4
ASSET PURCHASE AGREEMENT
By and Between
Delicious Brands, Inc.,
and
BF USB Inc.
THIS ASSET PURCHASE AGREEMENT (this "Agreement"), dated as of April
5, 2000, is by and between BF USB Inc., a Delaware corporation ("Purchaser"),
and Delicious Brands, Inc., a Delaware corporation ("Seller"). Seller and
Purchaser may hereinafter be referred to collectively as "Parties" and
individually as a "Party".
WHEREAS, the Parties wish to provide for the terms and conditions
upon which Purchaser will acquire substantially all of the assets of Seller.
WHEREAS, the Parties wish to make certain representations,
warranties, covenants and agreements in connection with the purchase of the
assets and also to prescribe various terms and conditions to such transaction.
NOW THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties hereby agree as
follows:
Section 1
Premises, Exhibits and Schedules
The premises, Exhibits and Schedules hereto constitute an integral
and substantive part of this Agreement.
Section 2
Definitions
2.1 Certain Defined Terms. As used in this Agreement, the term:
(a) "AAA" shall have the meaning set forth in Section 11(l).
(b) "Agreement" shall have the meaning set forth in the preamble.
(c) "Allocation Certificate" shall have the meaning set forth in
Section 3(e).
(d) "Antitrust Division" shall have the meaning set forth in
Section 6(f).
(e) "Appointing Authority" shall have the meaning set forth in
Section 11(l).
(f) "Assigned Contracts" shall have the meaning set forth in
Exhibit 3(a)(ii).
(g) "Assumed Liabilities" shall have the meaning set forth in the
Liability Undertaking.
(h) "Auditor" shall have the meaning set forth in Section 3(c).
(i) "Audited Closing Balance Sheet" shall have the meaning set
forth in Section 3(c).
(j) "Authority" and "Authorities" shall have the meanings set
forth in Section 4(e).
(k) "Bank" shall have the meaning set forth in Section 6(o).
(l) "Bank Extension" shall have the meaning set forth in Section
6(o).
(m) "Basket Amount" shall have the meaning set forth in Section
10(f).
(n) "Benefit Arrangement" shall have the meaning set forth in
Section 4(r)(iv).
(o) "Benefit Plans" shall have the meaning set forth in Section
4(r)(xii).
(p) "Break-up Fee" shall have the meaning set forth in Section
6(c)(ii).
(q) "Business Day" shall mean a day, other than a Saturday or a
Sunday, on which commercial banks are not closed in New York City, U.S.A. and in
the City of Parma, Italy.
(r) "Closing" shall have the meaning set forth in Section 3(d).
(s) "Closing Date" shall have the meaning set forth in Section
3(d).
(t) "Closing Working Capital Balance Adjustment" shall have the
meaning set forth in Section 3(c).
(u) "Closing Working Capital Balance/(Deficit)" shall have the
meaning set forth in Section 3(c).
(v) "COBRA" shall have the meaning set forth in Section 4(r)(xii).
(w) "Code" shall have the meaning set forth in Section 4(r)(i).
(x) "Consent" and "Consents" shall have the meaning set forth in
Section 4(f).
(y) "Disclose" shall have the meaning set forth in Section 6(e).
(z) "Disclosure Schedule" shall have the meaning set forth in
Section 4(a).
(aa) "DOL" shall have the meaning set forth in Section 4(r)(i)(B).
(bb) "Dollars" and "$" shall mean lawful money of the United States
of America.
(cc) "ERISA" shall have the meaning set forth in Section 4(r)(i).
(dd) "Escrow Account" shall have the meaning set forth in Section 3
of the Escrow Agreement.
(ee) "Escrow Agent" shall have the meaning ascribed thereto in the
preamble of the Escrow Agreement.
(ff) "Escrow Agreement" shall mean the escrow agreement
substantially in the form of Exhibit 7(g) hereto and to be delivered by the
parties at Closing pursuant to this Agreement.
(gg) "Escrow Amount" shall have the meaning set forth in Section
3(b)(A)(ii).
(hh) "Estimated Closing Working Capital Balance/(Deficit)" shall
have the meaning set forth in Section 3 (c).
(ii) "Excluded Assets" shall have the meaning set forth in Section
3(a)(iv).
(jj) "FTC" shall have the meaning set forth in Section 6(f).
(kk) "GAAP" and "general accepted accounting principles" shall have
the meaning set forth in Section 2.2.
(ll) "Hazardous Material" shall have the meaning set forth in
Section 4(z)(i).
2
(mm) "HSR Act" shall have the meaning set forth in Section 3(d).
(nn) "Indemnified Party" shall have the meaning set forth in
Section 10(g).
(oo) "Indemnifying Party" shall have the meaning set forth in
Section 10(g).
(pp) "Independent Accountants" shall have the meaning set forth in
Section 3(c).
(qq) "Information" shall have the meaning set forth in Section
6(e).
(rr) "IP Assignments" shall have the meaning set forth in Section
3(a)(iii).
(ss) "Intellectual Property Rights" shall have the meaning set
forth in Section 4(n).
(tt) "Latest Balance Sheet" shall have the meaning set forth in
Section 4(g).
(uu) "Law" and "Laws" shall have the meaning set forth in Section
4(e).
(vv) "Liability Undertaking" shall have the meaning set forth in
Section 3(b)(B).
(ww) "Lien" shall mean any restriction on personal or real property
of any kind, including without limitation, any mortgage, pledge, lien,
hypothecation, security interest, encumbrance, claim of any kind, easement,
right-of-way, tenancy, covenant, encroachment, restriction or charge of any kind
or nature (whether or not of record).
(xx) "Loss Contingency" shall have the meaning set forth in Section
4(h).
(yy) "New Name" shall have the meaning set forth in Section 7(j).
(zz) "Party" or "Parties" shall have the meaning set forth in the
preamble.
(aaa) "Payoff Schedule" shall have the meaning set forth in Section
6(q).
(bbb) "PBGC" shall have the meaning set forth in Section 4(r)(i)(B).
(ccc) "Pension Plan" shall have the meaning set forth in Section
4(r)(i).
(ddd) "Permitted Liens" shall have the meaning set forth in Section
3(a).
(eee) "Properties" shall have the meaning set forth in Section
4(z)(i).
(fff) "Purchase Price" shall have the meaning set forth in Section
3(b)(A).
(ggg) "Purchaser" shall mean BF USB Inc. or any other entity that:
(A) (x) owns or controls BF USB Inc.; (y) BF USB Inc. owns or controls; or (z)
is owned and controlled by the same parent company or companies or the same
ultimate beneficial owner as BF USB Inc., and (B) to which BF USB Inc. may have
assigned this Agreement as of the Closing.
(hhh) "Reserve Escrow Agreement" shall have the meaning set forth in
Section 6(n).
(iii) "Seller" shall mean Delicious Brands, Inc.
(jjj) "Seller's Assets" shall have the meaning set forth in Section
3(a).
(kkk) "Seller Capital Stock" shall have the meaning set forth in
Section 4(c).
(lll) "Special Reserve Fund" shall have the meaning set forth in
Section 6(n).
(mmm) "Subsidiary" and "Subsidiaries" shall have the meaning set
forth in Section 4(b).
(nnn) "Tax Returns" shall have the meaning set forth in Section
4(p).
3
(ooo) "Third Party" shall have the meaning set forth in Section
6(c)(i)(A).
(ppp) "Termination Date" shall have the meaning set forth in Section
3(d).
(qqq) "Treasury" shall have the meaning set forth in Section
4(r)(i)(B).
(rrr) "Transferred Employees" shall have the meaning set forth in
Section 6(l)(i).
(sss) "Welfare Plan" shall have the meaning set forth in Section
4(r)(iii).
(ttt) "Worth Agreements" shall have the meaning set forth in Section
6(p)(ii).
2.2 Accounting Terms and Determinations. All references in this
Agreement to "generally accepted accounting principles" or "GAAP" shall mean
generally accepted accounting principles in effect in the United States of
America at the time of application thereof. Unless otherwise specified herein,
all accounting terms used herein shall be interpreted, all determinations with
respect to accounting matters hereunder shall be made, and all financial
statements and certificates and reports as to financial matters required to be
furnished hereunder shall be prepared, in accordance with generally accepted
accounting principles, applied on a consistent basis.
Section 3
Purchase of Assets
(a) Assets to be Purchased. Upon the terms and subject to the
conditions set forth in this Agreement (other than such conditions as shall have
been waived in accordance with the terms hereof), Seller shall sell, transfer,
convey, assign and deliver to Purchaser, and Purchaser shall purchase from
Seller, at the Closing hereunder, all of the assets, properties, goodwill and
rights of Seller, as a going concern, of every nature, kind and description,
tangible and intangible, wheresoever located and whether or not carried or
reflected on the books and records of Seller (hereinafter sometimes collectively
referred to as "Seller's Assets"), including without limitation (i) the right to
use the names and all variations thereof listed on Exhibit 3(a)(i) hereto; (ii)
the assets referred to in the form(s) of Xxxx (or Bills) of Sale listed on
Exhibit 3(a)(ii) hereto; (iii) the trademarks, licenses, and other Intellectual
Property Rights set forth in the assignment and transfer documents set forth in
Exhibit 3(a)(iii) (the "IP Assignments"); and (iv) the assets reflected on the
Latest Balance Sheet, with only such dispositions of such assets as shall have
occurred in the ordinary course of Seller's business between December 31, 1999
and the Closing and which are permitted by the terms hereof; and excluding only
(x) the minute books, corporate seal and stock records of Seller, and (y) the
assets specifically set forth on Exhibit 3(a)(iv) hereto (the assets referred to
in Sections 3(a)(iv)(x) and (y), hereinafter, collectively, the "Excluded
Assets"). All real property assets and fixtures included among Seller's Assets
shall be conveyed free and clear of any Lien, except for those Liens described
on Exhibit 3(a) hereto (the "Permitted Liens"). All machinery, equipment,
vehicles and other personal property, including without limitation inventories,
accounts and notes receivable, trade notes, trade accounts and Intellectual
Property Rights, shall be conveyed free and clear of any Liens except for the
Permitted Liens. Purchaser shall not assume any liabilities of Seller whether or
not associated with Seller's Assets or in any other way associated with Seller
or any of its businesses except as specifically set forth in the Liability
Undertaking set forth in Exhibit 3(b)(B).
(b) Purchase Price. Upon the terms and subject to the conditions set
forth in this Agreement, in consideration for Seller's Assets and the covenants
contained herein (including, without limitation, the restrictive covenants set
forth in the Noncompetition and Confidentiality Agreement of the Seller and the
covenant to procure the other Noncompetition and Confidentiality
4
Agreements set forth on Exhibit 7(h)) and in full payment thereof, at Closing,
Purchaser shall:
(A) pay to Seller a total purchase price of Twenty Six
Million Six Hundred Eighty Thousand Dollars ($26,680,000) (the
"Purchase Price") as follows:
(i) By federal wire transfer of immediately
available funds to the account(s) designated
by Seller (including pursuant to Section
6(q)(i)(z)) by written notice to be
delivered to Purchaser at least five (5)
Business Days prior to Closing, the sum of
the Purchase Price, less (1) (x) the amount
of One Million Seven Hundred Thousand
Dollars ($1,700,000) representing the agreed
upon working capital adjustment, plus or
less (as the case may be), (y) the Estimated
Closing Working Capital Balance/(Deficit)
pursuant to Section 3(c); and less (2) the
Escrow Amount to be deposited pursuant to
subparagraph (ii) below.
(ii) By federal wire transfer of immediately
available funds to the Escrow Account, the
sum of Five Million Three Hundred Thirty-Six
Thousand Dollars ($5,336,000) (the "Escrow
Amount");
and
(B) execute and deliver to Seller a Liability
Undertaking in the form of Exhibit 3(b)(B) hereto ("Liability Undertaking").
(c) Closing Working Capital Balance Adjustment. The "Closing Working
Capital Balance Adjustment" shall be the amount stated in Exhibit 3(c),
Paragraph C, Item VI(c), equaling to the difference between: (x) the "Estimated
Closing Working Capital Balance/(Deficit)", as stated on Exhibit 3(c), Paragraph
C, Item V(a), and (y) the "Closing Working Capital Balance/(Deficit)", as stated
in Exhibit 3(c), Paragraph C, Item V(b). The Estimate Closing Working Capital
Balance/(Deficit) is Seller's estimate of the Closing Working Capital
Balance/(Deficit) calculated pursuant to Exhibit 3(c) using the figures notified
by Seller to Purchaser at least five (5) Business Days prior to Closing. The
Closing Working Capital Balance/(Deficit) shall be calculated using the figures
set forth in the Seller's Audited Closing Balance Sheet and the Closing Working
Capital Balance Adjustment shall be due to (xx) Purchaser, if positive, or (yy)
Seller, if negative, pursuant to Section 10(d). Within forty-five (45) days
after the Closing Date, Seller shall deliver to Purchaser a (consolidated)
balance sheet for the Seller (and its Subsidiaries) as of 11:59 p.m. of the day
immediately prior to the Closing Date (the "Audited Closing Balance Sheet"),
prepared by Seller in accordance with GAAP and consistently with the method of
preparation of the Latest Balance Sheet; provided, however, that audit fees and
expenses with respect to the audit of the Audited Closing Balance Sheet, any
entries or adjustments by reason of any Code election, any entries or
adjustments by reason of a change in the business or operations of Seller after
the Closing and any finders or brokers or similar fees and all legal fees and
expenses payable by Seller in connection with the transactions contemplated
hereby shall not be included in such Audited Closing Date Balance Sheet. The
Audited Closing Date Balance Sheet shall be audited by auditors appointed by
Seller (the "Auditor"). All Parties shall have the right to review the Auditor's
audit work papers. Auditor shall prepare a computation of the Closing Working
Capital Balance Adjustment based on the Audited Closing Balance Sheet and in
accordance with the terms of this Agreement and shall submit such computation to
Purchaser and Seller in writing at the same time that copies of the Audited
Closing Balance Sheet are delivered. The Audited Closing Balance Sheet shall
become
5
final and binding upon the parties unless, within thirty (30) days following
submission of the Audited Closing Balance Sheet and the Closing Working Capital
Balance Adjustment calculation, a Party notifies the other Party in writing of
its objection thereto (the "First Notification"). The Parties shall negotiate in
good faith to resolve their differences. If the Parties are unable to resolve
their differences within twenty (20) days of receipt of the First Notification
by the non-objecting Party, the Parties shall submit the dispute to an
independent accounting firm mutually selected by the Parties (the "Independent
Accountants") for resolution. The Independent Accountants shall be limited to
determining whether the Audited Closing Balance Sheet was prepared in accordance
with GAAP and consistently with the method of preparation of the Latest Balance
Sheet, and the calculation of the Closing Working Capital Balance Adjustment was
calculated appropriately from the figures contained in the Audited Closing
Balance Sheet and pursuant to the method set forth in Exhibit 3(c). The Parties
shall instruct the Independent Accountants to use their reasonable efforts to
make their determination within thirty (30) days of submission. The
determination of the Independent Accountants shall be final and non-appealable,
and shall be binding upon the Parties. The fees and expenses of the Independent
Accountants shall be divided and paid equally by Seller and Purchaser.
