EXHIBIT 99.2
EXECUTION COPY
ASSET PURCHASE AGREEMENT
BETWEEN
THE PROCTER & ▇▇▇▇▇▇ COMPANY
AND
BROTHERS GOURMET COFFEES, INC.
--------------------------------------------------------
AS OF MARCH 8, 1999
1. DEFINITIONS...................................................................................................1
1.1 APPENDIX OF DEFINED TERMS...............................................................................1
1.2 ACCOUNTING TERMS........................................................................................1
1.3 OTHER DEFINITIONAL PROVISIONS...........................................................................1
2. THE SALE AND PURCHASE OF CERTAIN ASSETS.......................................................................2
2.1 PURCHASE OF ASSETS......................................................................................2
2.2 PURCHASE CONSIDERATION..................................................................................2
2.3 PURCHASE PRICE ADJUSTMENTS..............................................................................3
2.4 CLOSING.................................................................................................4
2.5 CLOSING DATE............................................................................................4
2.6 CLOSING DELIVERIES......................................................................................4
2.7 CERTAIN EFFECTS OF THE CLOSING..........................................................................4
2.8 ESCROW ARRANGEMENT......................................................................................5
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.................................................................5
3.1 CORPORATE ORGANIZATION..................................................................................5
3.2 AUTHORIZATION...........................................................................................6
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS...................................................................6
3.4 FINANCIAL STATEMENTS....................................................................................7
3.5 COMPLIANCE WITH LAW..........................................................................................8
3.6 ENVIRONMENTAL MATTERS...................................................................................8
3.7 INSURANCE...............................................................................................9
3.8 INTELLECTUAL PROPERTY..................................................................................10
3.9 REORGANIZATION PROCEEDINGS..................................................................................10
3.10 BROKERS AND FINDERS........................................................................................10
3.11 FULL DISCLOSURE............................................................................................11
3.12 OTHER..................................................................................................11
3.13 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE.............................................................11
3.14 MATERIALITY OF REPRESENTATIONS AND WARRANTIES..............................................................11
4. REPRESENTATIONS AND WARRANTIES OF BUYER......................................................................11
4.1 CORPORATE STATUS............................................................................................11
4.2 AUTHORITY; CONSENTS; ENFORCEMENT; NONCONTRAVENTION..........................................................12
4.3 NO AGENT, FINDER OR BROKER..................................................................................12
4.4 COMPLETENESS OF STATEMENT; EFFECT OF REPRESENTATIONS AND WARRANTIES....................................12
5. COVENANTS OF THE PARTIES.....................................................................................13
5.1 PLAN OF REORGANIZATION AND/OR SALE MOTION...................................................................13
5.2 ACCESS TO INFORMATION AND EMPLOYEES....................................................................15
5.3 REGISTRATIONS, FILINGS, AND CONSENTS...................................................................17
5.4 EXECUTORY LEASES AND CONTRACTS.........................................................................17
5.5 CONDUCT OF BUSINESS....................................................................................18
5.6 BEST EFFORTS...........................................................................................19
5.7 NOTICE OF ACTIONS AND PROCEEDINGS......................................................................19
5.8 NOTIFICATION OF OTHER MATTERS..........................................................................19
5.9 MOTIONS BY THE COMPANY.................................................................................20
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5.10 SUPPLY AGREEMENT......................................................................................20
6. CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING.................................................................20
6.1 REPRESENTATION AND WARRANTIES..........................................................................20
6.2 CONSENTS...............................................................................................20
6.3 LITIGATION.............................................................................................20
6.4 MATERIAL ADVERSE EFFECT................................................................................21
6.5 NO AMENDMENTS..........................................................................................21
6.6 ENTRY OF THE CONFIRMATION ORDER OR THE SALE ORDER AND ASSUMPTION ORDER; CONSUMMATION OF THE PLAN.......21
6.7 ADDITIONAL PROVISIONS FOR A SALE ORDER.................................................................22
6.8 PROVISION FOR UNSECURED CREDITORS......................................................................22
6.9 COMPANY CERTIFICATE....................................................................................23
6.10 OTHER DOCUMENTS.......................................................................................23
6.11 CONSENTS..............................................................................................23
6.12 ORDERS................................................................................................23
6.13 CONDITIONS TO AMENDED PLAN............................................................................24
6.14 NO CONVERSION.........................................................................................24
6.15 CHANGE IN FINANCIAL MARKETS...........................................................................24
6.16 ASSETS.................................................................................................24
6.17 CUSTOMER AND OTHER ARRANGEMENTS.......................................................................24
6.18 EXECUTORY CONTRACTS...................................................................................25
6.19 SUPPLY................................................................................................25
6.20 SUPPLY AGREEMENT......................................................................................25
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING...........................................................25
7.1 REPRESENTATIONS AND WARRANTIES.........................................................................25
7.2 LITIGATION; CONSENTS...................................................................................25
7.3 HIGHEST AND BEST BIDDER................................................................................25
7.4 ENTRY OF THE CONFIRMATION ORDER OR THE SALE ORDER AND ASSUMPTION ORDER; CONSUMMATION OF THE PLAN.......26
8. AMENDMENT; TERMINATION; ASSIGNMENT; LIQUIDATED DAMAGES.......................................................26
8.1 AMENDMENT..............................................................................................26
8.2 TERMINATION............................................................................................27
8.3 RIGHTS OF TERMINATION..................................................................................28
8.4 ASSIGNMENT.............................................................................................29
8.5 LIQUIDATED DAMAGES.....................................................................................29
9. MISCELLANEOUS PROVISIONS.....................................................................................30
9.1 AMENDMENT; WAIVER......................................................................................30
9.2 BINDING EFFECT.........................................................................................30
9.3 CONSTRUCTION AND INTERPRETATION OF AGREEMENT...........................................................30
9.4 SEVERABILITY OF PROVISIONS.............................................................................30
9.5 EXHIBITS AND SCHEDULES.................................................................................31
9.6 COUNTERPARTS...........................................................................................31
9.7 ENTIRE AGREEMENT; DISCLOSURES IN WRITING...............................................................31
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9.8 EXPENSES...............................................................................................31
9.9 FURTHER ASSURANCES.....................................................................................31
9.10 GOVERNING LAW.........................................................................................31
9.11 NOTICES...............................................................................................31
9.12 CUMULATIVE REMEDIES; SPECIFIC PERFORMANCE.............................................................33
9.13 TIME OF ESSENCE.......................................................................................33
APPENDIX OF DEFINED TERMS.........................................................................................1
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SCHEDULES
SCHEDULE DESCRIPTION
2.1 Assets
2.2(a) Details of the Purchase Price
3.3 Consents and Approvals; No Violations
3.5(a) Exceptions to Compliance with Laws
3.5(b) Permits, Licenses, Approvals
3.6 Environmental Matters
3.8 Intellectual Property
3.9 Reorganization Proceedings
5.4(b) Customer Contracts
5.5(g) Contracts
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT dated as of March 8, 1999 is between The
Procter & ▇▇▇▇▇▇ Company ("Buyer"), an Ohio corporation, and BROTHERS GOURMET
COFFEES, INC., a Delaware corporation and its Subsidiaries, (collectively, with
the exception of Maryland Club Foods, Inc. referred to as "Company")
debtors-in-possession in Chapter 11 Case numbers 98-1970 (MFW), 98-1971 (MFW),
98-1973 (MFW) and 98-1974 (MFW) pending in the United States Bankruptcy Court
for the District of Delaware (the "Case"). "Company", when used in this
Agreement, includes the reorganized Company after the Amended Plan is confirmed.
RECITALS:
A. The Company is the debtor in the Case and desires to file the Amended
Plan or Sale Motion and Assumption Motion in the Chapter 11 Cases pursuant to
which Buyer will acquire some of the assets of the Company.
B. Buyer desires to purchase from the Company some of the assets of the
Company pursuant to an 11 U.S.C. Sections 105, 363 and 365 order or a
Confirmation Order.
AGREEMENT:
NOW, THEREFORE, the parties hereby agree as follows:
1. DEFINITIONS.
1.1 APPENDIX OF DEFINED TERMS. Certain terms used in this
Agreement are defined in the Appendix of Defined Terms.
1.2 ACCOUNTING TERMS. Accounting terms used in this Agreement
which are not otherwise defined shall have the meaning assigned such terms under
GAAP.
1.3 OTHER DEFINITIONAL PROVISIONS.
(a) When used in this Agreement, the word "including" shall
have its normal common meaning and any list of items that may follow such word
shall not be deemed to represent a complete list of the contents of the referent
of the subject.
(b) Unless the context otherwise requires, when used in
this Agreement, the singular shall include the plural, the plural shall include
the singular, and all nouns, pronouns and
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any variations thereof shall be deemed to refer to the masculine, feminine or
neuter, as the identity of the Person or Persons may require.
2. THE SALE AND PURCHASE OF CERTAIN ASSETS .
2.1 PURCHASE OF ASSETS. On the terms and conditions of this
Agreement, on the Closing Date the Company shall sell, transfer, assign, convey
and deliver to Buyer all of the assets on Schedule 2.1 attached hereto (all such
assets collectively referred to as "Assets"), free and clear of any liens,
claims and encumbrances. Buyer shall pay the Purchase Price to the Disbursing
Agent or the Company, pursuant to Section 2.2(b) and either the Disbursing Agent
or the trustee of the Trust or the Company shall sell the Assets to Buyer, on
the terms and subject to the conditions of this Agreement (the "Acquisition").
The mechanism for approving the transaction contemplated by this Agreement
(either through the Sale Motion and Assumption Motion or the Amended Plan) shall
be reasonably agreed by the parties.
2.2 PURCHASE CONSIDERATION.
(a) On the Closing Date, in consideration of the
Acquisition, Buyer shall pay the sum of $21,500,000 as adjusted in accordance
with Section 2.3 and the Assumed Liabilities pursuant to Section 2.7(b) (the
"Purchase Price"). Details of the components of such Purchase Price are set
forth on Schedule 2.2(a). These components shall be adjusted as appropriate and
necessary to reflect any Purchase Price Adjustment.
(b) Payment of the Purchase Price shall be made at the
Closing to the Disbursing Agent, at the option of Buyer, by (1) payment by Buyer
of the difference between the Purchase Price and the Escrow Amount by wire
transfer of immediately available funds in accordance with the Amended Plan and
the Confirmation Order or the Sale Order and release of the Escrow Amount to the
Disbursing Agent in accordance with the Escrow Agreement or (2) payment by Buyer
of the entire cash portion of the Purchase Price by wire transfer of immediately
available funds in accordance with the Amended Plan and the Confirmation Order
or the Sale Order and the simultaneous return of the Escrow Amount to the Buyer.
(c) Notwithstanding the foregoing, $3,087,500 of such
Purchase Price, less any Finished Product Inventory transferred by Company to
Buyer at Closing (at the rate of $3.25 per pound), shall be put in an escrow
account at Closing, subject to an escrow agreement as reasonably agreed by the
parties, and such sum shall be released by Buyer (at the rate of $3.25 per
pound) only as Company ships Finished Product Inventory pursuant to Buyer's
Order. The parties shall agree twenty-five (25) calendar days prior to the
anticipated Closing Date, on such Order for Finished Product Inventory.
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2.3 PURCHASE PRICE ADJUSTMENTS.
(a) The Purchase Price shall be adjusted (the "Purchase
Price Adjustment") in an amount (which may be a positive or negative number)
equal to the Green Coffee Inventory Adjustment, In-Store Inventory Adjustment
and Accounts Receivable Adjustment. The parties shall estimate the Purchase
Price Adjustment at the Closing and adjust the Purchase Price to be paid at the
Closing by such estimate.
(b) The "Green Coffee Inventory Adjustment" shall be an
amount equal to (1) 653,000 pounds minus the number of pounds of Green Coffee
Inventory, such difference multiplied by $1.225. If the product is negative,
then the Green Coffee Inventory Adjustment shall be added from the amount
specified in Section 2.2. If the balance is positive, then the Green Coffee
Inventory Adjustment shall be that amount and shall be subtracted from the
amount specified in Section 2.2.
