EXHIBIT 10.86
STOCK PURCHASE AGREEMENT
BETWEEN
SPECIALTY FOODS CORPORATION
AND
IBP, inc.
Dated as of March 9, 1999
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS
Section 1.1. Definitions 1
ARTICLE II PURCHASE AND SALE
Section 2.1. Purchase and Sale of the Shares 8
ARTICLE III PURCHASE PRICE
Section 3.1. Purchase Price and Payment 8
Section 3.2. Purchase Price Adjustment 8
ARTICLE IV CLOSING
Section 4.1. Closing Date 10
Section 4.2. Payment on the Closing Date 10
Section 4.3. Buyer's Additional Closing Date Deliveries 10
Section 4.4. Seller's Closing Date Deliveries 10
Section 4.5. Additional Closing Matters and Deliveries 12
ARTICLE VREPRESENTATIONS AND WARRANTIES OF SELLER
Section 5.1. Incorporation of Seller 12
Section 5.2. Incorporation; Capital Structure of the
Companies; Power and Authority 12
Section 5.3. Subsidiaries and Investments 13
Section 5.4. Authority of Seller; Conflicts 13
Section 5.5. Financial Statements 14
Section 5.6. Operations Since Financial Statement Date 14
Section 5.7. Taxes 14
Section 5.8. Governmental Permits 15
Section 5.9. Real Property 15
Section 5.10. Personal Property Leases 16
Section 5.11. Intellectual Property 16
Section 5.12. Title to Property 16
Section 5.13. No Violation, Litigation or Regulatory
Action 17
Section 5.14. Contracts 17
Section 5.15. Status of Contracts 18
Section 5.16. No Brokers 18
Section 5.17. ERISA and Employee Benefits 18
Section 5.18. Environmental Matters 20
Section 5.19. Employee Relations and Agreements 20
Section 5.20. Insurance 21
Section 5.21. Assets Used in the Business 21
Section 5.22. Capacity of the Business 21
Section 5.23. Transactions with Affiliates 21
ARTICLE VIREPRESENTATIONS AND WARRANTIES OF BUYER
Section 6.1. Incorporation of Buyer 22
Section 6.2. Authority of Buyer; Conflicts 22
Section 6.3. No Violation, Litigation or Regulatory
Action 23
ARTICLE VIIACTION PRIOR TO THE CLOSING DATE
Section 7.1. Access to Information 23
Section 7.2. Notifications 24
Section 7.3. Consents of Third Parties; Governmental
Approvals 24
Section 7.4. Operations Prior to the Closing Date 24
Section 7.5. Elimination of Inter-Company and Affiliate
Accounts 26
Section 7.6. Cash Management 26
Section 7.7. Property Transfers 26
Section 7.8. Antitrust Law Compliance 26
Section 7.9. Guaranties 26
ARTICLE VIII ADDITIONAL AGREEMENTS
Section 8.1. Insurance 27
Section 8.2. Tax Matters 27
Section 8.3. Employee Matters 32
Section 8.4. Covenant Not to Compete 32
Section 8.5. Release of Other Encumbrances 33
Section 8.6. Lease of Fort Worth Office Space 33
ARTICLE IXCONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
Section 9.1. No Misrepresentation or Breach of Covenants
and Warranties 33
Section 9.2. No Restraint 34
Section 9.3. Necessary Approvals 34
Section 9.4. Accounts Receivable Purchase Agreement 34
Section 9.5. Release of Encumbrances 34
ARTICLE XCONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
Section 10.1. No Misrepresentation or Breach of Covenants
and Warranties 35
Section 10.2. No Restraint 35
Section 10.3. Necessary Governmental Approvals 35
Section 10.4. Accounts Receivable Purchase Agreement 35
ARTICLE XI INDEMNIFICATION
Section 11.1. Indemnification by Seller 36
Section 11.2. Indemnification by Buyer 37
Section 11.3. Notice of Claims 37
Section 11.4. Third Person Claims 38
Section 11.5. Additional Limitations 40
ARTICLE XII TERMINATION
Section 12.1. Termination 41
Section 12.2. Notice of Termination 42
Section 12.3. Effect of Termination 42
Section 12.4. Employees 42
ARTICLE XIII GENERAL PROVISIONS
Section 13.1. Survival 42
Section 13.2. Confidential Nature of Information 43
Section 13.3. No Public Announcement 43
Section 13.4. Notices 43
Section 13.5. Successors and Assigns 44
Section 13.6. Access to Records after Closing 45
Section 13.7. Entire Agreement; Amendments 45
Section 13.8. Interpretation 46
Section 13.9. Waivers 47
Section 13.10. Expenses 47
Section 13.11. Partial Invalidity 47
Section 13.12. Execution in Counterparts 47
Section 13.13. Further Assurances 47
SECTION 13.14. GOVERNING LAW 48
Section 13.15. Disclaimer of Warranties 48
Section 13.16. Submission to Jurisdiction 48
List of Schedules
Schedules
I Excluded Real Property
3.2(b) Inventory Valuation Methods and Procedure
5.4 No Conflicts (Seller)
5.5 Financial Statements
5.6 Operations Since Financial Statement Date of the
Companies
5.7 Taxes
5.8 Governmental Permit Proceedings
5.9 Real Property
5.10 Personal Property Leases
5.11(a) Intellectual Property
5.11(b) Software
5.11(c) Right, Title and Interest in Intellectual Property
5.11(d) Infringement of Intellectual Property
5.11(e) Challenge to Intellectual Property Rights
5.11(f) Third Party Infringement
5.11(g) Superdice
5.12 Title to Property
5.13 Violation, Litigation or Regulatory Action of the
Companies
5.14 Contracts
5.15 Status of Contracts
5.17 ERISA and Employee Benefits
5.18 Environmental Matters
5.19 Employee Matters
5.21 Assets Used in the Business
5.23 Transactions with Affiliates
6.2 No Conflicts (Buyer)
6.3 Violation, Litigation or Regulatory Action of Buyer
7.4 Operations Prior to Closing Date
7.9 Guaranties
8.3 Special Payments
8.5 Other Encumbrances
9.3 Necessary Approvals (Seller)
11.1 Aggregate Limits
List of Exhibits
Exhibits
A Accounts Receivable Purchase Agreement
B Assignment and Assumption Agreement
C Escrow Agreement
D Legal Opinion of Counsel to Seller
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT dated as of March 9, 1999
between Specialty Foods Corporation, a Delaware corporation
("Seller"), and IBP, inc., a Delaware corporation (the "Buyer").
W I T N E S S E T H:
WHEREAS, Seller is the owner of all the outstanding
shares of capital stock of HMFS Holdings, Inc., a Delaware
corporation ("Holdco"), and Holdco is the owner of all of the
outstanding shares of capital stock of H&M Food Systems Company,
Inc., a Delaware corporation ("Opco" and, together with Holdco,
the "Companies");
WHEREAS, Opco manufactures pre-cooked, customized
specialty meats and prepared foods for foodservice and food
manufacturer customers;
WHEREAS, Seller desires to sell to Buyer, and Buyer
desires to purchase from Seller, all of the capital stock of
Holdco, on the terms and subject to the conditions set forth
herein;
NOW, THEREFORE, in consideration of the mutual cove
nants and agreements hereinafter set forth, it is hereby agreed
between Seller and Buyer as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In this Agreement, the
following terms have the meanings specified or referred to in
this Section 1.1 and shall be equally applicable to both the
singular and plural forms. Any agreement referred to below shall
mean such agreement as amended, supplemented and modified from
time to time to the extent permitted by the applicable provisions
thereof and by this Agreement.
"Accounts Receivable Closing" has the meaning specified
in Section 1.04 of the Accounts Receivable Purchase Agreement.
"Accounts Receivable Purchase Agreement" means that
certain agreement in the form attached hereto as Exhibit A.
"Accounts Receivable Purchase Price" has the meaning
specified in Section 1.03(a) of the Accounts Receivable Purchase
Agreement.
"Affiliate" means, with respect to any Person, any
other Person that directly or indirectly controls, is controlled
by or is under common control with such Person.
"Assignment and Assumption Agreement" means an
assignment and assumption agreement between Opco and Seller
substantially in the form attached hereto as Exhibit B.
"Balance Sheet" means the audited consolidated balance
sheet of the Companies at December 31, 1998 included in Schedule
5.5.
"Business" means Opco's business of manufacturing pre-
cooked, customized specialty meats and prepared foods as
conducted on the date hereof at the Owned Real Property and the
Leased Real Property.
"Business Agreements" has the meaning specified in
Section 5.15.
"Buyer" has the meaning specified in the first
paragraph of this Agreement.
"Buyer Ancillary Agreements" means all agreements,
instruments and documents being or to be executed and delivered
by Buyer under this Agreement or in connection herewith,
including the Accounts Receivable Purchase Agreement.
"Buyer Group Member" means (i) Buyer and its
Affiliates, (ii) directors, officers, employees, agents,
attorneys and consultants of Buyer and its Affiliates and (iii)
the successors and assigns of the foregoing.
"CERCLA" means the Comprehensive Environmental
Response, Compensation and Liability Act, 42 U.S.C. 9601 et
seq., any amendments thereto, any successor statutes, and any
regulations promulgated thereunder.
"Claim Notice" has the meaning specified in
Section 11.3(a).
"Closing" means the closing of the transfer of the
Shares from Seller to Buyer in exchange for the Purchase Price.
"Closing Date" has the meaning specified in
Section 4.1.
"Closing NOL Carryovers" has the meaning specified in
Section 5.7(d).
"Closing Statement" has the meaning specified in
Section 3.2(b).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Companies" has the meaning specified in the first
recital of this Agreement.
"Confidentiality Agreement" means the Confidentiality
Agreement dated January 18, 1999 between Buyer and Seller.
"Copyrights" means United States and foreign registered
or unregistered copyrights, and pending applications to register
the same.
"Court Order" means any ruling, judgment, order, award
or decree of any foreign, federal, state, local or other court,
tribunal or Governmental Body and any award in any arbitration
proceeding.
"Encumbrance" means any lien, claim, charge, license,
right to use, security interest, mortgage, pledge, easement,
conditional sale or other title retention agreement, defect in
title or other restrictions.
"Environmental Laws" means any federal, state or local
law or regulation (a) relating to the management, control, and
reporting of pollutants, contaminants, hazardous wastes, solid
wastes, hazardous materials, hazardous substances, and petroleum
or petroleum-related substances in the environment (including,
without limitation, ambient air, surface water, groundwater, or
land) and within above- and below-ground structures and
facilities, (b) providing definitions of solid or hazardous waste
or hazardous or toxic substances or materials, including (without
limiting the generality of the foregoing) asbestos, petroleum
(including, without limitation, oil, used oil, waste oil,
gasoline, diesel and petroleum based fuels), petroleum products
and by-products, petroleum wastes, petroleum contaminated soils,
any substance, material or waste which is regulated as
"hazardous"or "toxic," (or under any similar designation under
federal, state or local law) any material, substance or waste
defined as a "hazardous waste" pursuant to Section 1004 of the
Resource Conservation and Recovery Act (42 U.S.C. 6901, et
seq.) ("RCRA"), any material, substance or waste defined as a
"hazardous substance" pursuant to Section 101 of CERCLA, or any
material, substance or waste defined as a "regulated substance"
pursuant to Subchapter IX of the solid Waste Disposal Act (42
U.S.C. 6991, et seq.) (collectively "Hazardous Substances")
and, (c) otherwise relating to emissions, discharges, releases
or threatened releases of pollutants or Hazardous Substances into
the environment, or otherwise regulating or imposing standards
with respect to the storage, handling, transport or disposal of
Hazardous Substances.
"Escrow Agreement" means an escrow agreement among
Buyer, Seller and LaSalle National Bank, as escrow agent (the
"Escrow Agent") substantially in the form attached hereto as
Exhibit C; subject to revisions and modifications made at the
request of the Escrow Agent.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Excluded Assets" means property owned by Opco located
in the City of Fort Worth, Tarrant County, State of Texas
described in Schedule I and all fixtures (but excluding any
personal property) owned by Opco and situated on, or located at,
such real property, which will be transferred to Seller pursuant
to the Assignment and Assumption Agreement.
"Excluded Liabilities" means all liabilities and
obligations pertaining to the Excluded Assets (excluding all
liabilities and obligations arising out of or relating to the
operation or conduct of the Business at any time on, at or
utilizing the Excluded Assets, but including all liabilities and
obligations arising out of or relating to environmental
conditions that relate to the real property comprising the
Excluded Assets), which will be assumed by Seller pursuant to the
Assignment and Assumption Agreement.
"Excluded Taxes" has the meaning specified in Section
8.2(a)(i).
"Expenses" means any and all reasonable expenses
incurred in connection with investigating, defending or asserting
any claim, action, suit or proceeding incident to any matter
indemnified against hereunder (including court filing fees, court
costs, arbitration fees or costs, witness fees and reasonable
fees and disbursements of legal counsel, investigators, expert
witnesses, accountants and other professionals).
"Financial Statement Date" means December 31, 1998.
"GAAP" means United States generally accepted
accounting principles, consistently applied by the Companies, in
effect at the date of the financial statement to which it refers.
"Governmental Body" means any foreign, federal, state,
local or other governmental authority or regulatory body.
"Governmental Permits" has the meaning specified in
Section 5.8.
"Guaranties" has the meaning specified in Section 7.9.
"Holdco" has the meaning specified in the first recital
to this Agreement.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Indemnified Party" has the meaning specified in
Section 11.3(a).
"Indemnitor" has the meaning specified in
Section 11.3(a).
"Independent Accounting Firm" has the meaning specified
in Section 3.2(d).
"Intellectual Property" means Copyrights, Patent
Rights, Trademarks and Trade Secrets.
"Intercompany Accounts" has the meaning specified in
Section 7.5.
"Knowledge of Seller" means, as to a particular matter,
the actual knowledge of ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇,
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Art ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and shall include knowledge of facts
that any such person would have discovered after due inquiry.
"Leased Real Property" has the meaning specified in
Section 5.9.
"Losses" means any and all losses, costs, obligations,
liabilities, settlement payments, awards, judgments, fines,
penalties, damages, deficiencies or other charges, but with
respect to any Buyer Group Member or any Seller Group Member
shall not under any circumstances include any special, exemplary,
punitive or consequential damages (including loss of profit or
revenues) suffered or incurred by such Buyer Group Member or
Seller Group Member; provided, however, that the exclusion of
special damages shall not be interpreted to include actual out-of-
pocket damages.
"Material Adverse Effect" means a material adverse
effect on the Business, results of operations or financial
condition of the Companies taken as a whole, but shall exclude
(a) any change or effect relating or due to general economic
conditions or industry-wide conditions, or (b) any change or
effect resulting from the announcement by Seller of its intention
to sell the Companies or relating to the identity of Buyer.
"Minimum NOL Amount" has the meaning specified in
Section 5.7(d).
"Opco" has the meaning specified in the first recital
to this Agreement.
"Owned Real Property" has the meaning specified in
Section 5.9.
"Patent Rights" means United States and foreign
patents, patent applications, continuations, continuations-in-
part, divisions or reissues.
"Pension Plan" means any pension plan, as defined in
Section 3(2) of ERISA.
"Permitted Encumbrances" means (a) liens for Taxes and
other governmental charges and assessments which are not yet due
and payable, (b) liens of landlords and liens of carriers,
warehousemen, mechanics and materialmen and other like liens
arising in the ordinary course of business or arising in
connection with ongoing capital expenditure projects at the Owned
Real Property in accordance with the Companies' current business
plan for sums not yet due and payable, (c) liens disclosed in the
financial statements included in Schedule 5.5 and (d) other
Encumbrances or imperfections of title relating to an asset or
property which do not materially detract from the value of such
asset or property, and (e) all exceptions to title listed in
Schedule B (other than exceptions listed in numbers 2 through 8
of Schedule B of each policy and 9(h) and 9(i) of the Title
Commitment relating to the Lampassas property) reflected on the
TLTA Title Commitments previously delivered to Buyer with an
effective date of January 12, 1999 for the Lampassas property and
December 31, 1998 for the North Richland Hills property.
