Exhibit 2.1
Conformed Copy
Share Purchase Agreement
by and between
▇▇▇▇▇▇▇▇ Brands International, Inc.
▇▇▇▇▇▇▇ Corporation,
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇
September 15, 1997
Share Purchase Agreement
THIS SHARE PURCHASE AGREEMENT (this "Agreement") is made
and entered into as of the 15th day of September, 1997, by and
between ▇▇▇▇▇▇▇▇ BRANDS INTERNATIONAL, INC., a New Jersey corporation
("Buyer"), ▇▇▇▇▇▇▇ CORPORATION, a Nevada corporation ("▇▇▇▇▇▇▇"), and
▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇ (▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇
▇▇▇▇▇▇ are sometimes collectively referred to as "Sellers" and
sometimes individually as "Seller").
RECITALS
A. American Fine Foods, Inc., an Idaho corporation
("Company"), is engaged in the food processing business; and
▇. ▇▇▇▇▇▇▇ own all of the issued and outstanding shares
(the "Shares") of the capital stock of the Company as follows:
▇▇▇▇▇▇▇ 740,731 shares
▇▇▇▇▇▇ ▇▇▇▇ 72,000 shares
▇▇▇▇▇▇ ▇▇▇▇▇▇ 4,000 shares
▇. ▇▇▇▇▇▇▇ desire to sell the Shares to Buyer and Buyer
desires to purchase the Shares from Sellers.
NOW, THEREFORE, in consideration of the mutual terms,
conditions and other agreements set forth herein, Sellers and Buyer
hereby agree as follows:
SECTION 1
DEFINITIONS
For purposes of this Agreement, the following terms have
the meanings specified or referred to in this Section 1:
"Accountants" -- as defined in Section 2.6.1.
"Accounts Receivable" -- as defined in Section 3.7.
"Adjustment Amount" -- as defined in Section 2.5.
"Adjustment Shares" -- as defined in Section 2.4.2.
"Applicable Contract" -- any Contract (a) under which the
Company has or may acquire any rights, (b) under which the Company
has or may become subject to any obligation or liability, or (c) by
which the Company or any of the assets owned or used by it is or may
become bound.
"Balance Sheet" -- as defined in Section 3.4.
"Base Shares" -- as defined in Section 2.4.2.
"Best Efforts" -- the efforts that a prudent Person, as
hereinafter defined, desirous of achieving a result would use in
similar circumstances to ensure that such result is achieved as
expeditiously as possible.
"Breach" -- a "Breach" of a representation, warranty,
covenant, obligation, or other provision of this Agreement or any
instrument delivered pursuant to this Agreement will be deemed to
have occurred if there is or has been (a) any inaccuracy in or breach
of, or any failure to perform or comply with, such representation,
warranty, covenant, obligation, or other provision, or (b) any claim
(by any Person) or other occurrence or circumstance that is or was
inconsistent with such representation, warranty, covenant,
obligation, or other provision.
"Buyer" -- as defined in the first paragraph of this
Agreement.
"Buyer Costs" -- as defined in Section 6.5.1.
"Buyer's Advisors" -- as defined in Section 5.1.
"Cleanup" -- as defined in definition of Environmental,
Health and Safety Liabilities.
"Closing" -- as defined in Section 2.3.
"Closing Date" -- the date and time as of which the
Closing actually takes place.
"Closing Financial Statements" -- as defined in Section
2.6.1.
"Closing Price" -- as defined in Section 6.6.
"Code" -- as defined in Section 3.10.4.
"Common Stock" -- as defined in Section 2.4.2(a).
"Company" -- as defined in the Recitals of this
Agreement.
"Consent" -- any approval, consent, ratification, waiver,
or other authorization (including any Governmental Authorization, as
hereinafter defined).
"Contemplated Transactions" -- all of the transactions
contemplated by this Agreement, including, but not limited to:
(a) the sale of the Shares by Sellers to Buyer;
(b) the performance by Buyer and Sellers of their
respective covenants and obligations under this Agreement; and
(c) Buyer's acquisition and ownership of the Shares and
exercise of control over the Company.
"Contract" -- any agreement, contract, obligation,
promise, or undertaking (whether written or oral and whether express
or implied) that is legally binding.
"Damages" -- as defined in Section 10.2.
"Disclosure Letter" -- the disclosure letter delivered by
Sellers to Buyer concurrently with the execution and delivery of this
Agreement.
"Employee Plans" -- as defined in Section 3.12.1.
"Encumbrance" -- any charge, claim, community property
interest, condition, equitable interest, lien, option, pledge,
security interest, right of first refusal, or restriction of any
kind, including any restriction on use, voting, transfer, receipt of
income, or exercise of any other attribute of ownership.
"Environmental, Health, and Safety Liabilities" -- any
cost, damages, expense, liability, obligation, or other
responsibility arising from or under Environmental Law or
Occupational Safety and Health Law, as hereinafter defined, and
consisting of or relating to:
(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
or response, investigative, removal, remedial, or inspection costs or
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, as hereinafter defined, or any other Person) and
for any natural resource damages;
(d) any other compliance, corrective, investigative,
response or remedial measures or costs required under Environmental
Law or Occupational Safety and Health Law; or
(e) any non-compliance with or violation of any standard
or requirement of Environmental Law or Occupational Safety and Health
Law.
The terms "removal," "remedial," and "response action,"
include the types of activities covered by the United States
Comprehensive Environmental Response, Compensation, and Liability
Act, 42 U.S.C. Section 9601 et seq., as amended ("CERCLA"), the
Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., as amended,and/or any comparable state and local laws.
"Environmental Law" -- any Legal Requirement, as
hereinafter defined, that relates to the protection of human health
or the environment, including, but not limited to, any Legal
Requirement that requires or relates to:
(a) advising or notifying appropriate authorities,
employees, and the public of intended or expected or actual releases
of pollutants or hazardous substances or other Hazardous Materials,
violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or
construction, which activities could have significant impact on the
environment;
(b) preventing, limiting or reducing to acceptable levels
the release or potential release of pollutants or hazardous
substances or Hazardous 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 storage or transportation of hazardous substances, pollutants,
oil, Hazardous Materials or other potentially harmful substances;
(g) investigating and responding to and cleaning up
pollutants that have been released, preventing the threat of release,
or paying the costs of such investigation, clean up, response or
prevention;
(h) making responsible parties pay private parties, or
groups of them, for bodily injuries or 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;
(i) generating, storing, transporting, treating or
disposing of any Hazardous Material; or
(j) complying with any Governmental Authorization that
relates to the protection of health or the environment.
"ERISA" -- as defined in Section 3.12.1.
"Exchange Act" -- the Securities Exchange Act of 1934 or
any successor law, as amended, and regulations and rules issued
pursuant to that Act or any successor law, as amended.
"Facilities" -- any real property, leaseholds, or other
interests currently or formerly owned, leased or operated by the
Company and any buildings, plants, structures, or equipment
(including motor vehicles) currently or formerly owned, leased or
operated by the Company.
"GAAP" -- generally accepted United States accounting
principles consistently applied, and applied on a basis consistent
with the basis, methods and practices on which the Balance Sheet and
the other financial statements referred to in Section 3.4 were
prepared.
"Governmental Authorization" -- any approval, consent,
license, permit, waiver, or other authorization issued, granted,
given, or otherwise made available by or under the authority of any
Governmental Body or pursuant to any Legal Requirement.
"Governmental Body" -- any:
(a) nation, state, county, city, town, village, district,
or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign, or other
government;
(c) governmental or quasi-governmental authority of any
nature (including any governmental agency, branch, department,
official, or entity and any court or other tribunal);
(d) multi-national organization or body; or
(e) body exercising, or entitled to exercise, any
administrative, executive, judicial, legislative, police, regulatory,
or taxing authority or power of any nature.