(c) The "In-Store Inventory Adjustment," the intent of
which is to prevent inventory loading, shall be an amount equal to $6.00
multiplied by the sum of (1) the amount (in pounds), for any
direct-store-delivery ("DSD") Customer, of any product inventory at such
Customer premises that is not on the store shelves (e.g., in the back room);
and (2) any product inventory (in pounds) for DSD Customers, wherever situated,
which code date expires on or before the Closing Date, but excluding any
inventory included in (1) above. Such product, the In-Store Inventory
Adjustment, shall only be subtracted from the amount specified in Section 2.2.
(d) The "Accounts Receivable Adjustment" shall be the
difference between the actual balance of all accounts receivable at the Closing
Date and $5,500,000. If such difference is positive, such difference shall be
added to the amount specified in Section 2.2(a); if such difference is negative,
such difference shall be subtracted from the amount specified in Section 2.2(a).
(e) Buyer will prepare calculations of the Green Coffee
Inventory Adjustment, In-Store Inventory Adjustment and Accounts Receivable
Adjustment and deliver such calculations to the Disbursing Agent within thirty
days after the Closing Date. If within thirty days following delivery of the
calculations of the Green Coffee Inventory Adjustment, In-Store Inventory
Adjustment and Accounts Receivable Adjustment, the Disbursing Agent has not
given Buyer notice of its objection to such calculations (such notice must
contain a statement of the basis of the Disbursing Agent's objection), then the
Green Coffee Inventory Adjustment, In-Store Inventory Adjustment and Accounts
Receivable Adjustment calculated by Buyer will be used in computing the Purchase
Price Adjustment. If the Disbursing Agent gives such notice of objection, then
the issues in dispute will be submitted to the Accountants for resolution. If
issues in dispute are submitted to the Accountants for resolution, (1) each
party will furnish to the Accountants such workpapers and other documents and
information relating to the disputed issues as the Accountants may request and
are available to that party and will be afforded the
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opportunity to present to the Accountants any material relating to the
determination and to discuss the determination with the Accountants; (2) absent
manifest error, the determination by the Accountants, as set forth in a notice
delivered to both parties by the Accountants, will be binding and conclusive on
the parties; and (3) Buyer and Company or a distribution fund to be set up in
the Amended Plan ("Distribution Fund") will each bear 50% of the fees of the
Accountants for such determination.
(f) On the tenth Business Day following the final
determination of the Purchase Price Adjustment, if the Purchase Price Adjustment
is greater than the estimated payment made at Closing, Buyer will pay the
difference to the Disbursing Agent, and if the Purchase Price Adjustment is less
than the estimated payment made at Closing, the Disbursing Agent will pay the
difference to Buyer from the Distribution Fund. No administrative expenses
shall be paid prior to making all disbursements necessary to be made from the
Distribution Fund.
2.4 CLOSING. The closing of the Acquisition ("Closing") shall
take place at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, Miami, Florida at 9:00
a.m. local time.
2.5 CLOSING DATE. The Closing shall occur on a date designated
by Buyer which is not later than five (5) Business Days following the later to
occur of (1) the satisfaction, or waiver by Buyer, of all of the conditions set
forth in Section 6 hereof, (2) the satisfaction, or waiver by the Company, of
all of the conditions set forth in Section 7 hereof, and (3) the receipt of all
required Government Consents (the "Closing Date").
2.6 CLOSING DELIVERIES. At the Closing, subject to the
satisfaction of the terms and conditions set forth herein, Buyer will pay the
Purchase Price in the manner set forth in Section 2.2(b) and either the
Disbursing Agent or the trustee of the Trust or the Company will deliver the
Assets to Buyer. In addition to the foregoing, the Company and Buyer will
execute and deliver such other agreements, instruments, certificates and other
documents to be executed and delivered hereunder or as may be reasonably
requested by either party to consummate the transactions contemplated hereby,
all in form and substance reasonably satisfactory to the parties hereto and
their respective counsel.
2.7 CERTAIN EFFECTS OF THE CLOSING.
(a) Subject to Section 8.3(c) the representations and
warranties contained in this Agreement shall not survive the Closing of the
Acquisition and, after the Closing Date, the Company, its Subsidiaries and each
of their officers, directors, shareholders and affiliates shall have no further
obligations with respect thereto.
(b) At the Closing, Buyer shall assume up to $1,300,000 in
obligations accrued under the Company's Customer Contracts as of the Closing
Date in order of priority as specified by Buyer (the "Assumed Liabilities"). To
the extent that Buyer assumes less than $1,300,000 of such obligation as of the
Closing Date (not including the new King Soopers agreement), Buyer
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shall pay the difference in cash at the Closing Date as part of the Purchase
Price. Such Assumed Liabilities shall be increased pursuant to a new King
Soopers Customer Contract, as agreed by the parties, that is executed pursuant
to Section 6.15(b). Except with respect to the Assumed Liabilities, Buyer shall
not assume or be obligated for any liability or obligation of the Company,
direct or indirect, known or unknown, absolute or contingent, including but not
limited to product liability, Tax liabilities, contractual liabilities, any
employee related liabilities (including but not limited to wages, benefits,
COBRA, or other liabilities), environmental liabilities, any liabilities for
assets not purchased by Buyer, or any other liability of the Company or the
Subsidiaries arising from the operation of the Company and the Subsidiaries
prior to the Closing Date (other than any liability Buyer may have, if any,
pursuant to the Stock Purchase Agreement between Company and Buyer dated May 2,
1994 with respect to Maryland Club Foods, Inc. ("Maryland Club Agreement")).
2.8 ESCROW ARRANGEMENT. Buyer and the Company have entered into
an Escrow Agreement with the Escrow Agent (the "Escrow Agreement"), pursuant to
which Buyer has caused to be delivered to the Escrow Agent for the benefit of
the Company an irrevocable letter of credit in the amount of $500,000 (the
"Escrow Amount") to provide for a portion of the Purchase Price and to secure
payment of the liquidated damages provided for in Section 8.5.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby
represents and warrants to Buyer as follows:
3.1 CORPORATE ORGANIZATION.
(a) The Company (1) is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and (2) subject to the approval of the Amended Plan and the sale of the Assets
in the Confirmation Order and the occurrence of the effective date of the Plan
or the entry of the Sale Order and Assumption Order, has the corporate power and
corporate authority to (A) enter into this Agreement and the other agreements,
documents and instruments to be executed and delivered by the Company pursuant
hereto and (B) consummate the transactions contemplated hereby. The Company is
duly qualified and in good standing to transact business as a foreign
corporation in each jurisdiction where the ownership or use of its properties
and the conduct of its business necessitates such qualification, except such
jurisdictions, in which the failure to be so qualified will not have a Material
Adverse Effect.
(b) Each Subsidiary is a corporation duly organized, validly
existing and in good standing under the laws of their respective jurisdictions
of incorporation. Each Subsidiary is duly qualified and in good standing to
transact business as a foreign entity in each jurisdiction where the ownership
or use of its properties and the conduct of its business necessitates such
qualification except such jurisdictions in which the failure to be so qualified
will not have a Material Adverse Effect.
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(c) Neither the Company nor any Subsidiary is in material
violation of its charter or by-laws. The minute books of the Company and each
Subsidiary, contain in all material respects an accurate record of all corporate
action taken by the stockholders and Board of Directors (and the Committees of
such Board) of the Company and each Subsidiary.
3.2 AUTHORIZATION.
(a) The execution and delivery of this Agreement, the
Transition Supply and Services Agreement, the Escrow Agreement and the documents
contemplated hereby (collectively the "Company Documents") have been duly
authorized and approved by the Board of Directors of the Company. Subject to
the entry of the Confirmation Order by the Bankruptcy Court and the occurrence
of the effective date of the Amended Plan or the entry of the Sale Order and
Assumption Order by the Bankruptcy Court, (1) no other corporate proceedings or
shareholder action on the part of the Company will be necessary to authorize the
execution and delivery by the Company of this Agreement, the Escrow Agreement
and the other agreements to be executed in connection herewith and to consummate
the transactions contemplated hereby or thereby and (2) each of the Company
Documents will constitute the valid and binding agreement of the Company,
enforceable against the Company in accordance with its respective terms.
(b) Since the Bankruptcy Court has entered the Interim
Order, Sections 5.2 and 8 shall constitute valid and binding agreements of the
Company enforceable against the Company in the Case in accordance with their
respective terms.
3.3 CONSENTS AND APPROVALS; NO VIOLATIONS. Except as set forth
on Schedule 3.3 and except for the (1) Confirmation Order or the Sale Order and
Assumption Order, (2) the filing by Buyer and the Company of a pre-merger
notification with the Federal Trade Commission and the Antitrust Division of the
United States Department of Justice under the HSR Act ("Antitrust Filing"), (3)
applications for, and procurement of continuations of, licenses and/or permits,
except as set forth on Schedule 3.3, in connection with applicable state or
local law change in control statutes (the "Permits") (all of the foregoing
consents, applications, approvals and/or Permits, other than the entry of the
Confirmation Order or the Sale Order and Assumption Order, are referred to as
the "Government Consents"), neither the execution and delivery by the Company of
this Agreement and the other Company Documents nor the consummation by the
Company or any Subsidiary of the transactions contemplated hereby or thereby
will (a) violate or conflict with or result in any breach of any provision of
the certificates of incorporation, articles of incorporation or by-laws (or
similar documents) of the Company or any Subsidiary; (b) violate or conflict
with any order, injunction, decree, law, statute, rule, ordinance or regulation
applicable to the Company or any Subsidiary or by which any of their respective
properties or assets may be bound which violation or conflict, alone or in the
aggregate, would have a Material Adverse Effect; (c) require any filing with,
notification to, or permit, consent or approval of, any public, governmental or
regulatory body, agency or authority the absence of which, alone or in the
aggregate, would have a Material Adverse Effect; (d) result in a violation or
breach of, constitute a default or give rise to any right of termination,
cancellation or acceleration under an
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agreement, or result in the creation of a Lien upon any property or asset of the
Company or any Subsidiary or by which any of the Company's or any Subsidiary's
properties or assets may be bound, which violation or conflict, alone or in the
aggregate, would have a Material Adverse Effect; or (e) result in the loss of
any license, franchise or permit the loss of which would have a Material Adverse
Effect.
3.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to Buyer a copy of the
following consolidated financial statements of the Company and its Subsidiaries,
each of which presents fairly the consolidated financial condition and result of
operations of the Company and its Subsidiaries (together, the "Consolidated
Company") at the dates and for the periods covered by such statements in
accordance with GAAP (subject, in the case of interim statements, to normal
recurring accruals, year end adjustments, and matters that are reflected in the
footnotes). Except as set forth on Schedule 3.4(a), GAAP has been consistently
applied in the preparation of the financial statements described below
throughout the periods covered by such statements at and for the periods ended
December 29, 1995, December 27, 1996, December 26, 1997 and June 26, 1998:
Audited Consolidated Balance Sheets as of December 26, 1997 (the "Balance
Sheet Date") and December 27, 1996, together with notes thereto, and the
related Consolidated Statements of Operations, Consolidated Statements of
Changes in Stockholders' Equity and Consolidated Statements of Cash Flows
of the Company and its Subsidiaries, together with notes thereto, for each
of the three years ended, December 29, 1995, December 27, 1996, and
December 26, 1997 examined by Ernst & Young LLP as set forth in the
Company's 10-K Report filed with the SEC.
(b) The Company has delivered to Buyer copies of all
management letters prepared by Ernst & Young LLP, and delivered to the Company
since December 31, 1993.
(c) The Company has previously delivered to Buyer accurate
and complete copies of (1) its Annual Reports to Shareholders for the years
ended December 27, 1996 and December 29, 1995, (2) its Annual Reports on Form
10-K for the years ended December 26, 1997, December 27, 1996 and December 29,
1995 (together with all exhibits thereto), (3) all Quarterly Reports on Form
10-Q and Current Reports on Form 8-K filed by the Company since January 1, 1996,
(4) all proxy statements furnished to shareholders of the Company since January
1, 1996, (5) all registration statements filed by the Company with the SEC since
January 1, 1996 and (6) all unaudited financial statements for the past six (6)
months.
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3.5 COMPLIANCE WITH LAW.
(a) Except as set forth on Schedule 3.5(a) and other than
with respect to Environmental Laws:
(1) The business of each of the Company and each
Subsidiary is not being conducted in violation of any law, ordinance,
requirement or regulation of any governmental entity, regulatory body,
court or arbitrator (including, without limitation, those relating to
occupational safety and health practices), except for such violations,
which alone and in the aggregate, would not have a Material Adverse Effect.