(d) Closing. Unless this Agreement shall have been terminated and
the transactions contemplated herein shall have been abandoned pursuant to
Section 9 hereof, a closing (the "Closing") will be held as soon as practicable
but in no event later than May 31, 2000 (the "Closing Date"), provided, however,
that if any of the conditions provided for in Section 7 and Section 8 hereof
shall not have been satisfied or waived by such date, then the Party to this
Agreement that is unable to satisfy such condition or conditions, despite the
best efforts of such Party, shall be entitled to postpone the Closing by notice
to the other Parties until such condition or conditions shall have been
satisfied (which such notifying Party will seek to cause to happen at the
earliest practicable date) or waived, but in no event shall the Closing occur
later than the "Termination Date" which shall be the later to occur of: (i) ten
(10) days after the expiration of the waiting period (including any extension
thereof by reason of a request for further information) under the Xxxx-Xxxxx
Xxxxxx Antitrust Improvements Act of 1976, as amended, and the rules and
regulations promulgated thereunder (the "HSR Act"), and (ii) five (5) Business
Days after any necessary authority and approval of Seller's shareholders of this
Agreement and the transactions contemplated herein, but in no event later than
June 15, 2000, unless the Parties shall agree in writing to extend the date of
such Closing. The Closing shall be held at the offices of BBLP-Pavia e Ansaldo
at the address set forth in Section 11(e) or at such other location as the
Parties may agree in writing, at 10:00 a.m., local time or such other time as
the Parties may agree, at which time and place the documents and instruments
necessary or appropriate to effect the transactions contemplated herein will be
exchanged by the Parties.
(e) Allocation. Seller and Purchaser agree that the consideration
paid to Seller pursuant to this Section 3 shall be allocated for purposes of
this Agreement and for federal, state and local tax purposes as set forth on the
Allocation Certificate attached hereto as Exhibit 3(e) (the "Allocation
Certificate"). The Allocation Certificate shall be completed on or before the
Closing Date. Purchaser and Seller shall file all federal, state and local tax
returns in accordance with the allocation set forth on the Allocation
Certificate.
Section 4
Representations and Warranties of Seller
Seller hereby represents and warrants to Purchaser as of the date
hereof as follows:
6
(a) Disclosure Schedule. The disclosure schedule marked as Exhibit 4
hereto (the "Disclosure Schedule") is divided into "parts" which correspond to
the subsections of this Section 4. The Disclosure Schedule includes all
information concerning Seller and each of its subsidiaries which is responsive
to each section hereof to make such Disclosure Schedule accurate and complete in
all material respects for each such part.
(b) Corporate Organization. The Disclosure Schedule sets forth each
Subsidiary (as defined below) of Seller. Seller is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, has full corporate power and authority to carry on its business
as it is now being conducted and to own, lease and operate its properties and
assets, is duly qualified or licensed to do business as a foreign corporation in
good standing in every other jurisdiction in which the character or location of
the properties and assets owned, leased or operated by it or the conduct of its
business requires such qualification or licensing, except in such jurisdictions
in which the failure to be so qualified or licensed and in good standing would
not, individually or in the aggregate, have a material adverse effect on its
condition (financial or otherwise), results of operations, assets, properties
and going concern value; and has heretofore delivered to Purchaser complete and
correct copies of its articles or certificate of incorporation and bylaws, as
presently in effect. The Disclosure Schedule contains for Seller and its
subsidiaries a list of all jurisdictions in which each is qualified or licensed
to do business. The Disclosure Schedule sets forth the name and jurisdiction of
incorporation of each corporation as to which more than fifty percent (50%) of
the outstanding equity securities having ordinary voting rights or power at the
time of determination is being made is owned or controlled, directly or
indirectly, by Seller (individually, a "Subsidiary" and collectively, the
"Subsidiaries"). Except as set forth in the Disclosure Schedule, in the case of
each Subsidiary: (i) all outstanding capital stock and other equity securities
are owned or controlled directly or indirectly by Seller; (ii) there are no
contractual or consensual limitations on Seller's ability to vote or alienate
such securities; (iii) there are no outstanding options, warrants or other
rights to purchase or acquire securities of such corporation or securities owned
or held by Seller; (iv) there are no other contractual or consensual charges or
impediments which would materially limit or impair the ownership of such equity
interests or the ability effectively to exercise the full rights of ownership or
control of such equity interests, including without limitation any voting
trusts, voting agreements, or rights of first refusal or first option; and (v)
there are no contracts, commitments, understandings, arrangements or
restrictions by which any such corporation is bound to issue, sell, transfer or
to purchase or acquire any shares of its capital stock or other equity
securities or options, warrants or rights. Except as set forth on the Disclosure
Schedule, all shares of capital stock and other equity interests of each
Subsidiary are owned or controlled directly or indirectly by Seller free and
clear of all Liens. Except as set forth in the Disclosure Schedule, all of the
outstanding capital stock of Seller and each Subsidiary is duly authorized,
validly issued, fully paid, nonassessable and was not issued in violation of
preemptive rights.
(c) Capitalization. All authorized capital stock of Seller of all
classes ("Seller Capital Stock") is set forth on the Disclosure Schedule. The
number of shares of capital stock of Seller outstanding and the number of shares
of capital stock of Seller held in treasury as of the date of this Agreement are
set forth on the Disclosure Schedule. All issued and outstanding shares of
capital stock of Seller are duly authorized, validly issued, fully paid,
nonassessable and are without, and were not issued in violation of, preemptive
rights. Except as set forth on the Disclosure Schedule: (x) there are no shares
of capital stock or other equity securities of Seller outstanding or any
securities convertible into or exchangeable for such shares, securities or
rights; (y) there are no outstanding options, warrants, conversion privileges or
other rights to purchase or acquire any capital stock or other equity securities
of Seller granted by Seller, or any securities convertible into or exchangeable
for such shares, securities or rights; and (z) there are no contracts,
commitments, understandings, arrangements or restrictions by which Seller is
bound to issue or acquire any additional shares of its capital stock or other
equity securities or any options, warrants, conversion privileges or other
rights to
7
purchase or acquire any capital stock or other equity securities of Seller or
any securities convertible into or exchangeable for such shares, securities or
rights.
(d) Authorization. Seller has full corporate power and authority to
enter into this Agreement and to carry out the transactions contemplated herein.
The Board of Directors of Seller has taken all action required by law, its
articles or certificate of incorporation and bylaws and otherwise to authorize
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated herein. This Agreement has been duly and
validly executed and delivered by Seller and no other corporate action is
necessary other than approval of the Shareholders of Seller. This Agreement is
the valid and binding legal obligation of Seller, enforceable against Seller in
accordance with its terms, except that such enforceability may be subject to (i)
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
conveyance or moratorium or other similar laws affecting or relating to the
enforcement of creditor's rights generally, (ii) general principles of equity
relating to enforceability (regardless of whether considered in a proceeding at
law or equity) and (iii) as rights to indemnity may be limited by federal and
state securities laws and public policy.
(e) Non-Contravention. Except as set forth in the Disclosure
Schedule, neither the execution, delivery and performance of this Agreement nor
the consummation of the transactions contemplated herein will: (i) violate or be
in conflict with any provision of the articles or certificate of incorporation
or bylaws of Seller or the certificates of the designations, powers, preferences
and rights of any outstanding series of stock or other securities of Seller
(including, without limitation, the Series A, B, C, and D Convertible Preferred
Stock); or (ii) be in conflict with, or constitute a default, however defined
(or an event which, with the giving of due notice or lapse of time, or both,
would constitute such a default), under, or cause or permit the acceleration of
the maturity of, or give rise to any right of termination, cancellation,
imposition of fees or penalties under, any debt, note, bond, lease, mortgage,
indenture, license, obligation, contract, commitment, franchise, permit,
instrument or other agreement or obligation (including without limitation any
agreement with stockholders) to which Seller is a party or by which its
properties or assets are or may be bound (unless with respect to which defaults
or other rights, requisite waivers or consents shall have been obtained at or
prior to the Closing) or result in the creation or imposition of any third party
claim or cause of action against Seller or Purchaser (which in the aggregate
would result in a loss in excess of Ten Thousand Dollars ($10,000)), or Liens
(which in the aggregate would encumber assets of Seller in excess of Ten
Thousand Dollars ($10,000)), upon any property or asset of Seller under any
debt, obligation, contract, agreement or commitment to which Seller is a party
or by which Seller or any of its assets or properties is or may be bound; or
(iii) to the best of Seller's knowledge, violate any statute, treaty, law,
judgment, writ, injunction, decision, decree, order, regulation, ordinance or
other similar authoritative matters (sometimes hereinafter separately referred
to as a "Law" and sometimes collectively as "Laws") of any foreign, federal,
state or local governmental or quasi-governmental, administrative, regulatory or
judicial court, department, commission, agency, board, bureau, instrumentality
or other authority (hereinafter sometimes separately referred to as an
"Authority" and sometimes collectively as "Authorities").
(f) Consents and Approvals. Except as set forth in the Disclosure
Schedule, with
8
respect to Seller, no consent, approval, order or authorization of or from, or
registration, notification, declaration or filing with (hereinafter sometimes
separately referred to as a "Consent" and sometimes collectively as "Consents")
any individual or entity, including without limitation any Authority, is
required in connection with the execution, delivery or performance of this
Agreement by Seller or the consummation by Seller of the transactions
contemplated herein, other than shareholder approval or consents which if not
made or obtained, will not, individually or in the aggregate, have a material
adverse effect on the business of Seller and its Subsidiaries taken as a whole.
(g) Financial Statements. Seller has furnished to Purchaser the
(consolidated) balance sheets and statements of operations (or income or loss),
changes in shareholders' equity and changes in cash flow (or financial position)
and the reports of independent public accountants described on the Disclosure
Schedule. The most recent audited (consolidated) balance sheet provided by
Seller to Purchaser shall be for the period ending December 31, 1999 and is
referred to herein as the "Latest Balance Sheet". Prior to Closing, Seller will
furnish the (consolidated) financial statements and the reports of independent
public accountants described on the Disclosure Schedule to the Purchaser. Except
as disclosed therein, the aforesaid financial statements (i) are or will be, as
the case may be, in accordance with the books and records of Seller and have
been, or will be, as the case may be, prepared in conformity with GAAP
consistently applied for all periods, and (ii) fairly present and will fairly
present, as the case may be, the (consolidated) financial position of Seller as
of the respective dates thereof, and the (consolidated) results of operations
(or income or loss), changes in shareholders' equity and changes in cash flow
(or financial position) for the periods then ended, all in accordance with
generally accepted accounting principles consistently applied for all periods.
(h) Loss Contingencies; Other Non-Accrued Liabilities; Employee
Accruals. Except for those items listed in subparagraphs (i), (ii) and (iii)
below which do not exceed individually or in the aggregate Ten Thousand Dollars
($10,000), and except as described in the Disclosure Schedule, Seller does not
have (i) any loss contingencies which are not required by GAAP to be accrued;
(ii) any loss contingencies involving an unasserted claim or assessment (known
to Seller) which are not required by GAAP to be disclosed because the potential
claimants have not manifested to Seller an awareness of a possible claim or
assessment; or (iii) any categories of liabilities or obligations which are not
required by GAAP to be accrued. For purposes of this Agreement, "Loss
Contingency" shall have the meaning accorded to it by GAAP. All accruals for
unpaid vacation pay; premiums for employment insurance; health premiums; accrued
wages, salaries and commissions; and employee benefit plan payments have been
reflected in the books and records of Seller.
(i) Absence of Certain Changes. Except as set forth in the
Disclosure Schedule, since the date of the Latest Balance Sheet, Seller has
owned and operated its assets, properties and businesses in the ordinary course
of business and consistent with past practice; without limiting the generality
of the foregoing, Seller has not, subject to the aforesaid exceptions:
(i) suffered, as of the date hereof, any adverse change in its
condition (financial or otherwise), assets or properties or experienced any
event or failed to take any action which reasonably could be expected to result
in such a change that results in a cost in excess of Five Thousand Dollars
($5,000) individually, or Ten Thousand Dollars ($10,000) in the aggregate other
than in the ordinary course of business;
(ii) other than in the ordinary course of business, suffered
any loss, damage, destruction or other casualty (whether or not covered by
insurance) or any loss of
9
officers, employees, dealers, distributors, independent contractors, customers,
or suppliers which, individually or in the aggregate, could have a material
adverse effect on its business or operations,;
(iii) declared, set aside, made or paid any dividend or other
distribution in respect of its capital stock; or purchased or redeemed any
shares of its capital stock;
(iv) issued or sold any shares of its capital stock, or any
options, warrants, conversion, exchange or other rights to purchase or acquire
any such shares or any securities convertible into or exchangeable for such
shares;
(v) incurred any indebtedness for borrowed money;
(vi) mortgaged, pledged, or subjected to any Lien, or lease,
any of its properties or assets, tangible or intangible;
(vii) acquired or disposed of any assets or properties valued
in excess of Fifteen Thousand Dollars ($15,000) other than in the ordinary
course of business;
(viii) forgiven or canceled any debts or claims, or waived any
rights;
(ix) entered into any transaction in excess of Twenty-Five
Thousand Dollars ($25,000) other than in the ordinary course of business;
(x) granted to any officer or salaried employee or any other
employee any increase in compensation in any form or paid any severance or
termination pay other than in the ordinary course of business;
(xi) entered into any commitment for capital expenditures for
additions to plant, property or equipment in excess of twenty-five thousand
dollars ($25,000); or
(xii) agreed, whether in writing or otherwise, to take any
action described in this subsection.
(j) Real Properties. Except as set forth in the Disclosure Schedule,
Seller has good and marketable fee simple record title in and to, or a leasehold
interest in and to, all of their real property and real property assets and
fixtures reflected in the Latest Balance Sheet and all of their real property
assets and fixtures purchased or otherwise acquired since the date of the Latest
Balance Sheet (except for real property assets and fixtures sold in the ordinary
course of business since the date of the Latest Balance Sheet). Except as set
forth in the Disclosure Schedule, such leasehold interests are valid and in full
force and effect and, to the best of Seller's knowledge, enforceable in
accordance with their terms and there does not exist any violation, breach or
default thereof or thereunder. Except as set forth in the Disclosure Schedule,
none of the real property assets or fixtures owned by Seller is subject to any
Lien except for Permitted Liens. Except as set forth in the Disclosure Schedule,
to the best of Seller's knowledge, all real properties owned by and leased to
Seller used in the conduct of its business are free from structural defects, in
good operating condition and repair, with no maintenance, repair or replacement
having an estimated cost exceeding Twenty Five Thousand Dollars ($25,000) in the
aggregate having been deferred or neglected, suitable for the intended use and
free from other material defects. Except as set forth in the Disclosure
Schedule, to the best of Seller's knowledge, each such real property and its
present use conform in all respects to all occupational, safety or health,
zoning, planning, subdivision, platting and similar Laws. Except as set forth in
the Disclosure Schedule, all public utilities necessary for the use and
operation of any facilities on the aforesaid real properties are, to the best of
Seller's knowledge, available for
10
use or access at such properties and there is no legal or physical impairment to
free ingress or egress from any of such facilities or real properties. Seller is
not a foreign person and is not controlled by a foreign person, as the term
"foreign person" is defined in Section 1445(f)(3) of the Code.
