ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") is entered into as of February 27,
2003, by and between AMERICAN ITALIAN PASTA COMPANY, a Delaware corporation
("Buyer"), XXX. XXXXXX'X, INC., a California corporation ("MLI"), and XXXXX X.
XXXXXX, an individual, and XXXXXXXX X. XXXXXX, an individual (collectively,
"Muscats"). MLI and Muscats are hereinafter collectively referred to as
"Seller."
WHEREAS, Seller owns various items of personal and intellectual
property, as more fully defined in Section 2.1, used in the manufacture,
marketing and sale of various brands of pasta (the "Business"); and
WHEREAS, Seller desires to sell the Assets to Buyer and Buyer desires
to purchase the Assets from Seller in exchange for cash and other valuable
consideration.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements, covenants, representations, warranties and promises set forth
herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATIONS
Section 1.1 Defined Terms. Capitalized terms not otherwise
defined in this Agreement shall each have the meaning given in this Section 1.1.
"Affiliate" means any Person that controls, is controlled by, or is
under common control with, a Person.
"Brands" means those brands listed on Schedule 1.1.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto and any regulations promulgated thereunder.
"Confidentiality Agreement" means that certain Confidentiality
Agreement among MLI and Buyer dated February 14, 2003.
"Governmental Authority" means any federal, state, local or foreign
governmental or regulatory or administrative department, court, commission,
board, bureau, agency, authority or instrumentality.
"Lien" means any mortgage, pledge, lien, charge, claim, option,
conditional sale, deed of trust, security interest or other encumbrance,
restriction or limitation of any nature whatsoever.
"Material Adverse Event" means an event that causes or is reasonably
likely to lead to or result in a material adverse effect on, or a material
adverse change in, the operations, business prospects, or condition (financial
or otherwise) of the Business or the Assets or a material adverse effect on the
ability of Buyer or Seller to execute, deliver or perform this Agreement or any
of the other agreements and documents contemplated by this Agreement.
"Net Names" shall mean all right, title and interest in and to the
domain name xxx.xxxxxxxxxxxxxxx.xxx, any registered or unregistered trademarks,
service marks, copyrights or other intellectual property or proprietary rights
based on or related to such domain name, all registrations for such domain name
and all goodwill pertaining to such domain name.
"Ordinary Course of Business" means the ordinary course of business of
the Business consistent with industry-standard custom and practice (including
with respect to quantity, frequency, expense level, personnel resources,
promotional and sales activity, etc.).
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, a Governmental Authority or any other
type of entity.
"Tax" or "Taxes" means any and all taxes, fees, duties, tariffs,
imposts and other charges of any kind imposed by any Governmental Authority or
taxing authority, including: federal, state, local or foreign income, gross
receipts, windfall profits, property, motor vehicle, ad valorem, value added,
production, sales, use, license, excise, franchise, capital, transfer,
recordation, payroll, employment, severance, stamp, occupation, premium,
environmental (including taxes under Code ss.59A), customs duties, social
security (or similar), unemployment, disability, withholding, alternative or
add-on minimum tax, or other tax or governmental assessment, together with any
interest, additions, or penalties with respect thereto and any interest in
respect of such additions or penalties, whether disputed or not.
Section 1.2 Terms Defined in the Agreement. In addition
to the defined terms in Section 1.1, the following is a list of defined terms
used in this Agreement and a reference to the Section in which such term is
defined:
Defined Term Section in which Defined
------------ ------------------------
2004 Revenue Projection ss.3.2(a)(i)
2005 Revenue Projection ss.3.2(b)(i)
2006 Revenue Projection ss.3.2(c)(i)
2006 Target Profit ss.3.2(c)(ii)
Acceleration Event ss. 3.2 (d)
Additional Consideration ss. 3.2
Arbitrator ss. 11.3
Assets ss. 2.1
Assumed Liabilities ss. 2.3
Broker ss. 3.6(a)
Business Recitals
Buyer Indemnification Claim ss. 10.2
Closing ss. 4.1
Closing Date ss. 4.1
Common Stock ss. 3.1
Contracts ss. 2.1(d)
Customer Lists ss. 2.1(c)
Effective Time ss. 4.4
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Defined Term Section in which Defined
------------ ------------------------
Employment Agreements ss. 4.2(l)
Excluded Assets ss. 2.2
Files ss. 2.1
Financial Statements ss. 5.16
Indemnification Claim ss.10.4
Indemnification Claim Notice ss. 10.4
Intangible Personal Property ss. 5.9
Intellectual Property ss. 2.1(a)
Inventory ss. 2.1(b)
Materially Reduced ss. 5.15
Other Intangible Rights ss. 2.1(g)
Permits ss. 2.1(f)
Plan ss. 2.2(b)
Procedures ss. 11.2
Profit Level ss. 3.2(d)
PUR ss. 3.2(d)
Purchase Price ss. 3.1
Repurchase Notification ss. 3.6(a)
Refunds ss. 2.l(h)
Remaining Shares ss. 3.6
Retained Liabilities ss. 2.4
Seller Indemnification Claim ss. 10.3
Subsequent Contracts ss. 6.8
Trade Loading ss. 6.2(a)(iv)
UPC Codes ss. 2.1(g)
Section 1.3 Interpretations. Words used in this Agreement, regardless
of the gender and number specifically used, shall be construed to include any
other gender and any other number as the context requires. Use of the word
"including" throughout this Agreement shall mean "including but not limited to."
Except as otherwise provided in this Agreement in a particular instance, a
reference to a Section, Article, Schedule or Exhibit is a reference to a Section
or Article of this Agreement or a Schedule or Exhibit attached hereto, each of
which is incorporated into this Agreement by reference. The terms "hereof,"
"herein," "this Agreement" and other like terms refer to this Agreement as a
whole, including the Schedules and Exhibits hereto, all certificates and closing
documents delivered herewith, and not solely to any particular part of this
Agreement. The titles of the sections of this Agreement are for convenience of
reference only, and are not to be considered in construing this Agreement.
ARTICLE II
PURCHASE AND SALE OF ASSETS
Section 2.1 Assets. Subject to the terms and conditions set forth in
this Agreement, Seller shall at the Closing sell, transfer, convey, assign and
deliver to Buyer free and clear of all Liens, and Buyer shall at the Closing
purchase and accept from Seller, all of Seller's right, title and interest in
and to the assets described in clauses (a) through (i) below (the "Assets").
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(a) (i) all trademarks, trade names, service marks, copyrights,
patents, trade secrets, recipes, logos, marketing materials, designs
(including all trade dress and packaging artwork and logos presently
or historically used in promoting the Brands and the physical plates
or screens used to make, manufacture or press the same), confidential
or proprietary information and other intellectual property (regardless
of whether registered or pending to be registered with any
Governmental Authority) used in the Business including those set forth
on Schedule 2.1(a), and all goodwill associated with each of the
foregoing (the "Intellectual Property"), and (ii) all Net Names;
(b) all finished goods inventories of the Business with more than
ninety (90) days shelf life remaining as of the Closing Date,
regardless of where stored or warehoused, including those set forth on
Schedule 2.1(b) (the "Inventory");
(c) all lists of current and past customers and prospective
customers of the Business, including those set forth on Schedule
2.1(c) (the "Customer Lists");
(d) all agreements, contracts, contract rights, understandings,
commitments and arrangements of Seller (regardless of whether
prepaid), whether oral or written, that are (i) identified or
summarized on Schedule 2.1(d); (ii) open customer purchase orders
taken in the Ordinary Course of Business that have not been fulfilled
and paid for as of the Closing Date identified or summarized on
Schedule 2.1(d); (iii) customer and shelf space contracts (regardless
of whether pre-paid) identified or summarized on Schedule 2.1(d); and
(iv) supplier contracts identified or summarized on Schedule 2.1(d);
(collectively, the "Contracts");
(e) all rights and interest of Seller in and to all
authorizations, licenses, permits, variances, exemptions, consents,
certificates, approvals and orders necessary to own the Assets and to
conduct the Business issued to Seller by any Governmental Authority,
including those listed on Schedule 2.1(e) (collectively, the
"Permits");
(f) all of Seller's other rights and property interests of any
nature which are used in the operation of the Business, including
rights to use existing customer service telephone numbers, and the
rights to all of Seller's Uniform Product Codes exclusively used in
the Business (the "UPC Codes"), including those listed on Schedule
2.1(f) (collectively, the "Other Intangible Rights");
(g) any and all refunds, rebates or other payments, or the right
to receive any of the foregoing, related to the operation of the
Business (the "Refunds"); and
(h) all goodwill and ongoing business and customer relationships
of Seller associated with the Business.
The obligation of Seller to deliver any Intellectual Property, Customer
List, Contract, Book or Record, Permit, Other Intangible Right, Refunds
or other asset or document set forth above includes an obligation to
deliver all files, data, records of correspondence, analysis, reports,
etc. related thereto (collectively, the "Files"), including any File
stored on any media regardless of form, including paper files,
print-outs, computer disks, magnetic tapes, CD's, and the like.
Notwithstanding the foregoing, Seller is permitted to
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keep copies of Contracts for which the originals are delivered to
Buyer necessary for audit or other business purposes so long as such
Contracts are maintained in a manner consistent with Seller's
confidentiality and other obligations contained in the Confidentiality
Agreement.