(2) No proceeding is pending or, to the knowledge of
the Company, threatened to revoke or limit any existing Permits except
where such revocations, alone and in the aggregate, would not have a
Material Adverse Effect.
(b) Except as set forth on Schedule 3.5(b), there are no
permits, licenses or approvals required for the Company and the Subsidiaries to
conduct their business the absence of which, either alone or in the aggregate,
would have a Material Adverse Effect.
3.6 ENVIRONMENTAL MATTERS. Except as set forth in Schedule 3.6:
(a) The Company and each Subsidiary is, and at all times
has been, in full compliance with, and has not been and is not in violation of
or liable under, any Environmental Law with respect to the Facilities. Neither
the Company nor any Subsidiary has any basis to expect, nor has any of them or,
to the knowledge of the Company, any other Person for whose conduct they are or
may be held to be responsible received any actual or threatened order, notice,
or other communication from (1) any governmental body or private citizen acting
in the public interest, or (2) the current or prior owner or operator of any
Facilities, of any actual or potential violation or failure to comply with any
Environmental Law, or of any actual or threatened obligation to undertake or
bear the cost of any Environmental, Health, and Safety Liabilities with respect
to any of the Facilities or any other properties or assets (whether real,
personal, or mixed) in which the Company or any Subsidiary has an interest, or
with respect to any Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by the Company,
any Subsidiary or any other Person for whose conduct they are or may be held
responsible, or from which Hazardous Materials have been transported, treated,
stored, handled, transferred, disposed, recycled, or received.
(b) There are no pending or, to the knowledge of the
Company and the Subsidiaries, threatened claims, Liens, or other restrictions of
any nature, resulting from any Environmental, Health, and Safety Liabilities or
arising under or pursuant to any Environmental Law, with respect to or affecting
any of the Facilities or any other properties and assets (whether real,
personal, or mixed) in which the Company and Subsidiary has an interest.
8
(c) Neither the Company nor any Subsidiary has knowledge of
any basis to expect, nor has any of them or any other Person for whose conduct
they are or may be held responsible, received, any citation, directive, inquiry,
notice, order, summons, warning, or other communication that relates to
Hazardous Activity, Hazardous Materials, or any alleged, actual, or potential
violation or failure to comply with any Environmental Law, or of any alleged,
actual, or potential obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities.
(d) None of the Company, any Subsidiary, or, to the
knowledge of the Company, any other Person for whose conduct they are or may be
held responsible, has any Environmental, Health, and Safety Liabilities with
respect to the Facilities or with respect to any other properties and assets
(whether real, personal, or mixed) in which the Company or any Subsidiary (or
any predecessor), has an interest, or at any property geologically or
hydrologically adjoining the Facilities or any such other property or assets.
(e) There are no Hazardous Materials present on or in the
Environment at the Facilities or at any geologically or hydrologically
adjoining property, including any Hazardous Materials contained in barrels,
above or underground storage tanks, landfills, land deposits, dumps, equipment
(whether moveable or fixed) or other containers, either temporary or permanent,
and deposited or located in land, water, sumps, or any other part of the
Facilities or such adjoining property, or incorporated into any structure
therein or thereon. None of the Company, any Subsidiary, or, to the knowledge
of the Company, any other Person for whose conduct they are or may be held
responsible, has permitted or conducted, or is aware of, any Hazardous Activity
conducted with respect to the Facilities or any other properties or assets
(whether real, personal, or mixed) in which the Company or any Subsidiary has an
interest except in compliance with all applicable Environmental Laws.
(f) There has been no Release or, to the knowledge of the
Company, threat of Release, of any Hazardous Materials at or from the Facilities
or, to the knowledge of the Company, at any other locations where any Hazardous
Materials were generated, manufactured, refined, transferred, produced,
imported, used, or processed from or by the Facilities, or from or by any other
properties and assets (whether real, personal, or mixed) in which the Company or
any Subsidiary has an interest, or to the knowledge of the Company any
geologically or hydrologically adjoining property, whether by the Company, any
Subsidiary or any other Person.
(g) The Company has delivered to Buyer true and complete
copies and results of any reports, studies, analyses, tests, or monitoring
possessed or initiated by the Company or any Subsidiary pertaining to Hazardous
Materials or Hazardous Activities in, on, or under the Facilities, or concerning
compliance by the Company, any Subsidiary, or any other Person for whose conduct
they are or may be held responsible, with Environmental Laws.
3.7 INSURANCE. The Company has previously provided to Buyer
copies of each insurance policy (including policies providing property,
casualty, liability, and workers'
9
compensation coverage and bond and surety arrangements) to which the Company or
any Subsidiary has been a party, a named insured, or otherwise the beneficiary
of coverage at any time within the past three years along with the name,
address, and telephone number of the agent for each such policy. No notice of
cancellation or non-renewal with respect to, or disallowance of any claim under,
any such policy has been received by the Company.
3.8 INTELLECTUAL PROPERTY.
(a) Except as set forth on Schedule 3.8(a), the Company has
all material patents, trademarks, trade names, service marks, service names,
brand names, formulas, copyrights and similar intellectual property rights, that
are registered in the name of and/or owned by the Company or any Subsidiary or
are used in the conduct of the business of the Company or any Subsidiary (the
"Intellectual Property"). Schedule 3.8 lists all trademarks, trade names,
service marks, service names and brand names that are registered in the name of
the Company.
(b) Except as set forth on Schedule 3.8(b), the
Intellectual Property is duly registered or registration applied for, where
applicable, with the necessary jurisdictions. Except as set forth on Schedule
3.8(b), neither the Company nor any Subsidiary has received any notice from, and
neither the Company nor any subsidiary has knowledge of, any other Person
challenging or questioning the right of the Company or any Subsidiary to use any
Intellectual Property.
(c) The Intellectual Property comprises all of the patents,
trademarks, trade names, service marks, service names, brand names, formulas,
copyrights, UPC codes and similar intellectual property rights material to the
business of the Company or any Subsidiary.
(d) Except as set forth on Schedule 3.8(d), neither the
Company nor any Subsidiary has received any written notices alleging any
infringement or improper use of any patent, right, inventories, copyright,
trademark, service ▇▇▇▇, trade secret, or trade name of any other person or
entity, registered or unregistered, and no claim is pending, has been made or,
to the Company's knowledge, is threatened to such effect which, if true, would
have, alone or in the aggregate, a Material Adverse Effect.
3.9 REORGANIZATION PROCEEDINGS. Except as set forth on Schedule
3.9, neither the Company nor any Subsidiary Debtor has taken any material action
prohibited by the Bankruptcy Code, the Bankruptcy Rules or order of the
Bankruptcy Court in connection with any of the Chapter 11 Cases.
3.10 BROKERS AND FINDERS. Except for Pricewaterhouse Coopers
LLP, the Company has not employed any broker, finder, consultant or intermediary
in connection with the transactions contemplated by this Agreement who would be
entitled to a broker's, finder's, consultant's or similar fee or commission in
connection therewith or upon the consummation
10
thereof, or if the Closing does not occur. The Company shall bear all costs it
incurs in connection with the transaction contemplated by this Agreement unless
otherwise expressly provided herein.
3.11 FULL DISCLOSURE. No representation or warranty of the
Company contained in this Agreement or disclosed in accordance herewith,
contains an untrue statement of a material fact or omits to state a material
fact required to be stated herein or necessary to make the statements made, in
light of the circumstances under which they were made, not misleading as of the
date made or deemed made; PROVIDED, HOWEVER, that information contained in any
representation or warranty in this Agreement as of the later date, provided such
date is prior to the date hereof, shall be deemed to modify the information as
of an earlier date.
3.12 OTHER.
(a) Schedule 3.12(a) sets forth the the 10 largest Customer
Contracts of the Company and the Subsidiaries. Except as set forth on Schedule
3.12(a), other than such customer contracts, there is no contract the loss of
which would have a Material Adverse Effect.
(b) There are no Tax Liens on any of the Assets.
(c) Maryland Club Foods, Inc. has no and will have no Claims
against, loans to or encumbrances or liens against the Company.
3.13 REPRESENTATIONS AND WARRANTIES ON CLOSING DATE. The
representations and warranties contained in this Section 3 shall be true and
correct on and as of the Closing Date with the same force and effect as though
such representations and warranties had been made on and as of the Closing Date,
except (a) representations and warranties that were made as of a specific date
need be true in all respects only as of such date and (b) as expressly permitted
by this Agreement to change between the date of this Agreement and the Closing
Date.
3.14 MATERIALITY OF REPRESENTATIONS AND WARRANTIES. Matters
excluded from the representations and warranties as immaterial for any reason
(including, without limitation, the absence of a Material Adverse Effect) or as
a result of the qualification of the Company's knowledge would not, in the
aggregate, have a Material Adverse Effect after giving effect to improvements in
the Company's business, operations, properties or financial condition after the
date hereof (but without giving effect to the transactions contemplated herein)
which alone or in the aggregate, would have a favorable effect on the business,
operations, properties or financial condition of the Company and its
Subsidiaries.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer hereby represents and
warrants to the Company as follows:
4.1 CORPORATE STATUS. Buyer is a corporation duly incorporated
and existing under the laws of Ohio, in good standing and is authorized to
transact business in such state. Buyer
11
has, and at all times has had, full corporate power and authority to own and
lease its properties as such properties are now owned and leased and to conduct
its business as and where such businesses have and are now being conducted.
4.2 AUTHORITY; CONSENTS; ENFORCEMENT; NONCONTRAVENTION.
(a) This Agreement, the Transition Supply and Services
Agreement and the Escrow Agreement and any other document executed by Buyer in
connection herewith (collectively the "Buyer Documents") constitute the legal,
valid and binding obligations of Buyer, enforceable against Buyer in accordance
with their terms. Buyer has the absolute and unrestricted right, power,
authority, and capacity to execute and deliver this Agreement and to perform its
obligations under this Agreement. Except for the Governmental Consents, Buyer
does not need to give any notice to, make any filing with, or obtain any
authorization, consent, or approval of any governmental body in order to
consummate the Acquisition.
(b) The Buyer Documents have been duly executed and
delivered by Buyer and constitute the legal, valid and binding obligation of
Buyer, enforceable in accordance with their terms.
(c) Neither the execution and the delivery of the Buyer
Documents nor the compliance with, or the fulfillment of, the terms, conditions
and provisions hereof or thereof, will (a) violate any Legal Requirement of
Buyer, any provision of its charter or bylaws; or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create in
any party the right to accelerate, terminate, modify, or cancel, or result in
the imposition of or creation of any Lien upon or with respect to any of the
assets or properties owned or used by Buyer, or (c) require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Buyer is a party or by which it is bound or to which any of its assets or
properties are subject; or (d) require the approval, consent, authorization or
act of, or the making by Buyer of any declaration, filing or registration with,
any Person, other than Government Consents.
4.3 NO AGENT, FINDER OR BROKER. Buyer has no Liability or
obligation, contingent or otherwise, to pay any fees or commissions to any
agent, broker or finder with respect to the Acquisition.
4.4 COMPLETENESS OF STATEMENT; EFFECT OF REPRESENTATIONS AND
WARRANTIES. No representation or warranty of Buyer in this Agreement contains
any untrue statement of a material fact, omits any material fact necessary to
make such representation or warranty, under the circumstances which it was made,
not misleading, or contains any misstatement of a material fact.
12
5. COVENANTS OF THE PARTIES.
5.1 PLAN OF REORGANIZATION AND/OR SALE MOTION. The Company
shall take the following actions:
(a) Not later than five (5) Business Days after this
Agreement is executed, the Company shall file an Amended Plan or the Sale Motion
and Assumption Motion with the Bankruptcy Court as agreed by the parties in
accordance with Section 2.1. The Amended Plan or the Sale Motion and Assumption
Motion shall be in form and substance satisfactory to Buyer. Prior to the
Filing Date the Company will consult with Buyer on an ongoing basis and provide
drafts of the Amended Plan or Sale Motion and Assumption Motion to Buyer in
order to achieve the goals of this Section 5.1(a).
(b) Simultaneous with the filing of the Amended Plan (if
this Acquisition is consummated pursuant to such Amended Plan), the Company
shall file with the Bankruptcy Court an Amended Disclosure Statement pursuant to
Section 1125 of the Bankruptcy Code any pleading required or desirable as
reasonably determined by the Company and its counsel in order to obtain the
Disclosure Statement Order. The Company shall use its best efforts to obtain
prompt approval by the Bankruptcy Court of the Amended Disclosure Statement.