"Hazardous Materials" -- any waste, material or other
substance that is listed, defined, designated, or classified as, or
otherwise determined to be, hazardous, radioactive, toxic or a
pollutant or a contaminant, or that is otherwise regulated, under or
pursuant to any Environmental Law or any Occupational Safety and
Health Law.
"HSR Act" -- the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976 or any successor law, and regulations and rules issued
pursuant to that Act or any successor law.
"Indemnified Persons" -- as defined in Section 10.2.
"Intellectual Property Assets" -- as defined in Section
3.21.1.
"Knowledge" -- an individual will be deemed to have
"Knowledge" of a particular fact or other matter if:
(a) such individual is actually aware of such fact or
other matter;
(b) such individual is informed of a particular fact or
other matter upon inquiry of the Company's environmental or risk
manager, health and safety director, and Facility managers; or if no
inquiry is made, would have learned of such fact or other matter if
an inquiry had been made; or
(c) a prudent individual could be expected to discover or
otherwise become aware of such fact or other matter in the course of
such individual's employment or in the course of acting as a director
or officer of a Person (other than an individual) hereafter
referenced in this definition.
A Person (other than an individual) will be deemed to
have "Knowledge" of a particular fact or other matter if any
individual who is serving as a director, officer, partner, executor,
or trustee of such Person (or in any similar capacity) has, or at any
time had, Knowledge of such fact or other matter.
"Legal Requirement" -- any federal, state, local,
municipal, foreign, international, multinational, or other judicial
or administrative order, constitution, law, ordinance, principle of
common law, regulation, statute, or treaty or any Order.
"Marks" -- as defined in Section 3.21.1.
"Occupational Safety and Health Law" -- any Legal
Requirement designed to provide safe and healthful working conditions
or 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.
"Order" -- any award, decision, injunction, judgment,
order, ruling, subpoena, or verdict entered, issued, made, or
rendered by any court, administrative agency, or other Governmental
Body or by any arbitrator.
"Ordinary Course of Business" -- an action taken by a
Person will be deemed to have been taken in the "Ordinary Course of
Business" only if:
(a) such action is consistent with the past practices of
such Person and is taken in the ordinary course of the normal
day-to-day operations of such Person;
(b) such action is not required to be authorized by the
board of directors of such Person (or by any Person or group of
Persons exercising similar authority); and
(c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board of
directors (or by any Person or group of Persons exercising similar
authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business as
such Person.
"Organizational Documents" -- the articles or certificate
of incorporation and the bylaws of the Company.
"Person" -- any individual, corporation (including any
non-profit corporation), general or limited partnership, limited
liability company, joint venture, estate, trust, association,
organization, labor union, or other entity or Governmental Body.
"Preparation Costs" -- as defined in Section 6.5.1.
"Proceeding" -- any action, arbitration, audit, hearing,
investigation, litigation, or suit (whether civil, criminal,
administrative, investigative, or informal) commenced, brought,
conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
"Purchase Price" -- as defined in Section 2.2.
"Registration Costs" -- as defined in Section 6.5.1.
"Registration Statement" -- as defined in Section 6.4.1.
"Registrable Shares" -- as defined in Section 6.4.1.
"Related Person" -- with respect to a particular
individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled
by such individual or one or more members of such individual's
Family;
(c) any Person in which such individual or members of
such individual's Family hold (individually or in the aggregate) a
Material Interest; and
(d) any Person with respect to which such individual or
one or more members of such individual's Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity).
With respect to a specified Person other than an
individual:
(a) any Person that directly or indirectly controls, is
directly or indirectly controlled by, or is directly or indirectly
under common control with such specified Person;
(b) any Person that holds a Material Interest in such
specified Person;
(c) each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a
similar capacity);
(d) any Person in which such specified Person holds a
Material Interest;
(e) any Person with respect to which such specified
Person serves as a general partner or a trustee (or in a similar
capacity); and
(f) any Related Person of any individual described in
clause (b) or (c).
For purposes of this definition, (a) the "Family" of an
individual includes (i) the individual, (ii) the individual's spouse,
(iii) any other natural person who is related to the individual or
the individual's spouse within the second degree, and (iv) any other
natural person who resides with such individual, (b) "Material
Interest" means direct or indirect beneficial ownership (as defined
in Rule 13d-3 under the Securities Exchange Act of 1934) of voting
securities or other voting interests representing at least 50% of the
outstanding voting power of a Person or equity securities or other
equity interests representing at least 50% of the outstanding equity
securities or equity interests in a Person, and (c) each Seller shall
be deemed a Related Person with respect to the Company.
"Representative" -- with respect to a particular Person,
any director, officer, employee, agent, consultant, advisor, or other
representative of such Person, including legal counsel, accountants,
and financial advisors.
"Requested Information" -- as defined in Section 5.13.1.
"SEC" -- as defined in Section 6.4.1.
"Section" -- as defined in Section 11.11.
"Securities Act" -- the Securities Act of 1933 or any
successor law, as amended, and regulations and rules issued pursuant
to that Act or any successor law, as amended.
"Seller Costs" -- as defined in Section 6.5.1.
"Seller Environmental Matters" -- as defined in Section
10.2.4.
"Seller(s)" -- as defined in the first paragraph of this
Agreement.
"Shares" -- as defined in the Recitals of this Agreement.
"▇▇▇▇▇▇▇" -- as defined in the first paragraph of this
Agreement.
"▇▇▇▇▇▇▇ Returns" -- as defined in Section 5.10.1.
"Subsidiary" -- with respect to any Person (the "Owner"),
any corporation or other Person of which securities or other
interests having the power to elect a majority of that corporation's
or other Person's board of directors or similar governing body, or
otherwise having the power to direct the business and policies of
that corporation or other Person (other than securities or other
interests having such power only upon the happening of a contingency
that has not occurred) are held by the Owner or one or more of its
Subsidiaries; when used without reference to a particular Person,
"Subsidiary" means a Subsidiary of the Company.
"Tax and Taxes" -- taxes, charges, fees, levies, and
other governmental assessments and impositions of any kind, payable
to any federal, state, local or foreign governmental entity or taxing
authority or agency, including, without limitation, (i) income,
franchise, profits, gross receipts, estimated, ad valorem, value
added, sales, use, service, real or personal property, capital stock,
license, payroll, withholding, disability, employment, social
security, workers compensation, unemployment compensation, severance,
production, excise, stamp, occupation, premiums, windfall profits,
transfer and gains taxes, (ii) customs duties, imposts, charges,
levies or other similar assessments of any kind, and (iii) interest,
penalties and additions to tax imposed with respect thereto.
"Tax Return" -- any return (including any information
return), report, statement, schedule, notice, form, or other document
or information filed with or submitted to, or required to be filed
with or submitted to, any Governmental Body in connection with the
determination, assessment, collection, or payment of any Tax or in
connection with the administration, implementation, or enforcement of
or compliance with any Legal Requirement relating to any Tax.
"Threatened" -- a claim, Proceeding, dispute, action, or
other matter will be deemed to have been "Threatened" if any demand
or statement has been made (orally or in writing) or any notice has
been given (orally or in writing), or if any other event has occurred
or any other circumstances exist, that would lead a prudent Person to
conclude or to have knowledge that such a claim, Proceeding, dispute,
action, or other matter is likely to be asserted, commenced, taken,
or otherwise pursued in the future.
"Trade Date" -- as defined in Section 6.6
"Trade Secrets" -- as defined in Section 3.21.1(b).
"Violations" -- as defined in Section 10.3.4.
SECTION 2
SALE AND TRANSFER OF SHARES; CLOSING
2.1 Shares. Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer the Shares
to Buyer, and Buyer will purchase the Shares from Sellers.
2.2 Purchase Price. The purchase price (the "Purchase
Price") for the Shares will be $26,770,696, plus the Adjustment
Amount, payable in the form or forms hereafter provided in this
Agreement.
