action which would breach this Section 5.6(b) if BFC obtains the prior written
approval of Buyer and provided, further that nothing contained herein shall
prevent BFC from employing any person who responds to a general media
advertisement or non-directed search inquiry or who makes an unsolicited contact
to BFC for employment. BFC agrees that any remedy at law for any breach by it of
this Section 5.6(b) would be inadequate, and Buyer would be entitled to
injunctive relief in such a case. If it is ever held that the restriction placed
on BFC by this Section 5.6(b) is too broad to permit enforcement of such
restriction to its fullest extent,
BFC agrees that a court of competent jurisdiction may enforce such restriction
to the maximum extent permitted by law, and BFC hereby consents and agrees that
such scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
5.7. Further Actions. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its reasonable best efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement, including using its reasonable best
efforts: (i) to obtain, in addition to approvals discussed in Section 5.5
hereof, any licenses, permits, consents, approvals, authorizations,
qualifications and orders of federal, state and local Governmental Authorities
and parties to contracts with BFC or any of its subsidiaries as are required in
connection with the consummation of the transactions contemplated hereby; (ii)
to effect, in addition to filings discussed in Section 5.5 hereof, all
registrations and filings that are necessary to be made by such party; (iii) to
defend any lawsuits or other legal proceedings against such party, whether
judicial or administrative, whether brought derivatively or on behalf of third
parties (including Governmental Authorities or officials), challenging this
Agreement or the other transactions contemplated hereby; and (iv) to furnish to
each other such information and assistance and to consult with respect to the
terms of any registration, filing, application or undertaking as reasonably may
be requested in connection with the foregoing.
5.8. Trademark License Agreements. (a) (i) At the Closing, Xxxxxx, Inc.
("Xxxxxx" and/or BFC will enter into an agreement substantially in the form of
Exhibit C-1 (the "Xxxxxx Trademark License Agreement") with Buyer.
(ii) At the Closing, Buyer will enter into an agreement substantially in
the form of Exhibit C-2 (the "R&F Trademark License Agreement") with BFC or the
Relevant Transferee.
(iii) At the Closing, Buyer will enter into an agreement substantially in
the form of Exhibit C-3 (the "Mrs. Grass Trademark License Agreement") with BFC
Investments or the Relevant Transferee.
(iv) At the Closing, Buyer will enter into an agreement substantially in
the form of Exhibit C-4 (the "Ancillary Trademark License Agreement"; together
with the Xxxxxx Trademark License Agreement, the R&F Trademark License
Agreement, the Mrs. Grass Trademark License Agreement and the Ancillary
Trademark License Agreement, the "Trademark License Agreements") with BFC
Investments or the Relevant Transferee.
5.9. Access to Records and Personnel. (a) The parties shall retain the
Books and Records, documents, instruments, accounts, correspondence, writings,
evidences of title and other papers relating to the Brands and the Assets in
their possession for the period of time set forth in their respective records
retention policies on the Closing Date or for such longer period as may be
required by law or any applicable court order.
(b) The parties will allow each other (and Buyer shall allow to Xxxxxx)
reasonable access to such Books and Records and other documents, and to
personnel having knowledge of the whereabouts and/or contents of such Books and
Records and other documents, for legitimate business reasons, such as the
preparation of financial statements, tax returns or the defense of litigation or
tax audits. Each party shall be entitled to recover its out-of-pocket costs
(including, without limitation, copying costs) incurred in providing such
records and/or personnel to the other party. The requesting party will hold in
confidence all confidential information identified as such by, and obtained
from, the disclosing party, any of its officers, agents, representatives or
employees, provided, however, that information which was (i) in the public
domain; (ii) was in fact known to the requesting party prior to disclosure by
the disclosing party, its officers, agents, representatives or employees; or
(iii) becomes known to the requesting party from or through a third party not
under an obligation of non-disclosure to the disclosing party, shall not be
deemed to be confidential information.
5.10. Inventory. (a) (i) BFC or the Relevant Transferee shall use
reasonable commercial efforts to cause the Closing Date Inventory (organized by
UPC Code) to be at least equal to the amount of Inventory by UPC Code which it
customarily would have in the ordinary course of business based on past practice
and normal customer requirements.
(ii) If Buyer shall request by written notice to BFC or the Relevant
Transferee that Buyer wants to increase the Closing Date Inventory to levels
above those customarily maintained in the ordinary course of business, BFC or
the Relevant Transferee shall use its reasonable commercial efforts to produce
such requested additional Inventory. Any such written notice shall indicate by
UPC Code the level to which Buyer desires to increase the Closing Date
Inventory. The requirement that BFC and the Relevant Transferee use its
reasonable commercial efforts shall be subject to BFC's and the Relevant
Transferee's capacity limitations and shall not obligate BFC or the Relevant
Transferee to make any expenditure for equipment or to run any shifts for which
labor union consent would be required. Buyer agrees, upon the presentation of
written substantiation, promptly to reimburse BFC or the Relevant Transferee, as
the case may be, for any incremental costs incurred to increase the levels of
Closing Date Inventory, including, without limitation, any difference between
basic hourly rates and overtime rates for labor and costs of co-packaged product
relative to product produced in-house.
(iii) In the event that this Agreement is terminated without the Closing
having occurred other than due to a material breach of this Agreement by the
Sellers, Buyer shall pay to BFC or the Relevant Transferee, as the case may be,
all warehousing costs related to storing any Inventory that BFC or the Relevant
Transferee has produced at the request of Buyer in excess of the amount of
Inventory which would be normally available in the ordinary course of business
from the date of production to the date of the disposition of such Inventory by
BFC or the Relevant Transferee, as the case may be (up to a maximum of six (6)
months).