(c) The Company shall use its best efforts to obtain and
shall refrain from taking any action that would materially impede or result in a
revocation of:
(1) the entry by the Bankruptcy Court of an Order, in
form and substance satisfactory to Buyer (the "Sale Order") approving the
Sale of Assets pursuant to Sections 105 and 363 of the Bankruptcy Code and
providing for the assumption and assignment to Buyer of the Contracts and
Leases set forth on Schedule 5.5(g) in accordance with Section 365 of the
Bankruptcy Code. In connection therewith, the Company and its counsel
shall be required, among other things, to use their best efforts to cause
the Sale Order to include findings of fact and conclusions of law which
will:
a. provide for the transfer of Assets to the
Buyer free and clear of any liens, claims,
encumbrances, liabilities, obligations,
interests, causes of action, direct or
indirect, known or unknown, absolute or
contingent, including but not limited to
product liability, contractual liability, any
employee related liabilities (including but
not limited to wages, benefits, COBRA, or
other liabilities), environmental
liabilities, tax liabilities, other tort
claims, any liabilities for assets not
purchased by Buyer, or any other liability or
potential liability of the Company or the
Subsidiaries other than the Assumed
Liabilities and any liability of Buyer (if
any) under the Maryland Club Agreement.
13
b. provide that the Buyer is a good faith
purchaser and is entitled to the protections
afforded under Sections 363(m) and (n) of the
Bankruptcy Code;
c. provide for retention of jurisdiction of the
Bankruptcy Court to enforce its Sale Order;
d. provide that Buyer is not a successor and
will not be deemed a successor for any
purpose;
e. provide for a release by all claimants for
any claims, liabilities, liens, liabilities,
encumbrances, rights, interests or causes of
action they may have against the Buyer as a
result of the Acquisition;
f. provide that Contracts listed on Schedule
5.5(g) are assumed and assigned to Buyer;
g. provide for such other and further findings
of facts and conclusions of law reasonably
required by the Buyer; and
will obtain Bankruptcy Court approval of the Sale Order and Assumption
Order; or
(2) the entry by the Bankruptcy Court of an Order, in
form and substance satisfactory to Buyer, confirming the Amended Plan
pursuant to 1129 of the Bankruptcy Code, and providing for the effectuation
of a sale of the Assets of the Company to Buyer pursuant to Sections 105,
363 and 1141(c) of the Bankruptcy Code and providing for the assumption and
assignment to Buyer of the Contracts and Leases set forth on Schedule
5.5(g) in accordance with Section 365 of the Bankruptcy Code (the
"Confirmation Order"). In connection therewith, the Company and its
counsel shall be required, among other things, to (a) cause the
Confirmation Order to contain findings of fact and conclusions of law which
will be reasonably satisfactory to Buyer and will include those findings
and fact and conclusions of law as set forth in (1) above, and (b) obtain
the requisite acceptances of the Amended Plan required for entry of the
Confirmation Order or otherwise to confirm the Amended Plan pursuant to
Section 1129 (a) or (b) of the Bankruptcy Code.
(d) The Company shall comply in all material respects with
the Bankruptcy Code and all others laws, rules, regulations, decrees and orders
promulgated thereunder in connection with obtaining the Confirmation Order or
the Sale Order and Assumption Order.
(e) Buyer agrees to use its best efforts to cooperate with
the Company in its pursuit of the Confirmation Order or the Sale Order and
Assumption Order as provided in
14
Section 5.1(a) through 5.1(d) including providing the Company with information
relating to Buyer and the Acquisition necessary to prepare the Amended
Disclosure Statement or Sale Motion and Assumption Motion.
(f) From and after the date hereof, neither the Company nor
any Subsidiary Debtor shall take any action, or fail to take any action, which
might (1) prevent, materially impede or result in the revocation of the
confirmation of the Plan (as provided in Section 1144 of the Bankruptcy Code),
(2) prevent or materially impede the vesting, upon the entry of the Confirmation
Order or the Sale Order and Assumption Order and consummation of the
Acquisition, of the property of the Company and its Subsidiary Debtors in the
reorganized Company and its reorganized Subsidiaries free and clear of all Liens
and claims and interests of Claimants in accordance with and to the extent
provided in the Amended Plan or the Sale Order and Assumption Order or (3)
result in the reversal, voidance, modification or staying of any of the Interim
Order and the Disclosure Statement Order.
(g) The Company shall provide actual notice of (1) any
hearing on the Amended Disclosure Statement, (2) any hearing on the Confirmation
Order and (3) any hearing on the Sale Order and Assumption Order, in each case
in form and content and to such parties as reasonably requested in writing by
Buyer and in all cases in accordance with Bankruptcy Rules 2002 and 6004.
(h) The Company agrees that the Sale Order or the
Confirmation Order will provide a carve-out from the proceeds from the
transaction contemplated by this Agreement and the Transition Supply and
Services Agreement for the benefit of the general unsecured creditors in the
Case.
5.2 ACCESS TO INFORMATION AND EMPLOYEES.
(a) From the date hereof to the Closing Date, the Company
shall, and shall cause the Subsidiaries to, permit Buyer and its representatives
to have reasonable access, during regular business hours, upon reasonable
advance notice (and without causing undue disruption to the business of the
Company or such Subsidiary), to all books and records of the Company and each
Subsidiary and to the officers and independent accountants (if retained by the
Company) and other representatives, agents and advisors of the Company and each
Subsidiary, and shall furnish or cause to be furnished, to Buyer and its
representatives any financial and operating data and other information that is
available with respect to the business and properties of Company and each
Subsidiary as Buyer shall from time to time reasonably request. The Company
shall cause the managerial and supervisory employees, independent accountants
(if retained by the Company) and other representatives, agents or advisors of
the Company and of each of the Subsidiaries to be available upon reasonable
notice to answer questions of Buyer and its representatives concerning the
business and affairs of the Company and the Subsidiaries. The Company shall
permit and shall cause each Subsidiary to permit Buyer and its representatives
access to the Company's and each Subsidiary's facilities for purposes of
inspection at all
15
reasonable times, provided that such presence does not cause undue disruption to
the business of the Company or such Subsidiary. Any meetings, interviews or
other communications with the Company's customers shall occur only with a
representative of the Company present. Company shall also permit Buyer access
to Company employees to enable Buyer to interview and/or offer employment to
such employees.
(b) Buyer shall not disclose and shall keep confidential
all confidential information (if any) concerning the business and financial
condition of the Company.
(c) If this Agreement is terminated, Buyer shall maintain,
and shall cause its officers, employees, attorneys, accountants and other
representatives to maintain, the confidentiality of such information for two (2)
years from the date of such termination and shall not use such information for
any purpose; PROVIDED, HOWEVER, that nothing herein shall prevent the disclosure
or use of any information that (1) is required to be disclosed pursuant to any
requirement of law; (2) was already in Buyer's or Company's possession (as the
case may be) from sources other than the Company, its Subsidiaries or any of
their officers, attorneys or representatives prior to its disclosure by the
Company or its Subsidiaries; (3) was generally known to the public; (4) became
known to the public through no fault of non-disclosing party; or (5) was
disclosed to the party receiving the information by a third party not bound by
an obligation of confidentiality.
(d) In addition to, and not in limitation of Section
5.2(a), the Company shall provide Buyer with copies of financial statements and
all proxy statements, reports and other documents issued to its shareholders and
monthly financial statements distributed to its Board of Directors after the
date hereof and on or prior to the Closing Date, including, without limitation,
the Company's Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and
Annual Reports on Form 10-K promptly upon availability.
(e) The availability and actual delivery of information
about the Company or any of its Subsidiaries (other than as specifically
required herein and delivered in accordance with Section 9.7) shall not, except
as provided in Section 9.7 affect the representations, warranties or covenants
set forth in this Agreement; PROVIDED, that in the event the Company discloses
in writing after the date hereof, whether pursuant to Sections 5.6 or 5.7, or
otherwise, information which demonstrates that any representation or warranty
made by the Company herein was not true and correct in all material respects
when made, deemed made or to be deemed made in the future, and such written
disclosure specifies to Buyer such effect on the Company's representations and
warranties herein, Buyer shall have the right to terminate this Agreement in
accordance with Section 8.2(d) and 8.3 for a period of ten (10) Business Days
following the receipt of such disclosures from the Company. The failure to so
terminate this Agreement within such ten (10) Business Day period shall
constitute a waiver by Buyer of any breach by the Company of this Agreement as a
result of the untruth or inaccuracy of the information so disclosed, but any
termination by Buyer as a result of such disclosure shall not prejudice Buyer's
right to any other remedies to which it may be entitled hereunder as a result of
16
the matters so disclosed, including, without limitation, Buyer's right to
receive payment pursuant to this Agreement.
(f) The Company shall cooperate with Buyer and Buyer shall
cooperate with the Company in the development and distribution of all news
releases and other public information disclosures with respect to the
Acquisition and this Agreement, and neither the Company nor Buyer shall make any
such disclosures without the consent of the other party (which shall not be
unreasonably withheld); PROVIDED that nothing contained herein shall prevent the
Company or Buyer from disclosing or making a public filing of any information
which its respective counsel advises is required by law; and PROVIDED, FURTHER
that, in the event such disclosure or filing is required by either party, such
party shall give such prior notice thereof to the other party hereto as is
practical under the circumstances.
(g) The Company shall not disclose and shall keep
confidential all confidential information (if any) furnished by Buyer,
including, without limitations, any information specifically designated in
writing by Buyer as confidential, subject to the exceptions and the time
limitations as set forth in the proviso in Section 5.2(c).
5.3 REGISTRATIONS, FILINGS, AND CONSENTS. The Company and Buyer
will cooperate and use their respective best efforts to make all registrations,
filings and applications, to give all notices and to obtain any governmental or
other consents (including, without limitation, the Government Consents),
transfers, approvals, orders, qualifications and waivers necessary or desirable
for the consummation of the transactions contemplated hereby. Buyer and Company
shall each pay its own expenses incurred relating to obtaining the Government
Consents. The parties shall each file the Antitrust Filing within six (6)
Business Days of executing this Agreement.
5.4 EXECUTORY LEASES AND CONTRACTS.
(a) The Company has previously disclosed in writing to
Buyer its leases and contracts. In contemplation of the Amended Plan or Sale
Motion and Assumption Motion, Buyer shall have the right to review and, in its
sole and exclusive discretion, direct the Company and any Subsidiary to assume
any prepetition executory contract or lease to which the Company or any
Subsidiary may be a party that relates to the Assets being acquired.
(b) The Company will, and will cause the appropriate
Subsidiary to, with respect to, those prepetition licenses and prepetition
executory contracts and leases to which the Company or any Subsidiary may be a
party and which Buyer has indicated in writing to the Company, prior to the
filing of the Sale Motion and Assumption Motion or the Amended Plan that
assumption should be sought, cure or provide adequate assurance that any default
thereunder will be cured at or prior to the Closing Date or such other date on
or by which such cure or adequate assurance is required by the Bankruptcy Court,
and to the extent any licenses, executory contracts or leases (whether
prepetition or postpetition) to be assumed would terminate as a result
17
of Buyer's Acquisition take such action as is necessary to allow the Company to
continue to have the rights and benefits thereof.