2.3 Closing.
2.3.1 The purchase and sale (the "Closing")
provided for in this Agreement will take place at the offices
of ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, 1800 Star Bank Center, ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, at 4:15 p.m.
(Eastern Standard Time) on the later of (i) October 31, 1997,
(ii) the date that is two (2) business days following the
termination of the applicable waiting period under the HSR Act,
or (iii) the date the Registration Statement becomes effective,
or at such other time and place as the parties may agree.
2.3.2 If, on the date set for Closing under Section
2.3.1, the per share value of the Common Stock as determined
under Section 2.7 as of such date is five percent (5%) or more
lower than the per share value determined under Section 2.8 as
of such date, and all conditions specified in Sections 7 and 8
have been satisfied or would be satisfied if the Closing were
to occur on such date, the Buyer may, at its sole discretion,
cause the Closing to be postponed to the next business day.
The Buyer may, if the conditions set out above are satisfied on
the date to which the Closing has been postponed, continue to
postpone the Closing, one business day at a time, provided, the
Buyer may not postpone the Closing beyond the 30th day from the
date set for Closing under Section 2.3.1.
2.3.3 Subject to the provisions of Section 9,
failure to consummate the purchase and sale provided for in
this Agreement on the date and time and at the place determined
pursuant to this Section 2.3 will not result in the termination
of this Agreement and will not relieve any party of any
obligation under this Agreement.
2.4 Closing Obligations. At the Closing:
2.4.1 Sellers will deliver to Buyer:
(a) certificates representing the Shares, duly
endorsed (or accompanied by duly executed stock powers), with
signatures guaranteed by a commercial bank or by a member firm
of the New York Stock Exchange, for transfer to Buyer;
(b) duly executed resignation of the Company's
board of directors; and
(c) a certificate executed by Sellers representing
and warranting to Buyer that each of Sellers' representations
and warranties in this Agreement was accurate in all respects
as of the date of this Agreement and is accurate in all
respects as of the Closing Date as if made on the Closing Date
(giving full effect to any supplements to the Disclosure Letter
that were delivered by Sellers to Buyer prior to the Closing
Date in accordance with Section 5.5).
2.4.2 Buyer will deliver to Sellers:
(a) (i) certificates representing the number of
shares of common stock of Buyer ("Common Stock") having a total
value, determined as provided in Section 2.7, equal to
$26,770,696 ("Base Shares") plus, at the Buyer's option, an
amount equal to the Seller's best estimate of the Adjustment
Amount ("Adjustment Shares"); or (ii) if Buyer so elects, the
Buyer may deliver the number of shares at Closing equal in
value, determined as provided in Section 2.8, to ninety-five
percent (95%) of $26,770,696 plus, at the Buyer's option, an
amount equal to the Seller's best estimate of the Adjustment
Amount and by 4:00 p.m. (Eastern Standard Time) of the next
business day deliver the balance of the shares due Sellers as
specified in (i) of this section.
(b) a certificate executed by Buyer to the effect
that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was
accurate in all respects as of the date of this Agreement and
is accurate in all respects as of the Closing Date as if made
on the Closing Date.
2.5 Adjustment Amount. The Adjustment Amount (which may
be a positive or negative number) will be equal to (a) the
stockholders' equity of the Company as of the Closing Date
determined in accordance with GAAP except as provided below, minus
(b)$25,610,187.
2.6 Adjustment Procedure.
2.6.1 Sellers will prepare and will cause KMPG Peat
Marwick LLP, the Company's independent certified public
accountants, to audit financial statements ("Closing Financial
Statements") of the Company as of the Closing Date and for the
period from the date of the Balance Sheet through the Closing
Date, including a computation of stockholders' equity as of the
Closing Date. Provided, however, if the Closing Date is
postponed one or more times by the Buyer pursuant to Section
2.3.2, the Closing Financial Statements shall be prepared as of
the date originally set under Section 2.3.1 for the Closing.
In preparing the Closing Financial Statements and in computing
the stockholders' equity, the Company's liability for Taxes to
be included on a ▇▇▇▇▇▇▇ Return shall be computed on the basis
of a separate return for the Company, and the liability for any
such taxes shall be reflected as a payable to ▇▇▇▇▇▇▇ on the
Closing Financial Statements. Sellers will deliver the Closing
Financial Statements to Buyer within sixty (60) days after the
Closing Date. If within thirty (30) days following delivery of
the Closing Financial Statements, Buyer has not given Sellers
notice of its objection to the Closing Financial Statements
(such notice must contain a statement of the basis of Buyer's
objection), then the stockholders' equity reflected in the
Closing Financial Statements will be used in computing the
Adjustment Amount. If Buyer gives such notice of objection,
then the issues in dispute will be submitted to Price
Waterhouse (the "Accountants") for resolution. If issues in
dispute are submitted to the Accountants for resolution, (i)
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
(or its independent public accountants), and will be afforded
the opportunity to present to the Accountants any material
relating to the determination and to discuss the determination
with the Accountants; (ii) the determination by the
Accountants, which shall be based on GAAP as set forth in a
notice delivered to both parties by the Accountants, will be
binding and conclusive on the parties; and (iii) Buyer and
Sellers will each bear 50% of the fees of the Accountants for
such determination.
2.6.2 On the tenth business day following the final
determination of the Adjustment Amount, if the Adjustment
Amount is in excess of the estimated amount paid, if any, at
Closing, Buyer shall pay Sellers an amount equal to such
excess, and if the Adjustment Amount is less than the estimated
amount paid, if any, at Closing, Sellers will pay Buyer an
amount equal to such difference. The payment, if any, by Buyer
or Seller shall be made in the form of cash.
2.7 Value of Common Stock. The per share value of the
Common Stock for the purpose of determining the number of shares to
be issued to the Sellers shall be an amount equal to the closing
sales price of the Buyer's common stock on the New York Stock
Exchange composite tape on the Closing Date.
2.8 Estimated Value. The estimated per share value of
the Common Stock for the purpose of determining the number of shares
to be delivered at Closing under Section 2.4.2(a)(ii) shall be an
amount equal to the average closing sales price of the Buyer's common
stock on the New York Stock Exchange composite tape on each of the
fifteen (15) consecutive trading days immediately preceding the
second business day prior to the Closing Date.
2.9 Fractional Shares. In lieu of transfer of
fractional shares of Common Stock by Buyer, the Sellers will receive
cash equal to the value of such fractional shares.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF SELLERS
The Sellers hereby severally, but not jointly, represent
and warrant to Buyer that as of the date of this Agreement, the
following are true:
3.1 Corporate Organization; Subsidiaries.
3.1.1 The Company is a corporation duly organized,
validly existing and in good standing under the laws of Idaho,
and on the Closing Date will be duly qualified to do business
in each jurisdiction in which the nature of its business or
properties makes such qualification necessary, except where the
failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect upon the financial
condition or business of the Company taken as a whole.
Complete and correct copies of the Organizational Documents for
the Company have been delivered to Buyer.
3.1.2 ▇▇▇▇▇▇▇ is a corporation duly organized,
validly existing and in good standing under the laws of Nevada.
3.1.3 The Company has no Subsidiary and since 1970
has never had any Subsidiary. Except as set forth in Part 3.1
of the Disclosure Letter, the Company does not own any equity,
or similar interests in, or any interests convertible into or
exchangeable or exercisable for any equity or similar interest
in, any Person.
3.2 Authority; No Conflict.
3.2.1 This Agreement constitutes the legal, valid,
and binding obligation of Sellers, enforceable against Sellers
in accordance with its terms, except as such terms may be
affected by bankruptcy, insolvency, moratorium or other similar
laws relating to creditors' rights and general principles of
equity. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this
Agreement and to perform their obligations under this
Agreement.