(k) Machinery, Equipment, Vehicles and Personal Property. Except as
set forth in the Disclosure Schedule, Seller has good and merchantable right,
title and interest in and to, or a leasehold interest in and to, all its
machinery, equipment, vehicles and other personal property reflected in the
Latest Balance Sheet and purchased or otherwise acquired since the date of the
Latest Balance Sheet (except for such items sold or leased in the ordinary
course of business since the date of the Latest Balance Sheet). Except as set
forth in the Disclosure Schedule, all of such leasehold interests relating to
machinery, equipment, vehicles and other personal property are valid and in full
force and effect and enforceable in accordance with their terms and there does
not exist any violation, breach or default thereof or thereunder. Except as set
forth in the Disclosure Schedule, none of such machinery, equipment, vehicles or
other personal property owned by Seller is subject to any Lien except for
Permitted Liens. Except as set forth in the Disclosure Schedule, the machinery,
equipment, vehicles and other personal property of Seller which are necessary to
the conduct of its business are in good operating condition and repair and
readily usable for the intended purposes thereof and no necessary maintenance,
replacement or repair has been deferred or neglected.
(l) Inventories. Except as set forth in the Disclosure Schedule:
(i) all inventory of Seller, whether reflected in the Latest
Balance Sheet or otherwise, consists of a quality and quantity usable and
salable on normal trading terms in the industry; and the present quantities of
all Seller's inventory are reasonable in the present circumstances of the
business as currently conducted or as proposed to be conducted.
(ii) none of Seller's inventory is being held or is otherwise
regularly held by any third party whatsoever on a consignment basis.
(iii) Seller owns free of all Liens, all packaging inventory and
related materials maintained by suppliers and other third party packers or
co-packers held for Seller as shown on the Latest Balance Sheet.
(m) Receivables and Payables. Except as set forth on the Disclosure
Schedule: (A) Seller has good right, title and interest in and to all its
accounts and notes receivable and trade notes and trade accounts reflected in
the Latest Balance Sheet and those acquired and generated since the date of the
Latest Balance Sheet (except for those paid since the date of the Latest Balance
Sheet); (B) none of such accounts and notes receivable and trade notes and trade
accounts is subject to any Lien other than Permitted Liens; (C) except to the
extent of applicable reserves shown in the Latest Balance Sheet, all of the
accounts and notes receivable, trade notes and trade accounts owing to Seller
constitute valid and enforceable claims arising from bona fide transactions in
the ordinary course of business, and, to the best of Seller's knowledge, there
are no claims, refusals to pay or other rights of set-off against any thereof;
(D) no account or note debtor whose account or note balance exceeds Twenty-Five
Thousand Dollars ($25,000) has been delinquent in payment by more than sixty
(60) days; (E) the aging schedules of (x) the accounts, trade notes and trade
accounts of Seller previously furnished to Purchaser on March 6, 2000 for the
period ended March 3, 2000 annexed to the Disclosure Schedule, and (y) the
accounts receivable of Seller furnished to Purchaser on March 6, 2000 for the
period ended February 29, 2000 annexed to the Disclosure Schedule, are complete
and accurate in all material respects; and (F) the reserves established
therefore and reflected in the Latest Balance Sheet are reasonable.
11
(n) Intellectual Property Rights. Seller owns or has the right to
use (as specified in the Disclosure Schedule) the industrial and intellectual
property rights, including without limitation the patents, patent applications,
patent rights, trademarks, trademark applications, trade names, service marks,
service xxxx applications, copyrights, computer programs and other computer
software, inventions, know-how, trade secrets, technology, proprietary
processes, methods, systems, recipes, and formulae (collectively, "Intellectual
Property Rights") described on the Disclosure Schedule. Except as set forth on
the Disclosure Schedule, the use of all Intellectual Property Rights necessary
or required for the conduct of the businesses of Seller as presently conducted
and as proposed to be conducted does not and will not infringe or violate or
allegedly infringe or violate the intellectual property rights of any person or
entity. Except as described on the Disclosure Schedule, neither Seller nor any
Subsidiary owns or uses any Intellectual Property Rights pursuant to any license
agreement or has granted any person or entity any rights, pursuant to license
agreement or otherwise, to use the Intellectual Property Rights. Such agreements
as set forth on the Disclosure Schedule include written and oral agreements.
(o) Litigation. Except as set forth in the Disclosure Schedule,
there is no legal, administrative, arbitration, or other proceeding, suit, claim
or action of any nature or, to the best of Seller's knowledge, investigation,
review or audit of any kind, judgment, decree, decision, injunction, writ or
order pending, noticed, scheduled or, to the best of the Seller's knowledge,
threatened by or against or involving Seller, its assets, properties or
businesses or its directors, officers, agents or employees, whether at law or in
equity, before or by any person or entity or Authority, or which questions or
challenges the validity of this Agreement or any action taken or to be taken by
the Parties pursuant to this Agreement or in connection with the transactions
contemplated herein.
(p) Tax Returns. Seller has duly and timely filed all tax and
information reports, returns and related documents required to be filed by
Seller with respect to the income-type, sales/use-type and employment-related
taxes of the United States, the states, municipalities, and other foreign or
domestic jurisdictions set forth in the Disclosure Schedule (and the political
subdivisions thereof). Except as set forth in the Disclosure Schedule, Seller
has duly and timely filed all tax and information reports, returns and related
documents required to be filed by it with any Authority, including without
limitation all returns and reports of income, franchise, gross receipts, sales,
use, occupation, employment, withholding, excise, transfer, real and personal
property and other taxes, charges, assessments, and levies (collectively, the
"Tax Returns") and, except as set forth in the Disclosure Schedule, have duly
paid, or made adequate provision for the due and timely payment of all such
taxes and other charges, including without limitation interest, penalties,
assessments and deficiencies, due or claimed to be due from them by any such
Authorities, except where failure to pay would not result in a loss, cost, or
damages exceeding Ten Thousand Dollars ($10,000) in the aggregate; the reserves
for all of such taxes and other charges reflected in the Latest Balance Sheet
are adequate; and, to the best of Seller's knowledge, there are no Liens for
such taxes or other charges upon any property or assets of Seller. There is no
omission, deficiency, error, misstatement or misrepresentation, whether
innocent, intentional or fraudulent, in any Tax Return filed by Seller for any
period which could result in an actual tax liability in excess of Ten Thousand
Dollars ($10,000). The federal income tax returns (consolidated, if applicable)
of Seller have been examined by the Internal Revenue Service for all periods to
and including those expressly set forth in the Disclosure Schedule, and, except
to the extent shown therein, all deficiencies asserted as a result of such
12
examinations have been paid or finally settled and no issue has been raised by
the Internal Revenue Service in any such examination which, by application of
similar principles, reasonably could be expected to result in a proposed
deficiency for any other period not so examined. Except as set forth in the
Disclosure Schedule, all deficiencies and assessments levied or assessed to date
resulting from examination of the Tax Returns of Seller have been paid. Except
as set forth in the Disclosure Schedule, there are no outstanding agreements or
waivers extending the statutory period of limitation applicable to any Tax
Return for any period.
(q) Insurance. The Disclosure Schedule contains an accurate and
complete list of all policies of fire and other casualty, general liability,
theft, life, workers' compensation, health, directors and officers, business
interruption and other all other forms of insurance owned or held by Seller,
specifying the insurer, the policy number and the term of the coverage. All
present policies are in full force and effect and all premiums with respect
thereto have been paid. Seller has not been denied any form of insurance and no
policy of insurance has been revoked or rescinded during the past three (3)
years, except as described on the Disclosure Schedule.
(r) Benefit Plans. Except as set forth in the Disclosure Schedule:
(i) Seller does not sponsor, administer, maintain or contribute
to, nor has Seller at any time ever sponsored, administered, maintained,
contributed to, directly or indirectly, nor had an obligation to contribute or
been required to contribute to any "employee pension benefit plan" ("Pension
Plan", not including any union-sponsored plan) as such term is defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or under which Seller may incur any liability, including without
limitation, solely for purposes of this subsection a plan excluded from coverage
by Section 4(b)(5) of ERISA and, including without limitation any such Pension
Plan which is a "Multiemployer Plan" within the meaning of Section 4001(a)(3) of
ERISA, without regard to whether or not any of the foregoing is funded, whether
formal or informal, whether or not subject to ERISA and whether legally binding
or not. Each such Pension Plan is in compliance with the applicable provisions
of ERISA, the applicable provisions of the Internal Revenue Code of 1986, as
amended, and the regulations promulgated thereunder (the "Code"), and all other
applicable Law. No Pension Plan is subject to Title IV of ERISA or to Section
412 of the Code. Seller has satisfied all payment and contribution obligations
for all union sponsored plans. Set forth on the Disclosure Schedule is a list of
all Union-sponsored pension plans to which Seller contributes or Seller's
employees are entitled to benefits, and
(A) Each Pension Plan which is intended to meet the
requirements of Section 401(a) and where applicable, Section 401(k)
of the Code, now meets and since its inception has met, the
requirements for qualification under Section 401(a) and, where
applicable, Section 401(k) of the Code, and its related trust is
now, and since its inception has been, exempt from taxation under
Section 501(a) of the Code and nothing has occurred which would
adversely affect the qualified status of such Pension Plan.
(B) Seller has performed all obligations required to be
performed by it under, and is not in default under or in violation
of, any and all of the Pension Plans, and is in compliance in all
material respects with, and each Pension Plan has been operated and
administered in all material respects in accordance with its
provisions and in compliance in all material respects with the laws
governing each such Pension Plan, including without limitation,
rules and regulations promulgated by the Department of the Treasury
("Treasury"), the Internal Revenue Service, Department of Labor
13
("DOL"), and the Pension Benefit Guaranty Corporation ("PBGC")
pursuant to the provisions of ERISA and the Code.
(C) No event has occurred and there has been no failure
to act on the part of the Seller, as fiduciary of any Pension Plan,
or a plan official that violates Section 404 of ERISA or could
subject Seller, a Pension Plan, or a plan official to the imposition
of any tax, penalty, or other liability, further by way of indemnity
or otherwise.
(D) Seller does not owe any accrued but unpaid
contributions to any of the Pension Plans.
(E) No reportable event (as defined in Section 4043(e)
of ERISA), or requirement to provide security to a Pension Plan
(pursuant to Sections 401(a) 29 or Section 412(f) of the Code), or
plan termination (as defined in Title IV of ERISA or Section 411(d)
of the Code), has occurred with respect to any of the Pension Plans.
(F) The present value of accrued benefits (as agreed to
by Seller's actuary in writing) under any of the Pension Plans that
are covered by Title IV of ERISA does not exceed the value of the
assets of such Pension Plan. As of the last day of the last plan
year of each Pension Plan and as of the Closing Date, the amount of
"unfunded benefit liabilities" as defined in Section 4001(a)(18) of
ERISA (but excluding from the definition of "current value" of
"assets" of such Pension Plan, accrued but unpaid contributions) did
not and will not exceed zero. No "accumulated funding deficiency"
for which there is an excise tax due (or would be due in the absence
of a waiver), as defined in Section 412 of the Code or as defined in
Section 302(a)(2) of ERISA, whichever may apply, has been incurred
with respect to any Pension Plan with respect to any plan year,
whether or not waived. Seller has no liability for unpaid
contributions with respect to any Pension Plan pursuant to Section
412(m) of the Code.
(G) Seller has paid all premiums (and interest charges
and penalties for late payment, if applicable) due to the PBGC with
respect to each Pension Plan for each plan year thereof for which
such premiums are required. Seller has not engaged in, nor is a
successor to an entity that has engaged in, a transaction described
in Section 4069 of ERISA. There has been no reportable event as
defined in Section 4043(b) of ERISA and the PBGC regulations under
such section) with respect to any Pension Plan. No filing has been
made by Seller with PBGC, and no proceeding has been commenced by
the PBGC, to terminate any Pension Plan. No condition exists and no
event has occurred that could constitute grounds for termination of
any Pension Plan by the PBGC.
(ii) Seller has not ceased operations at any facility or
withdrawn from any Pension Plan or otherwise acted or omitted to act in a manner
which could subject it to liability under Section 4062, Section 4063, Section
4064, Section 4068, or Section 4069 of ERISA and there are no facts of
circumstances which might give rise to any liability of Seller to the PBGC under
Title IV of ERISA or which could reasonably be anticipated to result in any
claims being made against Purchaser, or Seller to the PBGC. Seller has not
incurred any withdrawal liability (including without limitation any contingent
or secondary withdrawal liability) within the meaning of Section 4201 and
Section 4204 of ERISA to any Multiemployer Plan. Seller has not, with respect to
any Pension Plan which is a Multiemployer Plan, suffered or otherwise caused a
"complete withdrawal" or a "partial withdrawal," as such terms are defined
respectively in Sections 4201, 4203, 4204 and 4205 of ERISA. Seller has no
liability to any such Multiemployer Plan in the event of a complete or partial
withdrawal therefrom as of the close
14
of the most recent fiscal year of any such Multiemployer Plan ended prior to the
date hereof.
(iii) Seller does not sponsor, administer, maintain,
contribute to, or has not at any time ever sponsored, administered, maintained,
contributed to, or been required to contribute to any "employee welfare benefit
plan" ("Welfare Plan"), as such term is defined in Section 3(1) of ERISA
(including without limitation a plan excluded from coverage by Section 4(b)(5)
of ERISA), or under which Seller may incur any liability, whether insured or
otherwise, without regard to whether or not any of the foregoing is funded,
whether formal or informal, whether or not subject to ERISA and whether legally
binding or not, and any such Welfare Plan maintained by Seller is in compliance
with the provisions of ERISA and all other applicable Laws. Seller has not
established or contributed to any "voluntary employees' beneficiary association"
within the meaning of Section 501(c)(9) of the Code. Seller does not maintain
any Welfare Plan which is a "Group Health Plan" (as such the term is defined in
Section 607(1) of ERISA and Section 4980B(g)(2) of the Code) that has not been
administered and operated in all respects in compliance with the applicable
requirements of Section 601 of ERISA and Section 4980B of the Code and Seller is
not subject to any liability, including but not limited to, additional
contributions, fines or penalties, or loss of tax deductions as a result of such
administration and operation.
(iv) Seller does not maintain or contribute to any
employment, consulting, severance, or other similar contract arrangement,
procedures, or policy and each plan, arrangement (written or oral), program,
agreement or commitment providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
life, health, disability, or accident benefits (including, without limitation,
any "voluntary employees' beneficiary association" as defined in Section
501(c)(9) of the Code providing for the same or other benefits), dependent care
spending accounts or assistance, split dollar arrangements, cafeteria plans,
supplemental retirement, termination pay, dental, salary, continuation or
deferred compensation, profit-sharing bonuses, stock options, stock appreciation
rights, stock purchases or other forms of incentive compensation or
post-retirement insurance, compensation or benefits which (A) is not a Welfare
Plan, Pension Plan, or Multiemployer Plan, (B) is entered into, maintained,
contributed to, or required to be contributed to, as the case may be, by Seller,
or under which Seller may incur any liability, without regard to whether or not
any of the foregoing is funded, whether formal or informal, whether or not
subject to ERISA, and whether legally binding or not, and (C) covers any
individual who is currently, or was previously, retained or employed by Seller
("Benefit Arrangement").