Section 2.2 Excluded Assets. Notwithstanding anything to the contrary
contained in Section 2.1, the following rights, properties and assets
(collectively, the "Excluded Assets") will not be included in the Assets:
(a) Current Assets and Cash. All cash, accounts and notes
receivable, and securities of Seller regardless of whether related to
the Business;
(b) Employees and Benefit Plans. Any (i) employment contracts,
(ii) benefit plans (within the meanings of the Employee Retirement and
Income Security Act) sponsored by Seller or an Affiliate of Seller or
to which Seller or an Affiliate of Seller contributes or has ever
contributed on behalf of its employees (a "Plan"), (iii) any of the
assets thereof, and (iv) any other employee benefit plan or
arrangement and the assets thereof, if any, maintained by Seller or
any Affiliate of Seller;
(c) Non-Business Assets. All assets of Seller not customarily
used in or related to the Business.
(d) Real Property. Any and all real property and improvements
owned by Seller.
(e) Equipment and Personal Property. Any and all machinery,
equipment, furniture, tools, spare parts, maintenance equipment and
supplies, and other items of personal property of Seller (other than
the Inventory);
(f) Raw Materials and Packaging. Any and all raw materials and
packaging materials inventories of Seller;
(g) Other Excluded Assets. Any right, property or asset that is
described on Schedule 2.2(g);
(h) Insurance. Any and all insurance policies maintained by
Seller, and any and all rights and recoveries thereunder; and
(i) Excluded Contracts. Any and all agreements, contracts,
contract rights, understandings, commitments and arrangements of
Seller, whether oral or written, other than the Contracts.
Section 2.3 Assumed Liabilities. As of the Closing, Buyer will assume and
agree to discharge and perform (i) all of Seller's obligations under the
Contracts but only to the extent such contracts are listed on Schedule 2.1(d)
and only to the extent that such obligations (A) arise from and after the
Closing or (B) are related to promotional activities (such as advertising, trade
deals, and the like) that occur after the Closing, (ii) any open purchase orders
delivered to suppliers related to the Business for which the goods or services
being purchased by Seller relate
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exclusively to the Business and are delivered to Buyer after the
Closing but only to the extent those contracts are listed on Schedule
2.1(d), (iii) those open purchase orders received from customers
related to the Business that have not been fulfilled and paid for as
of Closing but only to the extent those contracts are listed on
Schedule 2.1(d), (iv) customer and shelf space contracts but only to
the extent those contracts are listed on Schedule 2.1(d); (v) supplier
contracts but only to the extent those contracts are listed on
Schedule 2.1(d); and (vi) all liabilities and obligations with respect
to (A) any trade deals related to the Business which have been offered
to the trade but not reimbursed by Sellers prior to the Closing Date
(including, without limitation, off-invoice allowances, billback
allowances, in-ad coupons and lump sum allowances) but only to the
extent those trade deals are listed or summarized on Schedule 2.1(d),
and (B) any and all coupons related to the Business which are redeemed
or reimbursed on or after the Closing Date but only to the extent
those coupons are listed or summarized on Schedule 2.1(d) (the
"Assumed Liabilities"). "Assumed Liabilities" does not include and
Buyer shall not assume any liability for any tortious or other
wrongful action, breach of contract, or nonperformance of any duty by
Seller at any time before or after the Closing. In determining the
portion of any items with respect to (i)(A), above, that are Assumed
Liabilities, the allocation of pre-Closing and post-Closing cost shall
be made on the basis of the volume of the affected products sold
during the promotional event in each such period, or, if volume
analysis is not practical, then on such other cost allocation method
as the parties may agree.
Section 2.4 Retained Liabilities. Notwithstanding anything contained in
this Agreement to the contrary, Buyer does not assume or agree to pay, satisfy,
discharge or perform, and will not be deemed by virtue of the execution and
delivery of this Agreement or any document delivered at the Closing pursuant to
this Agreement, or as a result of the consummation of the transactions
contemplated by this Agreement, to have assumed, or to have agreed to pay,
satisfy, discharge or perform, any liability, obligation or indebtedness of
Seller, whether primary or secondary, direct or indirect, other than the Assumed
Liabilities. Seller shall retain and pay, satisfy, discharge and perform in
accordance with the terms thereof, all liabilities and obligations other than
the Assumed Liabilities (the "Retained Liabilities"). Without limitation, the
Retained Liabilities shall include:
(a) all obligations or liabilities of Seller or any Affiliate of
Seller in respect of the Contracts arising from or attributable to the
period before Closing;
(b) all obligations or liabilities of Seller or any Affiliate of
Seller in respect of trade payables, other accounts payable and
accrued expenses;
(c) all obligations or liabilities of Seller or any Affiliate of
Seller that relate to any of the Excluded Assets;
(d) all obligations or liabilities of Seller or any Affiliate of
Seller that relate to Taxes arising from or attributable to the period
before Closing;
(e) all obligations or liabilities for any legal, accounting,
investment banking, brokerage or similar fees or expenses incurred by
Seller or any Affiliate of Seller in connection with, resulting from
or attributable to the transactions contemplated by this Agreement;
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(f) all obligations or liabilities of Seller or any Affiliate of
Seller for any borrowed money, and all obligations or liabilities
arising under any letter of credit or guaranty issued in connection
therewith;
(g) all obligations or liabilities of Seller or any Affiliate of
Seller resulting from, caused by or arising out of, directly or
indirectly, the operation of the Business, or the ownership or lease
of any of the Assets or any properties or assets previously used in
the Business at any time prior to the Closing, including such of the
foregoing as constitute, may constitute or are alleged to constitute a
tort, or violation of any legal requirement, contract or agreement by
which Seller is bound;
(h) all obligations in respect of present or former employees or
independent contractors of Seller or any Affiliate of Seller,
including (i) claims for severance, unemployment compensation or
insurance, any employee benefits or other compensation or damages by
or on behalf of any present or former employees or independent
contractors of Seller or by or on behalf of any Governmental Authority
in respect of present or former employees or independent contractors
of Seller; (ii) all liabilities and obligations of Seller or any
Affiliate of Seller with respect to present or former employees or
independent contractors of Seller under any Plan; and (iii) all
liabilities and obligations with respect to physical, mental or other
health conditions of present or former employees or independent
contractors of Seller; and
(i) any and all obligations or liabilities that Sellers may have
to any third person arising out of or in connection with such person's
employment with, investment in or relationship to any of the Sellers,
or arising out of or in connection with the execution of this
Agreement and the consummation of the transactions contemplated
hereby.
ARTICLE III
PURCHASE PRICE OF ASSETS
Section 3.1 Purchase Price. Subject to the terms and conditions provided in
this Agreement, at the Closing, Buyer shall issue to Seller 100,000 shares (the
"Shares") of Class A Convertible Common Stock, par value $.001 per share (the
"Common Stock"), of the Buyer (the "Purchase Price").
Section 3.2 Additional Consideration. In addition to the Purchase Price,
subject to the terms and conditions provided in this Agreement, Buyer shall pay
to Seller by wire transfer the amounts determined in accordance with clauses (a)
through (e) below on such dates as set forth in clauses (a) through (e) below
(the "Additional Consideration").
(a) First Payment.
(i) During Buyer's fiscal year 2003 fourth quarter Buyer and
Muscats will meet to develop the projected business plan for the
Business for the 2004 fiscal year (October 1, 2003 through
September 30, 2004), including projected Net Sales for the 2004
fiscal year (the "2004 Net Sales Projection"). For purposes of
this Agreement, "Net Sales" shall mean gross sales less returns
and allowances. In the event Buyer and Muscats cannot agree by
November 1, 2003 on the 2004
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projected Net Sales, the 2004 Net Sales Projection will be deemed
for purposes of this Agreement to be equal to the actual Net
Sales of the Business for the period October 1, 2002 through
September 30, 2003.
(ii) If the Business achieved a Net Profit (as defined
below) of at least $291,667 for the period March 1, 2003 through
September 30, 2003 (the "2003 Target Net Profits"), on November
10, 2003, Buyer will wire transfer to Seller an amount equal to
ten percent (10%) of the 2004 Net Sales Projection (the "2004
Payment"). If the Business achieves a Net Profit of more than
$145,833 but less than $291,667 for the period March 1, 2003
through September 30, 2003, the 2004 Payment shall be reduced by
a percentage equal to the difference between the 2003 Target Net
Profits and the actual Net Profits for the period March 1, 2003
through September 30, 2003 divided by the 2003 Target Net
Profits, and if the Business does not achieve a Net Profit for
the period March 1, 2003 through September 30, 2003 of more than
$145,833, then no payment shall be made to Sellers pursuant to
this Section 3.2(a)(ii). For purposes of this Agreement, "Net
Profit" shall be defined pursuant to generally accepted
accounting principles with the acknowledgment that only those
expenses directly incurred by the Business shall reduce total
revenue.
(b) Second Payment.
(i) During Buyer's fiscal year 2004 fourth quarter Buyer and
Muscats will meet to develop the projected business plan for the
Business for the 2005 fiscal year (October 1, 2004 through
September 30, 2005), including projected Net Sales for the 2005
fiscal year (the "2005 Revenue Projection"). In the event Buyer
and Muscats cannot agree by November 1, 2004 on the 2005
projected Net Sales, the 2005 Net Sales Projection will be deemed
for purposes of this Agreement to be equal to the actual Net
Sales of the Business for the period October 1, 2003 through
September 30, 2004.