"Person" means any individual, corporation, partner
ship, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization or
Governmental Body.
"Post-Closing Adjustment" has the meaning specified in
Section 3.2(a).
"Post-Closing Adjustment Calculation" has the meaning
specified in Section 3.2(b).
"Purchase Price" has the meaning specified in Sec
tion 3.1(a).
"Purchased Accounts Receivable" shall have the meaning
specified in Section 1.02(a) of the Accounts Receivable Purchase
Agreement.
"Requirements of Law" means any duty or obligation
imposed by or under any foreign, federal, state and local laws,
statutes, regulations, rules, codes or ordinances enacted,
adopted, issued or promulgated by any Governmental Body.
"Security Documents" shall mean (i) that certain Term
Loan Agreement, dated as of March 16, 1998, among Seller, various
financial institutions party thereto, DLJ Capital Funding, Inc.,
as syndication agent and collateral agent, ABN Amro Bank, N.V.,
as administrative agent, and Summit Bank, as documentation agent
(the "Term Loan Agreement"), (ii) that certain Revolving Credit
Agreement, dated as of March 16, 1998, among Seller, Opco,
certain other subsidiaries of Seller, various financial
institutions party thereto, DLJ Capital Funding, Inc., as
syndication agent and collateral agent, ABN Amro Bank, N.V., as
administrative agent, and Summit Bank, as documentation agent
(the "Revolving Credit Agreement"), (iii) that certain Amended
and Restated Accounts Receivable Sale Agreement, dated as of
November 16, 1994, among SFFC, the Seller and certain
subsidiaries of the Seller (including Opco) (the "Accounts
Receivable Facility") and (iv) the collateral documents and
agreements entered into in connection with the foregoing Term
Loan Agreement, Revolving Credit Agreement and Accounts
Receivable Facility.
"Seller" has the meaning specified in the first
paragraph of this Agreement.
"Seller Ancillary Agreements" means all agreements,
instruments and documents being or to be executed and delivered
by Seller under this Agreement or in connection herewith,
including the Accounts Receivable Purchase Agreement.
"Seller Group Member" means (i) Seller and its
Affiliates, (ii) directors, officers, employees, agents,
attorneys and consultants of Seller and its Affiliates and (iii)
the successors and assigns of the foregoing.
"Seller Parent" means Specialty Foods Acquisition
Corporation, a Delaware corporation.
"Seller Tax Group" means the "affiliated group" (as
defined in Section 1504(a) of the Code without regard to the
limitations contained in Section 1504(b) of the Code) that
includes Seller.
"SFFC" means Specialty Foods Finance Corporation, a
Delaware corporation.
"Shares" has the meaning specified in Section 2.1.
"Software" means computer software programs and
software systems, including, without limitation, all databases,
compilations, tool sets, compilers, higher level "proprietary"
languages, related documentation and materials, whether in source
code, object code or human readable form.
"Special Payments" has the meaning specified in
Section 8.3(b).
"Straddle Period" means any taxable year or period
beginning before and ending after the Closing Date.
"Tax" means any federal, state, local or foreign
income, alternative or add-on minimum, gross receipts, property,
sales, use, transfer, gains, license, excise, franchise,
employment, payroll, withholding, ad valorem or value-added tax,
or any other tax, custom, duty, governmental fee or other like
assessment or charge of any kind whatsoever, together with any
interest or penalty, addition to tax or additional amount imposed
by any Governmental Body.
"Tax Package" has the meaning specified in Section
8.2(b)(iii).
"Tax Return" means any return, report or similar
statement required to be filed with respect to any Tax (including
any attached schedules), including any information return, claim
for refund, amended return or declaration of estimated Tax.
"Tax Sharing Agreement" shall mean any written or
unwritten agreement or arrangement for the allocation or payment
of Tax liabilities or payment for Tax benefits with respect to a
consolidated, combined or unitary Tax Return which Tax Return
includes the Companies.
"Third Party Claim" has the meaning specified in
Section 11.4(a).
"TLTA Title Commitments" means the Commitments for
Title Insurance issued by ▇▇▇▇▇▇▇ Title Guaranty Company with
respect to the Owned Real Property (with an effective date of
January 12, 1999 for the Lampassas property and December 31, 1998
for the North Richland Hills property), true and correct copies
of which have previously been delivered to Buyer.
"Trademarks" means registered United States, state and
foreign trademarks, service marks and trade names, and pending
applications to register the foregoing.
"Trade Secrets" means confidential ideas, trade
secrets, know-how, concepts, methods, processes, inventions,
formulae, reports, data, customer lists, mailing lists, business
plans, or other proprietary information that provides the owner
with a competitive advantage.
"Welfare Plan" means any welfare plan, as defined in
Section 3(1) of ERISA.
"Working Capital" means the Total Current Assets of the
Companies, on a consolidated basis, less the Total Current
Liabilities of the Companies, on a consolidated basis determined
in accordance with GAAP consistently applied by the Companies.
Total Current Assets shall consist of (i) Cash, (ii) Trade
Accounts Receivable, net of applicable reserves (including,
without limitation, such Trade Accounts Receivable that have been
conveyed to SFFC by Opco pursuant to the Accounts Receivable
Facility), (iii) Current Inventories and (iv) Other Current
Assets but specifically excluding current Tax assets. Total
Current Liabilities shall (x) consist of (i) Accounts Payable,
(ii) Accrued Expenses and Other Current Liabilities and (iii)
Current portion of Capitalized Leases and (y) include those
payments listed under Retention Bonus A, Retention Bonus B and
Deferred Bonus on Attachment 1 to Schedule 5.19 and (z) exclude
those payments listed under Change of Control Severance on
Attachment 1 to Schedule 5.19.
ARTICLE II
PURCHASE AND SALE
Section 2.1. Purchase and Sale of the Shares. Upon
the terms and subject to the conditions of this Agreement, at
Closing, Seller shall sell, transfer, assign, convey and deliver
to Buyer, and Buyer shall purchase and accept from Seller, all of
the issued and outstanding shares of capital stock of Holdco
(collectively, the "Shares").
ARTICLE III
PURCHASE PRICE
Section 3.1. Purchase Price and Payment. Subject to
adjustment in accordance with Section 3.2, the purchase price for
the Shares (the "Purchase Price") shall be an amount equal to
$132,000,000, decreased dollar for dollar by the Accounts
Receivable Purchase Price paid to SFFC at the Accounts Receivable
Closing under Section 1.03(a) of the Accounts Receivable Purchase
Agreement.
Section 3.2. Purchase Price Adjustment. (a) Seller
and Buyer agree that the Purchase Price shall be adjusted
following the Closing (the "Post-Closing Adjustment") as follows:
(i) the Purchase Price shall be decreased dollar for
dollar by the amount, if any, by which Working Capital set
forth on the Closing Statement is less than $17,500,000; and
(ii) the Purchase Price shall be (x) increased dollar
for dollar by the amount, if any, by which the Accounts
Receivable Purchase Price for the Purchased Accounts
Receivable is decreased after the Closing pursuant to
Section 1.03(b) of the Accounts Receivable Purchase
Agreement, or (y) decreased dollar for dollar by the amount,
if any, by which the Accounts Receivable Purchase Price for
the Purchased Accounts Receivable is increased after the
Closing pursuant to Section 1.03(b) of the Accounts
Receivable Purchase Agreement.
(b) A statement of the Working Capital at the end of
business on the Closing Date (the "Closing Statement") shall be
prepared by Buyer and furnished to Seller within sixty (60) days
after the Closing and shall include a calculation of the amount
of the Post-Closing Adjustment, if any, required pursuant to the
provisions of Section 3.2(a) all determined in accordance with
GAAP consistently applied by the Companies (the "Post-Closing
Adjustment Calculation"). In connection with the preparation of
the Closing Statement, the parties shall jointly take a complete
physical count of the Inventories of the Business in accordance
with the terms of the policies and procedures set forth in
Schedule 3.2(b).
(c) Seller and its independent accountants, KPMG Peat
Marwick LLP, shall have the right to review the books and records
and supporting work papers of Buyer for the purpose of verifying
the Closing Statement and the Post-Closing Adjustment
Calculation. Seller shall have a period of thirty (30) days
after receipt of the Closing Statement and the Post-Closing
Adjustment Calculation to present in writing to Buyer any
objections thereto, setting forth the specific item on the
Closing Statement to which each such objection relates and the
specific basis for each such objection (the "Written
Objections"). The Closing Statement and the Post-Closing
Adjustment Calculation shall be deemed to be acceptable to
Seller, and shall become final and binding on the parties, except
to the extent that Seller shall have made a specific written
objection thereto within such thirty (30) day period. If Seller
shall raise any such objection within such thirty (30) day
period, then Buyer and Seller shall attempt in good faith to
resolve any dispute concerning the item(s) subject to such
objection. Upon failure to resolve any such dispute within
thirty (30) days after the date on which such objection is
delivered, at the request of either party, the same shall be
submitted to Ernst & Young LLP, certified public accountants, or,
if such firm declines to act in such capacity or at the time of
such dispute has a significant ongoing relationship with either
Seller or Buyer or their respective Affiliates, to such other
nationally recognized firm of independent public accountants,
then having no significant ongoing relationship with any such
Person, as shall be mutually acceptable to Seller and Buyer;
provided, however, that if Seller and Buyer shall fail to agree
on mutually acceptable independent public accountants within ten
(10) days after Ernst & Young LLP has declined to act in such
capacity, then such dispute shall be resolved by a nationally
recognized "Big Five" firm of independent public accountants
designated by the American Arbitration Association. Ernst &
Young LLP, or such other accounting firm, as the case may be, is
herein referred to as the "Independent Accounting Firm". The
Independent Accounting Firm shall be instructed to use its best
efforts to render a decision as to all items in dispute within
thirty (30) days of submission, and the parties agree to
cooperate with each other and each other's authorized
representatives and with the Independent Accounting Firm in order
that any and all items in dispute shall be resolved as soon as
practicable. The decision shall be based solely upon the
Post-Closing Adjustment Calculation, the Written Objections,
supporting work papers and any written position papers submitted
by the parties within five (5) days of submission of the dispute
to the Independent Accounting Firm. The determination of the
Independent Accounting Firm concerning any item in dispute shall
be final and binding on the parties without further right of
appeal. The fees and expenses of the Independent Accounting Firm
incurred in the resolution of such dispute shall be borne by the
parties in proportion to their relative success, as determined by
the Independent Accounting Firm, in connection with the final
disposition of the disputed items. Within ten (10) days after the
Post-Closing Adjustment is finally determined as hereinabove
provided, Buyer, in the case of an adjustment increasing the
Purchase Price, or Seller, in the case of an adjustment
decreasing the Purchase Price, shall pay to the other the amount
of the required Post-Closing Adjustment in accordance with
Section 3.2; provided that Buyer, in the case of an adjustment
decreasing the Purchase Price, shall have the right (but not the
obligation) to obtain the amount of the required Post-Closing
Adjustment by proper claim under the Escrow Agreement.
ARTICLE IV
CLOSING
Section 4.1. Closing Date. The Closing shall be
consummated on March 29, 1999, or as soon thereafter as
practicable, but in no event later than the first Monday after
the conditions set forth in Articles IX and X have been satisfied
or waived; provided that in the event the transactions
contemplated hereby receive "early termination" of the waiting
period under the HSR Act the closing shall be consummated no
later than the first Monday that is at least the third business
day after the conditions set forth in Articles IX and X have been
satisfied or waived, at the offices of Sidley & Austin, Chicago,
Illinois, or at such other place as shall be agreed upon by Buyer
and Seller. The date on which the Closing is actually held is
referred to herein as the "Closing Date."
Section 4.2. Payment on the Closing Date. Subject to
fulfillment or waiver of the conditions set forth in Article IX,
at Closing (i) Buyer shall pay Seller an amount equal to the
Purchase Price, less $5,000,000, by wire transfer of immediately
available funds to the account or accounts specified by Seller in
a written notice delivered to Buyer and (ii) Buyer shall make a
$5,000,000 escrow deposit under the Escrow Agreement by wire
transfer of immediately available funds to the account specified
in the Escrow Agreement.
Section 4.3. Buyer's Additional Closing Date
Deliveries. Subject to fulfillment or waiver of the conditions
set forth in Article IX, at Closing Buyer shall deliver to Seller
all of the following:
(a) Certificate of the secretary or an assistant
secretary of Buyer, dated the Closing Date, in form and
substance reasonably satisfactory to Seller, as to (i)
the resolutions of the board of directors of Buyer
authorizing the execution and performance of this
Agreement, any Buyer Ancillary Agreement and the
transactions contemplated hereby and thereby, and (ii)
incumbency and signatures of the officers of Buyer
executing this Agreement and any Buyer Ancillary
Agreement;
(b) The certificate contemplated by Section 10.1,
duly executed by a duly authorized officer of Buyer;
and
(c) If not previously delivered to Seller, all
other documents, certificates, instruments and writings
required pursuant hereto to be delivered by or on
behalf of Buyer at or before Closing.
Section 4.4. Seller's Closing Date Deliveries.
Subject to fulfillment or waiver of the conditions set forth in
Article X, at Closing Seller shall deliver to Buyer all of the
following:
(a) Certificate of the secretary or an assistant
secretary of Seller, dated the Closing Date, in form
and substance reasonably satisfactory to Buyer, as to
(i) the Certificate of Incorporation of Seller and the
lack of amendments thereto, (ii) the By-laws of Seller,
(iii) the resolutions of the board of directors of
Seller authorizing the execution and performance of
this Agreement, any Seller Ancillary Agreement and the
transactions contemplated hereby and thereby and (iv)
incumbency and signatures of the officers of Seller
executing this Agreement and any Seller Ancillary
Agreement;
(b) The certificates representing all of the
Shares, duly endorsed in blank or accompanied by duly
executed stock powers;
(c) The certificate contemplated by Section 9.1,
duly executed by a duly authorized officer of Seller;
(d) The written resignations of the officers
designated by Buyer at least three business days prior
to Closing and all directors of each of the Companies;
(e) The stock book, stock ledger, minute books,
corporate seal and other corporate books and records of
each of the Companies;
(f) Executed documents or other instruments in
form reasonably satisfactory to Buyer that release the
Encumbrances on the Shares and the assets of the
Companies and any further liabilities under the
Security Documents;
(g) If not previously delivered to Buyer, all
other documents, certificates, instruments and writings
required pursuant hereto to be delivered by or on
behalf of Seller at or before Closing;
(h) An executed termination of the Shared Space
and Services Agreement, dated November 16, 1998 between
SFFC and Opco, pursuant to which Opco shall be relieved
of any present or future obligation or liability
thereunder;
(i) Evidence of compliance by the Seller of its
agreement set forth in Section 5.7(c);
(j) Legal opinion of counsel to Seller substantially
in the form attached hereto as Exhibit D; and
(k) Evidence that Opco's participation in the Accounts
Receivable Facility will be terminated as of the Closing
Date and that, after the Closing Date, Opco shall no longer
be bound thereby nor have any liability thereunder.
Section 4.5. Additional Closing Matters and
Deliveries. (a) The transactions contemplated by the
Assignment and Assumption Agreement shall have been
consummated prior to the Closing or effective simultaneously
with the Closing.
(b) The transactions contemplated by the Accounts
Receivable Purchase Agreement shall be consummated effective
simultaneously with the Closing.
(c) The parties hereto and the Escrow Agent shall
enter into the Escrow Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF SELLER
Notwithstanding anything to the contrary in this
Article V, no representation or warranty is made in this
Agreement with respect to the Excluded Assets and Excluded
Liabilities.
As an inducement to Buyer to enter into this Agreement
and to consummate the transactions contemplated hereby, Seller
represents and warrants to Buyer and agrees as follows:
Section 5.1. Incorporation of Seller. Seller is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware.