(v) As of or subsequent to the Closing Date, neither
Seller, nor any Welfare Plan or Benefit Arrangement maintained by Seller, has
any present or future obligation to maintain, sponsor, provide, or make any
payment to any present or former employee of Seller pursuant to any Welfare Plan
or Benefit Arrangement. Seller does not maintain any Welfare Plan or Benefit
Arrangement, which is funded by a trust described in Section 501(c)(9) of the
Code or subject to the provisions of Section 505 of the Code. No Welfare Plan or
Benefit Arrangement of Seller provides or is required to provide health, dental,
medical, life, death, or survivor benefits to any former or retired employee or
beneficiary thereof except to the extent required under any state insurance law
providing for a conversion option under a group insurance policy under Section
601 of ERISA or Section 4980B of the Code.
(vi) Neither any of Pension Plans or Welfare Plans or
Benefit Arrangements, nor any trust created or insurance contract issued
thereunder nor any trustee or
15
administrator thereof nor any officer, director or employee of Seller, custodian
or any other "disqualified person" within the meaning of Section 4975(e)(2) of
the Code, or "party in interest" within the meaning of Section 3(14) of ERISA,
with respect to any such Pension Plans or Welfare Plans or Benefit Arrangements
or any such trust or insurance contract or any trustee, custodian or
administrator thereof, or any disqualified person, party in interest or person
or entity dealing with such Pension Plans or Benefit Arrangements or any such
trust, insurance contract or any trustee is subject to a tax or penalty on
prohibited transactions imposed by Section 4975 of the Code or to a civil
penalty imposed by Section 502 of ERISA. There are no facts or circumstances
which could subject Seller to any excise tax under Section 4972 or Sections 4976
through 4980, both inclusive, of the Code.
(vii) Full payment has been made of all amounts which
Seller is required, under applicable Law, with respect to any Pension Plan or
Welfare Plan or Benefit Arrangement, or any agreement relating to any Pension
Plan or Welfare Plan or Benefit Arrangement, to have paid as a contribution
thereto. No accumulated funding deficiency (as defined in Section 302 of ERISA
and Section 412 of the Code), whether or not waived, exists with respect to any
Pension Plan. Seller does not maintain or contribute to, nor has it ever
sponsored, maintained or contributed to or been required to contribute to, any
Pension Plan subject to Part 3 of Title I of ERISA or Section 412(n) of the
Code. Seller has made adequate provisions for reserves to meet contributions
which have not been made because they are not yet due under the terms of any
Pension Plan or Welfare Plan or Benefit Arrangement or related agreements. All
Pension Plans which Seller operates as plans that are qualified under the
provisions of Section 401(a) of the Code satisfy the requirements of Section
401(a) and all other sections of the Code incorporated therein, including
without limitation Sections 401(k), 401(l) and 401(m) of the Code; and the
Internal Revenue Service has issued favorable determination letters with respect
to the current statement of all Pension Plans and, to Seller's knowledge,
nothing has occurred since the issuance of any such letters that could adversely
affect such favorable determination. There will be no change on or before
Closing in the operation of any Pension Plan, Welfare Plan or Benefit
Arrangement or any documents with respect thereto which will result in an
increase in the benefit liabilities under such plans, except as may be required
by Law.
(viii) Seller has complied with all reporting and
disclosure obligations with respect to the Pension Plans, Welfare Plans and
Benefit Arrangements imposed by Title I of ERISA or other applicable Law.
(ix) There are no pending or, to Seller's knowledge,
threatened claims, suits or other proceedings against Seller, the Pension Plan,
Welfare Plan, Benefit Arrangement, or any other party, including but not limited
to any fiduciary with respect to such plans or arrangements by present or former
employees of Seller, plan participants, beneficiaries or spouses of any of the
above, including without limitation claims against the assets of any trust,
involving any Pension Plan, Welfare Plan, or Benefit Arrangement, or any rights
or benefits thereunder, other than the ordinary and usual claims for benefits by
participants or beneficiaries.
(x) The transactions contemplated herein do not result
in the acceleration or accrual, vesting, funding or payment of any contribution
or benefit under any Pension Plan, Welfare Plan or Benefit Arrangement.
(xi) No action or omission of Seller or any director,
officer, employee, or agent thereof or any condition, circumstance, or verbal
requirement exists which in any way restricts, impairs or prohibits Purchaser or
Seller or any successor from amending, merging, or
16
terminating any Pension Plan, Welfare Plan or Benefit Arrangement in accordance
with the express terms of any such plan and applicable Law.
(xii) (A) Each Pension Plan, Welfare Plan, Benefit
Arrangement, related trust agreement, annuity contract, or other funding
instrument complies and has been maintained, in all material respects, in
compliance with its terms and, both as to its form, operation, and procedures
with all applicable requirements, including all record keeping, reporting, and
disclosure requirements, prescribed by any and all statutes, orders, rules, and
regulations including, but not limited to, ERISA, the Consolidated Omnibus
Budget Reconciliation Act, as amended ("COBRA"), and the Code; (B) Seller has
performed, in all material respects, all obligations required to be performed
under, and is not in default under or in violation of, any and all of the
Pension Plans, Welfare Plans, and Benefit Arrangements (collectively "Benefit
Plans") is, in all material respects, in compliance with, and each Benefit Plan
has been operated and administered in accordance with its provisions and in
compliance with, the laws governing each such plan, including without
limitation, rules and regulations promulgated by the DOL, PBGC, and the
Treasury, pursuant to the provisions of ERISA, COBRA, and the Code; (C) no event
has occurred and there has been no failure to act on the part of Seller, a
fiduciary of any Benefit Plan, or a "plan official" (as defined in Section 412
of ERISA) that violates Section 404 of ERISA or could subject the Purchaser, any
Benefit Plan, a fiduciary, or plan official to the imposition of any tax,
penalty, or other liability, whether by way of indemnity or otherwise; and (D)
no filing, application, or other matter with respect to any of the Benefit Plans
or the Seller is pending with the IRS, PBGC, DOL, or other governmental body.
(xiii) The Disclosure Schedule contains a true and
complete list of all of the Benefit Plans which the Seller is now or was
previously obligated, directly or indirectly, to contribute or maintain,
regardless of whether formal or informal and without regard to whether or not it
was funded. Seller has delivered to the Purchaser (A) true and complete copies
of all documents embodying or relating to the Benefit Plans, including without
limitation, with respect to each Benefit Plan, all amendments to the Benefit
Plans, and any trust or other funding arrangement, including certified financial
statements which fairly present the assets and liabilities of each of the
Benefit Plans as of the date thereof and there have been no material changes in
the assets and liabilities since the date of such financial statements; (B) the
most recent annual and periodic actuarial evaluations, if any, prepared for any
Benefit Plan; (C) the most recent annual reports (series Form 5500 and all
schedules thereto), if any, required under ERISA, including those prepared for
the most recent three (3) years for each Benefit Plan; (D) if the Benefit Plan
is funded, the most recent annual and periodic accounting of the Benefit Plan's
assets, including the most recent three (3) years of the plan; (E) the most
recent determination letter received from the IRS, if any, and a copy of the
most recent summary plan description together with the most recent summary of
modifications required under ERISA with respect to each Benefit Plan and all
employee communications and/or written interpretations or descriptions thereof
relating to each Benefit Plan; (F) with respect to each Benefit Plan, a
description setting forth the amount of any liability of the Seller as of the
date hereof or as of the Closing Date or which arises or accrues in connection
with the Closing Date for: (1) payments which are or will be more than thirty
(30) days past due, or (2) unfunded accrued benefits, including severance
benefits, the present value of which on an aggregate estimated basis exceeds or
will exceed Twenty-Five Thousand Dollars ($25,000); and (G) any correspondence
between any Benefit Plan and any governmental agency during the last three (3)
years.
17
(xiv) There is no contract, agreement, plan, or
arrangement covering any employee or former employee of the Seller that,
individually or collectively, provides for the payment by the Seller of any
amount (A) that is not deductible under Section 162(a)(1) or 404 of the Code or
(B) that is an "excess parachute payment" pursuant to Section 280G of the Code.
(xv) Neither the Seller nor any plan fiduciary of any
Pension Plan or Welfare Plan engaged in any transaction in violation of Sections
101 or 106 of ERISA or any "prohibited transaction," as defined in Section
4975(c)(1) of the Code, for which no exemption exists under Section 408 of ERISA
or Section 4975(c)(2) or (d) of the Code.
(xvi) Seller has not announced any plan or legally
binding commitment to create any additional Pension Plans, Welfare Plans, or
Benefit Arrangements or to amend or modify any existing Benefit Plan.
(xvii) No event has occurred in connection with which
Seller or any Pension Plan, Welfare Plan, or Benefit Arrangement, directly or
indirectly, could be subject to any liability (A) under any statute, regulation,
or governmental order relating to any Benefit Plans, or (B) pursuant to any
obligation of the Seller to indemnify any person against liability incurred
under any statute, regulation or order as they relate to the Benefit Plans.
(s) Bank Accounts; Powers of Attorney. The Disclosure Schedule sets
forth: (i) the names of all financial institutions, investment banking and
brokerage houses, and other similar institutions at which the Seller maintain
accounts, deposits, safe deposit boxes of any nature, and the names of all
persons authorized to draw thereon or make withdrawals there from; (ii) the
terms and conditions thereof and any limitations or restrictions as to use,
withdrawal or otherwise; and (iii) the names of all persons or entities holding
general or special powers of attorney from Seller and a summary of the terms
thereof.
(t) Contracts and Commitments; No Default.
(i) Except as set forth in the Disclosure Schedule,
Seller:
(A) does not have any written contract, commitment,
agreement or arrangement with any person or, to Seller's knowledge,
any oral contract, commitment, agreement or arrangement which (1)
requires payments individually in excess of $5,000 annually or in
excess of $10,000 over its term (including without limitation
periods covered by any option to extend or renew by either party)
and (2) is not terminable on ninety (90) days' or less notice
without cost or other liability;
(B) does not pay any person or entity cash remuneration
at the annual rate (including without limitation guaranteed bonuses)
of more than Forty Thousand Dollars ($40,000) for services rendered;
(C) is not restricted by agreement from carrying on
their businesses or any part thereof anywhere in the world or from
competing in any line of business with any person or entity;
(D) is not subject to any obligation or requirement to
provide funds to or make any investment (in the form of a loan,
capital contribution or otherwise) in any person or entity;
(E) is not party to any agreement, contract, commitment
or loan to which any of its directors, officers or shareholders or
any "affiliate" or "associate" (as defined in Rule 405 as
promulgated under the Securities Act of 1933) (or former affiliate
or associate) thereof is a party;
18
(F) is not subject to any outstanding sales or purchase
contracts, commitments or proposals which will result in any loss
upon completion or performance thereof;
(G) is not a party to any purchase or sale contract or
agreement that calls for aggregate purchases or sales in excess over
the course of such contract or agreement of Ten Thousand Dollars
($10,000) or which continues for a period of more than twelve (12)
months (including without limitation periods covered by any option
to renew or extend by either party) which is not terminable on
ninety (90) days' or less notice without cost or other liability at
or any time after the Closing;
(H) is not subject to any contract, commitment,
agreement or arrangement with any "disqualified individual" (as
defined in Section 280G(c) of the Code) which contains any severance
or termination pay liabilities which would result in a disallowance
of the deduction for any "excess parachute payment" (as defined in
Section 280G(b)(1) of the Code) under Section 280G of the Code; or
(I) has any distributorship, dealer, manufacturer's
representative, franchise or similar sales contract relating to the
payment of a commission.
(ii) True and complete copies (or summaries with all
material terms and conditions, in the case of oral contracts and
commitments) of all oral contracts and commitments in excess of Ten Thousand
Dollars ($10,000) and written contracts and commitments in excess of Twenty
Thousand Dollars ($20,000) disclosed pursuant to Section 4(t)(i) have been made
available to Purchaser for review. Except as set forth in the Disclosure
Schedule, all such contracts and commitments are valid and enforceable by and
against Seller in all material respects in accordance with their respective
terms; Seller is not in breach, violation or default, however defined, in the
performance of any of its obligations thereunder, and to the best of Seller's
knowledge, no facts and circumstances exist which, whether with the giving of
due notice, lapse of time, or both, would constitute such a breach, violation or
default thereunder or thereof; and, to the best of Seller's knowledge, no other
parties thereto are in a breach, violation or default, however defined,
thereunder or thereof, and no facts or circumstances exist which, whether with
the giving of due notice, lapse of time, or both, would constitute such a
breach, violation or default thereunder or thereof which would have a material
adverse effect on the business and operations of Seller.
(u) Orders, Commitments and Returns. Except as set forth in the
Disclosure Schedule, all accepted and unfulfilled orders for the sale of
products and the performance of services entered into by Seller and all
outstanding contracts or commitments for the purchase of supplies, materials and
services were made in bona fide transactions in the ordinary course of business.
Except as set forth in the Disclosure Schedule, to the best of Seller's
knowledge, there are no claims (in excess of $5,000 individually, or $10,000 in
the aggregate) against Seller to return products by reason of alleged
over-shipments, defective products or otherwise, or of products in the hands of
customers, retailers or distributors under an understanding that such products
would be returnable.
(v) Labor Matters.
(i) The Disclosure Schedule set forth a complete and
accurate list of all employees of Seller as of the date hereof.
19
(ii) Except as set forth in the Disclosure Schedule: (A)
Seller has been in material compliance with all applicable Laws respecting
employment and employment practices, terms and conditions of employment and
wages and hours, including without limitation any such Laws respecting
employment discrimination and occupational safety and health requirements; labor
and management relations; affirmative action plans; pension/employee benefits
laws; worker's compensation laws and has not and is not engaged in any unfair
labor practice and to Seller's knowledge no charge is being brought with regard
thereto nor has been threatened; (B) there is no unfair labor practice complaint
or investigation against the Seller for any violation of any employment law or
discrimination pending or, to the best of Seller's knowledge, threatened before
the National Labor Relations Board or any other comparable Authority; (C) there
is no labor strike, dispute, slowdown or stoppage actually pending or, to the
best of Seller's knowledge, threatened against or directly affecting Seller; (D)
to the best of Seller's knowledge, no labor representation question exists
respecting the employees of Seller and there is not pending or, to the best of
Seller's knowledge, threatened any activity intended or likely to result in a
labor representation vote respecting the employees of the Seller; (E) to the
best of Seller's knowledge, no grievance or any arbitration proceeding arising
out of or under collective bargaining agreements is pending and no claims
therefore exist or, to the best of Seller's knowledge, have been threatened; (F)
no collective bargaining agreement is binding and in force against Seller or
currently being negotiated by Seller; (G) Seller has not experienced any
significant work stoppage or other significant labor difficulties; (H) Seller is
not delinquent in payments to any persons for any wages, salaries, commissions,
bonuses or other direct or indirect compensation for any services performed by
them or amounts required to be reimbursed to such persons, including without
limitation any amounts due under any Pension Plan, Welfare Plan or Benefit
Arrangement; (I) upon termination of the employment of any person, neither
Seller, any Subsidiary, Purchaser or any subsidiary of Purchaser will, by reason
of anything done at or prior to or as of the Closing Date, be liable to any of
such persons for so-called "severance pay" or any other payments other than in
accordance with existing severance policies; (J) Seller has no policies,
practices, or procedures which require the Purchaser or the Seller to provide
severance benefits to any employees terminated by the Purchaser or the Seller;
(K) Seller has made no contract, agreement, handbook, practice, procedure,
policy or written, oral or other representation to its employees that are
inconsistent with their status as employees-at-will who may be terminated at any
time without cause; (L) Seller has made no written or oral representation to its
employees that Purchaser will retain them as employees or employ them for any
period of time subsequent to the Closing Date, and Seller has made no other
representation inconsistent with their employment by Purchaser on an at-will
basis; and (M) Seller has complied and will comply, to the extent required by
law, with all notices to employees and their unions required by the transactions
contemplated hereunder including without limitation those required by the
Federal "Warn Act" statute and all applicable similar state law statutes.