(ii) If the Business achieved a Net Profit of at least
$750,000 for the period October 1, 2003 through September 30,
2004 (the "2004 Target Net Profits"), on November 1, 2004, Buyer
will wire transfer to Seller an amount equal to ten percent (10%)
of the 2005 Net Sales Projection (the "2005 Payment"). If the
Business achieves a Net Profit of more than $375,000 but less
than $750,000 for the period October 1, 2003 through September
30, 2004, the 2005 Payment shall be reduced by a percentage equal
to the difference between the 2004 Target Net Profits and the
actual Net Profits for the period October 1, 2003 through
September 30, 2004 divided by the 2004 Target Net Profits, and if
the Business does not achieve a Net Profit for the period October
1, 2003 through September 30, 2004 of more than $375,000 then no
payment shall be made to Seller pursuant to this Section
3.2(b)(ii).
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(c) Third Payment.
(i) During Buyer's fiscal year 2005 fourth quarter Buyer and
Muscats will meet to develop the projected business plan for the
Business for the 2006 fiscal year (October 1, 2005 through
September 30, 2006), including projected Net Sales for the 2006
fiscal year (the "2006 Net Sales Projection"). In the event Buyer
and Muscats cannot agree by November 1, 2005 on the 2006
projected Net Sales, the 2006 Net Sales Projection will be deemed
for purposes of this Agreement to be equal to the actual Net
Sales of the Business for the period October 1, 2004 through
September 30, 2005.
(ii) If the Business achieved a Net Profit of at least
$1,000,000 for the period October 1, 2004 through September 30,
2005 (the "2005 Target Net Profits"), on December 15, 2005, Buyer
will wire transfer to Seller an amount equal to ten percent (10%)
of the 2006 Net Sales Projection (the "2005 Payment"). If the
Business achieves a Net Profit of more than $500,000 but less
than $1,000,000 for the period October 1, 2004 through September
30, 2005, the 2005 Payment shall be reduced by a percentage equal
to the difference between the 2005 Target Net Profits and the
actual Net Profits for the period October 1, 2004 through
September 30, 2005 divided by the 2005 Target Net Profits, and if
the Business does not achieve a Net Profit for the period October
1, 2004 through September 30, 2005 of more than $500,000, then no
payment shall be made to Seller pursuant to this Section
3.2(c)(ii).
(d) Except as set forth in Section 3.2(e), all payments
contemplated under Section 3.2 shall be due irrespective of the
continued employment of the Muscats under the Employment Agreements.
(e) Notwithstanding anything to the contrary in Sections 3.2(a)
through (d), in the event the employment of both Muscats with the
Buyer (or its successor) is terminated without Cause (as defined in
Section 7.3 of the Employment Agreements) after a Change in Control
(as defined in Section 9.3 of the Employment Agreements) (an
"Acceleration Event"), Seller and Buyer agree as follows:
(i) In the event an Acceleration Event occurs prior to or on
September 30, 2003, Buyer shall wire transfer to Seller, within
thirty (30) days of the termination of both Muscats without
Cause, an amount equal to $1,800,000, and Buyer's obligation to
pay Seller, and Seller's right to receive payment, pursuant to
Sections 3.2(a) through (c) shall terminate.
(ii) In the event an Acceleration Event occurs after
September 30, 2003, but prior to or on September 30, 2004, Buyer
shall wire transfer to Seller, within thirty (30) days of the
termination of both Muscats without Cause, an amount equal to
$1,300,000, and Buyer's obligation to pay Seller, and Seller's
right to receive payment, pursuant to Sections 3.2(b) and (c)
shall terminate.
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(iii) In the event an Acceleration Event occurs after
September 30, 2004, but prior to or on September 30, 2005, Buyer
shall wire transfer to Seller within thirty (30) days of the
termination of both Muscats without Cause, an amount equal to
$700,000, and Buyer's obligation to pay Seller, and Seller's
right to receive payment, pursuant to Section 3.2(c) shall
terminate.
(iv) In the event an Acceleration Event occurs after
September 30, 2005, Buyer shall not be obligated to wire transfer
any amount to Seller under this Section 3.2(e).
Section 3.3 Payment for Packaging Material. If and to the extent that Buyer
receives any credit pursuant to the Bushel 42 Agreement (as defined in Section
4.2(m)) for any packaging materials or raw materials delivered by Seller to
Bushel 42 (as defined in Section 4.2(m)), Buyer shall remit to Seller an amount
equal to such credit within thirty (30) days of receiving such credit from
Bushel 42.
Section 3.4 Allocation of Purchase Price. Seller and Buyer shall allocate
the Purchase Price among the Assets in accordance with Section 1060 of the Code.
Such allocation shall be established by mutual agreement of Seller and Buyer and
shall be attached to this Agreement as Schedule 3.4 within 60 days after
Closing. The allocations will be used by Buyer and Seller as the basis for
reporting asset values and other items for purposes of all required returns,
statements and reports with respect to taxes, including any reports required to
be filed under Section 1060(b) of the Code. Seller and Buyer agree not to
assert, in connection with any audit or other proceeding with respect to Taxes,
any asset values or other items inconsistent with the allocations determined
under this Section.
Section 3.5 Registration. After the Closing, Seller will use its
commercially reasonable efforts to register the Shares with the SEC by filing 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 Buyer with the SEC) (the "Registration
Statement") and shall provide evidence of the effectiveness of the same to
Seller; provided, however, that if Buyer, in its sole and absolute discretion,
determines that filing the Registration Statement would be detrimental to Buyer
it may defer filing of the Registration Statement for up to sixty (60) days
until such time as Buyer determines that such a filing would not be detrimental
to Buyer. If after the Registration Statement becomes effective, Buyer
determines, in its sole and absolute discretion, that sales pursuant to the
prospectus, included in such Registration Statement, should be suspended for any
reason, Buyer shall so notify Seller and Seller shall immediately cease selling
Shares pursuant to such prospectus and shall not sell any additional Shares
pursuant to such prospectus until Buyer delivers to Seller written notice that
it may again sell the Shares. If Seller is permitted to sell the Shares in
accordance with federal securities laws without registration thereunder, the
Buyer in its sole and absolute discretion may cease its efforts to file the
Registration Statement with the SEC or, if the Registration Statement has been
filed with, or declared effective by, the SEC, withdraw such Registration
Statement and have no further obligation to register the Shares under applicable
securities laws. Seller shall cooperate with Buyer in preparing and filing the
Registration Statement, including providing any information Buyer requests, and
shall comply with all applicable securities laws in connection with the sale of
such Shares.
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Section 3.6 Repurchase Requirements.
(a) If within the thirty-six (36) month period following the Closing
Date the Common Stock has not been publicly traded for at least $50.00 per
share during a period when Seller is permitted to sell the Shares pursuant
to a Registration Statement that has been declared effective by the
Securities and Exchange Commission or otherwise in accordance with federal
securities laws without registration thereunder, Seller may, no later than
fourteen (14) days after the thirty-six (36) month anniversary of the
Closing Date, provide Buyer with a written notification requesting Buyer to
purchase the Remaining Shares (defined below) at a price equal to $50.00
per share ("Repurchase Notification"). Within thirty (30) days after
receipt of the Repurchase Notification, Buyer shall elect, in its sole and
absolute discretion, to either (i) repurchase the Remaining Shares from
Seller at a price equal to $50.00 per share, or (ii) request that Seller
sell the Remaining Shares on the open market through a broker selected by
Buyer in its sole and absolute discretion (the "Broker"). In the event
Buyer requests Seller to sell the Remaining Shares on the open market
through the Broker, Seller shall, within thirty (30) days after receipt of
such request from Buyer, sell the Remaining Shares on the open market
through the Broker, and Buyer shall pay Seller the difference, if any,
between (x) $50.00 multiplied by the number of Remaining Shares and (y) the
aggregate market price at which such Remaining Shares were sold.
(b) Buyer's obligations under this Section 3.6 shall terminate if: (i)
Seller does not receive the Repurchase Notification within fourteen (14)
days after the three year anniversary of the Closing Date; (ii) there are
no Remaining Shares on the date Buyer receives the Repurchase Notification;
(iii) Buyer requests that Seller sell the Remaining Shares on the open
market through the Broker and Seller does not sell the Remaining Shares
through the Broker; or (iv) Buyer requests that Seller sell the Remaining
Shares on the open market through the Broker and Seller does not instruct
the Broker to sell the Remaining Shares within thirty (30) days after
receiving such request from Buyer.
(c) The stock prices under either party's options or rights in this
Section 3.6 shall be adjusted as appropriate to account for any
recapitalization of Buyer, including any stock splits, stock dividends,
stock recombinations or otherwise.
(d) For purposes of this Agreement, "Remaining Shares" shall be
defined to be the Shares that: (i) Seller has not transferred, assigned,
sold or otherwise disposed of prior to the third anniversary of the Closing
Date; and (ii) Seller has record ownership of as of the third anniversary
of the Closing Date.
ARTICLE IV
CLOSING
Section 4.1 Date, Time and Place of Closing. The consummation of the
transactions contemplated hereby (the "Closing") shall be held on February ___,
2003 (the "Closing Date"). The Closing shall take place at the offices of
Xxxxxxxxx Xxxxxxx Xxxxx Xxxxxx, LLP, 0000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx Xxxx,
Xxxxxxxx 00000 or at such other place as the parties agree.