Section 5.2. Incorporation; Capital Structure of the
Companies; Power and Authority. (a) Each of the Companies is a
corporation duly incorporated, validly existing and in good
standing under the laws of the jurisdiction of its incorporation.
Each of the Companies is duly qualified to transact business and
is in good standing in each jurisdiction in which the nature of
property owned or leased by it or the conduct of its business
requires it to be so qualified. Each of the Companies has the
power and authority to own or lease and operate its assets and to
carry on its business in the manner that it was conducted prior
to the date hereof. Seller has previously delivered or made
available to Buyer correct and complete copies of the certificate
of incorporation and by-laws, as currently in effect, of each of
the Companies.
(b) The authorized capital stock of Holdco consists of
10,000 shares of capital stock, par value $.01 per share, of
which 100 shares of common stock are issued and outstanding.
Except for this Agreement and the pledge of the Shares pursuant
to certain of the Security Documents, there are no agreements,
arrangements, options, warrants, calls, rights or commitments of
any kind relating to the issuance, sale, purchase or redemption
of any Shares. All of the Shares have been validly issued, are
fully paid, nonassessable and free of preemptive rights and are
owned by Seller free and clear from all Encumbrances, other than
the pledge of the Shares pursuant to certain of the Security
Documents, which pledge shall be released on or before the
Closing Date. The Shares are not subject to any voting trust,
dividend agreement or other contract, agreement or arrangement
relating to the voting, dividend or disposition of the Shares.
There are no calls, puts, options, warrants, subscriptions or any
other agreement relating to the capital stock of Holdco.
(c) The authorized capital stock of Opco consists of
200,000 shares, consisting of 100,000 shares of common stock, par
value $.01 per share, of which 1,000 shares are issued and
outstanding, and 100,000 shares of preferred stock, par value
$.01 per share, none of which are issued and outstanding. Except
for this Agreement and the pledge of the outstanding shares of
capital stock of Opco pursuant to certain of the Security
Documents, there are no agreements, arrangements, options,
warrants, calls, rights or commitments of any kind relating to
the issuance, sale, purchase or redemption of any shares of
capital stock of Opco. All of the outstanding shares of capital
stock of Opco have been validly issued, are fully paid,
nonassessable and free of preemptive rights and are owned by
Holdco free and clear from all Encumbrances, other than the
pledge of such shares of capital stock pursuant to certain of the
Security Documents, which pledge shall be released on or before
the Closing Date. The outstanding shares of capital stock of
Opco are not subject to any voting trust, dividend agreement or
other contract, agreement or arrangement relating to the voting,
dividend or disposition of such shares. There are no calls,
puts, options, warrants, subscriptions or any other agreement
relating to the capital stock of Opco.
Section 5.3. Subsidiaries and Investments. Except for
ownership of capital stock of Opco by Holdco, the Companies do
not, directly or indirectly, own, of record or beneficially, any
outstanding equity interests or investment in any Person.
Section 5.4. Authority of Seller; Conflicts. (a)
Seller has the power and authority to execute and deliver this
Agreement and each of the Seller Ancillary Agreements and to
perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Seller Ancillary
Agreements by Seller and the performance of Seller's obligations
hereunder and thereunder have been duly authorized and approved
by Seller's board of directors and do not require any further
authorization or consent of Seller or its stockholders. This
Agreement has been duly executed and delivered by Seller and
(assuming the valid authorization and due execution and delivery
of this Agreement by Buyer) is the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance
with its terms, and each of the Seller Ancillary Agreements, upon
execution and delivery by Seller will be (assuming the valid
authorization, execution and delivery by Buyer, where Buyer is a
party, or the other party or parties thereto) a legal, valid and
binding obligation of Seller, enforceable against Seller in
accordance with its terms, in each case subject to bankruptcy,
insolvency, reorganization, moratorium and similar laws of
general application relating to or affecting creditors' rights
and to general equity principles (regardless of whether in equity
or at law).
(b) Except as set forth in Schedule 5.4, the execu
tion, delivery and performance by Seller of this Agreement or any
of the Seller Ancillary Agreements will not:
(i) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute (with
or without the giving of notice, the passage of time or
both) a default, an event of default or an event
creating rights of acceleration, termination or
cancellation or a loss of rights under, or result in
the creation or imposition of any Encumbrance upon any
of the Shares or any of the assets of either of the
Companies, under (1) the certificate of incorporation
or by-laws of Seller or either of the Companies, (2)
any material note, instrument, mortgage, lease,
franchise or financial obligation to which Seller or
either of the Companies is a party or any of their
respective properties is subject or by which Seller or
either of the Companies is bound, (3) any Court Order
to which Seller or either of the Companies is a party
or by which Seller or either of the Companies or any of
their respective properties or businesses is bound, (4)
any Requirements of Law affecting Seller or either of
the Companies or (5) any Business Agreement.
(ii) require the approval, consent, authorization
or act of, or the making by Seller or either of the
Companies of any notices, declaration, filing or
registration with, any Person, except for (A) in
connection, or in compliance, with the provisions of
the HSR Act, (B) those that become applicable solely as
a result of the specific regulatory status of Buyer or
its Affiliates and (C) such approvals, consents,
authorizations, declarations, filings or registrations
the failure of which to be obtained or made would not
prevent the consummation of any of the transactions
contemplated hereby or interfere with the operation of
the Business immediately after Closing.
(c) Upon consummation of the Closing as contemplated
by this Agreement, Seller will deliver to Buyer good title to the
Shares, free and clear of any Encumbrances.
Section 5.5. Financial Statements. Schedule 5.5
contains the audited financial statements of the Companies as of
December 31, 1998 and 1997 and for the years then ended. Except
as set forth therein (including the notes thereto), such
financial statements have been prepared in conformity with GAAP,
and such financial statements present fairly the consolidated
financial position and results of operations of the Companies, as
of their respective dates and for the respective periods covered
thereby.
Section 5.6. Operations Since Financial Statement
Date. Except as set forth in Schedule 5.6 or as contemplated by
this Agreement, since the Financial Statement Date, (i) there
have been no events or changes in the Business, results of
operations or financial condition of the Companies which has
resulted in or with the passage of time could reasonably be
expected to result in a Material Adverse Effect, (ii) there has
been no physical damage, destruction or loss that would prevent
the Company from supplying its customers in the ordinary course
of the Business, (iii) the Companies have conducted the Business
in the ordinary course in all material respects and (iv) there
has been no action or event that if occurring after the date
hereof would violate Section 7.4(b) (excluding
Section 7.4(b)(xii)).
Section 5.7. Taxes. (a) Except as set forth on
Schedule 5.7, (i) each of the Companies (or Seller Parent or
Seller on their behalf) has filed all Tax Returns required to be
filed on or before the date hereof and paid in full all Taxes
shown to be due on such Tax Returns; (ii) the Tax Returns
referred to in clause (i), to the extent related to federal and
state income Taxes, have been examined by the appropriate taxing
authority or the period for assessment of the Taxes in respect of
which such Tax Returns were required to be filed has expired;
(iii) all deficiencies asserted or assessments made as a result
of any examination of the Tax Returns referred to in clause (i)
by a taxing authority have been paid in full or are being
challenged in good faith through appropriate proceedings; (iv) no
statute of limitations has been waived in writing with respect to
Taxes of the Companies and no extension of time has been agreed
to in writing with respect to a Tax deficiency or assessment of
the Companies; (v) all Taxes which the Companies are required to
withhold or to collect for payment in respect of any employee,
independent contractor, creditor or stockholder have been duly
withheld and collected, and have been paid or accrued, reserved
against or entered on the books of the Companies; (vi) no consent
under Code 341(f) concerning collapsible corporations has been
filed with respect to either Company; (vii) neither Company has
made any payments, is obligated to make any payment, or is a
party to an agreement that could obligate such Company to make
any payment, in each case that will not be deductible under Code
280G by reason of the sale of Shares pursuant to this
Agreement; (viii) there are no liens for taxes upon the assets of
either Company except for liens for Taxes which are not yet due
or are being contested in good faith; and (ix) Seller has
provided to Buyer pro forma separate company federal income tax
returns for the Companies for their taxable years ended 1996 and
1997, and the information set forth thereon is exactly the same
as the related information set forth on the consolidated federal
income tax returns for the Seller Tax Group for such respective
taxable years.
(b) Neither Company has been a United States real
property holding corporation within the meaning of Code
897(c)(2) during the applicable period specified in Code
897(c)(1)(A)(ii).
(c) Each Company's participation in Tax Sharing
Agreements in which either Company participated on or prior to
the Closing Date (other than this Agreement) will be terminated
as of the Closing Date and, after the Closing Date, neither
Company shall be bound thereby nor have any liability thereunder.
(d) The aggregate federal net operating loss
carryovers of the Companies as of the close of their taxable
years ended on the Closing Date (determined after taking into
account the effects of the transactions contemplated by
Section 7.5, the sale of the Shares pursuant to this Agreement,
and the transactions contemplated by the Assignment and
Assumption Agreement, but determined without regard to the
effects of any transaction occurring after the Closing) (the
"Closing NOL Carryovers") will not be less than $40 million
(forty million dollars) (the "Minimum NOL Amount"). No Tax
Return relating in whole or in part to the Companies shall be
amended, refiled or otherwise modified if the effect of doing so
would be to reduce the Closing NOL Carryovers.
Section 5.8. Governmental Permits. The Companies own,
hold or possess all material licenses, franchises, permits,
privileges, immunities, approvals and other authorizations from a
Governmental Body to entitle them to own or lease, operate and
use their assets and to carry on and conduct the Business as
conducted prior to the date hereof (herein collectively called
"Governmental Permits"). Except as disclosed in Schedule 5.8,
each of the Companies has complied in all material respects with
all terms and conditions of the Governmental Permits and no
proceeding is pending or, to the Knowledge of Seller, threatened
seeking the revocation or limitations of any such Governmental
Permit.
Section 5.9. Real Property. Schedule 5.9 lists each
parcel of real property owned by either Company specifying
whether such real property is used in or relating to the
Business, other than Excluded Assets ("Owned Real Property"), and
each option held by either Company to acquire real property.
Copies of TLTA Title Commitments for each parcel of Owned Real
Property have previously been delivered to Buyer. Schedule 5.9
also sets forth as of the date hereof a list of each lease or
similar agreement under which either Company is lessee of, or
holds or operates, any real property owned by any third Person
("Leased Real Property").
Section 5.10. Personal Property Leases. Schedule 5.10
contains as of the date hereof a list of each lease or other
agreement or right under which either Company is lessee of, or
holds or operates, any machinery, equipment, vehicle or other
tangible personal property owned by a third Person, except those
which are terminable by the Companies without penalty on sixty
(60) days' (or less) notice or which provide for annual rental
payments of less than $25,000.
Section 5.11. Intellectual Property. (a)
Schedule 5.11(a) contains as of the date hereof a list of all
Copyrights, Patent Rights and Trademarks owned or used by or
licensed to the Companies in the conduct of the Business and
identifies if such Copyrights, Patent Rights and Trademarks are
owned or licensed.
(b) Schedule 5.11(b) contains as of the date hereof a
list of all Software owned by or licensed to the Companies which
is material to the conduct of the Business and identifies if such
Software is owned or licensed.
(c) Except as disclosed in Schedule 5.11(c), the
Companies either: (i) own the entire right, title and interest
in and to the Intellectual Property and Software listed in
Schedules 5.11(a) and 5.11(b) hereof, free and clear of any
Encumbrance; or (ii) have the right and license to use the same
in the Business.
(d) Except as disclosed in Schedule 5.11(d), to the
Knowledge of Seller, since January 1, 1997, no infringement by
the Companies of any Intellectual Property of any other Person
has occurred and the Companies have not had written notice of a
claim against the Companies that the operations of the Business
infringe any Intellectual Property of any other Person.
(e) Except as disclosed in Schedule 5.11(e), no
proceedings are pending or, to the Knowledge of Seller,
threatened against the Companies which challenge the validity or
ownership or right to use any Intellectual Property owned or used
by the Companies.
(f) Except as disclosed in Schedule 5.11(f), to the
Knowledge of Seller, no third party is infringing any of the
Intellectual Property.
(g) Except as set forth in Schedule 5.11(g), as of the
date hereof, the Companies have the right to use the trade
secrets relating to the diced pepperoni technology process
commonly referred to as "Superdice."
Section 5.12. Title to Property. Except as disclosed
in Schedule 5.12, and except for the Excluded Assets and any
assets disposed of in the ordinary course of business, Opco has
good and marketable title to or holds by valid and existing lease
or license, as applicable, free and clear of all Encumbrances,
each piece of Owned Real Property, Leased Real Property and each
material piece of personal property reflected on the Balance
Sheet, and each piece of Owned Real Property and each material
piece of personal property acquired by the Companies since the
Financial Statement Date that would, had it been acquired prior
to such date, be required to be reflected on the Balance Sheet,
except, in each case, for Permitted Encumbrances.
Section 5.13. No Violation, Litigation or Regulatory
Action. Except as set forth in Schedule 5.13:
(i) to the Knowledge of Seller, the Companies
have materially complied with, and the Owned Real
Property and Leased Real Property are in material
compliance with, all applicable Requirements of Law,
including (i) all applicable zoning laws and any
material use or occupancy restrictions, building code
or ordinance or public utility easement, (ii) all
rules, regulations and orders promulgated by the
Occupational Safety and Health Administration ("OSHA"),
including OSHA's requirements on process safety
management, (iii) all rules, regulations and orders
promulgated by the United States Department of
Agriculture ("USDA"), (iv) all rules, regulations and
orders promulgated under the Federal Meat Inspection
Act, the Federal Food Drug and Cosmetic Act, and the
Nutrition Labeling and Education Act, and (v) Court
Orders;
(ii) there are no lawsuits, actions,
administrative or arbitration or other proceedings or
governmental investigations pending or, to the
Knowledge of Seller, threatened against the Companies;
(iii) there is no action, suit or proceeding
pending or, to the Knowledge of Seller, threatened that
questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Seller
Ancillary Agreements;
(iv) Seller has copies of all current blue prints
for the Owned Real Property and Leased Real Property,
as submitted to the USDA in connection with the
operation of the Business at each facility; and
(v) The facilities at the Owned Real Property and
Leased Real Property are approved for inspection by the
USDA's Food Safety and Inspection Service.
Section 5.14. Contracts. Except as set forth in
Schedule 5.14, any other Schedule hereto or as contemplated by
this Agreement, as of the date hereof, neither of the Companies
is a party to or bound by:
(i) any contract for the future purchase or sale
of real property;
(ii) any contract, agreement or arrangement
(other than purchase orders) obligating the Companies
to purchase or sell any products or services which (A)
is not terminable by the Companies without payment of
penalty or other liability upon ninety (90) days' (or
less) notice and (B) provides for annual payments by
the Companies aggregating $100,000 or more;
(iii) any advertising sales agency, brokerage or
distribution agreement which (A) is not terminable by
the Companies without payment of penalty or other
liability upon ninety (90) days' (or less) notice and
(B) provides for annual payments by the Companies
aggregating $100,000 or more;
(iv) any employment or consulting agreement
having a remaining term of at least one year and
requiring annual payments of base salary and bonus of
$60,000 or more;
(v) any note, mortgage, indenture or other
obligation or agreement or other instrument for or
relating to any lending or borrowing (including assumed
debt) of $100,000 or more (other than capitalized
leases reflected on the Balance Sheet) or which impose
any Encumbrances (other than Permitted Encumbrances) on
any assets or properties owned by the Companies; or
(vi) any confidentiality, noncompete or other
agreement restricting the ability of the Companies to
conduct the Business or use any information in their
possession.