(w) Permits and Other Operating Rights. Except as set forth in the
Disclosure Schedule, Seller does not require the Consent of any Authority to
permit them to operate in the manner in which it presently is being operated,
and possess all permits and other authorizations from all Authorities presently
required to permit them to operate its businesses in the manner in which its
businesses are presently conducted except where failure to possess such permits
or other authorizations would result in a loss, liability or damage, in the
aggregate, in excess of Ten Thousand Dollars ($10,000).
20
(x) Compliance with Law.
(i) Except as set forth in the Disclosure Schedule, and without
limiting the scope of any other representations or warranties contained in this
Agreement, the assets, properties, businesses and operations of Seller are and
have been in compliance with all Laws applicable to the ownership and conduct of
their assets, properties, Seller's businesses and operations, including without
limitation all franchising and similar licensing Laws, all applicable rules of
the Civil Rights Act of 1964, as amended, Executive Order No.11246, the
Occupational Safety and Health Act of 1970, as amended, the Xxxxxxx Act, as
amended, the Xxxxxxx Act, as amended, the Foreign Corrupt Practices Act, as
amended, the boycott and export control regulations promulgated by the U.S.
Department of Commerce, the boycott regulations promulgated by the Internal
Revenue Service, the Equal Employment Opportunity Act of 1974, as amended, the
Clean Air Act as amended, the Clean Water Act, as amended, the Resource
Conservation and Recovery Act, as amended, the Toxic Substances Control Act, as
amended, the Comprehensive Environmental Response, Liability and Compensation
Act of 1980, as amended, and the related employee and public right-to- know
provisions. There are no outstanding and unsatisfied deficiency reports, plans
of correction, notices of noncompliance or work orders relating to any such
Authorities, and no such discussions with any such Authorities are scheduled or
pending, to the best of Seller's knowledge.
(ii) No Franchise. Except as set forth in the Disclosure
Schedule, Seller has not been, for the past three (3) years, and is not
currently a party to any contract, agreement, or arrangement which would require
Seller to comply with, and Seller has not violated, any applicable federal or
state law, rule, or regulation governing franchises and franchisor-franchisee
relationships.
(y) Assets of Business. Except as set forth in Exhibit 3(a)(iv) and
the Disclosure Schedule, the assets owned or leased by Seller constitute all of
the assets held for use or used primarily in connection with its businesses and
are adequate to carry on such businesses as presently conducted.
(z) Hazardous Substances and Hazardous Wastes. Except as set forth
in the Disclosure Schedule, to the best of Seller's knowledge:
(i) there is not now, nor has there ever been, any disposal,
release or threatened release of Hazardous Materials (as defined below) on, from
or under properties now or ever owned or leased by or to Seller or by or to any
former subsidiary (the "Properties"). There has not been generated by or on
behalf of Seller or any former subsidiary (while owned by Seller) any Hazardous
Material. No Hazardous Material has been disposed of or allowed to be disposed
of on or off any of the Properties which may give rise to a clean-up
responsibility, personal injury liability or property damage claim against
Seller, or Seller being named a potentially responsible party for any such
clean-up costs, personal injuries or property damage or create any cause of
action by any third party against Seller. For purposes of this subsection, the
terms "disposal," "release," and "threatened release" shall have the definitions
assigned to them by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, and the term "Hazardous Material" means any
hazardous or toxic substance, material or waste or pollutants, contaminants or
asbestos containing material which is or becomes regulated by any Authority in
any jurisdiction in which any of the Properties is located. The term "Hazardous
Material" includes without limitation any material or substance which is (A)
defined as a "hazardous waste" or a "hazardous substance" under applicable Law;
(B) designated as a "hazardous substance" pursuant to Section 311 of the Federal
Water
21
Pollution Control Act; (C) defined as a "hazardous waste" pursuant to Section
1004 of the Federal Resource Conservation and Recovery Act; or (D) defined as a
"hazardous substance" pursuant to Section 101 of the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended.
(ii) None of Properties is (or, with respect to past Properties
and Properties of former subsidiaries, was at the time of disposition) in
violation of any Law (with respect to past Properties and Properties of former
subsidiaries, Laws in effect at the time of disposition) relating to industrial
hygiene or to the environmental conditions on, under or about such Properties,
including without limitation soil and ground water condition and there are (or
at the time of disposition were) no underground tanks or related piping,
conduits or related structures which would result in a loss, liability or damage
in excess of Ten Thousand Dollars ($10,000). During the period that Seller or
former subsidiaries owned or leased the Properties, neither Seller nor its
Subsidiaries nor its former subsidiaries nor, to Seller's knowledge, any third
party used, generated, manufactured or stored on, under or about such Properties
or transported to or from such Properties any Hazardous Materials and there has
been no litigation or other claim or action brought or threatened against Seller
or any settlements reached by Seller with any third party or third parties
alleging the presence, disposal, release or threatened release of any Hazardous
Materials on, from or under any of such Properties which would result in a loss,
liability or damage, in the aggregate, in excess of Ten Thousand Dollars
($10,000).
(aa) Brokers. Except as set forth in the Disclosure Schedule,
neither Seller nor its Subsidiaries, nor any of its directors, officers or
employees has employed any broker, finder or financial advisor or incurred any
liability for any brokerage fee or commission, finder's fee or financial
advisory fee, in connection with the transactions contemplated hereby, nor is
there any basis known to Seller for any such fee or commission to be claimed by
any person or entity.
(bb) SEC Reports. Seller has duly made all required filings with the
Securities and Exchange Commission under the Securities Exchange Act of 1934 and
all similar required filings with any other Authority and all of the reports,
forms and documents so filed complied in all material respects with all
applicable requirements and Laws. Seller will promptly furnish to Purchaser an
accurate and complete copy of the reports, forms and documents filed after the
date of this Agreement or such reports, forms or documents reasonably requested
by Purchaser.
(cc) Financial Capacity. As of the Closing Date, Seller shall have
the financial capacity to pay its debts as they become due and funds sufficient
to carry on its business as conducted and as proposed to be conducted.
(dd) Ralcorp. Without limiting the generality of any of Seller's
representations and warranties herein, Seller represents and warrants that,
except as set forth in the Disclosure Schedule:
(i) Seller has no written agreement with Ralcorp;
(ii) the main provisions, terms (including pricing) and
conditions of Seller's oral agreement with Ralcorp (including without
limitation, invoicing procedures between Seller and Ralcorp, on the one hand,
and among Seller, Ralcorp and customers on the other) are set forth on the
Disclosure Schedule;
(iii) Purchaser will be able, at any time after Closing, to
terminate Seller's agreement with Ralcorp without any liability except as such
liability relates to the purchase of products, inventory, and packaging, or the
exhaustion of such through manufacture upon termination as is customary in the
existing relationship between the Parties described in the Disclosure Schedule;
and
22
(iv) Seller has not at any time disclosed any of its
customers lists to Ralcorp.
(ee) Y2K. Sellers' computer and information technology systems are
all Y2K compliant and Seller has not experienced any damages, costs, expenses or
interruptions in its systems or of its business as a result of Y2K resulting in
costs, losses, or damages exceeding $25,000 in the aggregate.
(ff) Accuracy of Information. No representation or warranty by
Seller in this Agreement contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary in
order to make the statements herein or therein, in light of the circumstances
under which they were made, not misleading as of the date of the representation
or warranty.
Section 5
Representations and Warranties of Purchaser
Purchaser represents and warrants to Seller as of the date hereof as
follows:
(a) Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the law of the State of
Delaware.
(b) Authorization. Purchaser has full corporate power and authority
to enter into this Agreement and to carry out the transactions contemplated
herein. The Board of Directors of Purchaser has taken all action required by
law, its articles or certificate of incorporation and bylaws or otherwise to
authorize the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein. This Agreement is the
valid and binding legal obligation of Purchaser enforceable against it in
accordance with its terms.
(c) Non-Contravention. Neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated herein will:
(i) violate any provision of the articles or certificate of
incorporation or bylaws of Purchaser, which violation will materially adversely
affect Purchaser's ability to consummate the transactions contemplated herein;
or
(ii) violate, be in conflict with, or constitute a default,
however defined (or an event which, with the giving of due notice or lapse of
time, or both, would constitute such a default), under, or cause or permit the
acceleration of the maturity of, or give rise to, any right of termination,
cancellation, imposition of fees or penalties under, any debt, note, bond,
lease, mortgage, indenture, license, obligation, contract, commitment,
franchise, permit, instrument or other agreement or obligation to which
Purchaser or any subsidiary of Purchaser is a party or by which they or any of
their properties or assets is or may be bound (unless with respect to which
defaults or other rights, requisite waivers or consents shall have been obtained
at or prior to the Closing), which violation will materially adversely affect
Purchaser's ability to consummate the transactions contemplated herein, or
(iii) result in the creation or imposition of any Lien, upon
any property or assets of Purchaser or any subsidiary of Purchaser under any
debt, obligation, contract, agreement or commitment to which Purchaser or any
subsidiary of Purchaser is a party or by which Purchaser or any subsidiary of
Purchaser or any of their assets or properties is or may be bound, which Lien
will materially adversely affect Purchaser's ability to consummate the
transactions contemplated herein; or
23
(iv) to the knowledge of Purchaser, violate any Law which
violation will materially adversely affect Purchaser's ability to consummate the
transactions contemplated herein.
(d) Consents and Approvals. Except for the Consents identified on
Exhibit 5(d) hereto, no Consent is required by any person or entity, including
without limitation any Authority, in connection with the execution, delivery and
performance by Purchaser of this Agreement, or the consummation of the
transactions contemplated herein, other than any Consent which, if not made or
obtained, will not, individually or in the aggregate, have a material adverse
effect on the business of Purchaser and its subsidiaries taken as a whole.
(e) Brokers. Except as disclosed on Exhibit 5(e) hereto, neither
Purchaser nor any of its directors, officers or key employees have employed any
broker or finder, or incurred any liability for any brokerage fee or commission
or finder's fee, in connection with the transactions contemplated hereby, nor is
there any basis known to Purchaser for any such fee or commission to be claimed
by any person or entity.
(f) Disclosure. No representation or warranty by Purchaser in this
Agreement contains or will contain any untrue statement of material fact or
omits or will omit to state any material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which made,
not misleading as of the date of the representation or warranty.
(g) Current Business Practices. Purchaser will use its reasonable
commercial efforts to continue the Seller's customary practice relating to the
termination of services with its third-party manufacturers and suppliers by
purchasing unsold or unused product, inventory, and packaging, or allowing such
third party to continue manufacturing throughout the exhaustion of such product,
inventory, and packaging. A description of such practices is set forth on
Exhibit 5(g).
(h) Availability of Funds. Purchaser has the assets, resources and
the financial capacity necessary to consummate the transactions (including
without limitation the payment of the Purchase Price) contemplated by this
Agreement.
Section 6
Covenants
(a) Seller's Agreements as to Specified Matters. Except as
specifically set forth on the Disclosure Schedule, except in the ordinary course
of business and consistent with past practice, and except as may be otherwise
agreed in writing by Purchaser, from the date hereof until the Closing, Seller
shall not:
(i) Amend its articles or certificate of incorporation or
bylaws;
(ii) Borrow or agree to borrow any funds;
(iii) Incur, assume, suffer or become subject to, whether
directly or by way of guarantee or otherwise, any claims, obligations,
liabilities or loss contingencies which, individually or in the aggregate, is or
are in excess of Twenty-Five Thousand Dollars ($25,000) or would have an adverse
effect on the financial condition of Seller;
(iv) Pay, discharge or satisfy any claims, liabilities or
obligations;
24
(v) Permit or allow any of its properties or assets to
be subjected to any Lien, except the Permitted Liens;
(vi) Write down the value of any inventory or write-off
as uncollectible any notes or accounts receivable or any trade
accounts or trade notes;
(vii) Cancel or amend any debts, waive any claims or
rights or sell, transfer or otherwise dispose of any properties or
assets;
(viii) License, sell, transfer, pledge, modify,
disclose, dispose of or permit to lapse any right to the use of any
Intellectual Property Rights;
(ix) (A) Terminate, enter into, adopt, institute or
otherwise become subject to or amend in any material respect any collective
bargaining agreement or employment or similar agreement or arrangement with any
of its directors, officers or employees; (B) terminate, enter into, adopt,
institute or otherwise become subject to or amend in any material respect any
Benefit Arrangement; (C) contribute, set aside for contribution or authorize the
contribution of any amounts for any such Benefit Arrangement except as required
(and not discretionary) by the terms of such Benefit Arrangement; or (D) grant
or become obligated to grant any general increase in the compensation of any
directors, officers or employees (including without limitation any such increase
pursuant to any Benefit Arrangement);
(x) Make or enter into any commitment for capital
expenditures for additions to property, plant or equipment individually, or in
the aggregate, in excess of Twenty-Five Thousand Dollars ($25,000) unless
consented to in writing by Purchaser which consent may not be unreasonably
withheld;
(xi) (A) Declare, pay or set aside for payment any
dividend or other distribution in respect of its capital stock or other
securities (including without limitation distributions in redemption or
liquidation) or redeem, purchase or otherwise acquire any shares of its capital
stock or other securities, except with respect to securities comprising Seller
Capital Stock outstanding as of the date hereof; (B) issue, grant or sell any
shares of its capital stock or equity securities of any class, or any options,
warrants, conversion or other rights to purchase or acquire any such shares or
equity securities or any securities convertible into or exchangeable for such
shares or equity securities, except issuance of securities pursuant to the terms
of issuance of Seller Capital Stock outstanding as of the date hereof and the
issuance of additional Seller capital stock consisting of Series C and Series D
Preferred Stock to raise the working capital funds required hereunder; (C)
become a party to any merger, exchange, reorganization, recapitalization,
liquidation, dissolution or other similar corporate transaction; or (D) organize
any new subsidiary, acquire any capital stock or other equity securities or
other ownership interest in, or assets of, any person or entity or otherwise
make any investment by purchase of stock or securities, contributions to
capital, property transfer or purchase of any properties or assets of any person
or entity;
(xii) Pay, lend or advance any amounts to, or sell,
transfer or lease any properties or assets to, or enter into any agreement or
arrangement with, any director, officer, employee or shareholder;
(xiii) Terminate, enter into or amend in any material
respect any item identified in Part 4(t) of the Disclosure Schedule, or take any
action or omit to take any action which will cause a breach, violation or
default (however defined) under any such item; or
(xiv) Agree, whether in writing or otherwise, to take
any action described in this subsection.
25
(b) Conduct of Seller Business. Except as set forth in the
Disclosure Schedule, Seller shall maintain its assets and properties and carry
on its businesses and operations in the ordinary course of business in
substantially the same manner as previously operated; and Seller shall use its
best efforts to preserve intact its business organizations, existing business
relationships (including without limitation its relationships with officers,
employees, dealers, distributors, independent contractors, customers and
suppliers), good will and going concern value.
(c) No Seller Solicitation of Alternate Transaction.