3.2.2 The execution, delivery and performance of
this Agreement by ▇▇▇▇▇▇▇ have been duly authorized by all
requisite corporate action.
3.2.3 Except as set forth in Part 3.2 of the
Disclosure Letter, neither the execution nor delivery of this
Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with, or result in a
violation of any provision of the Organizational Documents;
(b) contravene, conflict with, or result in a
violation of, or give any Governmental Body or other Person the
right to challenge any of the Contemplated Transactions or to
exercise any remedy or obtain any relief under, any Legal
Requirement or any Order to which the Company or any Seller, or
any of the assets owned or used by the Company, may be subject;
(c) contravene, conflict with, or result in a
violation of any of the terms or requirements of, or give any
Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization
that is held by the Company or that otherwise relates to the
business of, or any of the assets owned or used by, the
Company;
(d) contravene, conflict with, or result in a
violation or breach of any provision of, or give any Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; or
(e) result in the imposition or creation of any
Encumbrance upon or with respect to any of the assets owned,
leased or used by the Company.
3.2.4 Except as set forth in Part 3.2 of the
Disclosure Letter, no Seller or the Company is or will be
required to give any notice to or obtain any Consent from any
Person (including, without limitation, from any Person that is
a party to any Applicable Contract) in connection with the
execution and delivery of this Agreement or the consummation or
performance of any of the Contemplated Transactions.
3.3 Capitalization. The authorized equity securities of
the Company consist of 2,000,000 shares of common stock, par value
$1.00 per share, of which 816,731 shares are issued and outstanding
and constitute the Shares. Sellers are and will be on the Closing
Date the record and beneficial owners and holders of good and valid
title to the Shares, free and clear of all Encumbrances. All of the
outstanding equity securities of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
There are no Contracts relating to the issuance, sale, or transfer of
any equity securities or any other securities of the Company. The
Company has not granted any options, warrants, or other rights,
agreements, arrangements or commitments of any character (including,
without limitation, voting agreements or arrangements relating to any
issued or unissued capital stock of the Company or obligating the
Company to issue or sell any shares of capital stock of, or other
equity interests in, the Company).
3.4 Financial Statements. Sellers have delivered to
Buyer: (i) audited balance sheets of the Company as at June 30 in
each of the years 1993 through 1996, and the related audited
statements of income, changes in stockholders' equity, and cash flow
for each of the fiscal years then ended, and (ii) an audited balance
sheet of the Company as at June 28, 1997 (including the notes
thereto, the "Balance Sheet"), and the related audited statements of
income, changes in stockholders' equity, and cash flow for the fiscal
year then ended, including in each case the notes thereto. Such
financial statements and notes fairly present the financial condition
and the results of operations, changes in stockholders' equity, and
cash flow of the Company as at the respective dates of and for the
periods referred to in such financial statements, all in accordance
with GAAP; the financial statements referred to in this Section 3.4
reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes to
such financial statements.
3.5 Books and Records. The books of account, minute
books, stock record books, and other records of the Company, all of
which will be made available to Buyer prior to Closing, are correct
and complete and have been maintained in accordance with sound legal,
accounting and business practices and methods consistently applied.
3.6 Title to Properties; Encumbrances. Part 3.6 of the
Disclosure Letter contains a complete and accurate list of all real
property, leaseholds, or other interests therein owned by the
Company. The Company owns (with good and marketable title in the
case of real property, subject only to the matters permitted by the
following sentence) all the properties and assets (whether real,
personal, or mixed and whether tangible or intangible) that it
purports to own, including all of the properties and assets reflected
in the Balance Sheet (except for assets held under capitalized leases
disclosed or not required to be disclosed in Part 3.16 of the
Disclosure Letter and personal property sold since the date of the
Balance Sheet, in the Ordinary Course of Business), and all of the
properties and assets purchased or otherwise acquired by the Company
since the date of the Balance Sheet (except for personal property
acquired and sold since the date of the Balance Sheet in the Ordinary
Course of Business and consistent with past practice). Except as
disclosed in Part 3.6 of the Disclosure Letter, all material
properties and assets reflected in the Balance Sheet are free and
clear of all Encumbrances and are not, in the case of real property
or the current use thereof, in violation of any Legal Requirement,
used in a manner not in conformity with any Legal Requirement, or
subject to any rights of way, building use restrictions, exceptions,
variances, reservations, or limitations of any nature except, with
respect to all such properties and assets, (a) mortgages or security
interests shown on the Balance Sheet as securing specified
liabilities or obligations, with respect to which no default (or
event that, with notice or lapse of time or both, would constitute a
default) exists, (b) liens for current taxes not yet due, and
(c) with respect to real property, (i) imperfections of title, none
of which impairs the use of the property subject thereto, or impairs
the operations of the Company, and (ii) zoning laws and other land
use restrictions that do not impair the present use of the property
subject thereto.
3.7 Accounts Receivable. All accounts receivable of the
Company that are reflected on the Balance Sheet or on the accounting
records of the Company as of the Closing Date (collectively, the
"Accounts Receivable") represent or will represent valid obligations
arising from sales actually made or services actually performed in
the Ordinary Course of Business. Unless paid prior to the Closing
Date, the Accounts Receivable are or will be as of the Closing Date
current and collectible net of the respective reserves shown on the
Balance Sheet or on the accounting records of the Company as of the
Closing Date (which reserves are adequate and calculated consistent
with past practice and methods and, in the case of the reserve as of
the Closing Date, will not represent a greater percentage of the
Accounts Receivable as of the Closing Date than the reserve reflected
in the Balance Sheet represented of the Accounts Receivable reflected
therein). There is no contest, claim, or right of set-off, other
than returns in the Ordinary Course of Business, under any Contract
with any obligor of an Accounts Receivable relating to the amount or
validity of such Accounts Receivable.
3.8 Inventory. All inventory of the Company, whether or
not reflected in the Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all of
which have been reserved for or written off or written down to net
realizable value in the Balance Sheet or on the accounting records of
the Company as of the Closing Date, as the case may be. All
inventories not reserved for or written off have been valued at the
lower of cost on a first in, first out basis or market, except for
corn which is valued at lower of average cost or market.
3.9 No Undisclosed Liabilities. Except as set forth in
the Balance Sheet or in the Disclosure Letter, to the Knowledge of
any of the Sellers or the Company, the Company has no liabilities or
obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) except for liabilities
or obligations reflected or reserved against in the Balance Sheet and
current liabilities incurred in the Ordinary Course of Business since
the date thereof.
3.10 Taxes.
3.10.1 The Company has filed or caused to be filed
on a timely basis all Tax Returns for any period where
assessment of a tax is not now barred by the lapse of time,
that are or were required to be filed by or with respect to it,
either separately or as a member of a group of corporations,
pursuant to applicable Legal Requirements. The Company has
paid, or has either made provision or provision will be made on
the Closing Financial Statements for the payment of, all Taxes
that have or may have become due pursuant to those Tax Returns
or otherwise.
3.10.2 All Tax Returns filed by (or that include on
a consolidated basis) the Company are true, correct, and
complete. Except for the payment due ▇▇▇▇▇▇▇ as will be
reflected on the Closing Financial Statements, there is no tax
sharing agreement that will require any payment to ▇▇▇▇▇▇▇ by
the Company after the date of this Agreement.
3.10.3 Except as set forth in Part 3.10 of the
Disclosure Letter, the Company is not, and has never been, a
party to any joint venture, partnership or other arrangement
that could be treated as a partnership for Tax purposes.
3.10.4 The Company has never consented to the
application of Internal Revenue Code ("Code") Section 341(f).
3.10.5 Except as set forth in Part 3.10 of the
Disclosure Letter, the Company does not, and has never had, a
permanent establishment in any foreign country and the Company
does not, and has never engaged, in a trade or business in any
foreign country.