(iv) At the Closing, BFC or the Relevant Transferee will enter into an
agreement substantially in the form of Exhibit D-1 (the "Contract Packaging
Agreement") with Buyer providing for the manufacture of pasta products by BFC or
the Relevant Transferee from the Facilities.
(v) At the Closing BFC, together with one or more appropriate subsidiaries
of BFC, or the Relevant Transferee will enter into an agreement substantially in
the form of D-2 (the "Whole Wheat Packaging Agreement") with Buyer providing for
the manufacture of whole wheat pasta products by BFC or the Relevant Transferee
from the BFC facility located in Xxxxxxxx, Xxxxxx, Xxxxxx.
5.11. Post-Closing Identification. Buyer shall ensure that products
produced after the Inventory Cutoff and any coupons and other promotional items
issued after the Closing Date are distinguishable from products produced prior
to the Inventory Cutoff and coupons and other promotional items issued or
dropped prior to the Closing Date.
5.12. "As Is" Condition. Notwithstanding anything herein to the contrary,
except as may be expressly represented or warranted herein, Buyer agrees that it
shall accept all the Assets in an "As Is" "Where Is" condition at the Closing
Date. BFC MAKES NO WARRANTY WITH RESPECT TO THE VALUE, CONDITION OR USE OF THE
ASSETS, WHETHER EXPRESSED OR IMPLIED, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
5.13. Misapplied Deductions. (a) Until the nine-month anniversary of the
Closing Date, in the event that customers of the Business xxxx Buyer or make
deductions against Buyer's otherwise valid customer receivables for trade
promotion programs (such as slotting allowances, retailer ads, store display
allowances and similar items) or with respect to returns (such as for damaged or
unsaleable goods) applicable to any of BFC's businesses other than the Business,
Buyer will promptly forward such xxxx and such deductions, with commercially
reasonable supporting documentation, to BFC which will, in turn promptly pay all
valid claims supported by such documentation; provided, that BFC shall be
permitted to assign its obligations under this Section 5.13(a), in whole or in
part, to the Relevant Transferee and upon the assumption of the obligations of
BFC under this Section 5.13(a) by the Relevant Transferee, BFC shall be relieved
of all further obligations and liabilities under this Section.
(b) Until the nine-month anniversary of the Closing Date, in the event
customers of the Business xxxx BFC or any Relevant Transferee or make deductions
against BFC's or any Relevant Transferee's otherwise valid customer receivables
for trade promotion programs (such as slotting allowances, retailer ads, store
display allowances and similar items) or with respect to returns (such as for
damaged or unsaleable goods) applicable to the Business, BFC or such Relevant
Transferee will promptly forward such xxxx and such deductions, with
commercially reasonable supporting documentation, to Buyer which will, in turn,
promptly pay all valid claims supported by such documentation. Without limiting
the foregoing, Buyer hereby assumes the obligations of BFC to any Relevant
Transferees with respect to Misapplied Deductions. BFC represents to Buyer that
its obligations to Relevant Transferees with respect to Misapplied Deductions is
or shall be consistent with its obligations to Buyer under this Section 5.13.
(c) All payments required to be made under Section 5.13(a) or 5.13(b) shall
be made as soon as practicable after the fifteenth day and the thirtieth day of
each month.
5.14. Services Agreement. On the Closing Date, Buyer and BFC shall execute
and deliver an agreement, substantially in the form attached hereto as Exhibit E
(the "Services Agreement").
5.15. No Sale Negotiations. Until the earlier of the Closing and the
termination of this Agreement pursuant to its terms, BFC shall not, shall cause
its subsidiaries, affiliates and each of its affiliates' directors, officers,
employees not to and shall use its reasonable best efforts to cause its
representatives not to, directly or indirectly, other than with Buyer, (i)
initiate, solicit or knowingly encourage any inquiries, proposals or offers
(whether initiated by BFC or otherwise) with respect to the acquisition of all
or a material portion of the Brands and Assets (a "Potential Transaction") from
any party or (ii) have any discussion with, enter into negotiations with respect
to, or provide information to any other party in connection with a Potential
Transaction.
5.16. Reporting Requirements. Each of the Sellers and Buyer shall notify
and keep the other parties hereto advised as to (a) any litigation or
administrative proceeding pending and known to such party that challenges this
Agreement or the transactions contemplated hereby or seeks to prevent the
consummation of any of the transactions contemplated by this Agreement and (b)
any event or circumstance which such party believes would result in the failure
to satisfy any of the conditions set forth in Section 6.1 and 6.2 (in the case
of the Buyer) or Section 6.1 and 6.3 (in the case of the Sellers) or would
materially interfere with or delay the consummation of any of the transactions
contemplated hereby.
5.17. Financing. Buyer shall use its reasonable best efforts to obtain the
debt financing necessary to pay the entire Purchase Price in cash.
ARTICLE VI
CONDITIONS
6.1. Conditions Precedent to Obligations of Buyer and the Sellers. The
respective obligations of Buyer and the Sellers to consummate the transactions
contemplated by this Agreement shall be subject to the satisfaction at or prior
to the Closing Date of the following conditions:
(a) No Injunction. At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or governmental agency or
body of competent jurisdiction that is in effect that restrains or prohibits the
consummation of the Purchase or the transfer to Buyer by the Sellers of any
Assets, except for the transfer of any Assets the failure of which to transfer
would not, individually or in the aggregate, be material to the value of the
Brands taken as a whole; provided, however, that the parties invoking this
condition shall use their best efforts to have such injunction, order or decree
vacated or denied.