5.5 CONDUCT OF BUSINESS. From the date hereof to the Closing
Date, and except as set forth on Schedule 5.5 or as otherwise contemplated in
this Agreement, the Company covenants and agrees that, without Buyer's prior
written consent, which may be given or withheld in Buyer's sole and exclusive
discretion and which consent shall be deemed given if Buyer does not expressly
withhold its consent within three (3) Business Days after a request therefor by
the Company:
(a) Except as may otherwise be approved by the Bankruptcy
Court, the Company shall and shall cause each Subsidiary to operate its
respective business only in the ordinary course and in a manner consistent with
past post-petition practice (including, without limitation, shipping/delivering
inventory to customers in amounts consistent with past practices and customer
requirements) and shall use, and cause its Subsidiaries to use, their joint
reasonable efforts to preserve the properties, business and relationships with
employees, suppliers, customers and other persons with whom the Company or any
Subsidiary has commercial dealings;
(b) The Company shall not, nor shall it permit any
Subsidiary to: (1) merge or consolidate with or into any other Person; (2) other
than in the ordinary course of business and in a manner consistent with past
practice, acquire or dispose of any material asset of the Company or any
Subsidiary which would be material to the Consolidated Company; or (3) settle or
otherwise enter into any consent or other arrangements with respect to any
material claim, action, proceeding or investigation; except for such settlement,
consents or other arrangements as are authorized by orders of the Bankruptcy
Court with respect to prepetition claims, actions or proceedings and which
provide for each settlement not in excess of $500 each;
(c) The Company shall not, nor shall it permit any
Subsidiary to: (1) hire any officer or create any new position with salary and
benefits which have a value in excess of $75,000 per year; or (2) establish,
adopt, enter into or amend any collective bargaining, bonus, profit sharing,
thrift, compensation, stock options, restricted stock, pension, retirement,
deferred compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of any directors,
officers or employees;
(d) The Company shall not, nor shall it permit any
Subsidiary to, enter into: (1) any agreement relating to the supply of coffee
beans which matures after September 30, 1999; (2) any agreement for sales to
customers having a term of more than one year which provides for aggregate
payments to or from the Company or any Subsidiary in excess of $250,000 per year
during the contractual term of such agreement; or (3) any other agreement having
a term of more than one year which provides for aggregate payments to or from
the Company or any Subsidiary in excess of $100,000 during the contractual term
of such agreement;
18
(e) The Company shall not, nor shall it permit any
Subsidiary to: (1) change any of its accounting methods; (2) write-up the book
value of any material current asset; or (3) transfer, dispose of, lease and/or
sell any Assets to any third party or transfer such Assets from their current
location;
(f) The Company shall not, nor shall it permit any
Subsidiary to: (1) make any single capital expenditure or series of related
capital expenditures in excess of $100,000 or (2) agree to do any other things
prohibited or restricted in this Section 5.4;
(g) The Company shall not, nor shall it permit any
Subsidiary to: (1) permit any executory contract or lease referenced in Schedule
5.5(g) ("Contracts") to expire or lapse; (2) alter any of the terms of any of
the Contracts; or (3) default on any of the terms of any of the Contracts.
5.6 BEST EFFORTS. Upon the terms and subject to the conditions
herein provided, each of the Company and Buyer agrees to use its best efforts to
take, or cause to be taken, any action, and to do, or cause to be done, all
thing necessary, proper or advisable under applicable laws and regulations, to
consummate and make effective the transactions contemplated by this Agreement
at the earliest practical date.
5.7 NOTICE OF ACTIONS AND PROCEEDINGS. The Company shall
promptly notify Buyer of any claims, actions, proceedings or investigations
commenced or, to the best of its knowledge, threatened, involving or affecting
the Company or any Subsidiary or any of their respective property or assets
which could have Material Adverse Effect or which could adversely affect the
consummation of the Acquisition. Buyer shall notify the Company of any claims,
actions, proceedings or investigations commenced or, to the best of its
knowledge threatened, involving or affecting Buyer or any of its property or
assets, or, to the best of Buyer's knowledge, which could adversely affect the
consummation of the Acquisition. As used in this Agreement, the term
"knowledge" of (a) the Company shall mean the knowledge of those persons holding
the offices of the Company or any Subsidiary, listed under the heading
"Executive Officers of Registrant" in the Company's most recent Annual Report on
Form 10-K filed with the SEC pursuant to the Exchange Act and (b) Buyer shall
mean knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇ or ▇▇▇▇▇▇▇ ▇▇▇▇▇.
5.8 NOTIFICATION OF OTHER MATTERS. The Company shall give
prompt notice to Buyer of: (a) any knowledge or notice of, or any communication
relating to, a default or event which, with notice or lapse of time or both,
would become a default, received by the Company or any Subsidiary prior to the
Closing Date, under any material agreement, indenture or instrument relating to
any of the Assets to be purchased; (b) any notice or other communication from
any third party alleging that the consent of such third party is or may be
required in connection with the transactions contemplated by this Agreement; (c)
any notice or other communication from any regulatory authority in connection
with the transactions contemplated hereby; (d) the occurrence or non-occurrence
of any event which would have caused any representation or
19
warranty contained in this Agreement to be untrue or inaccurate; (e) any failure
of the Company to comply with or satisfy in any respect any covenant, condition
or agreement to be complied with or satisfied by it hereunder; and (f) the
discovery of any information indicating that a representation or warranty
contained in this Agreement is untrue or incorrect; PROVIDED, HOWEVER, except as
provided in Section 5.2(e) (in the case of a failure to terminate this
Agreement), the delivery of any notice pursuant to this Section 5.10 shall not
prejudice Buyer's right to any remedies to which it may be entitled hereunder.
5.9 MOTIONS BY THE COMPANY. The Company shall file the Sale
Motion and Assumption Motion or Amended Plan with the Bankruptcy Court within
five (5) Business Days after this Agreement is executed, or on such later date
to which Buyer and the Company may reasonably agree, keeping in mind that time
is of the essence with respect to this Agreement.
5.10 SUPPLY AGREEMENT. The TS Agreement shall be in full force
and effect as of the Closing Date.
6. CONDITIONS TO BUYER'S OBLIGATIONS AT CLOSING. The obligations of
Buyer to consummate the Acquisition at the Closing as contemplated by this
Agreement shall be subject to the satisfaction or waiver by Buyer in writing on
or prior to the Closing Date of each of the following conditions:
6.1 REPRESENTATION AND WARRANTIES. Each of the representations
and warranties of the Company contained in this Agreement shall be true and
correct in all respects when made and as of the Closing Date, with the same
effect as though such representations and warranties had been made on and as of
the Closing Date (except representations and warranties that are made as of a
specific date need be true and correct in all respects only as of such date) and
each of the covenants and agreements of the Company and each Subsidiary to be
performed on or prior to the Closing Date shall have been duly performed in all
respects.
6.2 CONSENTS. All the Government Consents shall have been
received on or prior to the Closing Date (except for Government Consents
relating to Permits, the absence of which will, alone and in the aggregate, not
have a Material Adverse Effect on or after the Closing) and any waiting period
(and any extension thereof) with respect to the HSR Act shall have expired or
been terminated.
6.3 LITIGATION. There shall not be pending or threatened any
action or proceeding before any federal, state or foreign court or governmental,
administrative or regulatory authority or agency by any federal, state or
foreign legislative body, court, government or governmental, administrative or
regulatory authority or agency which shall have remained in effect and which
shall have had the effect of: (a) making illegal, materially delaying or
otherwise directly or indirectly restraining or prohibiting the Acquisition; (b)
prohibiting or materially limiting the ownership or operation by the Company,
Buyer or any of their respective subsidiaries of all of the Assets of the
Company or any of its Subsidiaries, or compelling the Company, Buyer or any
20
of their respective subsidiaries to dispose of or hold separate any of the
Assets of the Company, Buyer or any of their respective subsidiaries, as a
result of the transactions contemplated hereby; (c) requiring divestiture by
Buyer of any Assets of the Company; or (d) having a Material Adverse Effect.
6.4 MATERIAL ADVERSE EFFECT. Since the date hereof, there shall
not have been any Material Adverse Effect with respect to the Company or the
Assets.
6.5 NO AMENDMENTS. The Amended Plan or Sale Motion and
Assumption Motion shall not have been amended, supplemented or modified in any
manner which is not reasonably satisfactory to Buyer.
6.6 ENTRY OF THE CONFIRMATION ORDER OR THE SALE ORDER AND
ASSUMPTION ORDER; CONSUMMATION OF THE PLAN.
(a) The Amended Plan shall have been confirmed by the
Bankruptcy Court and, as confirmed, shall be in form and substance reasonably
satisfactory to Buyer and the Confirmation Order shall have become a Closing
Order; or the Sale Order and Assumption Order shall have been entered by the
Bankruptcy Court, and, as ordered, shall be in form and substance satisfactory
to Buyer, and the Sale Order and Assumption Order shall have become a Closing
Order.
(b) (i) The Confirmation Order shall not have been
modified, amended, dissolved, revoked or rescinded, shall be in full force and
effect on the Closing Date and, without the necessity of any further action or
proceedings by the Company, any Subsidiary or the Bankruptcy Court shall have
(1) as of the Closing Date, effected a full and complete discharge and release
of, and thereby extinguished, all debts of the Company and each Subsidiary (to
the fullest extent possible under Section 1141(d)(1) of the Bankruptcy Code) to
the extent specified in the Amended Plan, (2) extinguished all Existing Shares
and Existing Equity Rights, (3) at and as of the Closing, effected the issuance
to either the Disbursing Agent or the trustee of the Trust for transfer to Buyer
of the Assets, free and clear of all claims and interests of Claimants and Liens
in accordance with Section 1141(c) and in accordance with the Amended Plan and
the Confirmation Order and (4) as of the Closing Date, effectuated a release by
all claimants for any claims, liens, encumbrances, liabilities, rights, causes
of action, obligations, or interests they may have against Buyer as a result of
the Acquisition; or
(ii) The Sale Order and Assumption Order shall not have
been amended, dissolved, revoked or rescinded, shall be in full force and effect
on the Closing Date and, without the necessity of any further action or
proceedings by the Company, any Subsidiary or the Bankruptcy Court shall have:
a. as of the Closing Date, effected a full and
complete conveyance of assets free and clear of
all liens, claims, encumbrances, liabilities,
21
rights, interests, obligations, causes of action,
direct or indirect, known or unknown, absolute or
contingent, including but not limited to product
liability, contractual liability, any employee
related liabilities (including but not limited to
wages, benefits, COBRA, or other liabilities),
Environmental, Health and Safety Liabilities, Tax
Liabilities, other tort claims, any liabilities
for assets not purchased by Buyer, or any other
liability or potential liability of the Company or
the Company's affiliates other than the Assumed
Liabilities and any liability of Buyer (if any)
pursuant to the Maryland Club Agreement;
b. as of the Closing Date, effectuated a release by
all claimants for any claims, liens, encumbrances,
liabilities, rights, causes of action,
obligations, or interests they may have against
Buyer as a result of the Acquisition;
c. as of the Closing Date, effected an assumption and
assignment to Buyer of all Contracts listed on
Schedule 5.5(g).
6.7 ADDITIONAL PROVISIONS FOR A SALE ORDER. The Sale Order will
further provide that:
(a) With respect to the remaining assets of the Company and
the Subsidiaries, the Company and its Subsidiaries will not seek the benefit of
any provisions of Section 363, 105 or 1141(c) of the Bankruptcy Code with
respect to any of Buyer's claims, interests, rights, and encumbrances, if any,
under this Agreement or the Transitional Supply and Services Agreement ("TS
Agreement");
(b) Any claim of Buyer will survive confirmation of any
plan and will not be discharged;
(c) The Assignment / Change of Control paragraph in the TS
Agreement shall not be affected in a plan or later sale and shall survive
confirmation of a plan;
(d) Any amounts due and owing to Buyer as a result of a
breach of this Agreement or the TS Agreement, will be offset against any monies
owing to Supplier (or the Company) under the TS Agreement; and
(e) Buyer would have paid substantially less consideration
if it were not buying the Assets free and clear of any claims specifically
including claims of successor liability.
6.8 PROVISION FOR UNSECURED CREDITORS. If the transaction
contemplated by this Agreement is accomplished through the Sale Order instead of
the Amended Plan, then the Company shall:
22
(a) Set aside $100,000 of the proceeds in a separate
account to be earmarked for the funding of distributions to or for the benefit
of the unsecured creditors trust under a plan; and
(b) Confirm a plan of reorganization on or before October
31, 1999 (the "Creditor Plan") which Creditor Plan will:
(i) provide for a distribution pursuant to Section
6.8(a); and
(ii) provide for some value to the unsecured
creditors: (a) from the assets of the Company which Buyer chose to leave behind
for the unsecured creditors, and (b) from the TS Agreement whereby Buyer is
providing a continuing stream of income to the Company and its creditors
post-Closing.
6.9 COMPANY CERTIFICATE. Buyer shall have received a
certificate, dated the Closing Date, signed on behalf of the Company by an
officer of the Company certifying the fulfillment by the Company of the
conditions stated in Sections 6.1, 6.3, 6.4 and 6.5.
6.10 OTHER DOCUMENTS. Buyer shall have received from the
Company any other documents required to be delivered to Buyer pursuant to the
provisions of this Agreement.