3.10.6 A list of all intercompany transactions
(including deferred intercompany transactions, with both terms
having the meanings provided in Income Tax Regulations Section
1.1502-13(a) of the Code) which will result in the payment of
any tax by the Company after the Closing Date and which exist
because of transactions between the Company and any Related
Person are set forth in Part 3.10 of the Disclosure Letter,
except those which arose in the Ordinary Course of Business
from the intercompany sale of inventory.
3.10.7 The Company has paid to the proper taxing
authorities or is withholding and will pay when due to the
proper taxing authorities all amounts required to be withheld
or paid with respect to all Taxes on income, unemployment,
social security (FICA), or other similar programs or benefits
with respect to salary and other compensation of its directors,
officers and employees and any other Taxes required to be
withheld.
3.10.8 No election has been made under Income Tax
Regulations Section 1-301.7701 of the Code to treat the Company
as a taxable entity other than a corporation in its own right.
3.11 No Material Adverse Change. Since June 30, 1997,
other than general market conditions, there has not been any material
adverse change in the business, operations, properties, prospects,
assets, or condition of the Company, and, to the Knowledge of any of
the Sellers or the Company, no event has occurred or circumstance
exists that may result in such a material adverse change.
3.12 Employee Benefits.
3.12.1 Part 3.12 of the Disclosure Letter sets
forth all pension plans, profit-sharing plans, medical plans
and all other employee benefit plans as defined in Section 3.3
of the Employee Retirement Income Security Act ("ERISA") and
any other plan, policy, or arrangement, formal or informal,
providing for bonus, profit-sharing, deferred compensation,
stock option, or other stock-related rights or other forms of
incentive compensation or severance or retirement benefits in
which any of the Company's current or former employees are
participants or to which the Company contributes ("Employee
Plans"). In addition to the Employee Plans, the Company has
provided for the payment of severance pay to ▇▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ in the event their employment is
terminated in connection with the Contemplated Transaction as
detailed in Part 3.12 of the Disclosure Letter.
3.12.2 Each Employee Plan complies with all
applicable provisions of the ERISA, all applicable provisions
of the Code, and all other Legal Requirements. No Employee
Plan is maintained in connection with any trust described in
Section 501(c)(9) of the Code. There are no actions, suits or
claims pending or Threatened (other than routine claims for
benefits) with respect to any Employee Plan. No prohibited
transactions described in Section 406 of ERISA or Section 4975
of the Code have occurred. Each Employee Plan has been
operated in compliance with its terms.
3.12.3 All Employee Plans that are intended to be
qualified under Section 401(a) of the Code have received a
favorable determination letter as to such qualification from
the Internal Revenue Service, and no event has occurred, either
by reason of any action or failure to act, which would cause a
loss of any such qualification.
3.12.4 No employee of the Company currently
participates in any "multiemployer plan" (as defined in Section
3(37) or Section 4001(a)(2) of ERISA) on account of such
employee's employment with the Company, nor does the Company
have any obligation to contribute to or liability, potential
liability or contingent liability with respect to any
multiemployer plan on behalf of any employee or former employee
of the Company. The Company has not incurred any current or
potential withdrawal liability as a result of a complete or
partial withdrawal (or potential partial withdrawal) from any
multiemployer plan.
3.12.5 Except as set forth in Part 3.12 or Part
3.19 of the Disclosure Letter, the Company does not have any
obligation to provide post-retirement benefits of any nature to
its employees, former employees or their survivors, dependents
or beneficiaries, except as may be required by the Consolidated
Omnibus Budget Reconciliation Act of 1986 or any other
applicable state medical benefits continuation laws, nor will
any such obligation to provide such post-retirement benefits be
incurred solely as a result of the consummation of the
Contemplated Transactions.
3.12.6 Except for the medical and dental plan, the
prescription drug plan, the short term disability plan, the
employee assistance program, and the voluntary life insurance
plan, all Employee Plans are made available to the Company's
employees because the Company is a Subsidiary of ▇▇▇▇▇▇▇ and
such Employee Plans are made available by ▇▇▇▇▇▇▇. The Company
has made all payments required under the Employee Plans and has
complied with all Legal Requirements applicable to the Employee
Plans. Except as required under applicable Legal Requirements,
upon the completion of the Contemplated Transaction, none of
the employees of the Company will be eligible to participate in
any of the Employee Plans that are made available by ▇▇▇▇▇▇▇.
Except as set forth in the Disclosure Letter, the Contemplated
Transactions will not result in acceleration of any payment or
vesting under any non-qualified Employee Plan covering any
employee or former employee of the Company.
3.12.7 No "reportable event" (within the meaning
of Section 4043 of ERISA) has occurred with respect to any
Employee Plan. Neither the Company nor ▇▇▇▇▇▇▇ is a
contributing sponsor to which Section 4043(b)(1) of ERISA is
applicable, or is subject to advance reporting requirements of
Section 4043 of ERISA or Section 4043.61 of the Pension Benefit
Guarantee Corporation (PBGC) regulations. No Employee Plan has
during the previous three (3) years had unfunded vested
benefits (within the meaning of Section 4043.29(c)(3) or
4043.30(c)(3) of the PBGC regulations) of $1 million or
greater.
3.13 Compliance with Legal Requirements; Governmental
Authorizations.
3.13.1 Except as set forth in Part 3.13 of the
Disclosure Letter:
(a) to the Knowledge of any of the Sellers or the
Company, the Company is, and at all times since June 30, 1990,
has been (and was at all times on or prior to June 30, 1990 in
connection with any matter that otherwise, individually or in
the aggregate, could have a material adverse effect upon the
financial condition or business or prospects of the Company
after the Closing) in full compliance with each Legal
Requirement and Governmental Authorization that is or was
applicable to it or to the conduct or operation of its business
or the ownership or use of any of its assets;
(b) to the Knowledge of any of the Sellers or the
Company, no event has occurred or circumstance exists that
(with or without notice or lapse of time) (i) may constitute or
result in a violation by the Company of, or a failure on the
part of the Company to comply with, any Legal Requirement or
Governmental Authorization, or (ii) may give rise to any
obligation on the part of the Company to undertake, or to bear
all or any portion of the cost of, any remedial action of any
nature; and
(c) the Company has not received, at any time since
June 30, 1990 (or prior to June 30, 1990 in connection with any
matter that otherwise, individually or in the aggregate, could
have a material adverse effect upon the financial condition or
business or prospects of the Company after the Closing), any
notice or other communication (whether oral or written) from
any Governmental Body or any other Person regarding (i) any
actual, alleged, possible, or potential violation by the
Company of, or failure by the Company to comply with, any Legal
Requirement or Governmental Authorization, or (ii) any actual,
alleged, possible, or potential obligation on the part of the
Company to undertake, or to bear all or any portion of the cost
of, any remedial action of any nature.
3.13.2 The Governmental Authorizations held by the
Company collectively constitute all of the Governmental
Authorizations necessary to permit the Company to lawfully
conduct and operate its businesses in the manner it currently
conduct and operate such businesses and to permit the Company
to own and use its assets in the manner in which it currently
owns and uses such assets.
3.14 Legal Proceedings; Orders.
3.14.1 Except as set forth in Part 3.14 of the
Disclosure Letter, there is no pending Proceeding:
(a) that has been commenced by or against the
Company or that otherwise relates to or may affect the business
of, or any of the assets owned, leased or used by, the Company;
or
(b) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering
with, any of the Contemplated Transactions.
To the Knowledge of any of the Sellers or the Company, no
such Proceeding has been Threatened.
3.14.2 Except as set forth in Part 3.14 or Part
3.18 of the Disclosure Letter:
(a) there is no Order to which the Company, or any
of the assets owned or used by the Company, is subject;
(b) no Seller is subject to any Order that relates
to the business of, or any of the assets owned or used by, the
Company; and
(c) to the Knowledge of any of the Sellers or the
Company, no officer, director, agent, or employee of the
Company is subject to any Order that prohibits such officer,
director, agent, or employee from engaging in or continuing any
conduct, activity, or practice relating to the business of the
Company.