(b) Regulatory Authorizations. All consents, approvals, authorizations and
orders of federal and state governmental and regulatory authorities as are
necessary in connection with the
transfer of the Assets to Buyer or which if not obtained would be reasonably
likely to subject Buyer or any Seller, or any officer, director or agent of any
such person to civil or criminal liability or could render such transfer void or
voidable (the "Required Consents") shall have been obtained, except for Required
Consents the failure of which to obtain, individually or in the aggregate, are
not material to the value of the Brands taken as a whole and the failure of
which to obtain would not subject Buyer or any Seller, or any officer, director,
or agent of any such person to civil or criminal liability; provided that for
purposes of this Section 6.1(b) applicable waiting periods specified under the
Antitrust Improvements Act with respect to the transactions contemplated by this
Agreement shall have lapsed or been terminated.
(c) Expiration of the Antitrust Improvements Act Waiting Period. The
waiting period (and any extension thereof) under the Antitrust Improvements Act
shall have expired or shall have been terminated.
(d) Pending Litigation. No action, suit or proceeding brought by any
Governmental Authority or body of competent jurisdiction shall be pending before
any court of competent jurisdiction wherein an unfavorable injunction, judgment,
order, decree or ruling would (i) prevent the consummation of any of the
transactions contemplated by this Agreement or (ii) cause any of the
transactions contemplated by this Agreement to be rescinded following
consummation.
6.2. Conditions Precedent to Obligation of the Sellers. The obligation of
the Sellers to consummate the transactions provided for in this Agreement is
subject to fulfillment of each of the following conditions:
(a) Accuracy of Buyer's Representations and Warranties; Covenants of Buyer.
The representations and warranties of Buyer contained in this Agreement (except
as affected by the transactions contemplated in this Agreement) that are
qualified as to materiality shall be true and correct and the representations
and warranties of Buyer set forth in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case on the date of
this Agreement (except to the extent cured prior to the Closing Date) and on the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties speak as of an earlier date; Buyer shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to Closing; and BFC shall have received a
certificate signed by an officer of Buyer to such effect; provided, that this
Section 6.2(a) shall not apply with respect to the representations and
warranties set forth in Sections 4.6, 4.7 and 4.8 if no Stock Consideration is
being issued as part of the Purchase Price;
(b) Services Agreement. Buyer shall have executed and delivered to BFC the
Services Agreement;
(c) Assumption Agreement. Buyer shall have executed and delivered to BFC an
undertaking (the "Assumption Agreement") substantially in the form of
Exhibit F pursuant to which Buyer agrees to assume all
Assumed Liabilities;
(d) Contract Packaging Agreements. Buyer shall have executed and delivered
to BFC or the Relevant Transferee, as applicable, the Contract Packaging
Agreement and the Whole Wheat Packaging Agreement;
(e) Exemption Certificates. Buyer shall have executed and delivered to BFC
all certificates required by all relevant taxing authorities that are necessary
to support any exemption from the imposition of any sales or similar tax on the
transfer of the Assets; and
(f) Trademark License Agreements. Buyer shall have executed and delivered
to Xxxxxx, BFC or the Relevant Transferee, as the case may be, each of the
applicable Trademark License Agreements.
6.3. Conditions Precedent to Obligation of Buyer. The obligation of Buyer
to consummate the transactions provided for in this Agreement is subject to
fulfillment of each of the following conditions:
(a) Accuracy of Representations and Warranties of BFC; Covenants of BFC.
The representations and warranties of BFC contained in this Agreement (except as
affected by the transactions contemplated in this Agreement) that are qualified
as to materiality shall be true and correct and the representations and
warranties of BFC set forth in this Agreement that are not so qualified shall be
true and correct in all material respects, in each case on the date of this
Agreement (except to the extent cured prior to the Closing Date) and on the
Closing Date as though made on the Closing Date, except to the extent such
representations and warranties speak as of an earlier date; BFC shall have
complied in all material respects with all covenants contained in this Agreement
to be performed by it prior to Closing; and Buyer shall have received a
certificate signed by an officer of BFC to such effect;
(b) Services Agreement. BFC or the Relevant Transferee shall have executed
and delivered to Buyer the Services Agreement;
(c) Trademark License Agreements. Xxxxxx, BFC and/or the Relevant
Transferee, as the case may be, shall have executed and delivered to Buyer each
of the applicable Trademark License Agreements;
(d) Xxxx of Sale and Assignment. BFC shall have executed and delivered to
Buyer a xxxx of sale and assignment, substantially in the form of Exhibit G
hereto;
(e) Contract Packaging Agreements. BFC or the Relevant Transferee, as
applicable, shall have executed and delivered to Buyer the Contract Packaging
Agreement and the Whole Wheat Packaging Agreement;
(f) Intangible Property Assignment. For recording purposes, BFC, BFC
Investments and BFIC shall each have executed and delivered to Buyer an
agreement, substantially in the form of Exhibit H hereto, assigning its
respective rights to the intangible property set forth in Section 1.2; and
(g) Material Adverse Effect. No Material Adverse Effect shall have
occurred since the date of this Agreement.
ARTICLE VII
CLOSING
7.1. Closing Date. (a) Unless this Agreement shall have been terminated and
the transactions herein shall have been abandoned pursuant to Article IX hereof,
and subject to the satisfaction or waiver of the conditions set forth in Article
VI, the closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at 10:00 a.m. on the fifth business day following
the satisfaction or waiver of each of the conditions set forth in Article VI
hereof (the "Closing Date") at the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, unless another date, time or place is
agreed to in writing by the parties hereto. The Closing shall be deemed
effective as of 12:01 a.m., New York City time, on the Closing Date.
7.2. Buyer Deliveries. At the Closing, Buyer shall deliver (i) the BFC
Purchase Price, the BFC Investments and BFIC Purchase Price and the Cost of
Closing Date Inventory as provided in Section 2.1, (ii) the documents described
in Section 6.2 hereof and (iii) such other documents and instruments as counsel
for Buyer and BFC mutually agree to be reasonably necessary to consummate the
transactions described herein.