(i) Seller shall not, and will use its best efforts to ensure
that its directors, officers and employees, independent contractors,
consultants, counsel, accountants, investment advisors and other representatives
and agents shall not, directly or indirectly, solicit, initiate or encourage
discussions or negotiations with, provide any confidential or nonpublic
information to, or enter into any agreement with, any third party concerning (or
concerning the business of Seller in connection with) any tender offer
(including a self tender offer), exchange offer, merger, consolidation, sale of
substantial assets or of a significant amount of assets, sale of securities,
acquisition of beneficial ownership of or the right to vote securities
representing more than five percent (5%) of the total voting power of Seller,
liquidation, dissolution or similar transactions; provided, however, that the
foregoing shall not prohibit Seller (either directly or indirectly through its
directors, officers, employees, independent advisors, consultants, counsel, and
accountants) from:
(A) furnishing information concerning the Seller and its
businesses, properties, or assets to any person, corporation,
entity, or "group" as defined in Section 13(d) of the Exchange Act,
other than Purchaser or any of its affiliates (a "Third Party") in
response to any bona fide unsolicited inquiry, proposal or offer by
such Third Party;
(B) engaging in discussions or negotiations with such
Third Party that has made such bona fide unsolicited inquiry,
proposal, or offer;
(C) following receipt of such a bona fide unsolicited
proposal for acquisition of the Seller or its Assets, taking and
disclosing to its shareholders a position contemplated by Rule
14c-2(a) under the Exchange Act or otherwise making disclosure to
its shareholders; and
(D) taking any non-appealable, final action ordered to
be taken by the Seller by any court of competent jurisdiction but in
each case referred to in the foregoing clauses (A) through (C), only
to the extent that the Board of Directors of the Seller shall have
concluded in good faith that such action is required to prevent the
Board of Directors of the Seller from breaching its fiduciary duties
to the shareholders of the Seller under applicable law.
(ii) Break-up Fee. If for the reasons set forth in this Section
6(c), this Agreement and the transactions contemplated hereby shall be
terminated by Seller pursuant to Section 9(a)(iv) without the Closing having
occurred (whether such Third Party offer results in the consummation of a
transaction or not), then Seller agrees to pay Purchaser a "Break-up Fee". The
Break-up Fee shall consist of the sum of One Million Five Hundred Thousand
Dollars ($1,500,000), payable immediately upon termination hereof. The Parties
acknowledge that the Break-up Fee represents a negotiated figure which is not a
penalty and constitutes a reasonable estimate of the damages and costs that
would be incurred by Purchaser in the event of termination giving rise thereto.
26
(d) Full Access to Purchaser. Seller has and shall provide Purchaser
all information in its possession requested by Purchaser after using best
efforts to procure such information and afford to Purchaser and its directors,
officers, employees, counsel, accountants, investment advisors and other
authorized representatives and agents free and full access during normal
business hours to the facilities, properties, books and records of Seller in
order that Purchaser may have full opportunity to make such investigations as it
shall desire to make of the affairs of Seller; provided, however, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with business operations; and Seller shall furnish such additional
financial and operating data and other information as Purchaser shall, from time
to time, reasonably request, including without limitation access to the working
papers of their independent certified public accountants (as and to the extent
permitted by such independent certified public accountants); and, provided,
further, that any such investigation shall not affect or otherwise diminish or
obviate in any respect any of the representations and warranties of Seller
herein.
(e) Confidentiality. Each of the Parties agrees that it will not
use, or permit the use of, any of the information relating to any other Party
hereto furnished to it in connection with the transactions contemplated herein
("Information") in a manner or for a purpose detrimental to such other Party or
otherwise than in connection with the transaction, and that they will not
disclose, divulge, provide or make accessible (collectively, "Disclose"), or
permit the Disclosure of, any of the Information to any person or entity, other
than their responsible directors, officers, employees, investment advisors,
accountants, counsel and other authorized representatives and agents, except as
may be required by judicial or administrative process or, in the opinion of such
Party's regular counsel, by other requirements of Law; provided, however, that
prior to any Disclosure of any Information permitted hereunder, the disclosing
Party shall first obtain the recipients' undertaking to comply with the
provisions of this subsection with respect to such information. The term
"Information" as used herein shall not include any information relating to a
Party which the Party disclosing such information can show: (i) to have been in
its possession prior to its receipt from another Party hereto; (ii) to be now or
to later became generally available to the public through no fault of the
disclosing Party; (iii) to have been available to the public at the time of its
receipt by the disclosing Party; (iv) to have been received separately by the
disclosing Party in an unrestricted manner from a person entitled to disclose
such information; or (v) to have been developed independently by the disclosing
Party without regard to any information received in connection with this
transaction. Each Party hereto also agrees to promptly return to the Party from
whom originally received all original and duplicate copies of written materials
containing Information should the transactions contemplated herein not occur. A
Party hereto shall be deemed to have satisfied its obligations to hold the
Information confidential if it exercises the same care as it takes with respect
to its own similar information. The Parties acknowledge that the transaction
described herein is of a confidential nature, and agree that the terms hereof,
including the purchase price hereunder, shall be maintained in confidence.
Sellers, with the prior approval of Purchaser, at a time and in a manner that is
acceptable to both Purchaser and Sellers, may notify employees of the fact of
the subject transaction.
(f) Filings; Consents; Removal of Objections. Subject to the terms
and conditions herein provided, the Parties shall use their best efforts to take
or cause to be taken all actions and do or cause to be done all things
necessary, proper or advisable under applicable Laws to consummate and make
effective, as soon as reasonably practicable, the transactions contemplated
hereby, including without limitation obtaining all Consents of any person or
27
entity, whether private or governmental, required in connection with the
consummation of the transactions contemplated herein. In furtherance, and not in
limitation of the foregoing, it is the intent of the parties to consummate the
transactions contemplated herein at the earliest practicable time, and they
respectively agree to exert their best efforts to that end, including without
limitation, if required: (i) the filing with the Federal Trade Commission
("FTC") and the Antitrust Division of the Department of Justice (the "Antitrust
Division") all requisite documents and notifications in connection with the
transactions contemplated hereby pursuant to the HSR Act as soon as practicable
following the date hereof, and to respond as promptly as practicable to all
inquiries from the FTC or the Antitrust Division in connection therewith; (ii)
the removal or satisfaction, if possible, of any objections to the validity or
legality of the transactions contemplated herein; and (iii) the satisfaction of
the conditions to consummation of the transactions contemplated hereby.
(g) Further Assurances; Cooperation; Notification.
(i) Each Party hereto shall, before, at and after
Closing, execute and deliver such instruments and take such other actions as the
other Party or Parties may reasonably require in order to carry out the intent
of this Agreement.
(ii) Seller shall cooperate with Purchaser to promptly
develop plans for the management of the businesses after the Closing, including
without limitation plans relating to productivity, marketing, operations and
improvements, and Seller shall further cooperate with Purchaser to provide for
the implementation of such plans as soon as practicable after the Closing.
Subject to applicable Law, Seller shall confer on a regular and reasonable basis
with one or more representatives of Purchaser to report on material operational
matters and the general status of ongoing operations.
(iii) At all times from the date hereof until the
Closing, each Party shall promptly notify the other in writing of the occurrence
of any event which it reasonably believes will or may result in a failure by
such Party to satisfy the conditions specified in Section 7 and Section 8 hereof
within seven (7) days.
(h) Supplements to Disclosure Schedule. Within a reasonable time
(but in no event later than three (3) Business Days) prior to the Closing,
Seller shall supplement or amend the Disclosure Schedule with respect to any
event or development which, if existing or occurring at or prior to the date of
this Agreement, would have been required to be set forth or described in the
Disclosure Schedule or which is necessary to correct any information in the
Disclosure Schedule or in any representation and warranty of Seller which has
been rendered inaccurate by reason of such event or development. For purposes of
determining the accuracy as of the date hereof of the representations and
warranties of Seller contained in Section 4 hereof in order to determine the
fulfillment of the conditions set forth in Section 7, the Disclosure Schedule
shall be deemed to exclude any information contained in any supplement or
amendment hereto delivered after the delivery of the Disclosure Schedule.
(i) Public Announcements. None of the Parties shall make any public
announcement with respect to the transactions contemplated herein or the
purchase price hereunder without the prior written consent of the other Party;
provided, however, that any of the Parties may at any time make any
announcements which are required by applicable Law so long as the Party so
required to make an announcement, promptly upon learning of such requirement,
notifies the other Party of such requirement and discusses with it in good faith
the exact proposed wording of any such announcement for such other Party's
reasonable approval which shall not be unreasonably withheld. Without limiting
the generality of the foregoing,
28
Seller hereby agrees to deliver to Purchaser final draft(s) of any information
statements (any such information statement, an "Information Statement") to be
distributed to its shareholders pursuant to applicable Law in connection with
this Agreement and the terms and conditions contemplated hereby and the issuance
of the securities disclosed in Part 6(a)(xi)(B) of the Disclosure Schedule, it
being understood and agreed that any such Information Statement shall be (x) in
form and substance reasonably acceptable to Purchaser and (y) provided to
Purchaser at least two (2) Business Days prior to its distribution to Seller's
securities holders or filing with any applicable Authority.
(j) Transactional Tax Undertakings.
(i) The Parties shall cooperate to make any necessary
filings with state and local taxing authorities and to furnish any required
supplemental information to any federal, state, local, and foreign tax
liabilities resulting from the consummation of the transactions contemplated
herein.
(ii) In the event that any sales or use tax, or any tax
in the nature of a sales or use tax, or any transactional tax is payable or
assessed relative to the transactions contemplated herein, Seller shall pay all
such taxes and shall not collect any part thereof from Purchaser, provided,
however, that Purchaser shall pay any excise tax required with respect to the
relicensing of any motor vehicles which are part of Seller's Assets.
(k) Bulk Transfers. Seller has requested that Purchaser waive, and
Purchaser hereby agrees to waive, the requirements of the Uniform Commercial
Code concerning bulk transfers, as in effect in the various states in which
Seller has assets, including without limitation the requirement of notice to
creditors. It is expressly agreed by the Parties that the obligation to
indemnify Purchaser under Section 10(e) includes any and all liability
(including claims, suits or demands against Purchaser), loss, cost (including
reasonable attorney's fees), expense or damage of any kind which Purchaser may
suffer in connection with such request and waiver.
(l) Employee Benefits.
(i) Employees. On the Closing Date, Purchaser: (A) will
assume the employees covered by the collective bargaining agreements listed in
Part 4(v)(ii)(F), and in Part 4(v)(i) under "union" employees, of the Disclosure
Schedule and (B) shall have the right (but not the obligation) to offer to all
or any number of the other employees then employed with respect to the
businesses relating to Seller's Assets the opportunity to maintain such
employee's current employment and shall provide within thirty (30) days after
the execution of this Agreement, but not later than ten (10) Business Days prior
to Closing, a list of those employees of Seller to whom it will offer employment
(collectively, the "Transferred Employees"); provided, that Purchaser, in its
sole discretion and considering its best interests, may terminate the employment
of any employees who accept such offer at any time after such Closing Date.
During the first twelve (12) months after the Closing Date, the compensation and
benefits provided by Purchaser shall be reasonably comparable on an overall
basis (including without limitation all compensation and benefits accrued by
such employees as of the Closing Date under all Pension Plans, Welfare Plans and
Benefit Arrangements irrespective of whether such accrued benefits are actually
received by such employees) to those provided to such employees prior to the
Closing Date with credit given for the length of actual service with Seller (or
both) prior to the Closing Date. Purchaser has not agreed to assume any
obligation or liability under any Pension Plans, Welfare Plans, Benefit
Arrangements, severance obligation or other employment benefit related
obligation but may do so in its sole discretion.
29
(ii) Severance. If the employment of any employee who
accepts the offer referred to in Section 6(1)(i) above is terminated by
Purchaser other than for cause within the twelve (12) months after the Closing
Date, Purchaser shall be responsible for making payment of severance
compensation to such employee in accordance with the practice of Seller or any
of its Subsidiaries (as applicable) at the Closing Date, as described on Exhibit
6(1) hereto, with credit being given for the length of actual service with
Seller (or both) prior to the Closing Date.
(iii) 401(k) Plan. Purchaser shall take appropriate
measures with Seller's assistance as reasonably requested so that Seller's
401(k) plans shall be, upon Closing: (x) assumed by Purchaser (and amended, if
required by Purchaser), (y) merged into an existing 401(k) plan maintained by
Purchaser, and/or (z) frozen or terminated and replaced with new plans (within
Purchaser's sole discretion).
(iv) Retention of Employees. Neither Seller nor any
Subsidiary shall, for a period of three (3) years after the Closing Date, take
any action, other than with the written consent of Purchaser, to induce any
employee who accepts an offer pursuant to Section 6(1)(i) above, while still
employed by Purchaser or any subsidiary of Purchaser, to enter into the employ
of Seller or other affiliate of Seller.
(m) Use of Trade Names and Corporate Name. As of and after the
Closing, Seller shall not use any of the names listed on Exhibit 3(a)(i) or
title similar to such name or any other trade names or trademarks being
transferred hereunder.
(n) Special Reserve Fund. Seller has raised from among its current
shareholders through the issuance of new Series D Preferred Convertible Stock
the aggregate amount of One Million Five-Hundred Thousand Dollars ($1,500,000),
of which Five-Hundred Thousand Dollars ($500,000) have been set aside as a
separate cash reserve (the "Special Reserve Fund"), for the purpose of assuring
that Seller meets its payment obligations and working capital requirements from
the date hereof through the Closing Date; the amount of the Special Reserve Fund
has been set on the basis of Seller's Monthly Cash Flow Forecasts prepared by
Seller for the period from February 1 through May 31, 2000, attached hereto as
Schedule 6(n). The balance of One-Million Dollars ($1,000,000) shall be injected
into Seller for normal business and operational purposes. The Special Reserve
Fund, which is free of any Liens, may be drawn upon only on the terms and for
the purposes set forth in the "Reserve Escrow Agreement" delivered to Purchaser
on the date hereof substantially in the form of Exhibit 6(n).
(o) Bank Extension. Annexed hereto as Exhibit 6(o) is an executed
copy of the Fourth Amendment to Financing Agreement, dated as of March 31, 2000
(the "Bank Extension"), entered into by Seller and U.S. Bancorp Republic
Commercial Finance, Inc. (the "Bank"). Seller represents and warrants that: (x)
the Bank Extension is effective as of the date of execution of this Agreement,
and (y) Seller has complied with all of the conditions set forth therein..
(p) Noncompetition and Confidentiality Agreements. At the Closing,
Seller shall:
(i) provide Purchaser with copies of the Noncompetition and
Confidentiality Agreements dated as of the Closing Date, executed by Xxxxxx X.
Xxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxxxx substantially in the forms respectively
set forth in Exhibit 7(h), and
(ii) assign to Purchaser all of Seller's rights, benefits, and
interests under each of the Worth Agreements with respect to Protection of
Confidential Information and Noncompetition so that the provisions of Sections
4, 5 and 6 of each of the Worth Agreements
30
shall inure in full to the sole benefit of the Purchaser; it being understood
and agreed that (x) Purchaser shall not assume any obligations whatsoever under
the Worth Agreements and, except as expressly set forth above, Seller shall
retain all rights and obligations under the Worth Agreements, and (y) in the
event of any breach of the provisions of those rights under the Worth Agreements
assigned to Purchaser, Seller shall, at Purchaser's cost, take any and all
reasonable action requested by Purchaser to enforce those provisions. As used
herein, the "Worth Agreements" shall mean: (A) that certain Consulting, Loan
Repayment and Noncompetition Agreement dated as of August 13, 1997 between
Xxxxxxx X. Worth and Seller, and (B) that certain Consulting, Loan Repayment and
Noncompetition Agreement dated as of August 13, 1997 between Xxxxxx Worth and
Seller.