Section 5.15. Status of Contracts. Except as set
forth in Schedule 5.15, to the Knowledge of Seller: (i) each of
the leases, contracts and other agreements required to be listed
in Schedules 5.9, 5.10 and 5.14, recognizing that there may be
agreements listed on Schedule 5.9, 5.10 and 5.14 that are not
required to be disclosed thereon, (collectively, the "Business
Agreements") is in full force and effect and (ii) neither of the
Companies nor to the Knowledge of Seller any third party to such
Business Agreements is in breach or default under any Business
Agreement and no event has occurred which, with the giving of
notice or the passage of time or both, would constitute a breach
or default under any Business Agreement, other than such
breaches, defaults or events which would not, individually or in
the aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 5.16. No Brokers. Except for ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ Securities Corporation, whose fees and expenses
shall be the responsibility of Seller, neither Seller, any
Affiliate of Seller nor any Person acting on their behalf has
paid or become obligated to pay any fee or commission to any
broker, finder or intermediary for or on account of the
transactions contemplated by this Agreement.
Section 5.17. ERISA and Employee Benefits. Except as
otherwise set forth on Schedule 5.17:
(a) The Companies do not currently sponsor, maintain
or participate in, and are not required to contribute to or
accrue a benefit under, any employee benefit plan as defined in
Section 3(3) of ERISA, any multiemployer plan as defined in
Section 3(37)(A) or (D) of ERISA (a "Multiemployer Plan"), any
incentive compensation plan, bonus plan, deferred compensation
agreement or arrangement, stock option, stock bonus, stock
purchase plan, post-retirement severance benefits or any other
employee benefit plan (whether or not subject to ERISA), program
or arrangement of any kind whatsoever which provides or is
obligated to provide any kind of benefit (such plans, benefit
programs and agreements (excluding Multiemployer Plans) are
collectively referred to herein as the "Benefit Plans").
(b) Each Welfare Plan is either (i) unfunded or (ii)
funded through insurance contracts.
(c) The Companies do not participate in any
Multiemployer Plan or in any employee Benefit Plan maintained by
a union which provides health, pension or welfare benefits. No
withdrawal liability exists with respect to any such
Multiemployer Plan or Benefit Plan. The Companies have not
committed any act or acts prior to or as a result of the Closing
which has effected, or could reasonably be expected to effect, a
partial or complete withdrawal (as such terms are defined in
ERISA) from any such Multiemployer Plan or Benefit Plan. All
Multiemployer Plans and Benefit Plans that are defined benefit
pension plans are fully funded and there is no unfunded liability
for any such plan as of the Closing Date.
(d) The Companies (i) have not experienced any
reportable event within the meaning of 4043 of ERISA or other
event or condition which presents a material risk of termination
of any pension Benefit Plan by the Pension Benefit Guaranty
Corporation ("PBGC"); (ii) have not had any tax imposed on them
by the Internal Revenue Service for any violation under Section
4975 of the Code or Section 406 of ERISA; and (iii) have not
engaged in any transaction which could reasonably be expected to
subject either Company or any such Benefit Plan to any material
liability for any such tax under Section 4975 of the Code or
Section 406 of ERISA.
(e) There is no audit or investigation relating to any
Benefit Plan which is pending before the Internal Revenue
Service, the Department of Labor or any other governmental agency
or court.
(f) The Companies have made available to Buyer, or
will make available to Buyer prior to the Closing, true and
complete copies of, to the extent such documents exist: (i) all
Benefit Plans (including amendments), (ii) the most recent
summary plan description for each such plan, if applicable, (iii)
the most recent determination letter received from the Internal
Revenue Service with respect to any such plan, if applicable and
(iv) the most recent actuarial valuation, if applicable.
(g) All reports relating to the Benefit Plans required
to be filed with or furnished to any Governmental Body or court
or to the participants or beneficiaries prior to the date hereof
have been timely filed or furnished in accordance with applicable
law, except where failure to do so would not have a Material
Adverse Effect.
(h) The terms of all Benefit Plans comply in all
material respects with ERISA, the Code and all applicable
statutes, orders or governmental rules and regulations.
(i) To the Knowledge of Seller, with respect to each
Welfare Plan and Pension Plan listed on Schedule 5.17, (i) each
such plan has been maintained and operated in substantial
compliance with the applicable requirements of the Code and ERISA
and the regulations thereunder and (ii) no material litigation or
written asserted claims against the Companies exist.
Section 5.18. Environmental Matters. Except as
disclosed on Schedule 5.18:
(a) The Companies since Seller's acquisition thereof:
(i) are and have been in compliance with all Environmental Laws
and there exist no environmental conditions resulting from the
Companies' operation of the Business since Seller's acquisition
thereof, or to Seller's Knowledge, any predecessor operating on
the Owned Real Property or the Leased Real Property, that could
reasonably give rise to any claim or liability under
Environmental Laws; (ii) have not generated, manufactured,
recycled, reclaimed, refined, transported, treated, stored,
handled, disposed of, transferred, produced or processed
Hazardous Substances except in compliance with Environmental
Laws, and there has been no release or threatened release of any
Hazardous Substances at or from any Owned Real Property or any
Leased Real Property by the Companies since Seller's acquisition
thereof, or to Seller's Knowledge, any other person, that could
reasonably give rise to any claim or liability under
Environmental Law; (iii) have not entered into or been subject to
any consent decree, compliance order, or administrative order,
received notice under the citizen suit provision of any
Environmental Laws, received from any source any written request
for information, notice, demand letter, administrative inquiry,
or formal or informal complaint or claim with respect to any
violation of Environmental Law or release of any Hazardous
Substance that has not been fully resolved, or been subject to or
threatened in writing with a governmental or citizen enforcement
action.
(b) Schedule 5.18 lists and Seller has provided Buyer
with complete copies of any and all reports, studies, tests and
other information prepared on Seller's behalf or otherwise known
to Seller unless Seller determined that such report, study or
other information was not material or was superceded by more
recent environmental reports prepared on Seller's behalf relating
to the presence or suspected presence of any Hazardous Substances
or relating to the existence of any underground storage tank on
any Owned Real Property or Leased Real Property (the
"Environmental Reports"). The Companies since Seller's
acquisition thereof have possessed and are in compliance with all
permits, licenses, approvals and authorizations required pursuant
to Environmental Laws for the Business as currently conducted.
(c) To Seller's Knowledge, except as disclosed in
Schedule 5.18, including the Environmental Reports listed
thereon, (i) there is no environmental condition existing on any
Owned Real Property or Leased Real Property, or any properties
previously owned or leased by the Companies, that could
reasonably give rise to a claim or liability under Environmental
Laws and (ii) there is no past or existing event, condition,
circumstance or practice or procedure involving or relating to
the Companies' compliance with Environmental Laws which, if not
corrected, changed, reported, monitored or remediated, or
relating to a release of Hazardous Substances by the Companies
which, if not remedied, could reasonably result in a claim or
liability under Environmental Laws.
Section 5.19. Employee Relations and Agreements. (a)
Seller has made available to Buyer a true and complete listing of
all employees of the Companies as of a recent date, their job
description and date of hire and (A) in the case of salaried
employees, their salary range, and (B) in the case of hourly
employees, their hourly wage. Except as set forth in Schedule
5.19, neither Company (i) is a party to any collective bargaining
agreements or (ii) is involved in or, to the Knowledge of Seller,
threatened with, any labor dispute, arbitration, lawsuit or
administrative proceeding relating to labor matters involving
current or past employees of the Companies (excluding routine
workers' compensation claims and grievances) that, individually
or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth on Schedule 5.19, no director,
officer or employee of either Company is a party to any
employment or other agreement that entitles him or her to
compensation or other consideration upon the acquisition by any
Person of control of the Companies.
Section 5.20. Insurance. Seller has made available
to Buyer a true and complete list of all material insurance
policies owned or held by Seller or the Companies on the date
hereof, which may cover the Companies or the Business. As of the
date hereof, all such policies are in full force and effect and
no written notice of cancellation or termination has been
received with respect to any such policy.
Section 5.21. Assets Used in the Business. (a)
Except as set forth on Schedule 5.21, the facilities and the
other assets and property owned or leased by the Companies
currently used in the conduct of the Business are in good
operating condition and repair in all material respects, subject
to normal wear and tear, and are suitable in all material
respects for the purposes for which they are currently used.
(b) There are no condemnation proceedings pending or,
to the Knowledge of Seller, threatened with respect to the
facilities comprising the Business.
Section 5.22. Capacity of the Business. In 1998,
Opco's total annual production volume sold was 200.3 million
pounds (the "1998 Production Level") and, except as set forth in
Schedules 5.8, 5.13 and 5.18, to the Knowledge of Seller, Opco
was in material compliance with all applicable Requirements of
Law, Court Orders and Governmental Permits producing at the 1998
Production Level.
Section 5.23. Transactions with Affiliates. Schedule
5.23 lists all agreements or arrangements currently in effect
between Holdco or Opco and any Affiliate of the Companies (other
than Holdco or Opco) (all such persons and entities encompassed
by this clause being sometimes referred to collectively herein as
the "Related Parties" and individually as a "Related Party")
involving the sale of goods or services or licensing of
Intellectual Property by or to the Companies and that provide for
annual payments in excess of $25,000. No property or any
interest in any property used in the Business as currently
conducted is owned by or leased or licensed by or to any Related
Party.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
As an inducement to Seller to enter into this Agreement
and to consummate the transactions contemplated hereby, Buyer
hereby represents and warrants to Seller and agrees as follows:
Section 6.1. Incorporation of Buyer. Buyer is a
corporation duly incorporated, validly existing and in good
standing under the laws of the State of Delaware. Buyer has the
corporate power and corporate authority to own or lease and
operate its assets and to carry on its businesses in the manner
that they were conducted immediately prior to the date hereof.
Section 6.2. Authority of Buyer; Conflicts. (a) Buyer
has the corporate power and corporate authority to execute and
deliver this Agreement and each of the Buyer Ancillary Agreements
and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Buyer Ancillary
Agreements by Buyer and the performance of Buyer's obligations
hereunder and thereunder have been duly authorized and approved
by Buyer's board of directors and do not require any further
authorization or consent of Buyer or its stockholders. This
Agreement has been duly executed and delivered by Buyer and
(assuming the valid authorization, execution and delivery of this
Agreement by Seller) is the legal, valid and binding agreement of
Buyer enforceable against Buyer in accordance with its terms, and
each of the Buyer Ancillary Agreements, upon execution and
delivery by Buyer will be (assuming the valid authorization,
execution and delivery by Seller, where a Seller is a party, or
the other party or parties thereto) a legal, valid and binding
obligation of Buyer enforceable against Buyer in accordance with
its terms, in each case subject to bankruptcy, insolvency,
reorganization, moratorium and similar laws of general
application relating to or affecting creditors' rights and to
general equity principles (regardless of whether in equity or at
law).
(b) Except as set forth in Schedule 6.2, the
execution, delivery and performance by Buyer of this Agreement or
any of the Buyer Ancillary Agreements will not:
(i) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute (with
or without the giving of notice, the passage of time or
both) a default, an event of default or an event
creating rights of acceleration, termination or
cancellation or a loss of rights under (1) the charter
or by-laws of Buyer, (2) any note, instrument,
mortgage, lease, franchise or financial obligation to
which Buyer is a party or any of its properties is
subject or by which Buyer is bound, (3) any Court Order
to which Buyer is a party or by which it is bound or
(4) any Requirements of Law affecting Buyer, other
than, in the case of clause (2), any such conflicts,
breaches, defaults or rights that, individually or in
the aggregate, would not prevent the consummation of
any of the transactions contemplated hereby; or
(ii) require the approval, consent, authorization
or act of, or the making by Buyer of any declaration,
filing or registration with, any Person, except for (A)
in connection, or in compliance, with the provisions of
the HSR Act, and (B) such approvals, consents,
authorizations, declarations, filings or registrations
the failure of which to be obtained or made,
individually or in the aggregate, would not impair the
ability of Buyer to perform its obligations hereunder
or prevent the consummation of any of the transactions
contemplated hereby.
Section 6.3. No Violation, Litigation or Regulatory
Action. Except as set forth in Schedule 6.3:
(i) there are no lawsuits, actions,
administrative or arbitration or other proceedings or
governmental investigations pending or, to the knowl
edge of Buyer, threatened against the Buyer or its
Affiliates which are reasonably expected, individually
or in the aggregate, to impair the ability of Buyer to
perform its obligations hereunder or prevent the
consummation of any of the transactions contemplated
hereby; and
(ii) there is no action, suit or proceeding
pending or, to the knowledge of Buyer, threatened that
questions the legality or propriety of the transactions
contemplated by this Agreement or any of the Buyer
Ancillary Agreements.
ARTICLE VII
ACTION PRIOR TO THE CLOSING DATE
The respective parties hereto covenant and agree to
take the following actions between the date hereof and the Clos
ing Date:
Section 7.1. Access to Information. After the date
hereof, subject to any existing confidentiality restrictions and
to applicable law, Seller shall afford to the officers, employees
and authorized representatives of Buyer reasonable access during
normal business hours, upon reasonable advance notice, to the
offices, properties and business and financial records of the
Companies to the extent Buyer shall reasonably deem necessary or
desirable and shall furnish to Buyer or its authorized represen
tatives such additional information concerning the Companies as
shall be reasonably requested. Buyer agrees that such
investigation shall be conducted in a manner that shall not
interfere unreasonably with the personnel and operations of the
Companies or Seller. All Buyer requests for such access shall be
made to such representatives of Seller as Seller shall designate,
who shall be solely responsible for coordinating all such
requests and all such access hereunder. It is further understood
and agreed that neither Buyer nor its representatives shall
contact any employees, customers, suppliers or other associates
or Affiliates of Seller or the Companies in connection with the
transactions contemplated hereby, in any manner whatsoever,
without prior authorization of such representatives of Seller as
Seller may designate (which authorization shall not be
unreasonably withheld or delayed). If, as of the date hereof or
at anytime hereafter up to and including the Closing Date, Buyer
or its officers, employees or authorized representatives discover
any breach of any warranty or any inaccuracy of any
representation contained in this Agreement, Buyer covenants that
it will promptly so inform Seller in writing.
Section 7.2. Notifications. Each of Buyer and Seller
shall promptly notify the other of any action, suit or proceeding
that shall be instituted or threatened against such party to
restrain, prohibit or otherwise challenge the legality of any
transaction contemplated by this Agreement or the Accounts
Receivable Purchase Agreement.
Section 7.3. Consents of Third Parties; Governmental
Approvals. Subject to the terms and conditions of this
Agreement: (a) Seller and Buyer will act diligently and
reasonably to secure, before the Closing Date, the consent,
approval or waiver, in form and substance reasonably satisfactory
to the other party, required to be obtained from any Person
(other than a Governmental Body) to consummate the transactions
contemplated by this Agreement or to permit the operations of the
Business immediately after Closing.
(b) During the period prior to the Closing Date,
Seller and Buyer shall act diligently and reasonably, and shall
cooperate with each other, to secure any consents and approvals
of any Governmental Body required to be obtained by them in order
to permit the consummation of the transactions contemplated by
this Agreement or to permit the operations of the Business
immediately after Closing, or to otherwise satisfy the conditions
set forth in Section 9.3 and Section 10.3; and
(c) Each party shall use its commercially reasonable
best efforts to cause the Closing to occur.
Section 7.4. Operations Prior to the Closing Date.
(a) Subject to the terms and conditions of this Agreement,
Seller shall use reasonable efforts to cause the Companies to
conduct the Business in the ordinary course in all material
respects as operated prior to the date of this Agreement.
Consistent with the foregoing, Seller shall cause each of the
Companies to use its commercially reasonable best efforts
consistent with good business practice to preserve the goodwill
of the suppliers, contractors, licensors, employees, customers,
distributors and others having business relations with the
Companies.