7.3. Seller Deliveries. At the Closing, the Sellers shall deliver or cause
one or more of their respective affiliates to deliver (i) the documents
described in Section 6.3 hereof and (ii) such other documents and instruments as
counsel for Buyer and BFC mutually agree to be reasonably necessary to
consummate the transactions described herein.
ARTICLE VIII
INDEMNIFICATION
8.1. Indemnification by the Sellers. (a) The Sellers shall defend,
indemnify and hold Buyer and its present and future affiliates harmless from and
against and in respect of any and all actual losses, liabilities, damages,
judgments, settlements and expenses, including reasonable attorneys' fees but
excluding lost profits, consequential, punitive, special or indirect damages,
incurred directly by Buyer and its affiliates (hereinafter "Buyer Losses") (i)
which arise out of the ownership, operation or use of any of the Excluded Assets
or Excluded Liabilities or the satisfaction of any Permitted Liens, (ii) which
are directly related to any Covered Product Recalls or (iii) subject to Section
3.16, any breach of the representations, warranties and covenants contained
herein (reading such representations and warranties without regard to any
materiality qualifiers (including "Material Adverse Effect") contained therein,
but such representations and warranties shall not be read to exclude dollar
thresholds contained therein). Buyer shall give the Sellers prompt written
notice of any third party claim which may give rise to
any indemnity obligation under this Article, together with the estimated amount
of such claim for the representation, warranty and/or covenant that has been
alleged to have been breached, and the Sellers shall have the right to assume
the defense of any such claim through counsel of their own choosing, by so
notifying Buyer within sixty (60) days of receipt of Buyer's written notice;
provided, however, that the Sellers' counsel shall be reasonably satisfactory to
Buyer. Failure to give prompt notice shall not affect the indemnification
obligations hereunder in the absence of actual prejudice. If Buyer desires to
participate in any such defense assumed by the Sellers, it may do so at its sole
cost and expense. If the Sellers decline to assume any such defense, it shall be
liable for all reasonable costs and expenses of defending such claim incurred by
Buyer, including reasonable fees and disbursements of counsel. None of the
Sellers, on one hand, or the Buyer, on the other hand, shall, without the prior
written consent of the other, which shall not be unreasonably withheld, settle,
compromise or offer to settle or compromise any such claim or demand on a basis
which would result in the imposition of a consent order, injunction or decree
which would restrict the future activity or conduct of the other party or any
subsidiary or affiliate thereof or if such settlement or compromise does not
include an unconditional release of the other party for any liability arising
out of such claim or demand or any related claim or demand.
(b) Other than with respect to losses described in Section 8.1(a)(ii), the
Sellers shall not have any obligation under clause (iii) of Section 8.1(a) to
indemnify Buyer and its affiliates from and against any Buyer Losses caused by
the breach of any representation or warranty or covenant of the Sellers (i)
unless the Buyer Losses suffered in respect of each single or related occurrence
of a breach of any such representation or warranty for which Buyer seeks
indemnity shall be equal to or greater than $25,000 and (ii) until Buyer and its
affiliates have suffered Buyer Losses for which Buyer is entitled to be
indemnified for the breach of any such representation and warranty, in excess of
$600,000 in the aggregate (after which point the Sellers will only be obligated
to indemnify Buyer and its affiliates for the amount of Buyer Losses in excess
of the $600,000 deductible). Notwithstanding the foregoing, the liability of the
Sellers to indemnify Buyer and its affiliates under clauses (ii) and (iii) of
Section 8.1(a) shall not exceed 33% of the Purchase Price.
(c) Following the Closing, the indemnity provided in this Section 8.1 shall
be the sole and exclusive remedy of Buyer and its affiliates against the Sellers
at law or equity for any breach of a representation or warranty (except in the
case of fraud).
8.2. Indemnification by Buyer. (a) Buyer shall defend, indemnify and hold
the Sellers and their respective present and future affiliates harmless from and
against and in respect of any and all actual losses, liabilities, damages,
judgments, settlements and expenses, including reasonable attorney fees but
excluding lost profits, consequential, punitive, special or indirect damages,
incurred directly by the Sellers and their respective affiliates (hereinafter
"Sellers Losses"; together with Buyer Losses, "Losses") arising out of (i)
subject to Section 4.9, any breach of any of the representations, warranties and
covenants of Buyer contained herein (reading such representations and warranties
(other than those representations and warranties set forth in Section 4.8)
without regard to any materiality qualifiers contained therein), (ii) the
ownership, operation or use of the Assets on or after the Closing Date or (iii)
the Assumed Liabilities (other than Covered Product Recalls). The Sellers shall
give Buyer prompt written notice of any third party claim which may give rise to
any indemnity obligation under this
Article, together with the estimated amount of such claim, and Buyer shall have
the right to assume the defense of any such claim through counsel of its own
choosing, by so notifying the Sellers within sixty (60) days of receipt of the
Sellers' written notice; provided, however, that Buyer's counsel shall be
reasonably satisfactory to the Sellers. Failure to give prompt notice shall not
affect the indemnification obligations hereunder in the absence of actual
prejudice. If the Sellers desires to participate in any such defense assumed by
Buyer it may do so at its sole cost and expense. If Buyer declines to assume any
such defense, it shall be liable for all costs and expenses of defending such
claim incurred by the Sellers or their respective affiliates, including
reasonable fees and disbursements of counsel. None of the Sellers, on one hand,
nor the Buyer, on the other hand, shall, without the prior written consent of
the other party, which shall not be unreasonably withheld, settle, compromise or
offer to settle or compromise any such claim or demand on a basis which would
result in the imposition of a consent order, injunction or decree which would
restrict the future activity or conduct of the other party or any subsidiary or
affiliate thereof or if such settlement or compromise does not include an
unconditional release of the other party for any liability arising out of such
claim or demand.