(q) Payoff Schedule; Termination of Financing Agreement. (i) At
least five (5) Business Days prior to Closing, Seller shall deliver to Purchaser
a "Payoff Schedule" to be attached hereto as Exhibit 6(q), setting forth (x) a
list of every creditor of Seller (including but not limited to: stock, note,
warrant, option, and securities holders of Seller; banks and financial
institutions; trade creditors other than those assumed by Purchaser; suppliers
other than those assumed by Purchaser; and other third parties) to which Seller
owes amounts which are due or to become due within ninety (90) days after
Closing in excess of Ten Thousand Dollars ($10,000), (y) each such amount with
respect to each creditor as of a date which shall not be more than five (5)
Business Days prior to the Closing, and (z) for each creditors to be paid off at
or immediately after the Closing, the payment instructions to Purchaser with
information on the relevant bank account into which payment of the respective
payoff amounts shall be made at or immediately after the Closing.
(ii) On or before the Closing, Seller shall provide Purchaser
with fully executed originals, in form and substance acceptable to Purchaser,
of: (A) an agreement in writing between Bank and Seller providing for (x)
Seller's payment in full of all amounts due or outstanding under the Financing
Agreement (as defined in, and amended by, the Bank Extension), and (y) the
termination of such Financing Agreement and of any and all Liens granted to the
Bank on any of Seller's Assets, and (B) an instrument in writing of the Bank
releasing any and all of its Liens in any of Seller's Intellectual Property
Rights, and whereby the Bank covenants and agrees to execute and deliver to
Purchaser any further documents and instruments as may be necessary or
reasonably requested by Purchaser in order to fully release such Intellectual
Property Rights and other Seller's Assets from any Liens held in Bank's favor.
(r) Further Covenants of Seller. Without limiting the generality of
any other provision of this Agreement,
(i) On or prior to Closing, Seller shall: (A) be qualified to do
business and be in good standing in the state of Illinois or indemnify Purchaser
pursuant to Section 10(c) from and against any and all loss, liability, or
damage suffered or incurred by Purchaser in connection with Seller's failure to
so qualify or be in good standing; (B) obtain acknowledgement and consent of
Condor Ventures, Inc.; Laner, Muchin, Dombrow, Becker, Xxxxx and Tominberg, Ltd.
(LMDBLT), and the Bank that the execution of this Agreement and consummation of
the transactions contemplated hereby do not contravene the agreements set forth
in Part 4(e)(ii) of the Disclosure Schedule or indemnify Purchaser pursuant to
Section 10(c) from and against any and all loss, liability, or damage suffered
or incurred by Purchaser in connection with Seller's failure to obtain
acknowledgement and consent; (C) in relation to the Xxxx'x litigation disclosed
in Part 4(o) of the Disclosure Schedule, indemnify and hold Purchaser harmless
to the fullest extent set forth in Section 10 below, against all claims or
causes of action commenced, directly or indirectly, by Xxxx'x Bakery, LLC
against Purchaser; and (D) make all
31
necessary filings, cure any outstanding deficiencies and pay all fees and
penalties necessary to bring the 401(k) plans set forth in Part 4(r) of the
Disclosure Schedule in full compliance with law or, if Purchaser so chooses, at
Purchaser's sole discretion, indemnify Purchaser pursuant to Section 10(c) from
and against any and all loss, liability, or damage suffered or incurred by
Purchaser in connection with Seller's failure to make such filings, cure such
deficiencies or pay such fees and penalties;
(ii) Except as provided in Section 6(l)(i), Seller represents,
warrants and covenants that Purchaser has not, and will not, assume any
obligation whatsoever for any employment agreement(s) of Seller with any of its
employees including, but not limited to those with Xxxx Xxxxxx, Xxxxxx Xxxxxx
and Xxxxxxx Xxxxxx.
Section 7
Conditions to Obligations of Purchaser
Notwithstanding any other provision of this Agreement to the
contrary, the obligation of Purchaser to effect the transactions contemplated
herein shall be subject to the satisfaction at or prior to the Closing of each
of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of Seller contained in this Agreement, including without limitation
in the Disclosure Schedule initially delivered to Purchaser as Exhibit 4 (and
not including any changes or additions delivered to Purchaser pursuant to
Section 6(h)), shall be in all material respects true, complete and accurate as
of the date when made and at and as of the Closing as though such
representations and warranties were made at and as of such time, except for
changes specifically permitted or contemplated by this Agreement.
(b) Performance. Seller shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Seller on or
prior to the Closing.
(c) Required Approvals and Consents.
(i) All action required by law and otherwise to be taken by the
Board of Directors of Seller and the shareholders of Seller to authorize the
execution, delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby shall have been duly and
validly taken.
(ii) All Consents of or from all Authorities required hereunder
to consummate the transactions contemplated herein including, without
limitation, those required by the HSR Act, and all Consents of from all persons
and entities other than Authorities that are identified in the Disclosure
Schedule shall have been delivered, made or obtained, and Purchaser shall have
received copies thereof.
(d) No Proceeding or Litigation. To the best of Seller's knowledge,
no suit, action, investigation, inquiry or other proceeding by any Authority or
other person or entity shall have been instituted or threatened which questions
the validity or legality of the transactions contemplated hereby or which, if
successfully asserted, would individually or in the aggregate, otherwise have an
adverse effect on the conduct of the businesses relating to Seller's Assets.
(e) Opinion of Seller Counsel. Purchaser shall have received an
opinion from Olshan, Grundman, Frome, Xxxxxxxxxx & Wolosky, LLP, counsel to
Seller, dated the Closing Date, substantially in the form and substance set
forth as Exhibit 7(e) hereto.
32
(f) Certificates. Purchaser shall have received such certificates of
Seller's officers (including but not limited to an officer certificate
certifying that the Estimated Closing Working Capital Balance/(Deficit) and the
other unaudited financial statements and balance sheets provided by Seller
hereunder are in compliance with Section 4(g)) in a form and substance
reasonably satisfactory to Purchaser, dated the Closing Date, to evidence
compliance with the conditions set forth in this Section 7 and such other
matters as may be reasonably requested by Purchaser.
(g) Escrow Agreements. The parties thereto shall have executed and
delivered an Escrow Agreement in the form of Exhibit 7(g) hereto and the Reserve
Escrow Agreement in the form of Exhibit 6(n).
(h) Noncompetition and Confidentiality Agreements. On or before the
Closing Date, Seller shall have delivered to Purchaser Noncompetition and
Confidentiality Agreements dated as of the Closing Date and executed by Xxxxxx
X. Xxxxxx, Xxxxxxx Xxxxxx and Xxxxx Xxxxxxx respectively, substantially in the
forms respectively set forth in Exhibit 7(h).
(i) Documentation for Conveyance of Seller's Assets. Purchaser shall
have received, in form and substance reasonably satisfactory to Purchaser, dated
the Closing Date, all of the Xxxx(s) of Sale, deeds, assignments including,
without limitation, assignments of trademarks and other intellectual property
rights, certificates of title, and any and all other conveyance and transfer
documentation listed on Exhibit 7(i) hereto as may be supplemented after the
date hereof but before Closing.
(j) Certificates of Amendment. On the Closing Date, Seller's shall
deliver: (i) Certificate of Amendment of its certificate of incorporation to be
filed in the State of Delaware amending its corporate name from "Delicious
Brands, Inc." to any other name which is in compliance with Section 6(m) (the
"New Name"), (ii) Certificates of Amendment (or equivalent) amending its
certificates of authority to be filed in Illinois, New York and Michigan,
respectively, amending its corporate name from "Delicious Brands, Inc." to the
New Name, (iii) any other documents for any other jurisdiction in which it is
qualified to do business or uses the "Delicious Brands, Inc." name, and (iv) any
other documents otherwise necessary or convenient to consummate the transactions
contemplated in this Agreement, including but not limited to, certificates of
good standing from the States of Delaware, Illinois, New York and Michigan dated
no earlier than two (2) Business Days prior to Closing. All such certificates
shall be in form and substance reasonably satisfactory to Purchaser.
(k) Environmental Phase I. The "Phase I" environmental report on
Seller's premises (which Purchaser in its discretion may procure prior to
Closing) does not require, in Purchaser's reasonable discretion, any material
repairs to any of Seller's premises or will not cause or require the
interruption of the use of Seller's premises, interfere with the carrying out of
the business in the regular course, or otherwise present material liabilities or
other legal risks.
(l) Employees. Purchaser shall provide a list of the Transferred
Employees pursuant to Section 6(l). Seller shall be solely responsible for any
severance and all other employment benefits to and rights of the Transferred
Employees through the Closing Date and for the remainder of Seller's employees
that are not assumed or employed by Purchaser through and after Closing.
(m) Payoff Schedule. At Closing, Purchaser shall have received the
Payoff Schedule pursuant to Section 6(q), with any amendments as necessary to
make it current as of the Closing Date; it being understood and agreed that
Seller shall provide Purchaser with a draft
33
of the updated Payoff Schedule at least five (5) Business Days prior to Closing.
Section 8
Conditions to Seller's Obligations
Notwithstanding anything in this Agreement to the contrary, the
obligation of Seller to effect the transactions contemplated herein shall be
subject to the satisfaction at or prior to the Closing of each of the following
conditions:
(a) Representations and Warranties True. The representations and
warranties of Purchaser contained in this Agreement shall be in all material
respects true, complete and accurate as of the date when made and at and as of
the Closing, as though such representations and warranties were made at and as
of such time, except for changes permitted or contemplated in this Agreement.
(b) Performance. Purchaser shall have performed and complied in all
material respects with all agreements, covenants, obligations and conditions
required by this Agreement to be performed or complied with by Purchaser at or
prior to the Closing.
(c) Corporate Approvals. The shareholders of Seller shall have
approved the transactions contemplated hereby. All Consents listed on Exhibit
5(d) hereto shall have been delivered, made or obtained. All action required to
be taken by Purchaser to authorize the execution, delivery and performance of
this Agreement by Purchaser and the consummation of the transactions
contemplated hereby shall have been duly and validly taken.
(d) No Proceeding or Litigation. No suit, action, investigation,
inquiry or other proceeding by any Authority or other person or entity shall
have been instituted or threatened which questions the validity or legality of
the transactions contemplated hereby.
(e) Certificates. Purchaser shall have furnished Seller with such
certificates of Seller officers, in a form and substance reasonably acceptable
to Seller, dated the Closing Date, to evidence compliance with the conditions
set forth in this Section 6 and such other matters as may be reasonably
requested by Seller.
(f) Opinion of Purchaser Counsel. Purchaser shall have delivered to
Seller an opinion from BBLP - Pavia e Ansaldo Beiten Xxxxxxxxx Xxxxx & Xxxxxxx
Moquet Borde & Associes Xxxxx Xxxxxxxxxxxx, Professional Corporation, counsel to
Purchaser, dated the Closing Date, in the form and substance set forth as
Exhibit 8(f) hereto.
(g) Payment of Consideration. Seller shall have received
satisfactory evidence that the wire transfers required by Sections 3(b)(A)(i)
and 3(b)(A)(ii) hereof have been completed and the Liability Undertaking
required by Section 3(b)(B) hereof has been executed and delivered.
(h) Escrow Agreements. The parties thereto shall have executed and
delivered an Escrow Agreement in the form of Exhibit 7(g) hereto and the Reserve
Escrow Agreement in the form of Exhibit 6 (n) hereto.
Section 9
Termination and Abandonment
(a) Methods of Termination. This Agreement may be terminated and the
transactions contemplated herein may be abandoned at any time notwithstanding
approval
34
thereof by the shareholders of Seller, but not later than the Closing:
(i) By mutual written consent of Purchaser and Seller; or
(ii) By Purchaser on or after the Termination Date or such
later date as may be established pursuant to Section 3 hereof, if any of the
conditions provided for in Section 7 of this Agreement shall not have been
satisfied or waived in writing by Purchaser prior to such date; or
(iii) By Seller on or after the Termination Date or such later
date as may be established pursuant to Section 3 hereof, if any of the
conditions provided for in Section 8 of this Agreement shall not have been
satisfied or waived in writing by Seller prior to such date; or
(iv) By Seller if, prior to Closing, in good faith, based upon
written advice from outside counsel, and in order to prevent the Board of
Directors from breaching its fiduciary duty, the Board of Directors of Seller
shall have withdrawn or modified, in a manner adverse to Purchaser, its approval
or recommendation of this Agreement or its recommendation that shareholders of
the Seller adopt and approve this Agreement in order to permit Seller to execute
a definitive agreement providing for the acquisition of the assets of the Seller
or in order to approve a tender or exchange offer for any or all of the Seller's
Common Stock, in either case, that is determined, by the Board of Directors of
the Company to be a superior proposal. In the foregoing event, Seller shall pay
Purchaser the Break-up Fee as set forth above in Section 6(c)(ii).
(v) By any Party if the Closing shall not have occurred on or
before June 15, 2000.
(b) Procedure Upon Termination. In the event of termination and
abandonment pursuant to subsection (a), written notice thereof shall forthwith
be given to the other Party or Parties, and the provisions of this Agreement
(except to the extent provided in Section 11(a)) shall terminate, and the
transactions contemplated herein shall be abandoned, without further action by
any Party hereto. If this Agreement is terminated as provided herein: (i) each
Party will, upon request, redeliver all documents, work papers and other
material of any other Party (and all copies thereof) relating to the
transactions contemplated herein, whether so obtained before or after the
execution hereof, to the Party furnishing the same; (ii) the confidentiality
obligations of Section 6 (e) shall continue to be applicable; and (iii) except
as provided in this subsection, no Party shall have any liability for a breach
of any representation, warranty, agreement, covenant or other provision of this
Agreement, unless such breach was due to a willful or bad faith action or
omission of such Party or any representative, agent, employee or independent
contractor thereof.
Section 10
Survival and Indemnification
(a) Survival. The representations and warranties of each of the
Parties shall survive the Closing for a period of two (2) years from the Closing
Date.
(b) Indemnification by Purchaser. Purchaser agrees to indemnify
Seller from and against any and all loss, liability or damage suffered or
incurred by it by reason of (i) any untrue representation of, or breach of
warranty or covenant by, Purchaser in any part of this Agreement, provided,
however, that no claim for indemnity may be made pursuant to this subsection
after the second anniversary of the Closing Date; (ii) any nonfulfillment of any
covenant, agreement or undertaking of Purchaser in any part of this Agreement
which by its
35
terms is to remain in effect after the Closing and has not been specifically
waived in writing at the Closing by the Party or Parties hereof entitled to the
benefits thereof; and (iii) any obligations of Seller assumed by Purchaser in
the Liability Undertaking.