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Section 4.2 Deliveries by Seller at Closing. At the Closing, Seller shall
convey, transfer, assign, and deliver all of its right, title and interest in
and possession of the Assets to Buyer, and shall also deliver to Buyer the
following:
(a) A Xxxx of Sale, duly executed by Seller, in the form attached
hereto as Exhibit 4.2(a);
(b) An Assignment and Assumption Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(b);
(c) A Domain Name Assignment Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(c);
(d) Such other instruments of conveyance, assignment and transfer, in
form and substance satisfactory to Buyer, as appropriate to convey,
transfer and assign to, and to vest in, Buyer, good, clear, record and
marketable title to the Assets, including a consent or assignment related
to the UPC Codes;
(e) A Cross Receipt, duly executed by Buyer and Seller, in the form
attached hereto as Exhibit 4.2(e);
(f) A certified copy of duly adopted resolutions of MLI's Board of
Directors and shareholders authorizing, approving, and consenting to the
execution and delivery of this Agreement, to the consummation of the
transactions contemplated herein, and to performance of the agreements set
forth herein;
(g) A certificate of a duly authorized officer of Seller stating that
the representations and warranties of Seller in this Agreement are true as
of the Closing;
(h) The waiver, release, consent, certificate or other document of any
Person that is necessary to consummate the transactions contemplated
hereby, and to make the warranties and representations made in this
Agreement true, including, without limitation, those consents and approvals
required to be obtained pursuant to Section 5.6 of this Agreement;
(i) A certificate of good standing for MLI dated no more than ten (10)
days prior to the Closing Date;
(j) Originals of all Contracts in Seller's possession;
(k) An Employment Agreement duly executed by Xx Xxxxxx, and an
Employment Agreement duly executed by Xxxxxxxx Xxxxxx, each in the form
attached hereto as Exhibit 4.2(1) (collectively, the "Employment
Agreements"); and
(l) An Amendment to the Agreement between Heartland Durum Growers,
Cooperative, a North Dakota Farm Cooperative (d/b/a Bushel 42 Pasta
Company) ("Bushel 42"), and Xxx. Xxxxxx'x, Inc. (the "Bushel 42 Agreement")
signed by MLI and Bushel 42 (the "Bushel 42 Amendment").
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Section 4.3 Deliveries by Buyer at Closing. Buyer shall deliver to Seller
at Closing:
(a) The Purchase Price;
(b) An Assignment and Assumption Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(b);
(c) A Domain Name Assignment Agreement, duly executed by Buyer and
Seller, in the form attached hereto as Exhibit 4.2(c);
(d) A Cross Receipt, duly executed by Buyer and Seller, in the form
attached hereto as Exhibit 4.2(e);
(e) A certificate of a duly authorized officer of Buyer stating that
the representations and warranties of Buyer in this Agreement are true as
of the Closing;
(f) Duly executed copies of the Employment Agreements for Xx Xxxxxx
and Xxxxxxxx Xxxxxx, in the form attached hereto as Exhibit 4.2(l).
Section 4.4 Effective Time. The effective time of the transactions
contemplated by the Agreement shall be deemed to be as of 12:01 a.m. on the
Closing Date (the "Effective Time"). Provided the Closing occurs, Buyer shall be
entitled to possession of, and to exercise all rights arising under, the Assets
as of the Effective Time. The risk of loss or damage to the Assets by fire,
storm, flood, theft, or other casualty or cause shall be in all respects upon
Seller prior to the Effective Time and upon Buyer thereafter.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter this Agreement and to consummate the
transactions contemplated hereby, Seller represents and warrants to Buyer as
follows:
Section 5.1 Existence. MLI is duly organized, validly existing, and in good
standing under the laws of the State of California and is qualified to do
business and is in good standing in all jurisdictions in which it is required to
be so qualified and in good standing as a result of its operation of the
Business, except where the failure to be so qualified or in good standing would
not be a Material Adverse Event.
Section 5.2 Power and Authority. Seller has all requisite power and
authority to own its properties and assets, including the Assets, and to carry
on the Business as now conducted. Seller has all requisite corporate power and
authority to execute and deliver this Agreement, to perform the agreements and
covenants of Seller set forth in this Agreement and to consummate the
transactions contemplated by this Agreement, including the conveyance,
assignment and transfer of the Assets.
Section 5.3 Execution and Delivery Permitted. Except as set forth on
Schedule 5.3, the execution, delivery and performance of this Agreement will not
(i) violate or result in a breach of any term of MLI's Certificate of
Incorporation or Bylaws, (ii) result in a breach
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of or constitute a default under any term in any agreement or other instrument,
including any Contract, to which Seller is a party, (iii) violate any law or any
order, rule or regulation applicable to Seller, of any Governmental Authority
having jurisdiction over Seller, its properties or the Assets or (iv) result in
the creation or imposition of any Lien upon any of the Assets. The Seller has
taken all action required by law and by MLI's Certificate of Incorporation and
Bylaws to authorize the execution, delivery and performance of this Agreement
and the other agreements executed in connection herewith by Seller and the
transfer of all of the Assets to Buyer in accordance with this Agreement. The
Board of Directors of MLI and the shareholders of MLI have taken all action
required by law and by MLI's Certificate of Incorporation and Bylaws to approve
the execution, delivery and performance of this Agreement and the other
agreements executed in connection herewith by Seller and the transfer of all of
the Assets to Buyer in accordance with this Agreement.
Section 5.4 Consents. Except as set forth on Schedule 5.4, the execution,
delivery and performance of this Agreement and the other agreements executed in
connection herewith, and the consummation by Seller of the transactions
contemplated hereby and thereby do not require any filing with, notice to or
consent, waiver or approval of any third party, including but not limited to,
any Governmental Authority or entity other than any disclosure of this Agreement
required by applicable securities laws, regulations and rules.
Section 5.5 Affiliate Contracts. Except as set forth in Schedule 5.5
(including as to any oral matters an accurate and reasonably detailed summary
thereof), there are no contracts, agreements, commitments, understandings or
arrangements affecting or relating to the Business or the Assets to which any
Affiliate of Seller is a party or by which any such Affiliate is bound.
Section 5.6 Ownership of Assets. Seller has sole and good, clear and
marketable title to the Assets, which title will be transferred to Buyer at
Closing, free and clear of all Liens. Seller has the full, absolute and
unrestricted right to assign, transfer and convey to Buyer the Assets, subject
only to such consents and approvals as listed on Schedule 5.4, which consents
and approvals Seller shall deliver to Buyer at Closing.
Section 5.7 Inventory. All items of Inventory (i) are suitable for human
consumption and are merchantable for sale in the Ordinary Course of Business as
first quality goods at normal xxxx-ups, (ii) are valued at the lower of actual
cost or market, (iii) are the property of Seller and (iv) have a remaining shelf
life in excess of ninety (90) days. All Inventory complies with all applicable
federal, state and municipal laws, regulations and rules.
Section 5.8 Contracts. The Contracts have been entered into in the Ordinary
Course of Business and contain commercially reasonable terms. Except as
specifically provided on Schedule 5.8, Seller has full, absolute and
unrestricted right to assign, transfer and convey to Buyer the Contracts. Each
Contract is in full force and effect and constitutes the legal, valid, binding
and enforceable obligation of the parties thereto. Seller and the other parties
thereto are current in all obligations under each Contract. There have been no
events of default, and no state of facts exists that with notice or the passage
of time, or both, would constitute an event of default by Seller under any
Contract. To the Seller's knowledge, there have been no events of default, and
no state of facts exists that with notice or the passage of time, or both, would
constitute an event of default under any Contract by any party other than
Seller.
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Except as set forth on Schedule 5.8, the consummation of the
transactions contemplated by this Agreement will not (and will not give any
Person a right to) terminate or modify any rights of, or accelerate or increase
any obligation of Seller under any Contract. A true and complete copy of every
written Contract listed on Schedule 2.1(d) has been made available to Buyer and
such Schedule contains an accurate and reasonably detailed summary of all oral
contracts.
Section 5.9 Intangible Personal Property.
(a) Seller has full right, title and interest in and to the
Intellectual Property, the Customer Lists, and the Other Intangible Rights
(collectively, the "Intangible Personal Property"). Seller is not (i) a
licensor or licensee in respect of any Intangible Personal Property or (ii)
obligated to make any royalty or other payments with respect to any
Intangible Personal Property. Seller is not infringing upon or otherwise
acting adversely to the intangible personal property owned by any other
Person, and there is no notice, claim or action by any such Person pending
with respect thereto.
(b) Schedule 5.9(b) contains a complete and accurate list and summary
description of all Net Names. All Net Names have been registered in the
name of Seller and are in compliance with all formal legal requirements. No
Net Name has been or is now involved in any ICANN proceeding or any other
dispute, opposition, invalidation or cancellation proceeding and, to
Seller's knowledge, no such action is threatened with respect to any Net
Name. To Seller's knowledge, there is no domain name application pending of
any other person which would or would potentially interfere with or
infringe any Net Name. No Net Name is infringed or has been challenged,
interfered with or threatened in any way. No Net Name infringes upon,
interferes with, or is alleged to infringe upon or interfere with the
trademark, copyright or domain name of any other person.
Section 5.10 Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Seller in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Seller, enforceable against Seller in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Section 5.11 Documents Sufficient. The documents delivered by Seller to
Buyer pursuant to Article IV of this Agreement will be valid, sufficient and
effective to completely transfer to Buyer all of Seller's right, title and
interest in and to all of the Assets, free and clear of all Liens.
Section 5.12 Litigation and Compliance with Law. Except as set forth on
Schedule 5.12, there are no suits, actions, claims, demands, investigations,
complaints, or other proceedings of any nature whatsoever in law or in equity,
that are pending or, to the knowledge of Seller, threatened against Seller, that
affect the Business or any of the Assets, by or before any Governmental
Authority. Seller is not in default or violation with respect to any order,
writ, injunction, garnishment, levy, or decree of any Governmental Authority
applicable to the
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Business or the Assets, and the use, operation, ownership, or transfer of the
Business or the Assets does not constitute a default or violation thereunder.