3.15 Absence of Certain Changes and Events. Except as
set forth in Part 3.15 of the Disclosure Letter, since June 30, 1997,
the Company has conducted its businesses only in the Ordinary Course
of Business and there has not been any:
3.15.1 change in the Company's authorized or issued
capital stock; grant of any stock option, warrant or right to
purchase shares of capital stock of the Company; issuance of
any security convertible into such capital stock; grant of any
registration rights; purchase, redemption, retirement, or other
acquisition by the Company of any shares of any of the
Company's capital stock; or declaration, setting aside, or
payment of any dividend or other distribution or payment in
respect of shares of capital stock of the Company, or any
redemption, purchase or acquisition of any of the Company's
securities;
3.15.2 amendment to the Organizational Documents;
3.15.3 payment or increase by the Company of any
bonuses, salaries, or other compensation to any stockholder,
director or, except in the Ordinary Course of Business, any
officer or employee of the Company or entry into any
employment, severance, or similar Contract with any director,
officer, or employee of the Company;
3.15.4 adoption of, or increase in the payments to
or benefits under, any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other
employee benefit plan or Employee Plan, except for those
available to ▇▇▇▇▇▇▇ employees but not Company employees, for
or with any director, officer or employee of the Company;
3.15.5 damage to or destruction or loss of any
asset or property of the Company, whether or not covered by
insurance, materially and adversely affecting the properties,
assets, business, financial condition, or prospects of the
Company, taken as a whole;
3.15.6 sale (other than sales of inventory in the
Ordinary Course of Business), lease, or other disposition of
any asset or property of the Company or mortgage, pledge, or
imposition of any lien or other encumbrance on any material
asset or property of the Company;
3.15.7 cancellation or waiver of any claims or
rights with a value to the Company in excess of $50,000 in any
individual instance or $500,000 in the aggregate;
3.15.8 material change in the accounting methods
used by the Company;
3.15.9 borrowing of funds or incurring of
additional debt for borrowed money or capital lease obligations
beyond borrowings under the Company's revolving line of credit
with First Security Bank of Idaho, N.A., the maximum amount of
which has not been increased; or
3.15.10 agreement, whether oral or written, by the
Company to do any of the foregoing.
3.16 Contracts; No Defaults.
3.16.1 Part 3.16.1 of the Disclosure Letter
contains a complete and accurate list, and Sellers have
delivered to Buyer true and complete copies, of:
(a) each Applicable Contract that involves
performance of services or delivery of goods or materials by
the Company of an amount or value in excess of $50,000;
(b) each Applicable Contract that involves
performance of services or delivery of goods or materials to
the Company of an amount or value in excess of $25,000;
(c) each Applicable Contract that was not entered
into in the Ordinary Course of Business and that involves
expenditures or receipts of the Company in excess of $25,000;
(d) each lease, rental or occupancy agreement,
license, installment and conditional sale agreement, and other
Applicable Contract affecting the Company's ownership of,
leasing of, title to, use of, or any leasehold or other
interest in, any real or personal property (except personal
property leases and installment and conditional sales
agreements having a value per item or aggregate payments of
less than $25,000 and with terms of less than one year);
(e) each licensing agreement to which the Company
is a party or other Applicable Contract with respect to
patents, trademarks, copyrights, or other intellectual
property;
(f) each collective bargaining agreement to which
the Company is a party and other Applicable Contract to or with
any labor union or other employee representative of a group of
employees;
(g) each joint venture, partnership, and other
Applicable Contract (however named) involving a sharing of
profits, losses, costs, or liabilities by the Company with any
other Person;
(h) each Applicable Contract containing covenants
that in any way purport to restrict the business activity of
the Company or limit the freedom of the Company to engage in
any line of business or to compete with any Person;
(i) each Applicable Contract for capital
expenditures in excess of $25,000 in any individual instance
and a copy of the Company's current capital budget for the
Period from July 1, 1997 through June 30, 1998;
(j) each written warranty, guaranty, and other
similar undertaking with respect to contractual performance
extended by the Company other than in the Ordinary Course of
Business;
(k) each Applicable Contract containing a
restriction, limitation or consent requirement with respect to
a change in control of the Company; and
(l) each amendment, supplement, and modification
(whether oral or written) in respect of any of the foregoing.
3.16.2 Except as set forth in Part 3.16.2 of the
Disclosure Letter:
(a) no Seller (and no Related Person of any Seller)
has or may acquire any rights under, and no Seller has or may
become subject to any obligation or liability under, any
Contract with the Company or any Contract that relates to the
business of, or any of the assets owned or used by, the
Company; and
(b) to the Knowledge of any of the Sellers or the
Company, no officer, director, agent, employee, consultant, or
contractor of the Company is bound by any Contract that
purports to limit the ability of such officer, director, agent,
employee, consultant, or contractor to (i) engage in or
continue any conduct, activity, or practice relating to the
business of the Company, or (ii) assign to the Company or to
any other Person any rights to any invention, improvement, or
discovery.
3.16.3 Except as set forth in Part 3.16.3 of the
Disclosure Letter, to the Knowledge of any of the Sellers or
the Company, each Contract identified or required to be
identified in Part 3.16.1 of the Disclosure Letter is in full
force and effect and is valid and enforceable in accordance
with its terms.
3.16.4 Except as set forth in Part 3.16.4 of the
Disclosure Letter, to the Knowledge of the Sellers:
(a) the Company is, and at all times since June 30,
1995 has been, in full compliance with all applicable terms and
requirements of each Contract under which the Company has or
had any obligation or liability or by which the Company or any
of the assets owned or used by the Company is or was bound;
(b) each other Person that has or had any
obligation or liability under any Contract under which the
Company has or had any rights is, and at all times since June
30, 1995 has been, in full compliance with all applicable terms
and requirements of such Contract;
(c) no event has occurred or circumstance exists
(including, without limitation, the execution and delivery of
this Agreement or the anticipated consummation of the
Contemplated Transactions) that (with or without notice or
lapse of time) may contravene, conflict with, or result in a
violation or breach of, or give the Company or other Person the
right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel,
terminate, or modify, any Applicable Contract; and
(d) the Company has not given to or received from
any other Person, at any time since June 30, 1995, any notice
or other communication (whether oral or written) regarding any
actual, alleged, possible, or potential violation or breach of,
or default under, any Contract.
3.16.5 There are no renegotiations of, attempts to
renegotiate, or outstanding rights to renegotiate any material
amounts paid or payable to the Company under current or
completed Contracts with any Person and, to the Knowledge of
any of the Sellers or the Company, no such Person has made
written demand for such renegotiation.
3.16.6 The Contracts relating to the sale, design,
manufacture, or provision of products or services by the
Company have been entered into in the Ordinary Course of
Business and have been entered into without the commission of
any act alone or in concert with any other Person, or any
consideration having been paid or promised, that is or would be
in violation of any Legal Requirement or Governmental
Authorization.
3.17 Insurance.
3.17.1 Sellers have delivered to Buyer:
(a) true and complete copies of all policies of
insurance to which the Company is a party or under which the
Company, is or has been covered at any time within the three
(3) years preceding the date of this Agreement; and
(b) any statement by the auditor of the Company's
financial statements in any management letter with regard to
the adequacy of such entity's coverage or of the reserves for
claims.
3.17.2 Part 3.17 of the Disclosure Letter
describes:
(a) any self-insurance arrangement by or affecting
the Company, including any reserves established thereunder;
(b) any contract or arrangement, other than a
policy of insurance, for the transfer or sharing of any risk by
the Company; and
(c) all obligations of the Company to third parties
with respect to insurance (including such obligations under
leases and service agreements, certificates of insurance, bonds
and other items) and identifies the type of policy under which
such coverage is provided.