(c) Indemnification by Seller; Untrue Representation or Breach of
Warranty or Covenant. Seller agrees to indemnify Purchaser from and against any
and all loss, liability or damage suffered or incurred by it by reason of any
untrue representation of, or breach of warranty or covenant by Seller in this
Agreement, provided, however, that Purchaser shall make any claim(s) pursuant to
this subsection (c): (A) exclusively against the Escrow Fund (and then to the
Seller only in the event that the Escrow Fund is no longer available or lacks
sufficient funds) until the aggregate amount of all such claims exceeds
Five-Hundred Thousand Dollars ($500,000), and (B) either against the Escrow Fund
or directly against Seller, in Purchaser's sole discretion, once the amount of
all such claims exceeds Five-Hundred Thousand Dollars ($500,000), and provided,
further, that no claims for indemnity may be made pursuant to this subsection
after the second anniversary of the Closing Date.
(d) Indemnification by Parties; Closing Working Capital Balance
Adjustment. Seller and Purchaser agree to indemnify each other for the amount of
the Closing Working Capital Balance Adjustment determined pursuant to Section
3(c) and resulting in any shortfall or excess, as the case may be. Any shortfall
shall result in a dollar-for-dollar reduction in the Purchase Price in the full
amount of such shortfall. Purchaser shall, in its sole discretion, either make a
claim for such amount under the Escrow Agreement or directly in writing against
Seller, which shall be payable within ten (10) Business Days of receipt by
Seller. Any excess shall result in a dollar-for-dollar increase in the Purchase
Price in the full amount of such excess. Seller shall make a written demand to
Purchaser and such excess amount shall be payable within ten (10) Business Days
of receipt thereof by Purchaser.
(e) Indemnification by Seller; Other. Seller agrees to indemnify
Purchaser from and against: (i) any and all loss, liability or damage suffered
or incurred by it by reason of any nonfulfillment of any covenant, agreement or
undertaking of Seller in this Agreement which by its terms is to remain in
effect after the Closing and has not been specifically waived in writing at the
Closing by the Party or Parties entitled to the benefits thereof; (ii) any
obligations of Seller not specifically assumed by Purchaser in the Liability
Undertaking; and (iii) any and all costs and expenses, including, without
limitation, legal fees and expenses, in connection with enforcing the
indemnification rights of Purchaser pursuant to Sections 10(c), 10(d) and 10(e).
(f) Basket Amount. Notwithstanding anything in Sections 10(b), (c)
and 10(e) to the contrary, neither Party shall be entitled to any
indemnification under such subsections against the other Party if the aggregate
amount of all claims of the Indemnified Party (as defined below) thereunder is
less than One-Hundred Twenty-Five Thousand Dollars ($125,000) (the "Basket
Amount"), but if the aggregate amount of all such Indemnified Party's claims
exceeds the Basket Amount, then the Indemnified Party shall be entitled to full
indemnification of all claims and there shall be no Basket Amount.
Notwithstanding anything in this Agreement to the contrary, for the purposes of
calculating the Basket Amount, Purchaser and Seller agree that each dollar from
the very first dollar on the very first claim incurred by the Indemnified Party
shall be included in calculating the Basket Amount regardless of any threshold
set forth in any provision of this Agreement. The Parties do not intend that the
Basket Amount be deemed to be a definition of what is "material" for any purpose
in this Agreement. Neither Party shall be entitled to any indemnification under
the subsection hereof in excess of the Purchase Price. The foregoing
notwithstanding, there shall be no Basket Amount applicable to claims under
Section 10(d).
36
(g) Claims for Indemnification. Whenever any claim shall arise for
indemnification hereunder, the Party seeking indemnification (the "Indemnified
Party") shall promptly notify the Party from whom indemnification is sought (the
"Indemnifying Party") of the claim and, when known, the facts constituting the
basis for such claim. In the case of any such claim for indemnification,
hereunder resulting from or in connection with any claim or legal proceedings of
a third party, the notice to the Indemnifying Party shall specify, if known, the
amount or an estimate of the amount of the liability arising there from. The
Indemnified Party shall not settle or compromise any claim by a third party for
which it is entitled to indemnification hereunder without the prior written
consent of the Indemnifying Party, which shall not be unreasonably withheld. If
the Indemnifying Party is of the opinion that the Indemnified Party is not
entitled to indemnification, or is not entitled to indemnification in the amount
claimed in such notice, it shall deliver, within thirty (30) days after the
receipt of such notice, a written objection to such claim and written
specifications in reasonable detail of the aspects or details objected to, and
the grounds for such objection. If the Indemnifying Party shall file timely
written notice of objection to any claim for indemnification, the validity and
amount of such claim shall be determined by arbitration pursuant to Section
11(l) hereof. If timely notice of objection is not delivered or if a claim by an
Indemnified Party is admitted in writing by an Indemnifying Party or if an
arbitration award is made in favor of an Indemnified Party pursuant to Section
11(1), the Indemnified Party, as a non-exclusive remedy, shall have the right to
(i) receive from the Escrow Agent, upon five (5) days prior written notice to
the other party by the Escrow Agent of such release of funds, the amount of such
claim or award on a dollar-for-dollar basis in order to satisfy such claim or
award; (ii) set off the amount of such claim or award against any amount yet
owed, whether due or to become due, by the Indemnified Party or any subsidiary
thereof to any Indemnifying Party by reason of this Agreement or any agreement
or arrangement or contract to be entered into at the Closing; or (iii) recover
the amount of such claim or award by using a combination of subparagraphs (i)
and (ii).
(h) The Parties here agree and acknowledge that certain
representations, warranties, covenants and indemnification rights may survive
the term of the Escrow Agreement and, therefore, the availability of any Escrow
Funds (as defined therein). In the event that after termination of the Escrow
Agreement, a Party intends to make a claim to an Indemnifying Party pursuant to
a right hereunder, the Indemnified Party shall do so directly setting forth in a
written notice the basis for the claim and the amount sought. If the Parties
cannot mutually agree to resolve such claim within thirty (30) days after
receipt by the Indemnifying Party of such notice, the Indemnified Party may
pursue its remedies, under Section 11(l) of this Agreement.
Section 11
Miscellaneous Provisions
(a) Expense. Each of the Parties shall bear its own costs, fees and
expenses in connection with the negotiation, preparation, execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby, including without limitation fees, commissions and expenses
payable to brokers, finders, investment bankers, consultants, exchange or
transfer agents, attorneys, accountants and other professionals, whether or not
the transactions contemplated herein are consummated; provided, however, that
each Party shall bear fifty percent (50%) of the fees and expenses of the
Independent Accountant and each Party shall bear fifty percent (50%) of the fees
of the Escrow Agent.
(b) Amendment and Modification. Subject to applicable Law, this
Agreement may be amended or modified by the Parties at any time prior to the
Closing with respect to any of the
37
terms contained herein; provided, however, that all such amendments and
modifications must be in writing duly executed by all of the Parties.
(c) Waiver of Compliance; Consents. Any failure of a Party to comply
with any obligation, covenant, agreement or condition herein may be expressly
waived in writing by the Party entitled hereby to such compliance, but such
waiver or failure to insist upon strict compliance with such obligation,
covenant, agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure. No single or partial exercise
of a right or remedy shall preclude any other or further exercise thereof or of
any other right or remedy hereunder. Whenever this Agreement requires or permits
the consent by or on behalf of a Party, such consent shall be given in writing
in the same manner as for waivers of compliance.
(d) No Third Party Beneficiaries. Nothing in this Agreement shall
entitle any person or entity (other than an assignee of Purchaser or a Party
hereto and his, her or its respective successors and assigns permitted hereby)
to any claim, cause of action, remedy or right of any kind.
(e) Notices. All notices, requests, demands and other communications
to either party hereunder shall be in writing delivered by certified or
registered mail, return receipt requested; reputable overnight courier, by hand
and a copy by facsimile transmission and shall be given to:
if to Purchaser, to:
Parmalat Bakery Division
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0 Xxxxxx
Attn.: Xx. Xxx Xxxxxxx, President
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000 x 000
and
Parmalat Canada
000 Xxx Xxxx Xxxx
Xxxxx 0000, 00xx Xxxxx
Xxxxxxxxx, Xxxxxxx
X0X 0X0 Canada
Attn.: Xx. Xxxxx Xxxxxxxxxxx, Chief Financial Officer
Xx. Xxxxx Xxxxxxx, VP and General Counsel
Facsimile No.: 000-000-0000
Telephone No.: 000-000-0000
with a copy to:
Parmalat S.p.A.
Xxx X. Xxxxxx 00/00
00000 Xxxxxxxxxx
Xxxxx, Xxxxx
Attn.: Xx. Xxxxxx Xxxxx, Chief Financial Officer
Facsimile No.: (x00) 0000 000 000
Telephone No.: (x00) 0000 0000
38
BBLP - Pavia e Ansaldo
Beiten Xxxxxxxxx Xxxxx & Xxxxxxx
Moquet Borde & Associes
Xxxxx Xxxxxxxxxxxx, Professional Corporation
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn.: Gian Xxxxx Xxxx
Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000 0000
Telephone No.: (000) 000 0000
or to such other person or address as Purchaser shall furnish to the
other Parties in writing in accordance with this subsection.
if to Seller, to:
Delicious Brands, Inc.
0000 Xxxxx Xxxxxx
Xxx Xxxxxxx, Xxxxxxxx 00000
Attn.: Xx. Xxxxxx X. Xxxxxx, Chief Executive Officer
with a copy to:
Olshan, Grundman, Frome,
Xxxxxxxxxx & Xxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Xxxxxx Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
Telephone No.: (000) 000-0000
or to such other person or address as Seller shall furnish to the
other Parties in writing in accordance with this subsection.
All such notices, requests and other communications shall be deemed
received on the date of receipt by the recipient thereof if received prior to 5
p.m. in the place of receipt and such day is a Business Day in the place of
receipt. Otherwise, any such notice, request or communication shall be deemed
not to have been received until the next succeeding Business Day in the place of
receipt. For notice to be effective against the respective Parties, all copies
must be delivered as set forth above.
(f) Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the Parties and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned (whether
voluntarily, involuntarily, by operation of law or otherwise) by any of the
Parties without the prior written consent of the other parties; provided,
however, that Purchaser may assign this Agreement, in whole or in any part, and
from time to time as set forth in this Agreement.
(g) Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to the principles of
conflicts of law thereof.
(h) Counterparts. This Agreement may be executed simultaneously in
one or more
39
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
(i) Headings. The table of contents and the headings of the sections
and subsections of this Agreement are inserted for convenience only and shall
not constitute a part hereof.
(j) Entire Agreement. The Disclosure Schedule and the exhibits and
other writings referred to in this Agreement or in the Disclosure Schedule or
any such exhibit or other writing are part of this Agreement: together they
embody the entire agreement and understanding of the Parties in respect of the
transactions contemplated by this Agreement and together they are referred to as
"this Agreement" or the "Agreement". There are no restrictions, promises,
warranties, agreements, covenants or undertakings, other than those expressly
set forth or referred to in this Agreement. This Agreement supersedes all prior
agreements and understandings between the parties with respect to the
transaction or transactions contemplated by this Agreement and the subject
matter hereof (including without limitation (i) the letter of intent dated
October 7, 1999, from [Parmalat] to Seller, (ii) the memorandum dated October
27, 1999, from Seller to [Parmalat], (iii) the letter dated November 4, 1999,
from Pricewaterhouse Coopers to Seller, (iv) the Exclusivity Letter dated
October 27, 1999, between [Parmalat] and Seller and (v) the Confidentiality and
Non-Disclosure Agreement dated June 24, 1999, between [Parmalat] and Seller, and
all amendments and extensions thereof).
(k) Injunctive Relief. It is expressly agreed among the Parties that
monetary damages would be inadequate to compensate a party hereto for any breach
by any other Party of its covenants and agreements in Sections 6(c) and 6(e)
hereof. Accordingly, the Parties agree and acknowledge that any such violation
or threatened violation will cause irreparable injury to the non-breaching Party
and that, in addition to any other remedies which may be available, the
non-breaching Party shall be entitled to injunctive relief against the
threatened breach of Sections 6(c) and 6(e) hereof or the continuation of any
such breach without the necessity or proving actual damages and may seek to
specifically enforce the terms thereof.
(1) Arbitration. With the sole exception of the injunctive relief
contemplated by Section 11(k), any dispute, controversy or claim arising out of,
or relating to, this Agreement including, without limitation, the interpretation
or the breach, termination or invalidity thereof, shall be exclusively and
finally resolved by arbitration in accordance with the Commercial Rules of the
American Arbitration Association ("AAA") then obtaining. The arbitration panel
shall consist of three (3) arbitrators. The claimant shall propose one
arbitrator; the respondent shall propose the second arbitrator; and the third
arbitrator, who shall serve as chairman, shall be appointed by the AAA. If any
of the Parties shall fail to propose an arbitrator, such arbitrator shall be
appointed by the AAA (the "Appointing Authority"). The place of arbitration
shall be New York City, USA and the English language shall be used throughout
the arbitral proceedings. By agreeing to arbitrate, the Parties waive their
right to any form of appeal or recourse to a court of law or other judicial
authority, to the fullest extent permitted by law. Notwithstanding the
foregoing, this agreement to arbitrate shall not bar either party from seeking
temporary or provisional remedies in any Court of competent jurisdiction.
Judgment upon any arbitration award may be entered in any court having
jurisdiction thereon. The Parties hereby consent to the exclusive jurisdiction
of the state and federal courts located in New York county, New York State.
(m) Severability. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be
40
invalid, unenforceable, or void, the remainder of this Agreement and such
provisions as applied to other persons, places, and circumstances shall remain
in full force and effect.
[Signatures on following page]
41
IN WITNESS WHEREOF, the Parties have executed this Agreement as of
this 5th, day of April, 2000.
PURCHASER:
BF USB Inc.
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxxx
------------------- --------------------
Name: Xxxxx X. Xxxxxx Name: Xxxxx Xxxxxxxxxx
Title: President Title: Treasurer
ATTEST:
By: ____________________
Name:
Title:
STATE OF Missouri )
) ss.:
COUNTY OF St. Louis )
On this 5th day of April, 2000, before me personally came Xxxxx
Xxxxxx, _______________ of BF USB Inc., a Delaware corporation, to me known, and
known to me to be the person who executed the foregoing instrument, who, being
by me duly sworn, did depose and say that he is the President of BF USB Inc., a
Delaware corporation; and that he executed the foregoing instrument on behalf of
such corporation and affixed the corporate seal to the foregoing instrument by
order of the Board of Directors of said corporation and signed his name thereto
by like order.
/s/ Xxxxxxx Xxx Xxxxx
--------------------
Notary Public 3/10/2002
[seal]
42
SELLER:
DELICIOUS BRANDS, INC.
By: /s/ Xxx Xxxxxx
--------------------
Name: Xxx Xxxxxx
Title: President
ATTEST:
By: /s/ Xxxxxx Xxxxxx
----------------------
Name: Xxxxxx Xxxxxx
Title: CFO
STATE OF IL )
) ss.:
COUNTY OF DuPage )
On this 5th day of April, 2000, before me personally came Xxx
Xxxxxx, President of DELICIOUS BRANDS, INC., a Delaware corporation, to me
known, and known to me to be the person who executed the foregoing instrument,
who, being by me duly sworn, did depose and say that he is the President of
DELICIOUS BRANDS, INC., a Delaware corporation; and that he executed the
foregoing instrument on behalf of such corporation and affixed the corporate
seal to the foregoing instrument by order of the Board of Directors of said
corporation and signed his name thereto by like order.
/s/ Xxxxxx Xxxxxxx
--------------------
Notary Public
[seal]
43