The operations of the Business and the condition of the Assets do not violate in
any material respect any federal, state, or municipal law, regulation or rule.
Section 5.13 Taxes. Seller has timely filed (or will timely file) all
federal, state, local and other Tax returns and reports of whatever kind
pertaining to the Assets or the Business and required to be filed by Seller for
all periods up to and including the Closing Date. Seller has paid (or will
timely pay) all Taxes that are due and payable (or that relate to any period up
to and including the Closing Date) or for which assessments relating to any
period up to and including the Closing Date have been levied, the nonpayment of
which could result in a Lien on any of the Assets. There are no audits, suits,
actions, claims, investigations, inquiries, or proceedings pending or, to the
knowledge of Seller, threatened against Seller with respect to any Taxes, nor
are any such matters under discussion with any Governmental Authority as they
relate to the Business or the Assets.
Section 5.14 Licensure. The Permits listed on Schedule 2.1(f) are all of
the material governmental permits and licenses necessary to operate the
Business. Seller is in compliance with all requirements and limitations set
forth in the Permits. The Permits are now in full force and effect, and except
as set forth on Schedule 5.14, upon transfer to Buyer at Closing will be in full
force and effect.
Section 5.15 Customers. Schedule 5.15 lists the top ten (10) customers of
the Business and the cumulative sales of the products of the Business to those
customers for the 2002 fiscal year. Since October 1, 2002 none of the customers
listed on Schedule 5.15 has ceased to do business with Seller and since October
1, 2002 Seller has not received any notice that any customer listed on Schedule
5.15 intends to terminate its business with Seller. In addition, none of the
customers listed on Schedule 5.15 has Materially Reduced (as defined below) its
business with Seller. For purposes of this Section 5.15, "Materially Reduced"
shall mean that the sales attributed to such customer have decreased in the
twelve (12) months ended January 31, 2003 compared to the twelve (12) months
ended January 31, 2002 by more than 20%. Seller has no reason to believe that
there will be any adverse change in any relationships with any customer listed
on Schedule 5.15, either as a result of the consummation of the transactions
contemplated by this Agreement or otherwise.
Section 5.16 Books and Records; Disclosure. The books and records of Seller
relating to the Business are in all material respects complete and correct, have
been maintained in accordance with good business practices and the matters
contained therein are accurately reflected, to the extent required, on the
financial statements and projections of the Business provided to Buyer (the
"Financial Statements"). The Financial Statements have been maintained in
accordance with generally accepted accounting principles. None of (i) the
Financial Statements, (ii) the information concerning the Assets, Business or
Seller delivered to Buyer, (iii) the representations and warranties made by
Seller in this Agreement or (iv) the statements made by or on behalf of Seller
in any certificate, document or Schedule delivered or to be delivered in
connection with the transaction contemplated by this Agreement, contains or will
contain any untrue statement of material fact, and there is no omission of any
material fact necessary to make such representation or warranty or any such
statement not misleading, in light
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of the circumstances in which they are made. The items listed in the Schedules
attached to this Agreement constitute all of the matters required to be shown on
such Schedules.
Section 5.17 Brokers Fees. Seller has no liability or obligation to pay any
brokerage or finders fees or commissions with respect to the transactions
contemplated herein.
Section 5.18 Shareholders. All of the outstanding capital stock of MLI is
owned on the date of this Agreement, beneficially and of record, by the Muscats,
and will be so owned by the Muscats on the Closing Date.
Section 5.19 Securities Laws Matters. Each of the Sellers is an "accredited
investor" as defined under the Securities Act of 1933, as amended (the
"Securities Act"). Each of the Sellers is acquiring the Shares hereunder solely
for investment purposes for his, her or its own account and not with a view to
resale or distribution except in accordance with all applicable federal and
state securities laws and regulations. Each of the Sellers agrees that he, she
or 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 take a pledge of, any such shares) except in compliance
with all applicable federal and state securities laws and regulations.
ARTICLE VI
COVENANTS OF SELLER
Seller covenants and agrees as follows:
Section 6.1 Performance of Contracts and Retained Liabilities. Seller
shall, from the date hereof through the Closing, continue to faithfully,
diligently and promptly perform each and every obligation of Seller, if any,
under each of the Contracts and pay and satisfy each Retained Liability.
Section 6.2 Conduct of Business. From the date hereof through the Closing,
Seller shall operate the Business in accordance with the Ordinary Course of
Business and with at least as much attention and support as is currently being
provided, using its best efforts to preserve and maintain its relationships with
suppliers and customers and to preserve its current level of sales volume, shelf
space and historical operating margins. Seller shall pay all bills and debts
incurred by it and related to the operation of the Business promptly as they
become due. Seller shall consult in advance with Buyer on all decisions not in
the Ordinary Course of Business relating to the Assets or the Business.
(a) In particular, and without limiting the foregoing, with respect to
the Business, Seller shall:
(i) continue to conduct marketing, product pricing, promotional
and advertising activities consistent with historical practices;
(ii) maintain the sales force in a manner consistent with past
practices, including, but not limited to, maintaining the number of
active
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salespersons assigned to the Business, and maintain the levels of and
the payment of bonus, incentive and other compensation; (iii) continue
to purchase and maintain inventories in such quantities and quality as
necessary to operate the Business in the Ordinary Course of Business;
(iv) refrain from shipping manufactured pasta ahead of normally
maintained schedules or shipping dates or otherwise accelerating sales
or the amount of Inventory less than 90 days old in a manner not in
the Ordinary Course of Business ("Trade Loading"), or permitting or
tolerating any brokers or other representatives of Seller to engage in
Trade Loading;
(v) continue all customer service and fulfillment levels at
historical levels and maintain all shelf space and promotional
displays at least at the levels in existence as of the date hereof;
(vi) continue to operate the Business in compliance with all
applicable local, state and federal laws and regulations; and
(vii) notify Buyer within 48 hours of any termination,
cancellation, limitation of, or any adverse modification of or change
in, any Contract or any business relationship of Seller with any
customer described in Section 5.15.
(b) Further, Seller shall not, without the express prior written
approval of Buyer:
(i) change in any material manner the ownership of the Assets
(other than inventories sold in the Ordinary Course of Business);
(ii) terminate or decrease the rate of compensation or benefits
of, any salesperson responsible for the sale and/or distribution of
products within the Business;
(iii) mortgage, pledge or subject to Lien any of the Assets;
(iv) enter into or commit to enter into any contract other than
in the Ordinary Course of Business or any contract, agreement or
commitment that would be required to be set forth on Schedule 5.5
hereto; or
(v) other than in the Ordinary Course of Business, cancel or
terminate or consent to or accept any cancellation or termination of
any Contract, amend or otherwise modify any of the material terms or
provisions or give any consent, waiver or approval with respect to any
Contract, waive any breach of any material terms or provisions
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or take any other action in connection with any Contract that would
materially impair the interests or rights of Seller to be transferred
to Buyer hereunder.
Section 6.3 Access to Information. Seller shall afford Buyer, its counsel,
financial advisors, auditors and other authorized representatives reasonable
access for any purpose consistent with this Agreement from the date hereof
through the Closing or termination of this Agreement, whichever occurs first,
during normal business hours, to the offices, properties, books, and records of
Seller related to the Assets and the Business and shall furnish to Buyer such
additional financial and operating data and other information as Seller may
possess and as Buyer may reasonably request.
Section 6.4 No Sale Negotiations. Seller and its representatives and agents
shall not solicit, entertain or engage in any negotiations, discussions or
contact with any party other than Buyer, with respect to the sale, transfer or
other disposition of any of the Assets (other than the sale of Inventory in the
Ordinary Course of Business), the Business, or any interest, legal, equitable or
beneficial, in any of the above.
Section 6.5 Confidentiality. Seller will hold, and will cause its
directors, officers, employees, accountants, counsel, financial advisors and
other representatives and Affiliates to hold, any nonpublic information of Buyer
in confidence to the extent required by, and in accordance with, the provisions
of the Confidentiality Agreement.
Section 6.6 Reporting Requirements. From the date hereof through the
Closing, Seller shall promptly notify Buyer of:
(a) Any (i) Material Adverse Event, (ii) any fact that, if known as of
the date of this Agreement, would have been required to be disclosed to
Buyer, (iii) event that causes any representation or warranty contained
herein to be untrue or inaccurate in any respect or (iv) event that causes
any covenant, condition or agreement of Seller hereunder not to be complied
with or satisfied in any respect;
(b) all claims, actions, charges, orders or other directives that, if
adversely determined, would cause a Material Adverse Event; and
(c) such other information respecting the Assets or the operations,
business prospects or condition (financial or otherwise) of the Business as
Buyer may from time to time reasonably request.
Section 6.7 Cooperation; Other Actions.
(a) Seller will use its best efforts to facilitate and cause the
consummation of the transactions contemplated hereby and to obtain from all
Persons, and take all other actions with respect to, all consents or
approvals required on the part of such party with respect to the
consummation of the transactions contemplated hereby. If any Asset is
identified after Closing that should have been transferred to Buyer as part
of this Agreement, Seller shall promptly transfer such Asset to Buyer.
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(b) From the date hereof through the Closing, Seller shall not take
any action that would, or that would reasonably be expected to, result in
any of the conditions to the transactions contemplated hereby set forth in
Sections 9.1 and 9.2 hereof not being satisfied, or in the satisfaction
thereof being delayed.