(b)Buyer shall not have any obligation under clause (i) of Section 8.2(a)
to indemnify the Sellers and their respective affiliates from and against any
Sellers Losses caused by the breach of any representation, warranty or covenant
of Buyer (i) unless the Sellers Losses suffered in respect of each single or
related occurrence of a breach of any such representation or warranty for which
Sellers seek indemnity shall be equal to or greater than $25,000 and (ii) until
the Sellers and their respective affiliates have suffered Sellers Losses for
which the Sellers are entitled to be indemnified for the breach of any such
representation and warranty, in excess of $600,000 in the aggregate (after which
point Buyer will only be obligated to indemnify the Sellers and their respective
affiliates for the amount of Sellers Losses in excess of the $600,000
deductible). Notwithstanding the foregoing, the liability of Buyer to indemnify
the Sellers and their respective affiliates under clause (i) of Section 8.2(a)
shall not exceed 33% of the Purchase Price.
(c) Following the Closing, the indemnity provided in this Section 8.2 shall
be the sole and exclusive remedy of the Sellers and their respective affiliates
against Buyer at law or equity for any breach of a representation or warranty
(except in the case of fraud).
8.3. Indemnification Calculations. (a) The amount of any Sellers Losses or
Buyer Losses for which indemnification is provided under this Article VIII shall
be computed net of any insurance proceeds received by the indemnified party in
connection with such Losses. If the amount with respect to which any claim is
made under this Article VIII (an "Indemnity Claim") gives rise to a currently
realizable Tax Benefit (as defined below) to the party making the claim, the
indemnity payment shall be reduced by the amount of the Tax Benefit available to
the party making the claim. To the extent such Indemnity Claim does not give
rise to a currently realizable Tax Benefit, if the amount with respect to which
any Indemnity Claim is made gives rise to a subsequently realized Tax Benefit to
the party that made the claim, such party shall refund to the indemnifying party
the amount of such Tax Benefit when, as and if realized. For the purposes of
this Agreement, any subsequently realized Tax Benefit shall be treated as though
it were a reduction in the amount of the initial Indemnity Claim, and the
liabilities of the parties shall be redetermined as though both occurred at or
prior to the time of the indemnity payment.
For purposes of this Section 8.3, a "Tax Benefit" means an amount by which the
tax liability of the party (or group of corporations including the party) is
reduced (including, without limitation, by deduction, reduction of income by
virtue of increased tax basis or otherwise, entitlement to refund, credit or
otherwise) plus any related interest received from the relevant taxing authority
and taking into account the extent, if any, to which the indemnification payment
must under applicable law be treated other than as an adjustment to the Purchase
Price. Where a party has other losses, deductions, credits or items available to
it, the Tax Benefit from any losses, deductions, credits or items relating to
the Indemnity Claim shall be deemed to be realized proportionately with any
other losses, deductions, credits or items. For the purposes of this Section
8.3, a Tax Benefit is "currently realizable" to the extent it can be reasonably
anticipated that such Tax Benefit will be realized in the current taxable period
or year or in any tax return with respect thereto (including through a carryback
to a prior taxable period) or in any taxable period or year prior to the date of
the Indemnity Claim. In the event that there should be a determination
disallowing the Tax Benefit, the indemnifying party shall be liable to refund to
the indemnified party the amount of any related reduction previously allowed or
payments previously made to the indemnifying party pursuant to this Section 8.3.
The amount of the refunded reduction or payment shall be deemed a payment under
this Section 8.3 and thus shall be paid subject to any applicable reductions
under this Section 8.3.
(b) The parties agree that any indemnification payments made pursuant to
this Agreement shall be treated for tax purposes as an adjustment to the
Purchase Price, unless otherwise required by applicable law.
ARTICLE IX
TERMINATION
9.1. Termination Events. Without prejudice to other remedies which may be
available to the parties by law or this Agreement, this Agreement may be
terminated and the transactions contemplated herein may be abandoned:
(a) by mutual consent of the parties hereto;
(b) by any party by notice to the other party if the Closing shall not have
been consummated on or before September 30, 2001, unless extended by written
agreement of the parties hereto, so long as the party terminating this Agreement
shall not be in default or breach hereunder.
9.2. Effect of Termination. In the event of any termination of the
Agreement as provided in Section 9.1 above, this Agreement shall forthwith
become wholly void and of no further force and effect and there shall be no
liability on the part of Buyer or the Sellers, except that (i) the obligations
of Buyer and BFC under Sections 5.1, 5.6, 5.10(ii) and 11.6 of this Agreement
shall remain in full force and effect and (ii) termination shall not preclude
either party from suing the other party for breach of this Agreement.
ARTICLE X
ALTERNATIVE DISPUTE RESOLUTION
10.1. Alternative Dispute Resolution. The parties shall attempt in good
faith to resolve any dispute arising out of or relating to this Agreement
promptly by negotiations between executives who have authority to settle the
controversy. Any party may give the other party(ies) written notice of any
dispute not resolved in the normal course of business. Within twenty (20) days
after delivery of said notice, executives of both parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to exchange relevant information and to attempt to resolve the
dispute. If the matter has not been resolved within sixty (60) days of the
disputing party's original notice, or if the parties fail to meet within twenty
(20) days, either party may initiate legal proceedings to resolve the
controversy or claim. If a party's negotiator intends to be accompanied at a
meeting by an attorney, the other party's negotiator shall be given at least
three (3) working days' notice of such intention and may also be accompanied by
an attorney. All negotiations pursuant to this clause are confidential and shall
be treated as compromise and settlement negotiations for purposes of the Federal
Rules of Evidence and state rules of evidence.