6.11 CONSENTS. With respect to any licenses or executory
contracts or Contracts listed on Schedule 5.5(g) that are material to the
Company shall have either obtained (1) the consents of the parties thereto
required to permit the Company to continue to have the rights and benefits
thereof or (2) a Final Order authorizing the assumption and assignment of such
licenses or executory contracts or Contracts to Buyer under Section 365(a), (b)
and (f) of the Bankruptcy Code.
6.12 ORDERS.
(a) After the date hereof, neither the United States
Supreme Court nor the United States Court of Appeals for the Third Circuit shall
have entered an order or issued an opinion, nor shall the Bankruptcy Code have
been amended in such a manner, that Buyer could reasonably conclude that, as a
result of such order, opinion or amendment, the benefits and protection that
would be provided to the Company, Buyer or any of their respective subsidiaries,
or affiliates by the discharge of the Company and the Subsidiaries or any of
them under the Amended Plan or by the protections afforded Buyer in the Sale
Order and Assumption Order would be less protective in any material respect than
under current law as to have a Material Adverse Effect on any of the Company,
Buyer or any of their respective subsidiaries or affiliates.
(b) The Bankruptcy Court shall not have issued any orders
with respect to the conduct of the Company's and the Subsidiaries' businesses
that are not reasonably satisfactory to Buyer.
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6.13 CONDITIONS TO AMENDED PLAN. Unless a Sale Order is entered
and is a Closing Order, all conditions precedent to the confirmation and
consummation of the Amended Plan shall have been satisfied or waived by all
necessary parties.
6.14 NO CONVERSION. No motion to convert any of the Cases to a
proceeding under Chapter 7 of the Bankruptcy Code shall have been filed against
any Subsidiary Debtor, which motion is not dismissed within sixty (60) days
after filing thereof and which, if not dismissed, would have a Material Adverse
Effect.
6.15 CHANGE IN FINANCIAL MARKETS. There shall not exist at the
time of Closing (1) a general suspension of trading in, or limitation on prices
for, securities on any national securities exchange or in the over-the-counter
market, (2) a declaration of a mandatory banking moratorium or any mandatory
suspension of payments in respect of banks in the United States, (3) any decline
in the Standard & Poor's Index of 400 Industrial Companies by an amount in
excess of twenty-five percent (25%) measured from the date hereof, (4) a war,
armed hostilities or other international or national calamity directly or
indirectly involving the United States that has significantly adversely affected
the United States financial markets, or (5) a mandatory material limitation by
any United States governmental authority or agency on the extension of credit by
banks or other financial institutions.
6.16 ASSETS.
(a) The Assets shall be in substantially the same or better
condition as of the Closing Date than when last inspected by Buyer. There shall
have been no material depletion of the Assets.
(b) Upon consummation of the Closing, Buyer shall receive good
and marketable title to the Assets, free and clear of any Lien.
6.17 CUSTOMER AND OTHER ARRANGEMENTS.
(a) Representatives of the Company and Buyer shall have held a
meeting with purchasing executives of Publix, King Soopers, Ahold, ▇▇▇▇ ▇▇▇▇▇,
and the U.S. Military, as soon as possible after the execution of this
Agreement; and Buyer shall not have notified the Company in writing within 72
hours of the last of such meetings that Buyer is dissatisfied with the results
of such meetings.
(b) None of the Contracts listed in Schedule 5.5(g) shall have
expired prior to or at the Closing Date. Further, the Company must extend the
King Soopers contract for four (4) months from the Closing Date upon the same
terms as the current contract or make some other arrangement that is acceptable
to the Buyer prior to Closing, such that Buyer waives this Section 6.17(b).
24
6.18 EXECUTORY CONTRACTS. The Company shall have obtained a
Final Order satisfactory to Buyer assuming and assigning those Contracts listed
in Schedule 5.5(g) to Buyer.
6.19 SUPPLY. Nothing has come to the Buyer's attention, prior
to Closing, that would indicate that the Company will not be able to perform its
obligations under the TS Agreement, that shall be executed upon the signing of
this Agreement.
6.20 SUPPLY AGREEMENT. The TS Agreement shall be in full force
and effect as of the Closing Date.
7. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligation of Company to consummate the Acquisition at the Closing as
contemplated by this Agreement shall be subject to the satisfaction or waiver in
writing by Company on or prior to the Closing Date of each of the following
conditions:
7.1 REPRESENTATIONS AND WARRANTIES. Each of the representations
and warranties of Buyer contained in this Agreement shall be true and correct in
all respects when made and as of the Closing Date, with the same effect as
though such representations and warranties of Buyer had been made on and as of
the Closing Date (except (a) representations and warranties that are made as of
a specific date need be true and correct in all respects only as of such date
and (b) as expressly permitted by this Agreement to change between the date of
this Agreement and the Closing Date); each of the covenants and agreements of
Buyer to be performed on or prior to the Closing Date shall have been duly
performed in all respects; and the Company shall have received at the Closing a
certificate to the effect of the foregoing dated as of the Closing Date and
executed on behalf of Buyer by ▇▇▇▇ ▇▇▇▇▇.
7.2 LITIGATION; CONSENTS.
(a) Other than an appeal of the Confirmation Order, the
Sale Order or Assumption Order as contemplated in Section 6.6 hereof, there
shall be no order or preliminary or permanent injunction issued by any court or
governmental or regulatory body, restraining, modifying or preventing the
carrying out of the transactions contemplated hereby.
(b) All the Government Consents shall have been received on
or prior to the Closing Date, except for Government Consents the absence of
which will not have a Material Adverse Effect on Claimants or their rights under
the Amended Plan or Sale Order and Assumption Order.
7.3 HIGHEST AND BEST BIDDER. The Bankruptcy Court shall have
entered an order finding Buyer to be the highest and best bidder for the
Company.
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7.4 ENTRY OF THE CONFIRMATION ORDER OR THE SALE ORDER AND
ASSUMPTION ORDER; CONSUMMATION OF THE PLAN.
(a) The Plan shall have been confirmed by the Bankruptcy Court
and the Confirmation Order shall have been entered. The time allowed for
appeals of the Confirmation Order shall have expired without any appeal having
been taken or, if the Confirmation Order shall have been appealed, either (a) no
stay of the Confirmation Order shall be in effect or (b) if such a stay has been
granted by a court of competent jurisdiction, then (1) the stay shall have been
dissolved or (2) the Confirmation Order shall have become a Final Order. The
Confirmation Order shall not have been modified, amended, dissolved, revoked or
rescinded, shall be in full force and effect on the Closing Date and, without
the necessity of any further action or proceedings by the Company or any
Subsidiary, the Bankruptcy Court shall have (x) as of the Closing Date, effected
a full and complete discharge and release of, and thereby extinguish, all debts
of the Company and each Subsidiary (to the fullest extent possible under Section
1141(d)(1) of the Bankruptcy Code) to the extent specified in the Plan, (y)
extinguished all Existing Shares and Existing Equity Rights, and (z) at and as
of the Closing, effected the issuance to Buyer of the Assets, free and clear of
all claims and interests of Claimants in accordance with 1141(c) and the Amended
Plan and the Confirmation Order and as of the Closing Date, effectuated a
release by all claimants for any claims, liens, encumbrances, liabilities,
rights, causes of action, obligations, or interests they may have against Buyer
as a result of the Acquisition; or
(b) The Sale Motion and Assumption Motion shall have been
approved by the Bankruptcy Court and the Sale Order and Assumption Order shall
have been entered. The time allowed for appeals of the Sale Order and
Assumption Order shall have expired without having been taken or shall have
become a Final Order. The Sale Order and Assumption Order shall not have been
modified, amended, dissolved, revoked or rescinded and shall be in full force
and effect as of the Closing Date, and without the necessity of any further
action or proceedings by the Company or any Subsidiary, the Bankruptcy Court
shall have at and as of the Closing effected the issuance to Buyer of the
Assets, free and clear of all claims and interests of Claimants in accordance
with the Sale Order and Assumption Order.
7.5 SUPPLY. The Transition Supply and Services Agreement shall
be executed at the same time this Agreement is signed.
8. AMENDMENT; TERMINATION; ASSIGNMENT; LIQUIDATED DAMAGES.
8.1 AMENDMENT. This Agreement may be amended by the written
agreement of the Company and Buyer at any time prior to the Closing Date.
26
8.2 TERMINATION. This Agreement may be terminated as follows:
(a) By the mutual consent of the Company and Buyer at any
time prior to the confirmation by the Bankruptcy Court of the Amended Plan or
the entry of the Sale Order and Assumption Order;
(b) By Buyer if any of the conditions precedent to the
Closing set forth in Section 6 (other than Section 6.2, with respect to
Government Consents which are required to be complied with solely by Buyer and
other than those Government Consents necessary for HSR clearance) have not been
fulfilled in all respects by April 30, 1999;
(c) By the Company if it has become aware that Buyer has
materially breached this Agreement or if any of the conditions precedent to the
Closing set forth in Section 7 hereof (other than Section 7.2, with respect to
Government Consents which are required to be complied with solely by the Company
but excluding those consents needed for the Antitrust Filing) have not been
fulfilled in all respects by April 30, 1999;
(d) By Buyer if the Company refuses or otherwise fails to
perform its obligation to consummate the Acquisition if, after the conclusion of
the auction, Buyer is selected as the highest and best bidder;
(e) By Buyer if it has become aware pursuant to Sections
5.2(e), 5.7, 5.8, or otherwise, that the Company has materially breached this
Agreement (it being understood that any breach of a representation or warranty
that constitutes a Material Adverse Effect is a material breach of this
Agreement) or that the Company will be unable to comply with Section 6 hereof
(other than Section 6.2 with respect to Government Consents which are required
to be complied with solely by Buyer and other than those Government Consents
necessary for HSR clearance) by April 15, 1999;
(f) By the Company or Buyer in the event an acquisition
proposal, other than a proposal(s) involving Buyer, ("Acquisition Proposal") is
approved by the Bankruptcy Court or any sale order and assumption order or any
plan of reorganization other than the Amended Plan or the Sale Order and
Assumption Order is confirmed by the Bankruptcy Court (in either such event,
this Agreement will automatically be deemed terminated without the necessity of
providing written notice notwithstanding any provision to the contrary herein);
(g) By Buyer, if the Company's Board of Directors, or the
Board of Directors of a Subsidiary, shall propose a plan of reorganization other
than the Amended Plan or accept an Acquisition Proposal, including executing a
letter of intent or other agreement with respect thereto whether or not such
Acquisition Proposal was accepted in violation of the provisions contained in
Section 9.1 of this Agreement;
27
(h) By Buyer (1) if the Sale Motion and Assumption Motion
or the Amended Plan and Amended Disclosure Statement shall not have been filed
with the Bankruptcy Court on the dates required in Section 5.1 or (2) in the
event Buyer has not, within five (5) Business Days prior to such deadline,
complied with Section 5.1(e), if the Amended Disclosure Statement shall not have
been so filed within five (5) Business Days after Buyer's compliance with
Section 5.1(e);
(i) By Buyer if, after approval, the Sale Order, Disclosure
Statement Order or Assumption Order has been reversed, revoked, voided,
substantively modified or stayed by an order of a court of competent
jurisdiction;
(j) By Buyer if the Confirmation Order, Sale Order or
Assumption Order shall not have been approved by the Bankruptcy Court and
entered on the legal docket of the Chapter 11 Cases by the Clerk's Office of the
Bankruptcy Court prior to or on April 19, 1999;
(k) By Buyer, if the Sale Order, Confirmation Order or
Assumption Order is not a Final Order by April 30, 1999;
(l) By Buyer if the Amended Plan or Sale Motion and
Assumption Motion filed with the Bankruptcy Court pursuant to Section 5.1 or as
amended, supplemented or modified is not reasonably satisfactory to Buyer;
(m) By the Company if Buyer notifies the Company pursuant
to Section 6.15 that Buyer is dissatisfied with the results of its meeting with
such customers;
(n) By the Company if the Government Consents needed with
respect to the Antitrust Filing have not been received by April 30, 1999; or
(o) By Buyer if the Government Consents needed with respect
to the Antitrust Filing have not been received by June 30, 1999.