Section 6.8 Subsequent Contracts. From the date hereof through the Closing,
Seller shall (i) include in any agreements entered into by Seller relating in
any way to the Assets or the Business ("Subsequent Contracts") a provision
permitting the assignment of any such Subsequent Contract to Buyer and providing
that upon such assignment, Buyer shall succeed to all of Seller's rights, title
and interests thereunder and (ii) ensure that no Subsequent Contract contains
any provision which would limit in any way the rights, title and interest of
Seller in the Assets.
Section 6.9 Transfer and Sales Tax. Notwithstanding any provisions of law
imposing the burden of such taxes on Seller or Buyer, as the case may be, Seller
shall be responsible for and shall pay (a) all sales, use and transfer taxes,
and (b) all governmental charges, if any, upon the sale or transfer of any of
the Assets hereunder. If Seller shall fail to pay such amounts on a timely
basis, Buyer may pay such amounts to the appropriate Governmental Authority or
authorities, and Seller shall promptly reimburse Buyer for any amounts so paid
by Buyer.
Section 6.10 Pasta Products. MLI will not manufacture, market, sell or
distribute any branded retail dry pasta product, alone or in combination with
any other product, for a period of five years from the date hereof.
Section 6.11 Insurance. Seller shall continue to maintain product liability
insurance for all periods through the Effective Time and for a one year period
thereafter and shall as of the Closing add Buyer as an additional named insured.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF BUYER u As an inducement to Seller to
enter into this Agreement and to consummate the transactions contemplated
hereby, Buyer represents and warrants to Seller as follows:
Section 7.1 Corporate Existence. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is qualified to do business and is in good standing in all jurisdictions in
which it is required to be so qualified as a result of the operation of its
business, except where the failure to be so qualified or in good standing would
not be a Material Adverse Event.
Section 7.2 Corporate Power and Authority. Buyer has all requisite
corporate power and authority to own its properties and assets, and to carry on
the business in which it is now engaged. Buyer has all requisite corporate power
and authority to execute and deliver this Agreement, to perform the agreements
and covenants of Buyer set forth in this Agreement and to consummate the
transactions contemplated by this Agreement.
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Section 7.3 Execution and Delivery Permitted. The execution, delivery and
performance of this Agreement will not (i) violate or result in a breach of any
term of Buyer's Certificate of Incorporation or Bylaws; (ii) result in a breach
of or constitute a default under any term in any agreement or other instrument
to which Buyer is a party; or (iii) violate any law or any order, rule or
regulation applicable to Buyer, of any Governmental Authority having
jurisdiction over Buyer or its properties. The Buyer has taken all action
required by law, and by Buyer's Certificate of Incorporation and Bylaws to
authorize the execution, delivery and performance of this Agreement and the
other agreements executed in connection herewith by Buyer and the purchase of
the Assets from Seller in accordance with this Agreement.
Section 7.4 Binding Effect. This Agreement and each other agreement
required to be executed and delivered by Buyer in connection herewith, when
executed and delivered, will be the legal, valid and binding obligation of
Buyer, enforceable against Buyer in accordance with its terms, except as
enforceability may be limited by (i) applicable bankruptcy, reorganization,
insolvency, moratorium and similar laws affecting the enforcement of creditors'
rights generally, and (ii) general equitable principles (regardless of whether
enforceability is considered in a proceeding in equity or at law).
Section 7.5 Consents. Except as set forth on Schedule 7.5, the execution,
delivery and performance of this Agreement and the other agreements executed in
connection herewith, and the consummation by Buyer of the transactions
contemplated hereby and thereby do not require any filing with, notice to or
consent, waiver or approval of any third party, including but not limited to,
any Governmental Authority other than any disclosure of this Agreement required
by applicable securities laws, regulations and rules.
Section 7.6 Brokers Fees. Buyer has no liability or obligation to pay any
brokerage or finders fees or commissions with respect to the transactions
contemplated herein.
ARTICLE VIII
COVENANTS OF BUYER
Section 8.1 Buyer Performance. Buyer hereby covenants and agrees to accept
conveyance of the Assets, and to assume and perform the Assumed Liabilities.
Section 8.2 Confidentiality. 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
Seller in confidence to the extent required by, and in accordance with, the
provisions of the Confidentiality Agreement.
Section 8.3 Other Actions. From the date hereof to the Closing, Buyer shall
not take any action that would, or that would reasonably be expected to, result
in any of the conditions to Closing set forth in Sections 9.1 or 9.2 not being
satisfied, or in the satisfaction thereof being delayed.
Section 8.4 Notification of Certain Matters. From the date of this
Agreement through the Closing, Buyer shall promptly notify Seller of the
occurrence of any fact or event that would reasonably be expected (i) to cause
any representation or warranty of Buyer contained
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in this Agreement to be untrue in any material respect or (ii) to cause any
covenant, condition or agreement of Buyer hereunder not to be complied with or
satisfied in any material respect.
ARTICLE IX
CONDITIONS TO CLOSING
Section 9.1 Buyer's Conditions to Closing. The obligations of Buyer
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Buyer, be waived:
(a) All representations and warranties of Seller in this Agreement and
each Schedule hereto shall be true on and as of the Closing as if made as
of the Closing, and Seller shall have delivered to Buyer a certificate to
such effect dated as of the Closing Date;
(b) There shall be no Material Adverse Event from the date hereof to
the Closing Date;
(c) Seller shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied with
by Seller prior to or on the Closing Date;
(d) Seller shall be willing and able to deliver all of the items and
documents required to be delivered by it pursuant to Article IV of this
Agreement;
(e) The form and substance of the documents delivered by Seller
pursuant to this Agreement shall be reasonably acceptable to Buyer and
Buyer's counsel;
(f) Buyer shall have obtained, either from Seller or directly from the
issuing authority, the Permits;
(g) There shall be no claims, actions or suits pending or threatened
regarding the Assets or the Business or that otherwise would restrict or
prohibit Buyer or Seller from consummating the transactions contemplated
herein;
(h) Seller shall have obtained and delivered to Buyer all necessary
consents to transfer the Assets and assign the Contracts to Buyer; and
(i) Buyer shall have completed to its satisfaction any review and
investigation of the Assets and the Business.
Section 9.2 Seller's Conditions to Closing. The obligations of Seller
hereunder are subject to satisfaction of each of the following conditions at or
before Closing, the occurrence of which may, at the option of Seller, be waived:
(a) All representations and warranties of Buyer in this Agreement
shall be true on and as of the Closing as if made as of the Closing, and
Buyer shall have delivered to Seller a certificate to such effect dated as
of the Closing Date;
(b) Buyer shall have performed and complied with all of its
obligations under this Agreement which are to be performed or complied with
by Buyer prior to or on the Closing Date;
(c) Buyer shall be willing and able to deliver all of the items and
documents required to be delivered by it under Article IV of this
Agreement; and
(d) The form and substance of the documents delivered by Buyer
pursuant to this Agreement shall be reasonably acceptable to Seller and
Seller's counsel.
ARTICLE X
SURVIVAL AND INDEMNIFICATION
Section 10.1 Survival of Representations, Warranties and Covenants. The
representations, warranties, covenants, agreements and indemnification
obligations of the parties contained in this Agreement shall survive the
Closing. The parties shall be entitled to rely on the representations and
warranties contained herein, notwithstanding any due diligence investigation
conducted by the parties. If, as the result of any due diligence investigation
or otherwise, a party learns of a breach of any representation or warranty, such
party shall promptly inform the other in writing of such breach. The waiver of
any closing condition related to such breach by the party intended to benefit
therefrom shall not waive or impair such party's right to seek indemnification
for such breach after Closing.
Section 10.2 Indemnification by Seller. Seller agrees to defend, indemnify,
and hold harmless Buyer and its officers, directors, agents, employees, and
Affiliates against and in respect of any and all loss, liability, lien, damage,
cost and expense (each, a "Buyer Indemnification Claim") incurred or resulting
from:
(a) except for Assumed Liabilities, any matter or event of any nature
whatsoever relating to Seller or the ownership or operation of the Assets
or the Business that occurred prior to the Closing, and without limiting
the generality of the foregoing, such matters or events shall include all
Retained Liabilities and all Excluded Assets;
(b) any misrepresentation or breach of warranty made by Seller in this
Agreement or in any document, certificate or Schedule delivered hereunder;
or
(c) any non-fulfillment of any covenant or agreement by Seller under
this Agreement or any liability related to noncompliance with any bulk
sales laws.
Section 10.3 Indemnification by Buyer. Buyer agrees to defend, indemnify,
and hold harmless Seller and its officers, directors, agents, employees and
Affiliates against and in respect of any and all loss, liability, lien, damage,
costs and expense (each a "Seller Indemnification Claim") incurred or resulting
from:
(a) the ownership or operation of the Assets or the Business from and
after the Closing or the nonperformance of Assumed Liabilities;
23
(b) any misrepresentation or breach of warranty made by Buyer in this
Agreement or in any document, certificate or Schedule delivered hereunder;
or
(c) any non-fulfillment of any covenant or agreement by Buyer under
this Agreement.
Section 10.4 Assertion of Claims. Any Buyer Indemnification Claims or
Seller Indemnification Claims made pursuant to this Article must be asserted by
providing written notice to the party against which the Indemnification Claim is
made reasonably promptly after the asserting party becomes aware of such Claim
(the "Indemnification Claim Notice"). The right of a party to be indemnified
hereunder shall not be adversely affected by such party's failure to give such
Indemnification Claim Notice unless, and then only to the extent that, the party
against which the Indemnification Claim is made is prejudiced thereby. The
parties shall resolve disputes between them regarding Indemnification Claims in
accordance with Article XI. The term "Indemnification Claim" shall mean a Buyer
Indemnification Claim or a Seller Indemnification Claim, as appropriate.