3.17.3 Part 3.17.3 of the Disclosure Letter sets
forth, by year, for the current policy year and each of the
three (3) preceding policy years:
(a) a summary of the loss experience under each
policy;
(b) a statement describing each claim under an
insurance policy, which sets forth: (i) the name of the
claimant; (ii) a description of the policy by insurer, type of
insurance and period of coverage; and (iii) the amount and a
brief description of the claim; and
(c) a statement describing the loss experience for
all claims that were self-insured, including the number and
aggregate cost of such claims.
3.17.4 Except as set forth on Part 3.17.4 of the
Disclosure Letter:
(a) All policies to which the Company is a party or
that provide coverage to the Company, or any director or
officer of the Company: (i) are valid, outstanding, and
enforceable; (ii) are issued by an insurer that is financially
sound and reputable; (iii) taken together, provide adequate
insurance coverage for the assets and the operations of the
Company for all risks normally insured against by a Person
carrying on the same business or businesses as the Company;
(iv) are sufficient for compliance with all Legal Requirements
and Contracts to which the Company is a party or by which the
Company is bound; (v) will continue in full force and effect
only for the period through the Closing Date other than the
Workmen's Compensation Plan for the State of Washington which
may be continued after the Closing Date; and (vi) do not
provide for any retrospective premium adjustment or other
experienced-based liability on the part of the Company.
(b) No Seller or the Company has received (i) any
refusal of coverage or any notice that a defense will be
afforded with reservation of rights, or (ii) any notice of
cancellation or any other indication that any insurance policy
is no longer in full force or effect or will not be renewed or
that the issuer of any policy is not willing or able to perform
its obligations thereunder.
(c) The Company has paid, or made provision for
payments of, all premiums due for which the Company is
obligated to make payment, and has otherwise performed all of
its obligations, under each policy to which the Company is a
party or that provides coverage to the Company or any director
or officer thereof.
(d) The Company has given notice to the insurer of
any and all claims that may be insured thereby.
(e) Adequate provision has been made for all
workmen's compensation claims that have been made or
Threatened.
3.17.5 Part 3.17.5 of the Disclosure Letter lists
all policies of insurance to which the Company is or has been a
party, or under which the Company is or has been covered, at
any time since January 1, 1991, the period of effectiveness of
each of such policies, and all pending claims and liabilities
(other than those described at Part 3.17.3 of the Disclosure
Letter) under any such policies. All amounts necessary to
maintain such policies in effect during the periods described
in Part 3.17.5 of the Disclosure Letter were appropriately paid
and the Company maintains adequate reserves for claims on the
Balance Sheet.
3.18 Environmental Matters. Except as set forth in Part
3.18 of the Disclosure Letter:
3.18.1 To the Knowledge of any of the Sellers or
the Company, the Company 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 or Occupational Safety and
Health Law. Neither any Seller nor the Company has any basis
to expect, nor has any of them received, any actual or
Threatened order, notice, or other communication from any
Governmental Body or Person of any actual or potential
violation or failure to comply with any Environmental Law or
Occupational Safety and Health Law, any actual or Threatened
Proceeding involving a possible violation or noncompliance with
any Environmental Law or Occupational Safety and Health 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
(whether real, personal, or mixed, and including, but not
limited to, off site disposal locations).
3.18.2 There are no pending or, to the Knowledge of
any of the Sellers or the Company, Threatened claims,
Encumbrances, 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 has or had an interest or any other
properties at which the Company may be a generator of wastes.
3.18.3 Sellers have made available to Buyer true
and complete copies and results of any reports, studies,
analyses, tests, or monitoring possessed or initiated by the
Company or ▇▇▇▇▇▇▇ pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or
concerning compliance by the Company with Environmental Laws.
3.19 Employees.
3.19.1 Part 3.19 of the Disclosure Letter contains
a complete and accurate list of the following information, as
of the date of such list, for each employee of the Company,
including each employee on leave of absence or layoff status:
employer; name; job title; current compensation paid or
payable; and service credited for purposes of vesting and
eligibility to participate under any of the Employee Plans.
3.19.2 Part 3.19 of the Disclosure Letter also
contains a complete and accurate list of any benefits or other
payments to be made by the Company to any retired employee of
the Company, or their dependents.
3.20 Labor Relations; Compliance. Except as set forth
in Part 3.20 of the Disclosure Letter, since June 30, 1995, the
Company has not been and is not a party to any collective bargaining
or other labor Contract. Except as set forth in Part 3.20 of the
Disclosure Letter, since June 30, 1995, there has not been, there is
not presently pending or existing, and to the Knowledge of any of the
Sellers or the Company, there is not Threatened, (i) any strike,
slowdown, lockout, picketing, work stoppage, or employee grievance
process, (ii) any Proceeding against or affecting the Company
relating to the alleged violation of any Legal Requirement pertaining
to labor relations or employment matters, including any charge or
complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any
comparable Governmental Body, organizational activity, or other labor
or employment dispute against or affecting the Company or its
premises, or (iii) any application for certification of a collective
bargaining agent. To the Knowledge of any of the Sellers or the
Company, no event has occurred and no circumstance exists that could
provide the basis for any work stoppage or other labor dispute. The
Company has complied in all respects with all Legal Requirements
relating to employment, equal employment opportunity,
nondiscrimination, immigration, wages, hours, benefits, collective
bargaining, the payment of social security and similar taxes,
occupational safety and health, and plant closing. The Company is
not liable for the payment of any compensation, damages, taxes,
fines, penalties, or other amounts, however designated, for failure
to comply with any of the foregoing Legal Requirements.
3.21 Intellectual Property.
3.21.1 The term "Intellectual Property Assets"
includes:
(a) the name American Fine Foods, all fictional
business names, trading names, registered and unregistered
trademarks, service marks, and applications owned, used, or
licensed by the Company as a licensee or licensor
(collectively, "Marks"), all of which registered Marks are
listed in Part 3.21 of the Disclosure Schedule;
(b) all know-how, trade secrets, confidential
information, customer lists, software, technical information,
data, process technology, plans, drawings, and blue prints
owned, used, or licensed by the Company as licensee or licensor
(collectively, "Trade Secrets"); and
(c) all registered and unregistered copyrights
owned, used or licensed by the Company as licensee or licensor
(collectively, the "Copyrights").
3.21.2 The Intellectual Property Assets are all
those reasonably necessary for the operation of the Company's
businesses as they are currently conducted. The Company is the
owner of all right, title, and interest in and to, or has a
valid and enforceable license to use, each of the Intellectual
Property Assets, free and clear of all liens, security
interests, charges, encumbrances, equities, and other adverse
claims. The Company does not own or license (as licensee or
licensor) any patents.
3.21.3 Except as set forth in Part 3.21 of the
Disclosure Letter, no ▇▇▇▇ has been or is now involved in any
opposition, invalidation, or cancellation and, to the Knowledge
of each of the Sellers and the Company, no such action is
Threatened with the respect to any of the Marks.
3.21.4 Except as set forth in Part 3.21 of the
Disclosure Letter, to Knowledge of each of the Sellers and the
Company, there is no potentially interfering trademark or
trademark application of any third party.
3.21.5 Except as set forth in Part 3.21 of the
Disclosure Letter, no ▇▇▇▇ is infringed or, to the Knowledge of
any of the Sellers or the Company, has been challenged or
threatened in any way. None of the Intellectual Property
Assets used by the Company infringes or, to the Knowledge of
any Seller or the Company, is alleged to infringe any trade
name, trademark, service ▇▇▇▇, copyright, patent, trade secret,
or other right of any third party.