(b) Notwithstanding Section 7.4(a), except as set
forth on Schedule 7.4, as contemplated by this Agreement or
except with the express written approval of Buyer (which Buyer
agrees shall not be unreasonably withheld or delayed), Seller
shall cause the Companies not to:
(i) make any material change in the Business or
its operations, except such changes as may be required
to comply with any applicable Requirements of Law;
(ii) enter into any contract or commitment (or a
series of related contracts or commitments) to make any
capital expenditure in excess of $250,000;
(iii) enter into any contract for the purchase of
real property or exercise any option to extend a lease
listed in Schedule 5.9;
(iv) create, incur, guarantee or assume, or
agree to create, incur, guarantee or assume, any
indebtedness for borrowed money (other than money
borrowed or advances from any of its Affiliates in the
ordinary course of the Business), except in the
ordinary course of business;
(v) make, or agree to make, any payment of cash
or distribution of assets to any of its Affiliates
(other than payments made in respect of cash realized
upon collection of receivables generated in the
ordinary course of the Business);
(vi) institute any increase in any profit-
sharing, bonus, incentive, deferred compensation,
insurance, pension, retirement, medical, hospital,
disability, welfare or other employee benefit plan with
respect to its employees, other than as required by any
such plan or Requirements of Law;
(vii) make any change in the compensation of its
employees, other than, in the case of employees who are
not executive officers of the Company, changes made in
accordance with normal compensation practices and
consistent with past compensation practices;
(viii) issue, sell or redeem or agree to issue,
sell or redeem (i) any shares of capital stock or (ii)
any securities convertible into, or options with
respect to, or warrants to purchase or rights to
subscribe for, any shares of capital stock of either
Company;
(ix) except in the ordinary course of business,
as required by law or contractual obligations existing
on the date hereof or as provided for in or
contemplated by this Agreement, (A) sell, transfer or
otherwise dispose of any of its assets other than
inventory in the ordinary course of business, (B)
create any new Encumbrance on its properties or assets
(other than Permitted Encumbrances), (C) enter into any
joint venture or partnership or (D) purchase any assets
or securities of any Person;
(x) make any change in the accounting policies
applied in the preparation of the audited financial
statements contained in Schedule 5.5 other than as
required by GAAP;
(xi) make any change in the charter or by-laws of
either Company; or
(xii) enter into, modify or amend any Business
Agreement.
Notwithstanding the provisions of this Section, nothing
in this Agreement shall be construed or interpreted to prevent
the Companies from (i) paying or making regular or special
dividends or other distributions, (ii) making, accepting, paying,
repaying or settling inter- or intracompany receivables,
payables, loans or advances to, from or with one another or with
Seller or any Affiliate, or (iii) engaging in any transaction
incident to the cash management procedures of Seller and its
Affiliates and borrowings for working capital purposes and
purposes of providing additional funds to the Companies in the
ordinary course of business.
Section 7.5. Elimination of Inter-Company and
Affiliate Accounts. Prior to Closing, all inter-company
receivables, payables and loans (collectively, "Intercompany
Accounts") then existing between Holdco and Opco, on the one
hand, and Seller and any of the Seller's subsidiaries (other than
the Companies), on the other hand, shall be settled by way of a
capital contribution in kind with respect to an intercompany
amount due from Holdco or Opco to the Seller or any of the
Seller's subsidiaries (other than Holdco or Opco) or by way of a
dividend in kind with respect to an intercompany amount due from
the Seller or any of the Seller's subsidiaries (other than Holdco
or Opco) to Holdco or Opco. Any such settlement shall be
accomplished in the manner reasonably selected by Seller.
Section 7.6. Cash Management. The Companies
participate in the Seller's central cash management system and
shall continue to so participate in accordance with prior
practice until the Closing at which time all liabilities and
obligations of the Companies relating to Seller's central cash
management system shall be terminated thereunder. Accordingly,
nothing contained in this Agreement shall prohibit the Companies
from distributing any cash on hand from time to time to the
Seller or any of its affiliates.
Section 7.7. Property Transfers. It is understood and
agreed that, on or prior to the Closing, Opco and Seller will
enter into and consummate the transactions contemplated by the
Assignment and Assumption Agreement.
Section 7.8. Antitrust Law Compliance. (a) Buyer and
Seller Parent shall use their commercially reasonable best
efforts to file by March 11, 1999 (and shall file no later than
March 12, 1999) with the Federal Trade Commission and the
Antitrust Division of the Department of Justice the notifications
and other information required to be filed under the HSR Act, or
any rules and regulations promulgated thereunder, with respect to
the transactions contemplated hereby (including the Accounts
Receivable Purchase Agreement). Each party agrees that if it or
any of its Affiliates receives a request for additional
information or documentary material in connection with their
filings under the HSR Act, then such party shall promptly notify
the other party and endeavor in good faith to make, as soon as
practicable and after consultation with the other party, an
appropriate response in compliance with such request. Buyer and
Seller shall each pay one-half of the HSR Act filing fees.
(b) In furtherance and not in limitation of subsection
(a), Buyer shall take all reasonable steps to resolve as promptly
as possible any objections that may be asserted with respect to
the transactions contemplated hereby under any antitrust laws or
regulations (federal, state or foreign). Buyer will advise
Seller promptly in respect of any understandings, undertakings
or agreements (written or oral) which Buyer proposes to make with
the Federal Trade Commission, the United States Department of
Justice or any other Governmental Body in connection with the
transactions contemplated hereby.
Section 7.9. Guaranties. Buyer shall cause itself to
be substituted in all respects for Seller or any Affiliate of
Seller (other than the Companies), and shall cause Seller and any
such Affiliate to be fully released, in each case, effective as
of the Closing (and if not released as of Closing, as soon
thereafter as possible), in respect of all obligations of Seller
and any such Affiliate under any guaranties, letters of credit,
letters of comfort, bid bonds and performance bonds obtained by
Seller or any of such Affiliates for the benefit of the Business
or any of the Companies set forth in Schedule 7.9 (individually,
a "Guaranty," and collectively, the "Guaranties") and Seller
shall cooperate with Buyer in connection therewith. If prior to
Closing, Buyer is unable to effect such a substitution and
release with respect to any Guaranty after using its commercially
reasonable best efforts to do so, Buyer shall at its option
either (i) obtain letters of credit, on terms and from financial
institutions reasonably acceptable to both Buyer and Seller, or
(ii) indemnify and hold harmless Seller with respect to the
obligations covered by each of the Guaranties for which Buyer
does not effect such substitution and release. Without limiting
the foregoing, after Closing, Buyer will not, and will not permit
any of its Affiliates to, renew, extend, amend or supplement any
loan, contract, lease or other obligation that is covered by a
Guaranty without providing Seller with evidence satisfactory to
Seller that Seller's Guaranty has been released. Any cash or
other collateral posted by Seller or one of its Affiliates (other
than Holdco or Opco) in respect of any Guaranty which has been
released shall be delivered to Seller.
ARTICLE VIII
ADDITIONAL AGREEMENTS
Section 8.1. Insurance. Seller will cause the
Companies to keep insurance policies currently maintained by the
Companies covering their respective businesses, assets and
current or former employees, as the case may be, or suitable
replacements therefor, in full force and effect through the close
of business on the Closing Date, and Buyer shall become solely
responsible for all insurance coverage and related risk of loss
based on events occurring after the Closing Date with respect to
the Companies and their respective businesses, assets and current
or former employees. To the extent that after the Closing any
party hereto requires any information regarding claim data,
payroll or other information in order to make filing with
insurance carriers or self insurance regulators from another
party hereto, the other party will promptly supply such
information.
Section 8.2. Tax Matters. (a) Liability for Taxes.
(i) Seller shall be liable for and shall pay, and pursuant to
Article XI (and subject to the limitations thereof) shall
indemnify each Buyer Group Member against, all Taxes (A) imposed
on the Companies pursuant to Treas. Reg. 1.1502-6 or similar
provision of state or local law solely as a result of the
Companies having been a member of the Seller Tax Group, or
(B) imposed on the Companies for any taxable year or period
ending on or prior to the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period ending on
and including the Closing Date (including such Taxes imposed on
the transactions contemplated by the Assignment and Assumption
Agreement); provided, however, that Seller shall not be liable
for or pay and shall not indemnify any Buyer Group Member for,
(I) any Taxes up to the amount of such Taxes that are accrued on
the final Closing Statement (after resolution of all disputes),
(II) any Taxes that result from any actual or deemed election
under Section 338 of the Code or any similar provisions of any
other relevant Tax law relating to the purchase of the Shares, or
that result from Buyer, any Affiliate of Buyer or either Company
engaging in any activity or transaction that would cause the
transactions contemplated by this Agreement to be treated as a
purchase or sale of assets of either Company for federal, state,
local or other Tax purposes, and (III) any Taxes imposed on the
Companies as a result of transactions occurring on the Closing
Date that are properly allocable (based on, among other relevant
factors, factors set forth in Treas. Reg. 1.1502-
76(b)(1)(ii)(B)) to periods after the Closing (Taxes described in
this proviso, hereinafter "Excluded Taxes"). Buyer and Seller
agree that, with respect to any transaction described in clause
(III) of the preceding sentence, the Companies and all persons
related to the Companies under Section 267(b) of the Code
immediately after the Closing shall treat the transaction for all
federal income tax purposes (in accordance with Treas. Reg.
1.1502-76(b)(1)(ii)(B)), and (to the extent permitted) for other
income Tax purposes, as occurring at the beginning of the day
following the Closing Date. Seller shall be entitled to any
refund of (or credit for) Taxes allocable to any taxable year or
period that ends on or before the Closing Date and, with respect
to any Straddle Period, the portion of such Straddle Period
ending on and including the Closing Date. Neither Seller,
Seller's Parent nor any member of the Seller Tax Group shall
elect to retain any net operating loss carryovers of the
Companies under Regulations 1.1502-20(g).
(ii) Buyer shall be liable for and shall pay, and
pursuant to Article XI (and subject to the limitations thereof)
shall indemnify each Seller Group Member against, (A) all Taxes
imposed on the Companies for any taxable years or periods
beginning after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning
after the Closing Date and (B) Excluded Taxes. Except as
otherwise provided herein, Buyer shall be entitled to any refund
of (or credit for) Taxes allocable to any taxable year or period
that begins after the Closing Date and, with respect to any
Straddle Period, the portion of such Straddle Period beginning
after the Closing Date.
(iii) For purposes of paragraphs (a)(i) and (a)(ii),
whenever it is necessary to determine the liability for Taxes of
the Companies for a portion of any Straddle Period, the
determination of the Taxes of the Companies for the portion of
the Straddle Period ending on and including, and the portion of
the Straddle Period beginning after, the Closing Date shall be
determined by assuming that the Straddle Period consisted of two
taxable years or periods, one which ended at the close of the
Closing Date and the other which began at the beginning of the
day following the Closing Date, and items of income, gain,
deduction, loss or credit of the Companies for the Straddle
Period shall be allocated between such two taxable years or
periods on a "closing of the books basis" by assuming that the
books of the Companies were closed at the close of the Closing
Date; provided, however, that (I) transactions occurring on the
Closing Date that are properly allocable (based on, among other
relevant factors, factors set forth in Treas. Reg.
1.1502-76(b)(1)(ii)(B)) to the portion of the Closing Date
after the Closing shall be allocated to the taxable year or
period that is deemed to begin at the beginning of the day
following the Closing Date, and (II) exemptions, allowances or
deductions that are calculated on an annual basis, such as the
deduction for depreciation, shall be apportioned between such two
taxable years or periods on a daily basis. Notwithstanding the
foregoing provisions of this paragraph (a)(iii), if the
transactions contemplated by this Agreement result in the
reassessment of the value of any property owned by the Companies
for property Tax purposes, or the imposition of any property
Taxes at a rate which is different than the rate that would have
been imposed if such transactions had not occurred, then (y) the
portion of such property Taxes for the portion of the Straddle
Period ending on and including the Closing Date shall be
determined on a daily basis, using the assessed value and Tax
rate that would have applied had such transactions not occurred,
and (z) the portion of such property Taxes for the portion of
such Straddle Period beginning after the Closing Date shall be
the total property Taxes for the Straddle Period minus the amount
described in clause (y) of this sentence.
(iv) If, as a result of any action, suit,
investigation, audit, claim, assessment or amended Tax Return,
there is any change after the Closing Date in an item of income,
gain, loss, deduction or credit or amount of Tax that results in
an increase in a Tax liability for which Seller would otherwise
be liable pursuant to paragraph (a)(i), and such change results
in a decrease in the Tax liability of the Companies, Buyer, or
any Affiliate or successor thereof for any taxable year or period
beginning after the Closing Date or for the portion of any
Straddle Period beginning after the Closing Date, Seller shall
not be liable pursuant to paragraph (a)(i) with respect to such
increase to the extent of such decrease (and, to the extent such
increase in Tax liability is paid to a taxing authority by Seller
or any Affiliate thereof, Buyer shall pay Seller an amount equal
to such decrease as an indemnification payment determined in
accordance with Article XI).
(v) Except as provided in Section 5.7(d) and the last
sentence of Section 8.2(a)(i), Seller and Buyer agree that Seller
makes no representation, warranty or covenant with respect to the
amount of, or the ability to utilize, any net operating loss
carryovers, net capital loss carryovers, credits or similar items
of either of the Companies at any time.
(vi) Notwithstanding anything herein to the contrary,
Buyer shall be liable for and shall pay, and pursuant to Article
XI (and subject to the limitations thereof) shall indemnify each
Seller Group Member against, any real property transfer or gains
Tax, stamp Tax, stock transfer Tax, or other similar Tax imposed
on the sale of the Shares pursuant to this Agreement, together
with any penalties or interest with respect to such Taxes.
(vii) Neither Buyer, Seller nor any of their
respective Affiliates shall make an election described in Section
338 of the Code, including Section 338(h)(10), or any
corresponding election under any other relevant Tax laws for
which a separate election is permissible with respect to the
Companies or the transactions contemplated hereby.
(b) Tax Returns. (i) Seller shall timely file or
cause to be timely filed when due (taking into account all
extensions properly obtained) all Tax Returns that are required
to be filed by or with respect to the Companies for taxable years
or periods ending on or before the Closing Date (in the case of
Tax Returns required to be filed by or with respect to the
Companies on a combined, consolidated or unitary basis with
Seller or any Affiliate thereof other than solely the Companies)
or due on or before the Closing Date (with respect to other Tax
Returns), and in each case Seller shall remit or cause to be
remitted any Taxes shown to be due in respect of such Tax
Returns, and Buyer shall timely file or cause to be timely filed
when due (taking into account all extensions properly obtained)
all other Tax Returns that are required to be filed by or with
respect to the Companies for taxable years or periods ending on
or prior to the Closing Date and for Straddle Periods and Buyer
shall remit or cause to be remitted any Taxes shown to be due in
respect of such Tax Returns. With respect to Tax Returns to be
filed by Buyer pursuant to the preceding sentence (x) such Tax
Returns shall be filed in a manner consistent with past practice
and no position shall be taken, election made or method adopted
that is inconsistent with positions taken, elections made or
methods used in prior periods in filing such Tax Returns which
would have any adverse effect on the Companies, Seller or any
Affiliate thereof or on any obligation of Seller under this
Agreement (including, without limitation, any position which
would have the effect of accelerating income to periods for which
Seller is liable or deferring deductions to periods for which
Buyer is liable) and (y) such Tax Returns and the workpapers and
calculations supporting the Taxes due in respect of such Tax
Returns shall be submitted to Seller not later than 20 days prior
to the due date for filing such Tax Returns (or, if such due date
is within 45 days following the Closing Date, as promptly as
practicable following the Closing Date) (in each case taking into
account all extensions properly obtained) for review and approval
by Seller, which approval may not be unreasonably withheld, but
may in all cases be withheld if such Tax Returns were not
prepared in accordance with clause (x) of this sentence. Seller
or Buyer shall pay the other party for the Taxes for which Seller
or Buyer, respectively, is liable pursuant to Section 8.2(a) but
which are payable with any Tax Return to be filed by the other
party pursuant to this paragraph (b) upon the written request of
the party entitled to payment, setting forth in detail the
computation of the amount owed by Seller or Buyer, as the case
may be. Such payment shall be made within 10 days of such
request, but in no event earlier than 10 days prior to the due
date for paying such Taxes.