Section 10.5 Third Party Claim Indemnification Procedure. An indemnified
person shall promptly notify the indemnifying party of the existence of any
Indemnification Claim resulting from a claim made by a third party and shall
give the indemnifying party the opportunity to defend the same at its own
expense and with counsel of its own selection, provided that such indemnified
person shall at all times also have the right to participate fully in the
defense of the Indemnification Claim at its own expense. If the indemnifying
party shall, within twenty (20) days after such notice, fail to acknowledge its
indemnification obligation hereunder in writing or thereafter fail to defend
such Indemnification Claim adequately and reasonably, and such indemnified
person is entitled to such defense, such indemnified person shall have the
right, but not the obligation, to undertake the defense of, and to compromise or
settle (exercising reasonable business judgment) such Indemnification Claim on
behalf, for the account, and the sole risk and expense, of the indemnifying
party.
Section 10.6 Set-Off Right. The Buyer shall have the right from time to
time to set-off against the Additional Consideration the entire amount of any
Buyer Indemnification Claim by notifying Seller it is reducing or eliminating
any payments which may otherwise be due pursuant to Sections 3.2(a), (b), (c),
(d) or (e) or Section 3.6.
ARTICLE XI
DISPUTE RESOLUTION
Section 11.1 Negotiation. 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 written notice of any dispute not resolved in
the normal course of business. Within twenty (20) days after delivery of that
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
submit the controversy or claim to binding arbitration. If a party's negotiator
24
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.
Section 11.2 Arbitration; Claims Covered; Conclusive Determination. Claims
not settled by negotiation pursuant to Section 11.1 hereof shall be resolved by
arbitration in accordance with the American Arbitration Association procedures
for Commercial Arbitration and any supplemental rules deemed appropriate by the
arbitrator (the "Procedures"). The arbitration shall be conducted in the city of
Phoenix, Arizona. Claims by either party for injunctive or other equitable
relief, for unfair competition and the use or unauthorized disclosure of trade
secrets, confidential information, or intellectual property, are not covered by
this Article XI, and either party may seek and obtain relief for such claims
from a court of competent jurisdiction. The decision of the arbitrator may be
entered as a judgment in any court of competent jurisdiction thereof. Any
arbitral award shall be a conclusive determination of the matter and shall be
final and binding upon all parties.
Section 11.3 Arbitration Procedures; Survival. The parties agree that the
procedures and provisions set forth in this Section 11.3 shall apply to any
arbitration under this Agreement. This Agreement to arbitrate shall survive the
termination of this Agreement.
(a) The Arbitrator. Within thirty (30) days after a party submits a
dispute to arbitration, the parties shall select a single arbitrator (the
"Arbitrator") in accordance with the Procedures. The Arbitrator shall not
be liable to either party in connection with the proceeding. Neither party
shall xxx, join, subpoena, or in any manner otherwise involve the
Arbitrator in any action or proceeding.
(b) Discovery. For a period of sixty (60) days after the selection of
an arbitrator, the parties shall cooperate in the voluntary exchange of
relevant documents and information in the most expeditious and
cost-effective manner possible. In addition, each party shall have the
right to pose such interrogatories and to take such depositions as allowed
by the Arbitrator.
(c) Designation of Witnesses. At least twenty (20) days before the
arbitration, the parties must exchange lists of witnesses, including any
expert, and copies of all exhibits intended to be used at the arbitration.
(d) Subpoenas. Each party shall have the right to subpoena witnesses
and documents for the arbitration, and the Arbitrator is empowered to
subpoena witnesses or documents to the extent permitted in a judicial
proceeding, upon his or her initiative or the request of a party. Unless
the Arbitrator directs otherwise, the party requesting the production of
witnesses or proof shall bear the costs of production.
(e) Arbitration Procedures.
(i) Hearing. The arbitration hearing shall be conducted no more
than ninety (90) days after the selection of the Arbitrator. The
Arbitrator shall afford each party a full and fair opportunity to
present relevant proof, to call and cross examine witnesses and to
present argument. The Arbitrator shall not be bound by any formal
rules of
25
evidence with the exception of the applicable law with respect to the
attorney-client and work-product privileges.
(ii) Powers of the Arbitrator.
(A) The Arbitrator shall apply the substantive law of
the State of Missouri to this Agreement. The Arbitrator,
shall have exclusive authority to resolve any dispute
relating to the breach, interpretation, applicability,
enforceability, or formation of this Agreement, including,
but not limited to, any claim that all or any part of this
Agreement is void or voidable.
(B) The Arbitrator shall have jurisdiction to hear and
rule on discovery and subpoena disputes and any other
prehearing disputes and is authorized to hold prehearing
conferences by telephone or in person as the Arbitrator
deems necessary.
(iii) Record of Proceedings and Post-Hearing Briefs. A court
reporter shall provide a stenographic record of proceedings, and the
expense shall be apportioned as set forth in paragraph (e)(iv). Either
party, upon request at the close of the hearing, shall be given leave
to file a post-hearing brief. The time for filing such a brief shall
be set by the Arbitrator.
(iv) The Award. Within twenty (20) days after the conclusion of
the hearing, the Arbitrator shall render an award and opinion in
writing that shall be dated and which shall contain findings of fact,
conclusions of law, and rationale for the disposition of any and all
issues raised by the parties. Unless applicable law provides
otherwise, the award shall be based solely on the evidence and
authorities presented to the Arbitrator, the applicable law, and the
provisions of this Agreement.
(v) Confidentiality. All aspects of the proceedings provided for
by this Agreement, including the exchange of information during
discovery, any hearings, and the record of the proceedings, are
confidential and shall not be open to the public, except (a) to the
extent the parties agree otherwise in writing, (b) as may be necessary
to seek enforcement of the arbitration award, or (c) as may otherwise
be required by a Governmental Authority or the rules of the New York
Stock Exchange.
(f) Enforcement and Collateral Proceedings.
(i) Either party may bring an action in any court of competent
jurisdiction to compel arbitration under this Agreement, to enforce
any prehearing orders or subpoenas issued by the Arbitrator, and to
enforce an arbitration award.
(ii) The parties agree not to commence or pursue any litigation
or administrative proceeding on any claim, dispute, or issue subject
to a proceeding under Section 11.3(f)(i), and the parties also agree
to discontinue any such proceeding which is commenced after, or is
pending at, the time of submission of a claim under a Section
11.3(f)(i) proceeding.
26
ARTICLE XII
MISCELLANEOUS
Section 12.1 Notices. Except as otherwise expressly provided, all notices
or other communications required or permitted under this Agreement shall be made
in writing and shall be deemed given (i) upon delivery, if sent by (A) personal
delivery or (B) courier (e.g., overnight delivery), (ii) 3 days after being sent
by certified mail, return receipt requested, postage and registration fees
prepaid and correctly addressed to a party as set forth below or (iii) upon
sending, if sent by telecopy to a party at the number listed below for such
party (with a telecopy machine generated confirmation sheet retained by the
sender):
If to Buyer: American Italian Pasta Company
0000 X. Xxxxxxxx, Xxxxx 000
Xxxxxx Xxxx, Xxxxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx
Telecopy: (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
Telecopy: (000) 000-0000
If to Seller: Xxx. Xxxxxx'x, Inc.
Xxxxxxxx Xxxxxx
Xx Xxxxxx
00000 Xxxxxxxx Xxxx
Xxxxx, Xxxxxxxxxx 00000
Telecopy: (000) 000-0000
with a copy to: BMB Bruno Skorhelm LLP
Certified Public Accountants & Consultants
000 Xxxx Xxxxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx Xxxxx
Telecopy: (000) 000-0000
or to such other address as Buyer or Seller shall have last designated by notice
to the other party.
Section 12.2 Applicable Law. This Agreement, and the rights and obligations
of the parties hereto, shall be governed by and determined in accordance with
the laws of the State of Missouri, without giving effect to the choice or
conflicts of law provisions thereof.
Section 12.3 Benefit and Assignment. This Agreement shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and permitted assigns. Neither this Agreement nor any rights hereunder may be
assigned or transferred, and no duties may be delegated, by Seller without the
prior written consent of Buyer. Buyer may assign or transfer its rights and
delegate its duties hereunder to any Affiliate of Buyer.
27
Section 12.4 No Third Party Beneficiary. This Agreement is for the benefit
of, and may be enforced only by, the parties who are signatories hereto and
their respective successors and permitted assigns. This Agreement is not for the
benefit of, and may not be enforced by, any third party.
Section 12.5 Expenses. Except as otherwise provided in this Agreement, each
party hereto shall pay its own expenses incurred in connection with this
Agreement and in the preparation for and consummation of the transactions
provided for herein.
Section 12.6 Waiver. Except as otherwise provided in this Agreement, no
delay or failure on the part of any party hereto in exercising any right, power
or privilege under this Agreement or under any other instrument or document
given in connection with or pursuant to this Agreement shall impair any such
right, power or privilege or be construed as a waiver of any default or any
acquiescence therein. No single or partial exercise of any such right, power or
privilege shall preclude the further exercise of such right, power or privilege,
or the exercise of any other right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party against
whom enforcement of such waiver is sought and then only to the extent expressly
specified therein.