ARTICLE XI
MISCELLANEOUS AGREEMENTS OF THE PARTIES
11.1. Notices. All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if delivered personally
or mailed, certified or registered mail with postage prepaid, or sent by
telegram or telecopy, as follows:
If to Buyer: American Italian Pasta Company
0000 Xxxxx Xxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: President and Chief Executive Officer
Fax: 000-000-0000
and
Attn: Chief Financial Officer
Fax: 000-000-0000
With a copy to: Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx LLP
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxx X. Xxx
Fax: 000-000-0000
If to BFC: Xxxxx X. Xxxxx
Vice President and General Counsel
Xxxxxx Foods Corporation
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Fax: 000-000-0000
With a copy to: Xxxxxxx X. Xxxxx, Xx., Esq.
Senior Vice President and General Counsel
Xxxxxx, Inc.
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Fax: 000-000-0000
and
Xxxxx X. Xxxxxx, Esq.
Xxxxx X. Xxxxxx, Esq.
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy: 000-000-0000
If to Xxxxxx: To it at the address set forth above, with a
copy to Xxxxxxx Xxxxxxx & Xxxxxxxx at the
address set forth above.
or to such other person or address as a party shall specify by notice in writing
to the other parties. All such notices, requests, demands, waivers and
communications shall be deemed to have been received on the date of personal
delivery or on the third business day after the mailing thereof or, in the case
of notice by telecopier, when receipt thereof is confirmed by telephone.
11.2. Bulk Transfers. Buyer waives compliance with the provisions of all
applicable laws relating to bulk transfers in connection with this sale of
assets and the Sellers agree to indemnify Buyer for any costs incurred by Buyer
related to noncompliance with any bulk transfer laws in respect of the
contemplated transactions.
11.3. Transaction Taxes. Buyer shall be responsible for the payment of all
sales and transfer taxes, if any, which may be payable with respect to the
consummation of the transactions contemplated by this Agreement and to the
extent any exemptions from such taxes are available Buyer and BFC shall
cooperate to prepare any certificates or other documents necessary to claim such
exemptions.
11.4. Further Assurances; Asset Returns. Upon request from time to time,
BFC shall execute or cause the other Sellers to execute and deliver all
documents, take all rightful oaths, and do all other acts that may be reasonably
necessary or desirable, in the reasonable opinion of counsel for Buyer, to
perfect or record the title of Buyer, or any successor of Buyer, to
the Assets transferred or to be transferred under this Agreement, or to aid in
the prosecution, defense, or other litigation of any rights arising from said
transfer (provided that Buyer shall reimburse the Sellers for all out-of-pocket
costs and expenses resulting from any such request). In the event that Buyer
receives any assets of BFC that are not intended to be transferred pursuant to
the terms of this Agreement, whether or not related to the Brands, Buyer agrees
to promptly return such assets to BFC at BFC's expense.
11.5. Other Covenants. To the extent that any consents needed to assign to
Buyer any of the Assets have not been obtained on or prior to the Closing Date
this Agreement shall not constitute an assignment or attempted assignment
thereof if such assignment or attempted assignment would constitute a breach
thereof. If any such consent shall not be obtained on or prior to the Closing
Date, then (i) BFC and Buyer shall use their reasonable efforts in good faith to
obtain such consent as promptly as practicable thereafter and (ii) if in the
reasonable judgment of Buyer such consent may not be obtained, the parties shall
use reasonable efforts in good faith to cooperate, and to cause each of their
respective affiliates to cooperate, in any lawful arrangement designed to
provide for Buyer the benefits under any such Assets.
11.6. Expenses. Whether or not the transactions contemplated hereby are
consummated, except as expressly provided herein, BFC and Buyer shall each pay
their respective fees and expenses incident to the negotiation, preparation and
execution of this Agreement, including attorneys', accountants' and other
advisors' fees and the fees and expenses of any broker, finder or agent retained
by such party in connection with the transactions contemplated by this
Agreement.
11.7. Entire Agreement. This Agreement (including the Schedules and
Exhibits hereto and the documents referred to herein) constitutes the entire
agreement between the parties hereto and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to the
subject matter hereof.
11.8. No Third Party Beneficiaries. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. Nothing in this Agreement, expressed or implied, is
intended to confer on any person other than the parties hereto or their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except that the provisions of
Sections 5.8, 5.10, 5.13, 11.8 and 11.18 shall inure to the benefit of the
Relevant Transferee and any of its transferees.
11.9. Possible Adjustment to Purchase Price (a) If and only if it is
required by the FTC or the Antitrust Division in order to permit the
consummation of the Purchase by September 30, 2001, Buyer shall agree to
purchase fewer Brands than otherwise contemplated by this Agreement; provided
that neither party hereto shall be required to consummate the Purchase if more
than 20.5 million Pasta Pounds are attributable to the Brands that Buyer may not
purchase pursuant to a requirement of the FTC or the Antitrust Division. If
fewer Brands are transferred to Buyer pursuant to this Section 11.9 than as
otherwise initially contemplated by this Agreement, the Purchase Price shall be
reduced by $5.60 per $1.00 of DPCDA attributable to the Brands not transferred
for the year ended December 31, 2000; provided, that if the number of Pasta
Pounds attributable to such Brands exceeds 14.9 million, the Purchase Price
shall be
reduced by $8.40 per $1.00 of DPCDA attributable to such Brands. Schedule 11.9
sets forth the number of Pasta Pounds and DPCDA attributable to each of the
Brands. Each of the parties hereto agrees to execute and deliver all documents
(including amendments to this Agreement and the other agreements contemplated
hereby) and do all other acts that may be reasonably necessary or desirable to
give effect to this adjustment of the Purchase Price and the transfer of the
Brands in a manner consistent with the other agreements set forth herein. All
Brands not transferred to Buyer pursuant to this Section 11.9 shall remain the
sole property of the Sellers.