(ii) Neither Buyer nor any Affiliate of Buyer shall
(or shall cause or permit the Companies to) amend, refile or
otherwise modify (or grant an extension of any statute of
limitation with respect to) any Tax Return relating in whole or
in part to the Companies (x) with respect to any taxable year or
period ending on or before the Closing Date without the prior
written consent of Seller, which consent may be withheld in the
sole discretion of the Seller or (y) with respect to any Straddle
Period except in accordance with the procedures set forth in
Section 8.2(b)(i) applicable upon the Buyer filing a Tax Return
for a Straddle Period.
(iii) With respect to the taxable year of each Company
ending December 31, 1998 and the period in 1999 on and prior to
the Closing Date, Buyer shall promptly cause the Companies to
prepare and provide to Seller a package of tax information
materials, including, without limitation, schedules and work
papers (the "Tax Package"), required by Seller to enable Seller
to prepare and file all Tax Returns required to be prepared and
filed by them pursuant to paragraph (b)(i). The Tax Package
shall be completed in accordance with past practice including
past practice as to providing such information, and as to the
method of computation of separate taxable income or other
relevant measure of income of each of the Companies. Buyer shall
cause the Tax Package to be delivered to Seller within sixty (60)
days after the Closing Date.
(c) Contest Provisions. Buyer shall promptly notify
Seller in writing upon receipt by Buyer, any of its Affiliates or
the Companies of notice of any pending or threatened federal,
state, local or foreign Tax audits, examinations or assessments
which may affect any Tax liability for which Seller is liable
pursuant to Section 5.7 or Section 8.2(a), provided that failure
to comply with this provision shall not affect Buyer's right to
indemnification hereunder except to the extent such failure
impairs Seller's ability to contest any such Tax liabilities.
Except as otherwise provided in this paragraph, Seller
shall have the sole right to represent each Company's interests
in any Tax audit or administrative or court proceeding relating
to taxable periods ending on or before the Closing Date (and any
audit or proceeding relating to the determination of the Closing
NOL Carryovers), and to employ counsel of its choice at its
expense. Seller shall keep Buyer reasonably informed as to any
material change or development in the status of any such audit or
proceeding to the extent such change or development would
reasonably be expected to have a material effect on the Taxes of
the Companies, or any Affiliate thereof, for any period after the
Closing Date. Seller shall have the sole right to settle, either
administratively or after the commencement of litigation, any
proceeding relating to Taxes of either Company for any taxable
period ending on or before the Closing Date (and any proceeding
relating to the determination of the Closing NOL Carryovers);
provided, however, that Seller shall not settle any claim for
Taxes which would have an adverse effect on the Companies, or any
Affiliate thereof, for periods after the Closing Date without the
prior written consent of Buyer, which consent shall not be
unreasonably withheld and shall not be withheld, in any event, if
Seller has indemnified Buyer against the effects of any such
settlement. In the case of any Straddle Period, Seller shall be
entitled to participate at its expense in any Tax audit or
administrative or court proceeding relating (in whole or in part)
to Taxes attributable to the portion of such Straddle Period
ending on and including the Closing Date and, with the written
consent of Buyer, and at Seller's sole expense, may assume the
entire control of such audit or proceeding. None of Buyer, any
of its Affiliates or either of the Companies may agree to settle
any Tax claim which may be the subject of indemnification by
Seller under Section 5.7 or paragraph (a) of this Section 8.2
without the prior written consent of Seller, which consent may be
withheld in the sole discretion of Seller.
(d) Assistance and Cooperation. After the Closing
Date, each of Seller and Buyer shall (and shall cause its
respective Affiliates to):
(i) assist the other party in preparing any Tax
Returns which such other party is responsible for
preparing and filing in accordance with paragraph (b)
of this Section 8.2;
(ii) cooperate fully in preparing for any audits
of, or disputes with taxing authorities regarding, any
Tax Returns of the Companies;
(iii) make available to the other and to any
taxing authority as reasonably requested all
information, records, and documents relating to Taxes
of the Companies;
(iv) subject to Section 8.2(c), provide timely
notice to the other in writing of any pending or
threatened Tax audits or assessments of the Companies
for taxable periods for which the other may have a
liability under Section 5.7 or this Section 8.2;
(v) furnish the other with copies of all
correspondence received from any taxing authority in
connection with any Tax audit or information request
with respect to any such taxable period;
(vi) timely sign and deliver such certificates or
forms as may be necessary or appropriate to establish
an exemption from (or otherwise reduce), or file Tax
Returns or other reports with respect to, Taxes
described in paragraph (a)(vi) of this Section 8.2
(relating to sales, transfer and similar Taxes); and
(vii) timely provide to the other powers of
attorney or similar authorizations necessary to carry
out the purposes of this Section 8.2.
Section 8.3. Employee Matters. (a) The Companies
shall terminate their participation in Seller's Travel Accident
Program as of the Closing Date. Seller shall retain the
responsibility for payment of all covered claims or expenses
incurred by any employee of the Companies under such plan prior
to the Closing Date, and Buyer shall not assume nor shall the
Companies be responsible for any liability with respect to such
claims (except with respect to the performance by the Companies
as a third-party administrator of such claims).
(b) Buyer agrees to indemnify and hold harmless Seller
and its Affiliates from and against any and all liabilities in
connection with or arising under the agreements, plans and
arrangements set forth in Schedule 8.3 (the "Special Payments").
Section 8.4. Covenant Not to Compete. (a) In
furtherance of the sale of the Shares to Buyer hereunder and to
protect more effectively the value and goodwill of the Business,
Seller covenants and agrees that, for a period commencing on the
Closing Date and ending on the fifth anniversary of the Closing
Date, none of Seller Parent, Seller or any of their respective
direct and indirect subsidiaries will directly or indirectly own,
manage, operate, control, or otherwise carry on, a business
directly competitive with the Business conducted by Opco on the
date hereof anywhere in the United States (it being understood by
the parties hereto that the prohibited activities are not limited
to any particular region because the Business has been conducted
by Opco throughout the United States and the prohibited
activities may be engaged in effectively from any location in the
United States; provided, that nothing set forth in this Section
8.4 shall prohibit Seller Parent, Seller or any of their
respective direct or indirect subsidiaries from (i) owning not in
excess of 5% of the securities of a corporation which engages in
such proscribed conduct if such securities are traded on a
national securities exchange or the NASDAQ National Market System
or are traded publicly in the over-the-counter market, (ii)
owning not in excess of a 5% interest in any Person which engages
in such proscribed conduct, (iii) having an ownership interest
otherwise proscribed by this Section 8.4 if such interest arises
as a result of the acquisition of, or merger or consolidation
with, a business not principally engaged in the proscribed
conduct, (iv) being acquired by, including by merger or
consolidation (other than a merger or consolidation in which
Seller Parent, Seller or any of their respective direct or
indirect subsidiaries is the surviving entity) with, any Person
which has total revenues greater than the total revenues of
Seller and which engages in the proscribed conduct, or (v) in
connection with an employee benefit plan, the assets of which are
managed by an independent investment advisor, invest in any
Person which engages in such proscribed conduct. For purposes of
clause (iii) above, an acquired business entity shall not be
principally engaged in the proscribed conduct if its revenues
from sales of products which would be proscribed hereunder
represent less than 20% of its total revenues.
(b) In the event Seller Parent, Seller or any of their
respective subsidiaries violates any of their obligations under
this Section 8.4, Buyer or Opco may proceed against Seller in law
or in equity for such damages or other relief as a court may deem
appropriate. Seller acknowledges that a violation of this
Section 8.4 may cause Buyer or Opco irreparable harm which may
not be adequately compensated for by money damages. Seller
therefore agrees that in the event of any violation of this
Section 8.4, Buyer or Opco shall be entitled, in addition to
other remedies that it may have, to a temporary restraining order
and to preliminary and final injunctive relief against Seller
Parent, Seller or such subsidiary to prevent any violations of
this Section 8.4.
(c) It is the intent and understanding of each party
hereto that if, in any action before any court or agency legally
empowered to enforce this Section 8.4, any term, restriction,
covenant or promise in this Section 8.4 is found to be
unreasonable and for that reason unenforceable, then such term,
restriction, covenant or promise shall be deemed modified to the
extent necessary to make it enforceable by such court or agency.
Section 8.5. Release of Other Encumbrances. After the
Closing, Seller shall use commercially reasonable efforts to
cause to be released those encumbrances disclosed on
Schedule 5.11(a) and items 12, 20 and 21 listed in the Attachment
to Schedule 5.12. The parties hereby understand and agree that
such Encumbrances had secured indebtedness which is no longer
outstanding and that such Encumbrances do not materially affect
the properties or assets to which they relate.
Section 8.6. Lease of Fort Worth Office Space. Buyer
shall have the right to occupy and use the office space (the
"Premises") currently used by the Companies at the Fort Worth
facility (which is a part of the Excluded Assets) for a period
not to exceed 90 days after the Closing Date; provided, however
Buyer agrees to use the Premises only as office space. Buyer
agrees to (i) reimburse Seller for Seller's actual, direct
out-of-pocket costs incurred and related to Buyer's occupancy of
the Premises and (ii) indemnify Seller for any liability or
obligation incurred by Seller and related to Buyer's occupancy of
the Premises. Upon vacating the Premises, Buyer shall leave the
Premises in, or restore the Premises to, its condition
substantially as it existed on the Closing Date.
ARTICLE IX
CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement shall, at
the option of Buyer (to the extent permissible under applicable
law), be subject to the satisfaction, on or prior to the Closing
Date, of the following conditions:
Section 9.1. No Misrepresentation or Breach of
Covenants and Warranties. (a) The covenants and agreements of
Seller to be performed on or before the Closing Date in
accordance with this Agreement shall have been performed in all
material respects.
(b) (i) The representations and warranties of Seller
contained in this Agreement that are qualified by Material
Adverse Effect shall be true and correct on the Closing Date as
though made on the Closing Date (except to the extent that they
expressly relate to an earlier date) and/or (ii) all other
representations and warranties of Seller contained in this
Agreement shall be true and correct (unless the failure of any
such representations or warranties to be true and correct would
not, individually or in the aggregate, have a Material Adverse
Effect), on the Closing Date as though made on the Closing Date
(except to the extent that they expressly relate to an earlier
date), except in the case of each of clause (i) and (ii) for
changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing
by Buyer or any transaction permitted by Section 7.4.
(c) There shall have been delivered to Buyer a
certificate dated the Closing Date and signed on behalf of Seller
by a duly authorized officer of Seller to the effect of
paragraphs (a) and (b) above.
Section 9.2. No Restraint. The waiting period under
the HSR Act shall have expired or been terminated; and no
preliminary or permanent injunction or decree or other order
shall have been issued by any court of competent jurisdiction and
be in effect which restrains or prohibits any material
transaction contemplated hereby; provided, however, that in the
case of any such injunction, decree or order, Buyer shall have
used its commercially reasonable best efforts to prevent the
entry thereof and to appeal as promptly as possible any such
injunction, decree or order.
Section 9.3. Necessary Approvals. All approvals,
actions and consents of or by all Persons listed on Schedule 9.3
shall have been obtained.
Section 9.4. Accounts Receivable Purchase Agreement.
Buyer, Seller and SFFC shall have entered into the Accounts
Receivable Purchase Agreement and the transactions contemplated
thereby shall be consummated effective simultaneously with the
Closing.
Section 9.5. Release of Encumbrances. The
Encumbrances on the Shares and the assets of the Companies under
the Security Documents shall have been released or shall be
positioned to be released simultaneously with the Closing and the
guarantees of Holdco and Opco guaranteeing obligations under the
Revolving Credit Facility shall have been terminated or shall be
positioned to terminate simultaneously with the Closing.
Notwithstanding the failure of any one or more of the
foregoing conditions, Buyer may proceed with the Closing without
satisfaction, in whole or in part, of any one or more of such
conditions and without written waiver. To the extent that at the
Closing Seller delivers to Buyer a written notice specifying in
reasonable detail the failure of any of such conditions or the
breach by Seller of any of the representations or warranties of
Seller herein, and Buyer nevertheless proceeds with the Closing,
Buyer shall be deemed to have waived for all purposes any rights
or remedies it may have against Seller by reason of the failure
of any such conditions or the breach of any such representations
or warranties to the extent fully described in such notice.
ARTICLE X
CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement shall,
at the option of Seller (to the extent permissible under
applicable law), be subject to the satisfaction, on or prior to
the Closing Date, of the following conditions:
Section 10.1. No Misrepresentation or Breach of
Covenants and Warranties. The covenants and agreements of Buyer
to be performed on or before the Closing Date in accordance with
this Agreement shall have been performed in all material
respects; each of the representations and warranties of Buyer
contained in this Agreement shall be true and correct in all
material respects on the Closing Date as though made on the
Closing Date, except for changes therein specifically permitted
by this Agreement or resulting from any transaction expressly
consented to in writing by Seller or any transaction contemplated
by this Agreement; and there shall have been delivered to Seller
a certificate to such effect, dated the Closing Date, signed on
behalf of Buyer by a duly authorized officer of Buyer.
Section 10.2. No Restraint. The waiting period under
the HSR Act shall have expired or been terminated; and no
preliminary or permanent injunction, decree or other order shall
have been issued by any court of competent jurisdiction and be in
effect which restrains or prohibits any material transaction
contemplated hereby; provided, however, that in the case of any
such injunction, decree or order, Seller shall have used its
commercially reasonable best efforts to prevent the entry thereof
and to appeal as promptly as possible such injunction, decree or
order.
Section 10.3. Necessary Governmental Approvals. All
approvals and actions of or by all Governmental Bodies which are
necessary to consummate the transactions contemplated hereby
shall have been obtained or taken place, other than those as to
which the failure to have been obtained or taken place would not,
individually or in the aggregate, reasonably be expected to have
a Material Adverse Effect.
Section 10.4. Accounts Receivable Purchase Agreement.
Buyer, Seller and SFFC shall have entered into the Accounts
Receivable Purchase Agreement and the transactions contemplated
thereby shall be consummated effective simultaneously with the
Closing.
Notwithstanding the failure of any one or more of the
foregoing conditions, Seller may proceed with the Closing without
satisfaction, in whole or in part, of any one or more of such
conditions and without written waiver. To the extent that at the
Closing Buyer delivers to Seller a written notice specifying in
reasonable detail the failure of any of such conditions or the
breach by Buyer of any of the representations or warranties of
Buyer herein, and Seller nevertheless proceeds with the Closing,
Seller shall be deemed to have waived for all purposes any rights
or remedies it may have against Buyer by reason of the failure of
any such conditions or the breach of any such representations or
warranties to the extent fully described in such notice.
ARTICLE XI
INDEMNIFICATION
Section 11.1. Indemnification by Seller. (a) Seller
agrees to indemnify and hold harmless each Buyer Group Member
from and against any and all Losses and Expenses incurred by such
Buyer Group Member in connection with or arising from (i) any
breach of any representation, warranty, covenant or agreement (A)
made by Seller in this Agreement (other than representations and
warranties made by Seller in Sections 5.2(b), 5.2(c) and 5.4(c)
and covenants and agreements made by Seller in Section 8.2) or in
any certificate delivered by or on behalf of Seller pursuant
hereto or (B) made by Seller or SFFC in the Accounts Receivable
Purchase Agreement, (ii) any breach of any representation or
warranty made by Seller in Section 5.2(b), 5.2(c) and 5.4(c) and
any breach of any covenant or agreement made by Seller in
Section 8.2, (iii) any Excluded Liability and (iv) any failure by
Seller to pay the Post-Closing Adjustment, if applicable;
provided, however, that Seller shall be required to indemnify and
hold harmless any Buyer Group Member under clause (i) of this
Section 11.1(a) with respect to Losses and Expenses incurred
thereby only to the extent that the aggregate amount of all
Losses and Expenses incurred thereby under clause (i) exceeds the
amount set forth as the Basket Amount in Schedule 11.1 (the
"Basket Amount") (which Basket Amount is an aggregate deductible
amount which shall not be recoverable from Seller under
clause (i) of this Section 11.1); and provided, further, that the
aggregate amount required to be paid by Seller pursuant to
clause (i) of this Section 11.1(a) shall not exceed the amount
set forth as the Cap in Schedule 11.1 (the "Cap" and, together
with the Basket Amount, the "Aggregate Limits"). Seller's
obligation to indemnify any Buyer Group Member for Losses and
Expenses pursuant to clauses (ii), (iii) and (iv) of this Section
11.1(a) shall not be subject to the Basket Amount or the Cap.