Section 12.7 Equitable Relief; Remedies Cumulative; Interest. Seller hereby
acknowledges that irreparable injury will result to Buyer in the event of a
breach of this Agreement by Seller. It is therefore agreed that, if Seller
breaches this Agreement, Buyer shall be entitled, in addition to any other
remedies and damages available: (i) to seek an injunction to restrain the
violation thereof by such party, or its shareholders, directors, agents,
servants, employers or employees of such party, and all Persons acting for or
with such party and (ii) to seek to compel specific performance of the terms and
conditions of this Agreement. All rights and remedies granted in this Agreement
or available under law or at equity shall be deemed concurrent and cumulative,
and not alternative or exclusive remedies, to the full extent permitted by law
and this Agreement. Any party may proceed with any number of remedies at the
same time or in any order. The exercise of any one right or remedy shall not be
deemed a waiver or release of any other right or remedy. The parties waive any
right they may have to require, or any obligation on the part of, another party
to post a bond in connection with any equitable remedies. Except as otherwise
provided herein, each party shall be entitled to interest on any amounts owed by
and not timely paid by the other from the date such amount was first due to be
paid until the date of actual payment thereof at the prime rate of Citibank,
N.A., as published from time to time in The Wall Street Journal.
Section 12.8 Further Actions; Transition.
(a) If at any time after the Closing any further action is necessary
or desirable to carry out the purposes of this Agreement, each party will
take such further action (including the execution and delivery of such
further instruments and documents) as the other party reasonably may
request, all at the sole cost and expense of the requesting party (unless
the requesting party is entitled to indemnification therefor under Article
X). Seller acknowledges and agrees that from and after the Effective Time,
Buyer will be entitled to possession of all documents, books, records
(including Tax records), agreements, and financial data directly relating
to the Business.
28
(b) Seller shall not take any action that is designed or intended to
have the effect of discouraging any customer, supplier or other business
associate of Seller from establishing or maintaining the same business
relationships with Buyer after the Closing as it maintained with Seller
prior to the Closing. Seller will refer all customer inquiries relating to
the Business to Buyer from and after the Closing.
(c) In the event that Buyer or Seller receives funds after the Closing
which belong to or are property payable to the other, the receiving party
shall promptly endorse over or otherwise pay to the other all such
erroneously received funds.
Section 12.9 Entire Agreement; Amendment. This Agreement, the Exhibits and
Schedules attached hereto, the Confidentiality Agreement and the Employment
Agreement contain the entire Agreement of the parties hereto with respect to the
transactions contemplated hereby and supersede any and all prior agreements,
arrangements, and understandings between the parties. No inducements contrary to
the terms of this Agreement exist. No waiver of any term, provision, or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances shall be construed as a further or continuing waiver of any such term,
provision or condition or any other term, provision or condition of this
Agreement. This Agreement may not be modified orally and may only be amended in
a writing executed by all parties hereto.
Section 12.10 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original, but all of which
together shall constitute a single agreement.
Section 12.11 Termination.
(a) This Agreement may be terminated prior to the Closing as follows:
(i) At any time by the mutual consent of Seller and Buyer;
(ii) By Buyer, at its sole election, if the Closing shall not
have occurred on or before March 1, 2003;
(iii) By Buyer upon a material breach of any representation,
warranty, covenant or agreement on the part of Seller set forth in
this Agreement; or
(iv) By Seller upon a material breach of any representation,
warranty, covenant or agreement on the part of Buyer set forth in this
Agreement.
(b) In the event of the termination of this Agreement pursuant to
subparagraph (iii) or (iv) above because Seller or Buyer, as the case may
be, shall have willingly or in bad faith failed to satisfy a condition to
the Closing, the other party shall be entitled to pursue, exercise, and
enforce any and all remedies, rights, powers, and privileges available to
it at law or in equity.
(c) If the conditions to Closing set forth in Section 9.2 have been
satisfied and Buyer elects not to complete the transactions contemplated
hereby, then upon written
29
demand of Seller, Buyer shall pay Seller $100,000 and shall have no further
liability or obligation to Seller.
Section 12.12 Public Announcements. Buyer and Seller will coordinate with
each other regarding the initial public announcement of the transactions
contemplated by this Agreement and, except to the extent required by law or the
rules of any stock exchange, refrain from issuing any press release, publicity
statement or other public notice relating to this Agreement or the transactions
contemplated hereby without providing the other party reasonable opportunity to
review and comment thereon.
[The remainder of this page is intentionally blank.]
30
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
Xxx. Xxxxxx'x, Inc.
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------------
Name: Xxxxxxxx Xxxxxx
-----------------------------------
Title: President
----------------------------------
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, individually
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------------
Xxxxxxxx X. Xxxxxx, individually
American Italian Pasta Company
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxx
---------------------------------------
Title: Executive Vice President
--------------------------------------
Operations and Corporate Development
---------------------------------------
31
TABLE OF CONTENTS
Page No.
ARTICLE i DEFINITIONS AND INTERPRETATIONS...................................1
Section 1.1 Defined Terms.........................................1
Section 1.2 Terms Defined in the Agreement........................2
Section 1.3 Interpretations.......................................3
ARTICLE II PURCHASE AND SALE OF ASSETS....................................3
Section 2.1 Assets................................................3
Section 2.2 Excluded Assets.......................................5
Section 2.3 Assumed Liabilities...................................5
Section 2.4 Retained Liabilities..................................6
ARTICLE III PURCHASE PRICE OF ASSETS.......................................7
Section 3.1 Purchase Price........................................7
Section 3.2 Additional Consideration..............................7
Section 3.3 Payment for Packaging Material.......................10
Section 3.4 Allocation of Purchase Price.........................10
Section 3.5 Registration.........................................10
Section 3.6 Repurchase Requirements..............................11
ARTICLE IV CLOSING.......................................................11
Section 4.1 Date, Time and Place of Closing......................11
Section 4.2 Deliveries by Seller at Closing......................12
Section 4.3 Deliveries by Buyer at Closing.......................13
Section 4.4 Effective Time.......................................13
ARTICLE V REPRESENTATIONS AND WARRANTIES OF SELLER......................13
Section 5.1 Existence............................................13
Section 5.2 Power and Authority..................................13
Section 5.3 Execution and Delivery Permitted.....................13
Section 5.4 Consents.............................................14
Section 5.5 Affiliate Contracts..................................14
Section 5.6 Ownership of Assets..................................14
Section 5.7 Inventory............................................14
Section 5.8 Contracts............................................14
Section 5.9 Intangible Personal Property.........................15
Section 5.10 Binding Effect.......................................15
Section 5.11 Documents Sufficient.................................15
Section 5.12 Litigation and Compliance with Law...................15
Section 5.13 Taxes................................................16
Section 5.14 Licensure............................................16
Section 5.15 Customers............................................16
Section 5.16 Books and Records; Disclosure........................16
Section 5.17 Brokers Fees.........................................17
Section 5.18 Shareholders.........................................17
Section 5.19 Securities Laws Matters..............................17
ARTICLE VI COVENANTS OF SELLER...........................................17
Section 6.1 Performance of Contracts and Retained Liabilities....17
Section 6.2 Conduct of Business..................................17
Section 6.3 Access to Information................................19
Section 6.4 No Sale Negotiations.................................19
Section 6.5 Confidentiality......................................19
Section 6.6 Reporting Requirements...............................19
Section 6.7 Cooperation; Other Actions...........................19
Section 6.8 Subsequent Contracts.................................20
Section 6.9 Transfer and Sales Tax...............................20
Section 6.10 Pasta Products.......................................20
Section 6.11 Insurance............................................20
ARTICLE VII REPRESENTATIONS AND WARRANTIES OF BUYER.......................20
Section 7.1 Corporate Existence..................................20
Section 7.2 Corporate Power and Authority........................20
Section 7.3 Execution and Delivery Permitted.....................21
Section 7.4 Binding Effect.......................................21
Section 7.5 Consents.............................................21
Section 7.6 Brokers Fees.........................................21
ARTICLE VIII COVENANTS OF BUYER.........................................21
Section 8.1 Buyer Performance....................................21
ii
Section 8.2 Confidentiality......................................21
Section 8.3 Other Actions........................................21
Section 8.4 Notification of Certain Matters......................21
ARTICLE IX CONDITIONS TO CLOSING.........................................22
Section 9.1 Buyer's Conditions to Closing........................22
Section 9.2 Seller's Conditions to Closing.......................22
ARTICLE X SURVIVAL AND INDEMNIFICATION..................................23
Section 10.1 Survival of Representations, Warranties and
Covenants............................................23
Section 10.2 Indemnification by Seller............................23
Section 10.3 Indemnification by Buyer.............................23
Section 10.4 Assertion of Claims..................................24
Section 10.5 Third Party Claim Indemnification Procedure..........24
Section 10.6 Set-Off Right........................................24
ARTICLE XI DISPUTE RESOLUTION............................................24
Section 11.1 Negotiation..........................................24
Section 11.2 Arbitration; Claims Covered; Conclusive Determination25
Section 11.3 Arbitration Procedures; Survival.....................25
ARTICLE XiI MISCELLANEOUS.................................................27
Section 12.1 Notices..............................................27
Section 12.2 Applicable Law.......................................27
Section 12.3 Benefit and Assignment...............................27
Section 12.4 No Third Party Beneficiary...........................28
Section 12.5 Expenses.............................................28
Section 12.6 Waiver...............................................28
Section 12.7 Equitable Relief; Remedies Cumulative; Interest......28
Section 12.8 Further Actions; Transition..........................28
Section 12.9 Entire Agreement; Amendment..........................29
Section 12.10 Counterparts.........................................29
Section 12.11 Termination..........................................29
Section 12.12 Public Announcements.................................30
iii
AMERICAN ITALIAN PASTA COMPANY
AND
XXX. XXXXXX'X, INC.
ASSET PURCHASE AGREEMENT
FEBRUARY 27, 2003