8.3 RIGHTS OF TERMINATION.
(a) The right of termination hereunder may be exercised by
Buyer or the Company, as the case may be, only by giving written notice, signed
on behalf of such party by its duly authorized officer to the other party;
PROVIDED, HOWEVER, that in the event of written notice of termination by Buyer
pursuant to Section 8.2(d), or the Company pursuant to Section 8.2(c), if the
breach of this Agreement or inability to comply with Section 6 or Section 7,
respectively, is susceptible to cure within a thirty (30) day period, but in any
event prior to the termination date otherwise provided in Section 8.2(b), in the
case of a breach by the Company, or Section 8.2(c) (in each case, the "Cure
Date") in the case of a breach by Buyer, the breaching party shall, provided it
gives notice to the other party of its attempt to do so within four (4) Business
Days of receipt of the breaching party's notice of termination, have until the
earlier of (1) thirty (30) days
28
after delivery to the other party of such notice or (2) the applicable Cure
Date, to cure such breach or noncompliance, and in the event such breach or
noncompliance is cured within the applicable time period, then such notice of
termination shall be inoperative.
(b) No exercise by either party of its right to terminate
this Agreement pursuant to Section 8.2 shall prejudice that party's rights and
remedies against the other for breach of obligations under this Agreement
including, without limitation, the Company's right to liquidated damages in
accordance with Section 8.5(b).
(c) The provisions of Sections 2.8, 5.2(b), 5.2(c), 5.2(f),
5.2(g), 6.7, 6.8, 8.5 and Article 3, to the extent that such representation made
under that Article 3 affect the Company's performance or ability to perform
under the Transition Supply and Services Agreement, shall survive the
termination of this Agreement. Further, in addition to the provisions of
Section 6.7, any damages associated with Company's breach of this Agreement
shall become an administrative claim under Section 503(b) of the Bankruptcy
Code.
8.4 ASSIGNMENT. Except as otherwise contemplated in Section 2.1
and the Amended Plan with respect to the assignment of rights and obligations of
the Company hereunder to the Disbursing Agent, neither party may assign this
Agreement or any of its rights, privileges, duties or obligations thereto
without the prior written consent of the other party to this Agreement.
Notwithstanding the foregoing, Buyer may, at its option, assign any or all
rights, privileges, duties or obligations it may have under this Agreement to
any of its wholly-owned subsidiaries so long as Buyer also remains responsible
for such duties and obligations.
8.5 LIQUIDATED DAMAGES. In the event that the Acquisition is
not consummated as a result of Buyer's material breach of this Agreement or
Buyer's failure to meet any material condition set forth herein (including
Buyer's failure to pay the Purchase Price due at Closing upon the Company's
compliance with the conditions in Section 6), the Company shall be entitled to
liquidated damages in the amount of One Million and 00/100 Dollars ($1,000,000).
In such event, the Company may (1) instruct the Escrow Agent, which instruction
Buyer shall join in or (2) if Buyer refuses to join in such instruction, obtain
an order of the Bankruptcy Court instructing the Escrow Agent to pay the full
Escrow Amount to the Company in accordance with the Escrow Agreement. The
amounts payable by Buyer pursuant to this Section prior to the confirmation of
this Acquisition shall constitute the Company's liquidated damages for Buyer's
breach of this Agreement or any other Buyer Document and the Company's right to
such damages shall constitute its sole and exclusive remedy for any and all such
breaches prior to the confirmation of this Acquisition. Notwithstanding the
foregoing, it shall not be considered a breach of this Agreement if, after
making Antitrust Filings pursuant to this Agreement, the parties do not receive
clearance pursuant to the HSR Act.
29
9. MISCELLANEOUS PROVISIONS.
9.1 AMENDMENT; WAIVER. This Agreement may be amended, modified
or superseded only by a written instrument signed by all of the parties to this
Agreement. No party shall be deemed to have waived compliance by another party
of any provision of this Agreement unless such waiver is contained in a written
instrument signed by the waiving party and no waiver that may be given by a
party will be applicable except in the specific instance for which it is given.
The failure of any party to enforce at any time any of the provisions of this
Agreement or to exercise any right or option contained in this Agreement or to
require at any time performance of any of the provisions of this Agreement, by
any of the other parties shall not be construed to be a waiver of such
provisions and shall not affect the validity of this Agreement or any of its
provisions or the right of such party thereafter to enforce each provision of
this Agreement. No course of dealing shall operate as a waiver or modification
of any provision of this Agreement or otherwise prejudice such party's rights,
powers and remedies.
9.2 BINDING EFFECT. No assigning party shall be relieved of its
obligations arising under this Agreement. Subject to the foregoing, all the
provisions of this Agreement shall be binding upon and shall inure to the
benefit of and be enforceable by the parties to this Agreement and their
respective heirs, legal representatives, successors and assigns.
9.3 CONSTRUCTION AND INTERPRETATION OF AGREEMENT.
(a) Section titles or captions in this Agreement are
included for purposes of convenience only and shall not be considered a part of
the Agreement in construing or interpreting any of its provisions. All
references in this Agreement to Sections shall refer to Sections of this
Agreement unless the context clearly otherwise requires.
(b) The parties have participated jointly in the
negotiation and drafting of this Agreement. If any ambiguity or question of
intent or interpretation arises, no presumption or burden of proof shall arise
favoring or disfavoring any party by virtue of the authorship of any of the
provisions of this Agreement.
(c) The parties do not intend that this Agreement shall
confer on any third party any right, remedy or benefit or that any third party
shall have any right to enforce any provision of this Agreement.
9.4 SEVERABILITY OF PROVISIONS. If a court in any proceeding
holds any provision of this Agreement or its application to any person or
circumstance invalid, illegal or unenforceable, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it was held to be invalid, illegal or unenforceable, shall not be
affected, and shall be valid, legal and enforceable to the fullest extent
permitted by law, but only if and to the extent such enforcement would not
materially and adversely frustrate the parties' essential objectives as
expressed in this Agreement. Furthermore, in lieu of any such invalid or
30
unenforceable term or provision, the parties intend that the court add to this
Agreement a provision as similar in terms to such invalid or unenforceable
provision as may be valid and enforceable, so as to effect the original intent
of the parties to the greatest extent possible.
9.5 EXHIBITS AND SCHEDULES. All Exhibits and Schedules to this
Agreement shall constitute part of this Agreement and shall be deemed to be
incorporated in this Agreement by reference and made a part of this Agreement as
if set out in full at the point where first mentioned.
9.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original copy of this
Agreement and all of which, when taken together, shall be deemed to constitute
one and the same agreement.
9.7 ENTIRE AGREEMENT; DISCLOSURES IN WRITING. This Agreement
embodies the entire agreement and understanding of the parties related to its
subject matter and supersedes all prior proposals, understandings, agreements,
correspondence, arrangements and contemporaneous oral agreements relating to
subject matter of this Agreement. No representation, promise, inducement or
statement of intention has been made by any party which has not been embodied in
this Agreement. Any statement in this Agreement that a matter has been
disclosed previously to Buyer in writing shall not be effective as to any
disclosure by the Company unless such disclosure is described on the disclosure
schedule delivered to Buyer prior to the execution of this Agreement,
acknowledged in writing by Buyer, specifying the purpose (including a reference
to the Section or Sections of this Agreement) for which it has been disclosed
and, once so disclosed, such disclosure shall be deemed (a) incorporated herein
by reference and (b) to modify the Section or Sections referenced and any
representation, warranty or covenant contained in such Section or Sections for
all purposes of this Agreement.
9.8 EXPENSES. Except as otherwise expressly provided for in
this Agreement, each party will bear its own expenses incurred in connection
with the preparation, execution and performance of its obligations under this
Agreement, including all fees and expenses of agents, representatives, counsel
and accountants.
9.9 FURTHER ASSURANCES. Each party shall execute and deliver
such additional documents or take such additional actions as may be requested by
another party to this Agreement if such requested document or action is
reasonably necessary to effect the transactions described in this Agreement.
9.10 GOVERNING LAW. This Agreement shall be governed by, and
shall be construed and enforced in accordance with, the laws of Delaware,
without giving effect to any conflict of law rule or principle of such state.
9.11 NOTICES. All notices, requests, consents, approvals,
waivers, demands and other communications required or permitted to be given or
made under this Agreement shall be in
31
writing and shall be deemed delivered to the parties (a) on the date of personal
delivery or transmission by facsimile transmission, (b) on the first Business
Day following the date of delivery to a nationally recognized overnight courier
service, or (c) or the third Business Day following the date of deposit in the
United States Mail, postage prepaid, by certified mail, in each case, addressed
as follows, or to such other address, person or entity as any party may
designate by notice to the others in accordance herewith:
If to the Company: Brothers Gourmet Coffees, Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President and CEO
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to: ▇▇▇▇▇▇▇▇▇▇ Hyatt ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C.
Twenty-Second Floor
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and Weil, Gotshal & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and White & Case
▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(until the unsecured creditors Committee has been
disbanded)
If to Buyer: The Procter & ▇▇▇▇▇▇ Company
▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: General Manager - Coffee
Facsimile:
Copy to: ▇▇▇▇▇▇▇▇ & Shohl
1900 Chemed Center
32
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
9.12 CUMULATIVE REMEDIES; SPECIFIC PERFORMANCE. NO right or
remedy conferred upon or reserved to any of the parties under the terms of this
Agreement is intended to be, nor shall it be deemed, exclusive of any other
right or remedy provided in this Agreement or by law or equity, but each shall
be cumulative of every other right or remedy. The parties understand and
acknowledge that a party would be damaged irreparably by reason of a failure of
another party to perform any obligation under this Agreement. Accordingly, if
any party attempts to enforce the provisions of this Agreement by specific
performance (including preliminary or permanent injunctive relief), the party
against whom such action or proceeding is brought waives the claim or defense
that the other party has an adequate remedy at law.
9.13 TIME OF ESSENCE. Time is of the essence to the performance
of the obligations set forth in this Agreement.
33
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
The Procter & ▇▇▇▇▇▇ Company
By:
--------------------------------------
Title:
-----------------------------------
("Buyer")
BROTHERS GOURMET COFFEES, INC.
By:
--------------------------------------
Title:
-----------------------------------
(the "Company")
BROTHERS RETAIL CORP.
By:
--------------------------------------
Title:
-----------------------------------
(SUBSIDIARY OF THE COMPANY)
BROTHERS COFFEE BARS, INC.
By:
--------------------------------------
Title:
-----------------------------------
(SUBSIDIARY OF THE COMPANY)
MARYLAND CLUB FOODS, INC.
By:
--------------------------------------
Title:
-----------------------------------
(SUBSIDIARY OF THE COMPANY)
34
APPENDIX OF DEFINED TERMS
"ACCOUNTANTS" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co., LLP, certified public accountants.
"ACCOUNTS RECEIVABLE ADJUSTMENT" shall have the meaning as set forth in Section
2.3(d).
"ACQUISITION" has the meaning set forth in Section 2.1.
"ACQUISITION PROPOSAL" shall have the meaning set forth in Section 8.2(f).
"AGREEMENT" means this Agreement and the Exhibits and Schedules.
"AMENDED DISCLOSURE STATEMENT" means the Disclosure Statement with respect to
the Amended Plan of Reorganization under Chapter ▇▇, ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
Code for Brother Gourmet Coffees Inc. and its Affiliated Debtors, which will be
reviewed and must be satisfactory in form and substance to Buyer and Buyer's
counsel with respect to incorporating the Acquisition.
"AMENDED PLAN" means the Plan of Reorganization to be filed by Debtors with The
Bankruptcy Court which will be reviewed and must be satisfactory in form and
substance to Buyer and Buyer's counsel with respect to incorporating the
Acquisition.
"ANTITRUST FILING" SHALL HAVE THE MEANING SET FORTH IN SECTION 3.3.
"ASSUMED LIABILITIES" SHALL HAVE THE MEANING SET FORTH IN SECTION 2.7(b).
"ASSUMPTION MOTION" means the motion to be filed by the Debtors which will be in
form and substance satisfactory to Buyer and Buyer's counsel seeking an order
assuming and assigning those contracts, licenses and/or leases listed on
Schedule 5.5(g) to this Agreement (which contracts, leases and/or licenses can
be changed prior to the entry of the Assumption Order) pursuant to 5.1 of this
Agreement.