(b) The indemnification provided for in Section
11.1(a) shall terminate one year after the Closing Date (and no
claims shall be made by any Buyer Group Member under
Section 11.1(a) thereafter), except that the indemnification by
Seller shall continue as to:
(i) the covenants of Seller set forth in
Section 13.6, which shall survive for the period of
time set forth therein;
(ii) the covenants of Seller set forth in
Section 8.2, which shall survive until the expiration
of the relevant statutory period of limitations
applicable to the underlying claim, giving effect to
any waiver, mitigation or extension thereof;
(iii) the representations and warranties of
Seller set forth in Section 5.7, which shall survive
until the expiration of the relevant statutory period
of limitations applicable to the underlying claim,
giving effect to any waiver, mitigation or extension
thereof;
(iv) the obligation of Seller with respect to the
Excluded Liabilities, as to which no time limit shall
apply;
(v) the representations and warranties set forth
in Section 5.2(b), 5.2(c) and 5.4(c), as to which no
time limit shall apply; and
(vi) any Losses or Expenses of which any Buyer
Group Member has notified Seller in accordance with the
requirements of Section 11.3 on or prior to the date
such indemnification would otherwise terminate in
accordance with this Section 11.1, as to which the
obligation of Seller shall continue until the liability
of Seller shall have been determined pursuant to this
Article XI, and Seller shall have reimbursed all Buyer
Group Members for such Losses and Expenses in
accordance with this Article XI.
Section 11.2. Indemnification by Buyer. (a) Buyer
agrees to indemnify and hold harmless each Seller Group Member
from and against any and all Losses and Expenses incurred by such
Seller Group Member in connection with or arising from any breach
of any representation, warranty, covenant or agreement made by
Buyer in this Agreement or in any certificate delivered by or on
behalf of Buyer pursuant hereto or in the Accounts Receivable
Purchase Agreement.
(b) The indemnification provided for in Section
11.2(a) shall terminate one year after the Closing Date (and no
claims shall be made by any Seller Group Member under
Section 11.2(a) thereafter), except that the indemnification by
Buyer shall continue as to:
(i) the covenants of Buyer set forth in Section
13.6 which shall survive for the period of time set
forth in such section;
(ii) the covenants of Buyer set forth in
Section 8.2, which shall survive until the expiration
of the relevant statutory period of limitations
applicable to the underlying claim, giving effect to
any waiver, mitigation or extension thereof; and
(iii) any Losses or Expenses of which any Seller
Group Member has notified Buyer in accordance with the
requirements of Section 11.3 on or prior to the date
such indemnification would otherwise terminate in
accordance with this Section 11.2, as to which the
obligation of Buyer shall continue until the liability
of Buyer shall have been determined pursuant to this
Article XI, and Buyer shall have reimbursed all Seller
Group Members for such Losses and Expenses in
accordance with this Article XI.
Section 11.3. Notice of Claims. (a) Any Buyer Group
Member or Seller Group Member (each, an "Indemnified Party")
seeking indemnification hereunder shall give to the party
obligated to provide indemnification to such Indemnified Party
(the "Indemnitor") a written notice (a "Claim Notice") promptly
after the Indemnified Party has knowledge of any claim which the
Indemnified Party has determined has given or could give rise to
a right of indemnification hereunder, in each case describing in
reasonable detail the facts giving rise to the claim for
indemnification hereunder and shall include in such Claim Notice
(if then known) the amount or the method of computation of the
amount of such claim, and a reference to the provision of this
Agreement or the Accounts Receivable Purchase Agreement upon
which such claim is based; provided, however, that a Claim Notice
in respect of any action at law or suit in equity by or against a
third Person as to which indemnification will be sought shall be
given promptly after the action or suit is commenced.
(b) After the giving of any Claim Notice pursuant
hereto, the amount of indemnification to which an Indemnified
Party shall be entitled under this Article XI shall be
determined: (i) by the written agreement between the Indemnified
Party and the Indemnitor; (ii) by a final judgment or decree of
any court of competent jurisdiction; or (iii) by any other means
to which the Indemnified Party and the Indemnitor shall agree.
The judgment or decree of a court shall be deemed final when the
time for appeal, if any, shall have expired and no appeal shall
have been taken or when all appeals taken shall have been finally
determined. The Indemnified Party shall have the burden of proof
in establishing the amount of Losses and Expenses suffered by it.
(c) No Claim Notice may be given in respect of a Loss
or Expense incurred by a Buyer Group Member in connection with or
arising from a breach of any representation or warranty of Seller
set forth in Section 5.7(d) or the covenant set forth in the last
sentence of Section 8.2(a)(i) earlier than the time such breach
causes such Buyer Group Member to actually pay incremental Taxes,
and no Claim Notice shall be made in respect of anticipated
incremental Tax payments. With respect to such breach, the
amount of a Buyer Group Member's Loss or Expense in respect of a
payment of a Tax shall equal (x) the excess, if any, of the
amount of such Tax payment (assuming utilization of all available
losses, credits and similar Tax attributes) over the amount such
Tax payment would have been if there had been no breach of any
representation or warranty of Seller set forth in Section 5.7(d)
or the covenant set forth in the last sentence of
Section 8.2(a)(i), (y) discounted at a rate of 7% per annum
(compounded annually) from the date of such payment of Tax to the
Closing Date. Seller's obligation to indemnify and hold harmless
a Buyer Group Member in respect of such amount of Loss or Expense
shall be subject to the Aggregate Limits in accordance with the
terms of Section 11.1(a) and the provisions of clauses (1) and
(3) of Section 11.5(a).
Section 11.4. Third Person Claims. (a) In order for
a party to be entitled to any indemnification provided for under
this Agreement in respect of, arising out of or involving any
legal proceeding, claim or demand (a "Third Party Claim") made by
any third Person against the Indemnified Party in respect of
which indemnity may be sought from the Indemnitor under this
Article XI, such Indemnified Party must notify the Indemnitor in
writing, and in reasonable detail, of the Third Party Claim
promptly after receipt by such Indemnified Party of written
notice of the Third Party Claim. Thereafter, the Indemnified
Party shall deliver to the Indemnitor, promptly after the
Indemnified Party's receipt thereof, copies of all notices and
documents (including court papers) received by the Indemnitor
relating to the Third Party Claim. Notwithstanding the
foregoing, should a party be physically served with a complaint
with regard to a Third Party Claim, the Indemnified Party must
notify the Indemnitor with a copy of the complaint promptly after
receipt thereof and shall deliver to the Indemnitor promptly
after the receipt of such complaint copies of notices and
documents (including court papers) received by the Indemnified
Party relating to the Third Party Claim.
(b) In the event any legal proceeding shall be
threatened or instituted or any claim or demand shall be asserted
by any Person in respect of which payment may be sought by one
party hereto from the other party under the provisions of this
Article XI, the Indemnified Party shall promptly cause written
notice of the assertion of any such claim of which it has
knowledge which is covered by this indemnity to be forwarded to
the Indemnitor. Any notice of a claim shall contain a reference
to the provision of this Agreement or the Accounts Receivable
Purchase Agreement upon which such claim is based, the facts
giving rise to an alleged basis for the claim and the amount of
the liability asserted against the Indemnitor by reason of the
claim.
(c) The Indemnitor shall have the right to conduct and
control (so long as it does so diligently), at its expense and
with counsel of its choosing that is reasonably satisfactory to
such Indemnified Party, the defense, compromise or settlement of
any such Third Party Claim against such Indemnified Party as to
which indemnification will be sought by any Indemnified Party
from any Indemnitor hereunder, and in any such case the
Indemnified Party shall cooperate in connection therewith and
shall furnish and make available to the Indemnitor all witnesses,
records, information and testimony and attend such conferences,
discovery proceedings, hearings, trials and appeals as may be
reasonably requested by the Indemnitor in connection therewith;
provided, that the Indemnified Party may participate, through
counsel chosen by it and at its own expense, in the defense of
any such Third Party Claim as to which the Indemnitor has so
elected to conduct and control the defense thereof. Except for
the settlement of a Third Party Claim which involves the payment
of money only (without the admission of liability), with respect
to which the Indemnitor has agreed to indemnify the Indemnified
Party, no Third Party Claim may be settled by the Indemnitor
without the written consent of the Indemnified Party, which
consent shall not be unreasonably withheld or delayed.
Notwithstanding the foregoing, the Indemnified Party shall have
the right to pay, settle or compromise any such Third Party Claim
that Indemnitor has agreed to defend, provided that in such event
the Indemnified Party shall waive any right to indemnity therefor
hereunder. In the event Indemnitor has determined not to conduct
and control the defense of such Third Party Claim, the
Indemnified Party may defend, compromise or settle (or take or
fail to take any action with respect to) such Third Party Claim
without waiver of its rights against Indemnitor hereunder.
(d) After any final judgment or award shall have been
rendered by a court, arbitration board or administrative agency
of competent jurisdiction and the time in which to appeal
therefrom has expired, or a settlement shall have been
consummated, or the Indemnified Party and the Indemnitor shall
arrive at a mutually binding agreement with respect to each
separate matter alleged to be indemnified by the Indemnitor
hereunder, the Indemnified Party shall, subject to
Section 11.5(d), forward to the Indemnitor notice of any sums due
and owing by it with respect to such matter and the Indemnitor
shall pay all of the sums so owning to the Indemnified Party by
wire transfer, certified or bank cashier's check within thirty
(30) days after the date of such notice.
(e) To the extent of any inconsistency between this
Section 11.4 and Section 8.2(c) (relating to Tax contests), the
provisions of Section 8.2(c) shall control with respect to Tax
contests.
(f) The failure of an Indemnified Party to give any
notice required in Section 11.3 or this Section 11.4 shall not
relieve the Indemnitor of its obligations hereunder except to the
extent it shall have been prejudiced by such failure.
Section 11.5. Additional Limitations. (a) In
calculating any Loss or Expense there shall be deducted any
insurance recovery in respect thereof (and no right of
subrogation shall accrue hereunder to any insurer); provided,
however, that neither party shall be required to seek an
insurance recovery in any event. Any indemnity payment
hereunder with respect to any Loss or Expense shall be calculated
on an "After-Tax Basis," which shall mean an amount which is
sufficient to compensate the Indemnified Party for the event
giving rise to such Loss or Expense (the "Indemnified Event"),
determined after taking into account (1) all increases in
federal, state, local or other Taxes (including estimated Taxes)
payable by the Indemnified Party as a result of the receipt of
the indemnity payment (as a result of the indemnity payment being
included in income, resulting in a reduction of tax basis, or
otherwise); provided, however, that Buyer and Seller agree to
report each payment made in respect of a Loss or Expense as an
adjustment to the Purchase Price for federal income Tax purposes,
(2) all increases in federal, state, local and other Taxes
(including estimated Taxes) payable by the Indemnified Party for
all affected taxable years as a result of the Indemnified Event,
and (3) all reductions in federal, state, local and other Taxes
(including estimated Taxes) payable by the Indemnified Party as a
result of the Indemnified Event.
(b) In any case where an Indemnified Party recovers
from any third Person any amount in respect of a matter with
respect to which an Indemnitor has indemnified it pursuant to
this Article XI, such Indemnified Party shall promptly pay over
to the Indemnitor the amount so recovered (after deducting
therefrom the expenses incurred by it in procuring such
recovery), but not in excess of the sum of (i) any amount
previously so paid by the Indemnitor to or on behalf of the
Indemnified Party in respect of such matter and (ii) any amount
expended by the Indemnitor in pursuing or defending any claim
arising out of such matter.
(c) Except for Buyer's obligations under Sections 7.9
(if any), 8.3(b) and 8.6, fraud and remedies that cannot be
waived as a matter of law and injunctive and provisional relief,
if the Closing occurs, this Article XI shall be the exclusive
remedy for breaches of this Agreement (including any covenant,
obligation, representation or warranty contained in this
Agreement or in any certificate delivered pursuant to this
Agreement), the Accounts Receivable Purchase Agreement (including
any covenant, obligation, representation or warranty of Seller or
SFFC contained therein) or otherwise in respect of the
transactions contemplated hereby or thereby. After the Closing,
Buyer shall not be entitled to a recision of the sale of the
Shares hereunder or a rescission of the sale of the Purchased
Accounts Receivable under the Accounts Receivable Purchase
Agreement.
(d) Without limiting the generality of any other
provision hereof, with respect to all environmental matters
(other than those related to the Excluded Assets and Excluded
Liabilities): (i) the parties agree that their respective rights
and obligations as provided in this Agreement shall supersede any
rights and obligations that any party may have under any existing
or future law; (ii) Seller shall have no liability or obligation
under Section 11.1(a) for breaches of representations and
warranties that relate to the operations of the Companies prior
to Seller's acquisition thereof, or any prior operations on the
Owned Real Property or Leased Real Property, unless the subject
matter of such environmental claim was within the Knowledge of
Seller as of the date hereof; (iii) Seller will not be liable for
the costs of remedial or other actions more extensive than those
required under applicable Environmental Laws in effect on the
date hereof utilizing commercially reasonable and cost effective
measures and utilizing the least stringent cleanup standards
acceptable to relevant Governmental Authorities taking into
account the industrial use of the Owned Real Property or Leased
Real Property; (iv) no claim may be asserted pursuant to Section
11.1(a) to the extent that Losses and Expenses are incurred by
Buyer as a result of any voluntary investigation (unless such
investigation is (A) undertaken only where Buyer has a good faith
reasonable basis to believe that such investigation is necessary
to address a violation of Environmental Laws or (B) consistent
with Buyer's pre-existing environmental policies and standards in
place with respect to its other comparable facilities and is not
undertaken without a legitimate business purpose or in any
significant respect due to the indemnification provided in this
Article XI) or any remedial work not required by Environmental
Laws; and (v) Buyer waives, releases and agrees not to make any
claim or bring any contribution, cost recovery or other action
against Seller or any of its Affiliates or any of their
successors or assigns, under CERCLA, common law or any other
federal, state or local law or regulation now existing or
hereinafter enacted.
(e) The obligations of Seller in respect of a claim
for indemnification under this Article XI shall not include any
special, exemplary, punitive or consequential damages (including
loss of profit or revenue) suffered or incurred by such Buyer
Group Member; provided, however, that the exclusion of special
damages shall not be interpreted to include actual out-of-pocket
damages.
(f) Each of the parties agrees to take all reasonable
steps to mitigate their respective Losses upon and after becoming
aware of any event which could reasonably be expected to give
rise to any Losses that are indemnified hereunder.
(g) Upon making any indemnification payment, the
Indemnitor will, to the extent of such payment, be subrogated to
all rights of the Indemnified Party against any third party in
respect of the Loss to which the payment relates except against a
current customer of the Companies. Without limiting the
generality of any other provision hereof, each such Indemnitor
and Indemnified Party will duly execute upon request all
instruments reasonably necessary to evidence and perfect such
subrogation rights.
(h) Notwithstanding anything to the contrary in this
Agreement, including Section 11.3(b) and Section 11.4(d), in the
event that Seller is obligated to make any payment with respect
to its indemnity obligations in accordance with the terms of this
Article XI, Buyer shall be required to recover such amounts under
the Escrow Agreement (to the full extent of any funds that are on
deposit thereunder) prior to any obligation of Seller to make any
such payment under this Article XI.