(b) Notwithstanding anything in this Agreement to the contrary, the parties
will use reasonable best efforts to satisfy the conditions set forth in Section
6.1(b) and Section 6.1(c) and to effect the actions required by Section 5.5 and
Section 5.7 of this Agreement without taking the actions contemplated in Section
11.9(a) or, if the conditions set forth in Section 6.1(b) or Section 6.1(c)
cannot be satisfied without taking the actions contemplated by Section 11.9(a),
by minimizing the extent to which the actions contemplated by Section 11.9(a)
must be taken.
11.10. Assignability. Except as expressly set forth in this Agreement, this
Agreement shall not be assigned by any of the parties hereto without the prior
written consent of the other parties hereto; provided that Buyer may, without
the prior written consent of BFC, assign all of its rights to a direct or
indirect wholly owned subsidiary of Buyer; provided that, notwithstanding any
such assignment, Buyer shall remain liable to perform all of its obligations
hereunder, including without limitation the obligations to fund the full amount
of the Purchase Price.
11.11. Amendment and Modification; Waiver. Subject to applicable law, this
Agreement may be amended, modified and supplemented by a written instrument
authorized and executed on behalf of the parties hereto at any time prior to the
Closing Date with respect to any of the terms contained herein. No waiver by any
party of any of the provisions hereof shall be effective unless explicitly set
forth in writing and executed by the party so waiving. Except as provided in the
preceding sentence, no action taken pursuant to this Agreement, including
without limitation, any investigation by or on behalf of any party, shall be
deemed to constitute a waiver by the party taking such action of compliance with
any representations, warranties, covenants, or agreements contained herein, and
in any documents delivered or to be delivered pursuant to this Agreement and in
connection with the Closing hereunder. The waiver by any party hereto of a
breach of any provision of this Agreement shall not operate or be construed as a
waiver of any other or subsequent breach.
11.12. Public Announcements. Unless otherwise required by law, prior to the
Closing Date, no news release or other public announcement pertaining to the
transactions contemplated by this Agreement will be made by or on behalf of any
party. Prior to issuing a press release or other public announcement required by
law with respect to the execution and delivery of or the transactions
contemplated by this Agreement, Buyer and BFC shall consult with each other and
each party shall have reasonable opportunity to comment on such press release
and prior to issuing a press release or other public announcement with respect
to the Closing, Buyer and BFC shall agree on the form of such press release or
other public announcement.
11.13. Schedules and Exhibits. All exhibits and schedules hereto are hereby
incorporated by reference and made a part of this Agreement. Any fact or item
which is clearly disclosed on any Schedule or Exhibit to this Agreement in such
a way as to make its relevance to a representation or representations made
elsewhere in this Agreement or to the information called for by another Schedule
or other Schedules (or Exhibit or other Exhibits) to this Agreement readily
apparent shall be deemed to be an exception to such representation or
representations or to be disclosed on such other Schedule or Schedules (or
Exhibit or Exhibits), as the case may be, notwithstanding the omission of a
reference or cross-reference thereto. Any fact or item disclosed on any Schedule
or Exhibit hereto shall not by reason only of such inclusion be deemed to be
material and shall not be employed as a point of reference in determining any
standard of materiality under this Agreement.
11.14. Section Headings; Table of Contents. The section headings contained
in this Agreement and the Table of Contents to this Agreement are for reference
purposes only and shall not affect the meaning or interpretation of this
Agreement.
11.15. Severability. If any provision of this Agreement shall be declared
by any court of competent jurisdiction to be illegal, void or unenforceable, all
other provisions of this Agreement shall not be affected and shall remain in
full force and effect.
11.16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
11.17. Enforcement. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement in any court of the United States
located in the State of New York, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, each of the parties
hereto (i) consents to submit itself to the personal jurisdiction of the United
States District Court for the Southern District of New York or any court of the
State of New York located in such district in the event any dispute arises out
of this Agreement or any of the transactions contemplated by this Agreement,
(ii) agrees that it will not attempt to deny or defeat such personal
jurisdiction or venue by motion or other request for leave from any such court
and (iii) agrees that it will not bring any action relating to this Agreement or
any of the transactions contemplated by this Agreement in any court other than
such courts sitting in the State of New York.
11.18. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
11.19. Certain Definitions. For purposes of this Agreement, the term:
(i) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, the first mentioned person;
(ii) "Borden Marks" means any trademarks, service marks, trade names,
logos, brand names, trade dress, domain names or other source indicators of BFC,
BFC Investments or BFIC and their respective affiliates incorporating the word
"Xxxxxx" or "Xxxxx" or the cow head design or used in the continuing business of
Xxxxxx and any translations, adaptations, derivations or combinations thereof or
any goodwill associated therewith.
(iii) "Covered Product Recalls" means a recall of products manufactured by
the Sellers prior to the Closing Date that is made by order of a Governmental
Authority or at the request of a customer that is made as a result of such
products being adulterated or infested by vermin or because of a reasonable
concern for the health and safety of the public that occurs within twelve (12)
months after the Closing Date and that results in Buyer Losses with respect to
the Brands of $500,000 or greater.
(iv) "Customer Lists" means all lists of current and past customers of the
Business, including those set forth on Schedule 1.2(a)(i)(A) which lists all
"xxxx-to" and "ship-to" purchasers for the period January 1, 2000 to May 1,
2001, and copies and, if available, electronic versions of all related files and
data;
(v) "DPCDA" means, with respect to any Brands, revenues attributable to
such Brands less, to the extent they are attributable to such assets, the
following: discounts and allowances, plant-level cost of goods sold (excluding
depreciation), transportation and warehousing, trade promotions, advertising and
consumer promotions, sales commissions, brand management expenses and other
direct Brand costs, in certain cases allocated to such assets consistent with
BFC's internal reporting policies.