"ASSUMPTION ORDER" means the order to be entered by The Bankruptcy Court
assuming and assigning those contracts, licenses and/or leases listed on
Schedule 5.5(g) to this Agreement (which contracts, leases and/or licenses can
be changed prior to the entry of this order), which order will be in form and
substance satisfactory to Buyer and Buyer's counsel.
"AVERAGE NET SALES" means the six (6) weeks' average net sales (in pounds) of
In-Store Inventory as measured from August 1, 1998 to January 31, 1999, as
calculated for each Customer separately.
"BALANCE SHEET DATE" shall have the meaning set forth in Section 3.4(a).
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"BANKRUPTCY CODE" means Title I of the Bankruptcy Reform Action of 1978, as
amended and codified in Title 11 of the United States Code.
"BANKRUPTCY COURT" means the Bankruptcy Court unit of the United States District
Court for the District of Delaware, or such other court having jurisdiction over
the Chapter 11 Cases or any proceeding relating thereto.
"BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure, as the same
are applicable to the Chapter 11 Cases.
"BUSINESS DAY" means a day of the year on which banks are not authorized to be
closed in the City of New York.
"BUYER" means The Procter & ▇▇▇▇▇▇ Company.
"BUYER DOCUMENTS" shall have the meaning set forth in Section 4.2(a).
"CASE" shall have the meaning set forth in the Preamble to this Agreement.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.
"CHAPTER 11 CASES" means the cases commenced under Chapter 11 of the Bankruptcy
Code by Debtors on the Petition Date by the filing of Chapter 11 petitions with
the Bankruptcy Court.
"CLAIMANT" means all creditors, claimants and interest holders having claims
against or interests in the Consolidated Estates.
"CLOSING" shall have the meaning set forth in Section 2.4.
"CLOSING DATE" shall have the meaning set forth in Section 2.5.
"CLOSING ORDER" means, with respect to the Confirmation Order, Sale Order or
Assumption Order, either the Confirmation Order, Sale Order or Assumption Order
shall have become a Final Order.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" shall have the meaning set forth in the Preamble to this Agreement.
"COMPANY DOCUMENTS" shall have the meaning set forth in Section 3.2(a).
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"CONFIRMATION ORDER" shall have the meaning set forth in Section 5.1(c)(2).
"CONSOLIDATED COMPANY" shall have the meaning set forth in Section 3.4(a).
"CONTINGENT" means, with reference to a Claim, a Claim that has not accrued or
is not otherwise payable and the accrual of which or the obligation to make
payment on which is dependent upon a future event that may or may not occur.
"CONTRACTS" shall have the meaning set forth in Section 5.5(g).
"CURE DATE" shall have the meaning set forth in Section 8.3(a).
"CUSTOMER" means the customers listed in Schedule 2.1 under "Customer
Contracts."
"DEBTORS" means one or more of the Company, and any or all of its Subsidiaries,
in their capacities as prepetition, post-petition or post-confirmation debtors
and as singular, consolidated, merged or reorganized entities, depending upon
the context.
"DISBURSING AGENT" means the person appointed by the Bankruptcy Court, and if no
Disbursing Agent is appointed, the Company, pursuant to the Amended Plan or Sale
Order.
"DISCLOSURE STATEMENT ORDER" means an order of the Bankruptcy Court, in form and
substance reasonably satisfactory to Buyer and its counsel, approving, pursuant
to Section 1125 of the Bankruptcy Code, the Amended Disclosure Statement for
solicitations of acceptances and rejections of the Plan, setting forth voting
procedures and scheduling a confirmation hearing.
"DISTRIBUTION FUND" shall have the meaning set forth in Section 2.3(e).
"DOLLARS"; "$" means lawful currency of the United States of America.
"EFFECTIVE DATE" means the Closing Date.
"ENVIRONMENT" means soil, land surface or subsurface strata, surface waters
(including navigable waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments, ambient air
(including indoor air), plant and animal life, and any other environmental
medium or natural resource.
"ENVIRONMENTAL, HEALTH, AND SAFETY LIABILITIES" means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
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(a) any environmental, health, or safety matters or conditions
(including on-site or off-site contamination, occupational safety and health,
and regulation of chemical substances or products);
(b) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising under
Environmental Law or Occupational Safety and Health Law;
(c) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including any
investigation, cleanup, removal, containment, or other remediation or response
actions ("Cleanup") required by applicable Environmental Law or Occupational
Safety and Health Law (whether or not such Cleanup has been required or
requested by any Governmental Body or any other Person) and for any natural
resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial," and "response action," include the types
of activities covered by CERCLA.
"ENVIRONMENTAL LAW" means any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the commencements
of activities, such as resource extraction or construction, that could have
significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged, and
used so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species, or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other potentially
harmful substances;
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(g) cleaning up pollutants that have been released, preventing the
threat of release, or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment, or permitting
self-appointed representatives of the public interest to recover for injuries
done to public assets.
"EQUITY INTERESTS" shall mean any ownership interest or a share of capital stock
in the Company or any Subsidiary, as the case may be (including any Equity
Rights), whether or not transferable, preferred, common, voting or denominated
"stock," or a similar security.
"EQUITY RIGHTS" shall mean all options, warrants, subscriptions, calls,
contracts, demands, commitments, convertible securities or other agreements or
arrangements of any character or nature, whatsoever under which the Company or
any Subsidiary, as the case may be, is or may become obligated to vote, issue,
purchase, sell, return, redeem, assign, pledge or transfer any shares of its
capital stock, or rights or warrants to acquire, or securities convertible into
shares of its capital stock,
"ESCROW AGENT" means Weil, Gotshal & ▇▇▇▇▇▇ LLP in its capacity as escrow agent
pursuant to the Escrow Agreement.
"ESCROW AGREEMENT" shall have the meaning set forth in Section 2.8.
"ESCROW AMOUNT" shall have the meaning set forth in Section 2.8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FACILITIES" means any real property, leaseholds or other real property
interests owned or leased by the Company or any Subsidiary, and any buildings,
plants, structures, or equipment (including motor vehicles), that are owned or
leased both as of the date hereof and as of the Closing Date.
"FINAL ORDER" means an order, judgment, ruling or other decree issued and
entered by the Bankruptcy Court (as entered on the docket in the Chapter 11
Cases), or any state or federal court or other tribunal located in one of the
states, territories, or possessions of the United States of America or the
District of Columbia, which judgment, order or other decree has not been
reversed, stayed, modified or amended, and as to which (x) the time to appeal or
to seek review, rehearing or certiorari has expired and as to which no appeal or
petition for review, rehearing or certiorari is pending or has been timely filed
or (y) any appeal that has been or may be taken or any petition for certiorari
that has been or may be filed has been resolved by the highest court to which
the order or judgment was appealed or from which certiorari was sought.
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"FINISHED PRODUCT INVENTORY" means (a) 950,000 pounds of unadulterated,
packaged, ready to be shipped (in cartons or totes) whole bean or ground 100%
premium or specialty grade arabica coffee of merchantable quality; (b) under the
BROTHERS trademark or as specified by Buyer; (c) such product being no more than
seven (7) months older than its manufacture date on the package for pre-pack
products, and no more than ninety (90) days on bulk products, at the time of
delivery to Buyer; and (d) of such combination as specified by Buyer.
"GAAP" means generally accepted accounting principles in effect in the United
States consistently applied.
"GOVERNMENT CONSENTS" shall have the meaning set forth in Section 3.3.
"GREEN COFFEE INVENTORY" shall mean all green coffee that Company owns, which is
fresh and from the current green coffee crop (1998 / 1999 season), of good
quality and free of flavor defects, at the Closing Date. In no event shall
Green Coffee Inventory be used for Finished Product Inventory unless, there is a
corresponding price decrease ($1.53 per pound) to the Finished Product
Inventory, as agreed by Buyer.
"GREEN COFFEE INVENTORY ADJUSTMENT" shall have the same meaning set forth in
Section 2.3(b).
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended.
"HAZARDOUS ACTIVITY" means the distribution, generation, handling, importing,
management, manufacturing, processing, production, refinement, Release, storage,
transfer, transportation, treatment, or use (including any withdrawal or other
use of groundwater) of Hazardous Materials in, on, under, about, or from the
Facilities or any part thereof into the Environment, and any other act,
business, operation, or thing that increases the danger, or risk of danger, or
poses an unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the Company or any
Subsidiary.
"HAZARDOUS MATERIALS" means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or pursuant to any
Environmental Law, including any admixture or solution thereof, and specifically
including petroleum and all derivatives thereof or synthetic substitutes
therefor and asbestos or asbestos-containing materials.
"IN-STORE INVENTORY" shall mean all Finished Product Inventory (as if it were
in-store), and all other inventory sold or otherwise distributed by Company that
is not under the BROTHERS trademark, as of the Closing Date (as measured in
pounds) that Company sells or otherwise provides to each Customer that is (a) on
the shelves of such Customer's stores, (b) on such Customer's premises, whether
in a store, warehouse or elsewhere or (c) at a wholesaler/distributor's premises
which is intended to be shipped to the Customer.
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"IN-STORE INVENTORY ADJUSTMENT" shall have the meaning set forth in Section
2.3(c).
"INTELLECTUAL PROPERTY" shall have the meaning set forth in Section 3.9(a).
"INTERIM ORDER" means the Order entered by the Bankruptcy Court on January 15,
1999 styled "Order Approving Proposed Bidding Procedures, with Respect to the
Sale of Debtor's Business and Approving Certain Terms of the Stock Purchase
Agreement. "
"IRS" means the Internal Revenue Service.
"LEGAL REQUIREMENT" means any federal, state, local, municipal, foreign,
international, multinational, or other administrative order, constitution, law,
ordinance, principle of common law, regulation, statute, or treaty.
"LIEN" means any lien, claim, encumbrance, security interest, option, mortgage
note, deed of trust, easement, license, leasehold interest, right of way, title
defect, charge, restriction or right of any third party of any kind.
"MATERIAL ADVERSE EFFECT" means any condition, change or event that would
materially and adversely affect the Assets.
"MARYLAND CLUB AGREEMENT" shall have the meaning set forth in Section 2.7(b).
"OSHA" means Occupational Safety and Health Act.
"OCCUPATIONAL SAFETY AND HEALTH LAW" means any Legal Requirement designed to
provide safe and healthful working conditions and to reduce occupational safety
and health hazards, and any program, whether governmental or private (including
those promulgated or sponsored by industry associations and insurance
companies), designed to provide safe and healthful working conditions.
"PERMITS" shall have the meaning set forth in Section 3.3.
"PERSON" means any individual, corporation, partnership, firm, joint venture,
association, joint-stock company, trust, unincorporated organization,
governmental or regulatory body or other entity.
"PETITION DATE" means August 27, 1998, the date on which Debtors commenced the
Chapter 11 Cases.
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"PLAN" means the Plan of Reorganization dated January 15, 1999 and filed with
the Bankruptcy Court pursuant to Section 5.1.
"PURCHASE PRICE" shall have the meaning set forth in Section 2.2(a).
"PURCHASE PRICE ADJUSTMENT" shall have the meaning set forth in Section 2.3(a).
"RCRA" means the Resource Conservation and Recovery Act.
"RELEASE" means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
"SALE MOTION" means the motion to be filed by the Debtors with The Bankruptcy
Court pursuant to 5.1 of this Agreement in accordance with Section 105 and 363
of The Bankruptcy Code.
"SALE ORDER" shall have the meaning set forth in Section 5.1(c)(1).
"SEC" means the Securities and Exchange Commission.
"SUBSIDIARIES" shall mean Brothers Gourmet Coffees, Inc., Brothers Retail Corp.,
Brothers Coffee Bars, Inc., and Maryland Club Foods, all wholly owned
subsidiaries of Company.
"TAX" means any taxes, however denominated, including income tax, capital gains
tax, value-added tax, sales tax, property tax, gift tax, estate tax, capital
stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, sales, use, transfer, registration, alternative or
add-on minimum, estimated, or other tax of any kind whatsoever and any related
charge or amount (including any fine, penalty, interest or addition to tax),
imposed, assessed or collected by or under the authority of any Governmental
Body or payable pursuant to any tax-sharing agreement or any other arrangement
relating to the sharing or payment of any such tax, levy, assessment, tariff,
duty, deficiency or fee, including any interest, penalty, or addition thereto,
whether disputed or not.
"TRUST" means the creditors' trust, if any, for the benefit of the Claimants
established pursuant to the Plan.
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