ARTICLE XII
TERMINATION
Section 12.1. Termination. Notwithstanding anything
contained in this Agreement to the contrary, this Agreement may
be terminated at any time prior to the Closing Date:
(a) By the mutual consent of Buyer and Seller;
(b) By Buyer or Seller if any court of competent
jurisdiction in the United States or other United States
Governmental Body shall have issued a final and non-
appealable order, decree or ruling permanently restraining,
enjoining or otherwise prohibiting the consummation of the
transactions contemplated hereby;
(c) By Seller if the Closing shall not have occurred
on or before the first Monday after the date on which the
waiting period under the HSR Act shall expire or terminate;
provided that in the event that the transactions
contemplated hereby receive "early termination" under the
HSR Act, Seller shall have the right to terminate this
Agreement if the Closing shall not have occurred on or
before the first Monday that is at least the third business
day after the date of such early termination of the waiting
period under the HSR Act; provided that the failure to
consummate the Closing on or before such date did not result
from the failure of Seller to fulfill any undertaking or
commitment provided for herein that Seller is required to
fulfill prior to Closing;
(d) By Seller at any time after Buyer or Seller or any
of their respective Affiliates has received a request for
additional information or documentary material pursuant to
15 USC 18(a) (subpart e) and the implementing regulations
thereto (commonly known as a second request); or
(e) By Buyer if the Closing shall not have occurred on
or before July 16, 1999 for any reason other than the
failure of Buyer to fulfill any undertaking or commitment
provided for herein that Buyer is required to fulfill prior
to Closing.
Section 12.2. Notice of Termination. Any party
desiring to terminate this Agreement pursuant to Section 12.1
shall give written notice of such termination to the other party
to this Agreement.
Section 12.3. Effect of Termination. In the event
that this Agreement shall be terminated pursuant to this Article
XII, all further obligations of the parties under this Agreement
(other than the parties' obligations under Sections 12.4, 13.2,
13.3 and 13.10) shall be terminated without further liability of
any party to the other, provided that nothing herein shall
relieve any party from liability for its willful breach of this
Agreement.
Section 12.4. Employees. If this Agreement is
terminated, Buyer agrees that the provisions of the
Confidentiality Agreement relating to Buyer's covenants regarding
the solicitation and hiring of employees of Seller or its
subsidiaries shall survive for the period set forth therein.
ARTICLE XIII
GENERAL PROVISIONS
Section 13.1. Survival. All representations and
warranties contained in this Agreement shall survive the
consummation of the transactions contemplated by this Agreement
through the period during which claims for indemnification may be
made pursuant to Article XI (at which time all representations
and warranties shall terminate).
Section 13.2. Confidential Nature of Information.
Each party hereto agrees that all documents, materials and other
information which it or its representatives shall have obtained
regarding the other party or its Affiliates during the course of
the negotiations leading to the consummation of the transactions
contemplated hereby (whether obtained before or after the date of
this Agreement), the investigation provided for herein and the
preparation of this Agreement and other related documents shall
be held in confidence pursuant to the Confidentiality Agreement
for the period set forth therein.
Section 13.3. No Public Announcement. Neither Buyer
nor Seller shall, without the approval of the other, make any
press release or other public announcement concerning the
transactions contemplated by this Agreement, except as and to the
extent that any such party shall be so obligated by law, in which
case the other party shall be advised and the parties shall use
their commercially reasonable best efforts to cause a mutually
agreeable release or announcement to be issued; provided,
however, that the foregoing shall not preclude communications or
disclosures necessary to implement the provisions of this
Agreement or to comply with the accounting and SEC disclosure
obligations or the rules of any securities exchange.
Section 13.4. Notices. All notices or other
communications required or permitted hereunder shall be
sufficiently given for all purposes hereunder if in writing and
delivered personally, sent by documented overnight delivery
service or, to the extent receipt is confirmed telephonically,
telecopy or other electronic transmission service, or after seven
(7) days if mailed by registered or certified mail to the
appropriate address or number set forth below:
If to Buyer, to:
IBP, inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
President IBP Enterprise and
Chief Financial Officer
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
IBP, inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
Senior Corporate Attorney
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Seller, to:
Specialty Foods Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Vice President and General Counsel
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Sidley & Austin
One First National Plaza
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or number or such other person as such
party may indicate by a notice delivered to the other party
hereto.
Section 13.5. Successors and Assigns. This Agreement
shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns;
provided, however, that neither this Agreement nor any rights,
interests or obligations under this Agreement shall be assigned
by any of the parties hereto without the express written consent
of the other parties hereto; provided, further, that Buyer may
assign its rights and interests under this Agreement to any
direct or indirect wholly owned subsidiary of Buyer (but no such
assignment shall relieve Buyer of any of its duties or
obligations hereunder). Except for Article XI, which is intended
to benefit, and to be enforceable by, the parties specified
therein, including any Buyer Group Member and any Seller Group
Member, as the case may be, nothing in this Agreement, expressed
or implied, is intended or shall be construed to confer upon any
Person other than the parties and successors and assigns
permitted by this Section 13.5 any right, remedy or claim under
or by reason of this Agreement.
Section 13.6. Access to Records after Closing. Buyer
agrees, and agrees to cause the Companies, for a period of six
years from the Closing Date, to hold all of the books and records
of or pertaining to the Companies existing on the Closing Date
and not to destroy or dispose of any such books and records. If
at any time Buyer proposes to destroy or dispose of any of such
books and records, Buyer agrees, and agrees to cause the
Companies, to offer first in writing at least sixty (60) days
prior to such proposed destruction or disposition to surrender
them to Seller. Buyer agrees, and agrees to cause the Companies,
at any time and from time to time following the Closing Date to
afford Seller, its accountants, and counsel, during normal
business hours, upon reasonable request, full access to such
books, records and other data and to the employees engaged in the
Business or any successor thereto to the extent that such access
may be requested for any legitimate purpose, including the
preparation of Tax Returns, the operations of the Business prior
to the Closing Date and any dispute or controversy arising out of
this Agreement, at no cost to Seller (other than for reasonable
out-of-pocket expenses); provided, however, that nothing herein
shall limit any of Seller's or its Affiliates' rights of
discovery. For a period of six years after the Closing, Buyer
will make available, and will cause the Companies to make
available, to Seller the employees of the Companies whom Seller
and its Affiliates may reasonably need in order to defend or
prosecute any legal or administrative action to which Seller or
any of its Affiliates is, or is threatened to be made, a party
and which relates to the conduct of the Business prior to the
Closing. Seller agrees to, and shall cause its accountants,
counsel and other representatives to, hold in confidence and not
to use except for the purposes provided above all books, records
and other data of the Companies, except to the extent the
disclosure of any information is required in connection with the
purposes for which such information is sought and then (except
with respect to any disclosure relating to Requirements of Law)
only after giving notice to Buyer of the portions to be disclosed
and the Person to whom such information is to be disclosed. If
Buyer reasonably requests, Seller will use its reasonable efforts
to maintain the confidentiality of such information to be filed
or provided to any other Person.
Seller agrees, for a period of six years from the
Closing Date, to hold all of the books and records of or
pertaining to the Companies existing on the Closing Date that are
retained by Seller and not to destroy or dispose of any such
books and records. If at any ▇▇▇▇ ▇▇▇▇▇▇ proposes to destroy or
dispose of any of such books and records, to offer first in
writing at least sixty (60) days prior to such proposed
destruction or disposition to surrender them to Buyer. Seller
agrees at any time and from time to time following the Closing
Date to afford Buyer, its accountants, and counsel, during normal
business hours, upon reasonable request, full access to such
books, records and other data to the extent that such access may
be requested for any legitimate purpose at no cost to Buyer
(other than for reasonable out-of-pocket expenses); provided,
however, that nothing herein shall limit any of Buyer's or its
Affiliates' rights of discovery.
Section 13.7. Entire Agreement; Amendments. This
Agreement, the Exhibits and Schedules referred to herein and the
documents delivered pursuant hereto (including all Buyer or
Seller Ancillary Agreements) and the Confidentiality Agreement
and the Accounts Receivable Purchase Agreement contain the entire
understanding of the parties hereto with regard to the subject
matter contained herein or therein, and supersede all other prior
agreements, understandings or letters of intent between or among
any of the parties hereto (whether written or oral). This
Agreement shall not be amended, modified or supplemented except
by a written instrument signed by an authorized representative of
each of the parties hereto.
Section 13.8. Interpretation. (a) Articles, titles
and headings to sections herein are inserted for convenience of
reference only and are not intended to be a part of or to affect
the meaning or interpretation of this Agreement. All references
to sections or articles contained herein mean sections or
articles of this Agreement unless otherwise stated. The
Schedules and Exhibits referred to herein shall be construed with
and as an integral part of this Agreement to the same extent as
if they were set forth verbatim herein. Disclosure of any fact
or item in any Schedule hereto referenced by a particular section
in this Agreement shall be deemed to have been disclosed with
respect to every other section in this Agreement to the extent
that it is reasonably apparent from the face of such Schedule
that such disclosure relates to any other Section of this
Agreement. Neither the specification of any dollar amount in any
representation or warranty contained in this Agreement nor the
inclusion of any specific item in any Schedule hereto is intended
to vary the definition of "Material Adverse Effect" or to imply
that such amount, or higher or lower amounts, or the item so
included or other items, are or are not material, and no party
shall use the fact of the setting forth of any such amount or the
inclusion of any such item in any dispute or controversy between
the parties as to whether any obligation, item or matter not
described herein or included in any Schedule is or is not
material for purposes of this Agreement. Unless this Agreement
specifically provides otherwise, neither the specification of any
item or matter in any representation or warranty contained in
this Agreement nor the inclusion of any specific item in any
Schedule hereto is intended to imply that such item or matter, or
other items or matters, are or are not in the ordinary course of
business, and no party shall use the fact of the setting forth or
the inclusion of any such item or matter in any dispute or
controversy between the parties as to whether any obligation,
item or matter not described herein or included in any Schedule
is or is not in the ordinary course of business for purposes of
this Agreement. Seller may, from time to time prior to or at the
Closing, by notice in accordance with the terms of this
Agreement, supplement, amend or create any Schedule, in order to
add information with respect to any fact, circumstance or event
that has arisen or occurred on or after the date of this
Agreement. No such amendment shall be evidence, in and of
itself, that the representations and warranties in the
corresponding section are no longer true and correct in all
material respects. It is specifically agreed that such Schedules
may be so amended to add immaterial, as well as material, items
thereto. No such supplemental, amended or additional Schedule
shall be deemed to cure any breach for purposes of Section 9.1.
In the event that Seller amends or supplements any existing
Schedule or adds a Schedule on a date which is less than two
business days prior to the Closing, Buyer shall have the right to
extend the Closing Date to no later than the second business day
after the date of the receipt thereof in order to evaluate such
amended or supplemented or additional Schedule. If, however, the
Closing occurs, any such supplement, amendment or addition will
be effective to cure and correct for all other purposes any
breach of any representation, warranty or covenant which would
have existed if Seller had not made such supplement, amendment or
addition, and all references to any Schedule hereto which is
supplemented or amended as provided in this Section 13.8 shall
for all purposes after the Closing be deemed to be a reference to
such Schedule as so supplemented or amended.
(b) For the purposes of this Agreement, (i) words in
the singular shall be held to include the plural and vice versa
and words of one gender shall be held to include the other
genders as the context requires, (ii) the terms "hereof",
"herein" and "herewith" and words of similar import shall be
construed to refer to this Agreement in its entirety and to all
of the Schedules and not to any particular provision, unless
otherwise stated, and (iii) the term "including" shall mean
"including without limitation." The use of the phrase
"reasonable efforts" in provisions relating to the obligations of
any of the parties to seek required consents and approvals of any
Person shall in no event contemplate payment of any amount to any
such Person that is more than minimal or the incurrence of any
liability or the agreement to the modification of any existing
obligation or arrangement in a manner that would be adverse in
any material respect to any party hereto in order to obtain any
such consent or approval.
(c) This Agreement shall be construed without regard
to any presumption or rule requiring construction or
interpretation against the party drafting or causing any
instrument to be drafted.
Section 13.9. Waivers. Any term or provision of this
Agreement may be waived, or the time for its performance may be
extended, by the party or parties entitled to the benefit
thereof. Any such waiver shall be validly and sufficiently
authorized for the purposes of this Agreement if, as to any
party, it is authorized in writing by an authorized
representative of such party. The failure of any party hereto to
enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to
affect the validity of this Agreement or any part hereof or the
right of any party thereafter to enforce each and every such
provision. No waiver of any breach of this Agreement shall be
held to constitute a waiver of any other or subsequent breach.
Section 13.10. Expenses. Except as set forth in this
Agreement, whether or not the Closing is consummated, each party
hereto will pay all costs and expenses incident to its
negotiation and preparation of this Agreement and to its
performance and compliance with all agreements and conditions
contained herein on its part to be performed or complied with,
including the fees, expenses and disbursements of its counsel and
independent public accountants.
Section 13.11. Partial Invalidity. Wherever possible,
each provision hereof shall be interpreted in such manner as to
be effective and valid under applicable law, but in case any one
or more of the provisions contained herein shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect,
such provision shall be ineffective to the extent, but only to
the extent, of such invalidity, illegality or unenforceability
without invalidating the remainder of such invalid, illegal or
unenforceable provision or provisions or any other provisions
hereof, unless such a construction would be unreasonable.
Section 13.12. Execution in Counterparts. This
Agreement may be executed in one or more counterparts, each of
which shall be considered an original instrument, but all of
which shall be considered one and the same agreement, and shall
become binding when one or more counterparts have been signed by
each of the parties hereto and delivered to Seller and Buyer.
Section 13.13. Further Assurances. On and after the
Closing Date each party hereto shall take such other actions and
execute such other documents and instruments of conveyance and
transfer as may be reasonably requested by the other party hereto
from time to time to effectuate or confirm the transfer of the
Shares to Buyer in accordance with the terms of this Agreement.
SECTION 13.14. GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF
THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO ANY CONFLICT OF
LAW PROVISIONS.
Section 13.15. Disclaimer of Warranties. EXCEPT AS TO
THOSE MATTERS EXPRESSLY COVERED BY THE REPRESENTATIONS AND
WARRANTIES IN THIS AGREEMENT AND THE CERTIFICATE DELIVERED BY
SELLER PURSUANT TO SECTION 4.4, SELLER IS SELLING THE SHARES (AND
THE BUSINESS AND ASSETS OF THE COMPANIES REPRESENTED THEREBY) ON
AN "AS IS, WHERE IS" BASIS AND SELLER DISCLAIMS ALL OTHER
WARRANTIES, REPRESENTATIONS AND GUARANTIES WHETHER EXPRESS OR
IMPLIED. SELLER MAKES NO REPRESENTATION OR WARRANTY AS TO
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE AND NO
IMPLIED WARRANTIES WHATSOEVER. Buyer acknowledges that neither
Seller nor any of its representatives nor any other Person has
made any representation or warranty, express or implied, as to
the accuracy or completeness of any memoranda, charts, summaries,
schedules, projections, forecasts or forward-looking information
heretofore made available or provided by Seller or its
representatives to Buyer or any other information which is not
included in this Agreement or the Schedules hereto, and neither
Seller nor any of its representatives nor any other Person will
have or be subject to any liability to Buyer, any Affiliate of
Buyer or any other Person resulting from the distribution of any
such information to, or use of any such information by, Buyer,
any Affiliate of Buyer or any of their agents, consultants,
accountants, counsel or other representatives.
Section 13.16. Submission to Jurisdiction. Seller and
Buyer hereby irrevocably submit in any suit, action or proceeding
arising out of or related to this Agreement, the Accounts
Receivable Purchase Agreement or the Escrow Agreement or any of
the transactions contemplated hereby or thereby to the
jurisdiction of the United States District Court for the Northern
District of Illinois and the jurisdiction of any court of the
State of Illinois located in Chicago and waive any and all
objections to jurisdiction that they may have under the laws of
the State of Illinois or the United States.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the day and year first above
written.
IBP, inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: President IBP
Enterprise and Chief Financial
Officer
SPECIALTY FOODS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
___________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Vice President
and General Counsel