(vi) "Governmental Authority" means any federal, state, local or foreign
governmental or regulatory or administrative department, court, commission,
board, bureau, agency, authority, or instrumentality;
(vii) "Misapplied Deductions" means bills or deductions made against a
Relevant Transferee's otherwise valid customer receivables for trade promotion
programs (such as slotting allowances, retailer ads, store display allowances
and similar items) or with respect to returns (such as for damaged or unsaleable
goods) applicable to the Business and submitted to Buyer by a Relevant
Transferee for payment or reimbursement;
(viii) "Permitted Liens" means the following: (A) mechanics', workmen's,
repairmen's, warehousemen's, carriers' or other like liens arising or incurred
in the ordinary course of business if the underlying obligations are not past
due; and (B) other liens, charges or other encumbrances which would not be
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect;
(ix) "person" means an individual, corporation, partnership, association,
trust, incorporated organization, other entity or group (as defined in Section
13(d)(3) of the Exchange Act);
(x) "Relevant Transferee" means, with respect to any rights or obligations
under this Agreement, the person (or persons) who has (or have) purchased the
assets or assumed the liabilities related to such rights or obligations from
BFC, BFC Investments or BFIC, as the case may be;
(xi) "subsidiary" or "subsidiaries" of Buyer, BFC or any other person means
any corporation, partnership, joint venture or other legal entity of which
Buyer, BFC or such other person, as the case may be (either alone or through or
together with any other subsidiary), owns, directly or indirectly, 50% or more
of the stock or other equity interests the holder of which is generally entitled
to vote for the election of the board of directors or other governing body of
such corporation or other legal entity; and
(xii) "the knowledge of" or "the best knowledge of" a party hereto when
modifying any representation and warranty shall mean that such party has no
knowledge that such representation and warranty is not true and correct to the
same extent as provided in the applicable representation and warranty, and that:
(A) such party has made appropriate investigations and inquiries of its
officers and responsible employees; and
(B) nothing has come to its attention in the course of such investigation
and inquiries or otherwise which would cause such party, in the exercise of due
diligence, to believe that such representation and warranty is not true and
correct in all material respects.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the date first above written.
XXXXXX FOODS CORPORATION
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
Title:
BFC INVESTMENTS, L.P.
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title:
BF FOODS INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxx X. Xxxxx
Title:
AMERICAN ITALIAN PASTA COMPANY
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------
Name: Xxxxx X. Xxxxxx
Title:
Exhibit A
Cost of Inventory
Cost of Finished Goods
"Cost" is defined as the sum for all Finished Goods Inventory of the result for
each product of (i) the quantity of such product multiplied by (ii) the Product
Cost of such product.
"Product Cost" is defined as (i) BFC's standard cost of a product including,
without limitation, raw materials, packaging materials, inbound freight,
co-packer tolling charges, direct labor, and variable and fixed manufacturing
costs; and (ii) a per-pound amount representing an allocation for primary
freight, defined as the cost of moving product from a plant to a distribution
warehouse, and purchasing and manufacturing variances other than variances based
on volume pursuant to the subsequent paragraph (the "Freight & Variance
Amount").
The Freight & Variance Amount will be calculated by dividing (x) the sum of
primary-freight expense and purchasing and manufacturing-related variances
(other than volume variances) incurred over the inventory turn period ending on
the last day of the latest fiscal month prior to the Closing Date for which such
information is available (the "Measurement Date") by (y) pounds of finished
goods inventory for BFC's entire pasta and noodles business as of the
Measurement Date. Consistent with current practice, inventory turns are
calculated as the average month-end inventory in pounds of the prior thirteen
(13) months divided by the average of monthly sales volume in pounds for the
prior twelve (12) months.
Cost and Product Cost shall be determined in accordance with generally accepted
accounting principles and practices (except as to the above-noted exclusion of
variances based on volume) and the methods used in the preparing the Inventory
Statement, consistently applied.
Cost of Packaging Materials
"Cost" is defined as the carrying costs for Inventory of packaging materials as
determined in accordance with generally accepted accounting principles and
practices and the methods used in preparing the Inventory Statement,
consistently applied.
Exhibit B
Terms and Conditions Related to Stock Consideration
1. Sale upon Registration. Buyer, within twenty (20) days after Closing,
shall register all (but not less than all) of the Shares by filing and having
declared effective a Form S-3 registration statement (or successor registration
form adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Buyer with the SEC) and
shall immediately provide evidence of the same to Sellers. Sellers shall
cooperate with Buyer in making such a registration and all reasonable
qualifications and compliance requested by Buyer as would permit or facilitate
the sale and distribution of the Shares. Buyer shall bear all expenses incurred
by Buyer or Sellers in making such registration, including, without limitation,
all SEC and NYSE registration and filing fees, printing expenses, fees and
disbursements of counsel for Buyer, and blue sky fees and expenses. In addition,
Buyer and Sellers agree to enter into such further agreements as are reasonable
and customary to effect the provisions of this Exhibit B.
2. Put Rights. For a period of six (6) months from and after the Closing
Date or, if later, six (6) months after the effective date of the registration
statement discussed above, Sellers may sell the Shares at market price ("Sold
Shares"). On the six-month anniversary of the Closing Date, Sellers may put all
Shares then remaining in its ownership, if any, ("Put Shares") to the Buyer.
Buyer shall, within ten (10) days thereafter, pay to BFC against delivery of the
Shares an amount equal to the Average Buyer Price times 1.0275 for each Put
Share.
3. Adjustment of Prices. The stock prices relevant to either party's
options or rights in this Schedule shall be adjusted as appropriate to account
for any recapitalization of the Buyer, including stock splits, reverse stock
splits, and stock dividends, to preserve the parties contemplated economic
rights.