3.22 Brokers or Finders. Other than as set out in Part
3.22 of the Disclosure Letter, none of the Company, any Seller, or
any of their respective agents has incurred any obligation or
liability, contingent or otherwise, for brokerage or finders' fees or
agents' commissions in connection with this Agreement.
3.23 Investment Representations. Each Seller intends to
acquire the Common Stock for investment for such Seller's own account
(and such Seller will be the sole beneficial owner thereof) and the
Common Stock is being acquired for the purpose of investment and not
with a view to distribution or resale thereof except pursuant to the
Registration Statement or another registration under the Securities
Act or exemption therefrom. Each Seller understands that, until
registered under the Securities Act, all certificates evidencing the
Common Stock, whether upon initial issuance or upon any transfer
thereof, shall bear a legend, prominently stamped or printed thereon,
reading substantially as follows:
"The securities represented by this
certificate have not been registered under
the Securities Act of 1933 or applicable
state securities laws. These securities have
been acquired for investment and not with a
view to distribution or resale. These
securities may not be offered for sale, sold,
delivered after sale, or transferred in the
absence of an effective registration
statement covering such shares under such Act
and any applicable state securities laws, or
the availability, in the opinion of counsel,
of an exemption from registration
thereunder."
3.24 Disclosure. The representations and warranties
made by the Sellers in this Agreement and the Disclosure Schedule (as
the same may be updated in accordance with this Agreement) do not
include any untrue statement of a material fact or omit to state a
material fact required to be stated herein or therein in order to
make the statements herein or therein, in light of the circumstances
under which they are made, not misleading.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF BUYER
The Buyer hereby represents and warrants to Sellers that
as of the date of this Agreement the following are true:
4.1 Organization and Good Standing. Buyer is a
corporation duly organized, validly existing, and in good standing
under the laws of the State of New Jersey.
4.2 Authority; No Conflict.
4.2.1 This Agreement constitutes the legal, valid,
and binding obligation of Buyer, enforceable against Buyer in
accordance with its terms, except as such terms may be affected
by bankruptcy, insolvency, moratorium or other similar laws
relating to creditors' rights and general principles of equity.
Buyer has the right, power, and authority to execute and
deliver this Agreement and to perform its obligations under
this Agreement.
4.2.2 Neither the execution and delivery of this
Agreement by Buyer nor the consummation or performance of any
of the Contemplated Transactions by Buyer will give any Person
the right to prevent, delay, or otherwise interfere with any of
the Contemplated Transactions pursuant to: (i) any provision
of Buyer's Articles of Incorporation or Bylaws; (ii) any
resolution adopted by the board of directors or the
stockholders of Buyer; (iii) any Legal Requirement or Order to
which Buyer may be subject; or (iv) any Contract to which Buyer
is a party or by which Buyer may be bound.
4.2.3 Except as provided in Section 6.1 or
otherwise provided in this Agreement, Buyer is not and will not
be required to obtain any Consent from any Person in connection
with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated
Transactions.
4.3 Investment Intent. Buyer is acquiring the Shares
for its own account and not with a view to their distribution within
the meaning of Section 2(11) of the Securities Act.
4.4 Certain Proceedings. There is no pending Proceeding
that has been commenced against Buyer that challenges, or may have
the effect of preventing, delaying, making illegal, or otherwise
interfering with, any of the Contemplated Transactions. To Buyer's
Knowledge, no such Proceeding has been Threatened.
4.5 Brokers or Finders. Buyer and its officers and
agents have incurred no obligation or liability, contingent or
otherwise, for brokerage or finders' fees or agents' commissions or
other similar payment in connection with this Agreement and will
indemnify and hold Sellers harmless from any such payment alleged to
be due by or through Buyer as a result of the action of Buyer or its
officers or agents.
4.6 Common Stock. On the Closing Date, the Common Stock
will be listed on the New York Stock Exchange but may bear a
restrictive legend limiting resales not in compliance with the
Securities Act.
SECTION 5
COVENANTS OF SELLERS; REGISTRATION
5.1 Access and Investigation. Between the date of this
Agreement and the Closing Date, Sellers will, and will cause the
Company and its Representatives to, (i) afford Buyer and its
Representatives and prospective lenders and their Representatives
(collectively, "Buyer's Advisors") full and free access to the
Company's personnel, properties (including subsurface testing),
contracts, books and records, and other documents and data, (ii)
furnish Buyer and Buyer's Advisors with copies of all such contracts,
books and records, and other existing documents and data as Buyer may
reasonably request, and (iii) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information
as Buyer may reasonably request.
5.2 Operation of the Businesses of the Company. Between
the date of this Agreement and the Closing Date, Sellers will, and
will cause the Company to conduct the business of the Company only in
the Ordinary Course of Business.
5.3 Negative Covenant. Except as otherwise expressly
permitted by this Agreement, between the date of this Agreement and
the Closing Date, Sellers will not, and will cause the Company not
to, without the prior consent of Buyer (i) take any affirmative
action, or fail to take any reasonable action within their or its
control, as a result of which any of the changes or events listed in
Section 3.15 will or is likely to occur; (ii) incur any more debt
under the Company's existing revolving line of credit than necessary
to meet the Company's normal operational needs; (iii) make any
commitment for capital expenditures in excess of $25,000; or (iv)
enter into any contracts having a value in excess of $100,000.
Provided, however, the Company may pay bonuses equal in total to the
amount of the liability for bonuses accrued on the Balance Sheet.
5.4 Required Approvals. As promptly as practicable after
the date of this Agreement, Sellers will, and will cause the Company
and each of its Related Persons to, make all filings required by
Legal Requirements to be made by them in order to consummate the
Contemplated Transactions (including all filings under the HSR Act).
Between the date of this Agreement and the Closing Date, Sellers
will, and will cause the Company and each of its Related Persons to,
(i) cooperate with Buyer with respect to all filings that Buyer
elects to make or is required by Legal Requirements to make in
connection with the Contemplated Transactions, and (ii) cooperate
with Buyer in obtaining all consents identified in Schedule 4.2
(including taking all actions requested by Buyer to cause early
termination of any applicable waiting period under the HSR Act).
5.5 Notification. Between the date of this Agreement
and the Closing Date, each Seller will promptly notify Buyer in
writing if such Seller or the Company becomes aware of any fact or
condition that causes or constitutes a Breach of any of Sellers'
representations and warranties as of the date of this Agreement, or
if such Seller or the Company becomes aware of the occurrence after
the date of this Agreement of any fact or condition that would
(except as expressly contemplated by this Agreement) cause or
constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or
discovery of such fact or condition. Should any such fact or
condition require any change in the Disclosure Letter if the
Disclosure Letter were dated the date of the occurrence or discovery
of any such fact or condition, Sellers will promptly deliver to Buyer
a supplement to the Disclosure Letter specifying such change. During
the same period, each Seller will promptly notify Buyer of the
occurrence of any Breach of any covenant of Sellers in this Section 5
or of the occurrence of any event that may make the satisfaction of
the conditions in Section 7 impossible or unlikely.
5.6 Payment of Indebtedness by Related Persons. Except
as expressly provided in this Agreement or listed in Part 5.6 of the
Disclosure Letter, Sellers will cause all indebtedness owed to the
Company by any Seller, other than ▇▇▇▇▇▇▇, or any Related Person of
any Seller to be paid in full prior to Closing. Any amounts owed by
▇▇▇▇▇▇▇ will be paid as soon as practicable, but in any event, on or
before the date the Closing Financial Statements are delivered to the
Buyer.
5.7 Best Efforts. Between the date of this Agreement
and the Closing Date, Sellers will use their Best Efforts to cause
the conditions in Sections 7 and 8 to be satisfied.
5.8 Employee Plans. The Sellers shall insure that all
liabilities and Legal Requirements are satisfied and complied with in
connection with the termination of the Company's employees'
participation in those Employee Plans that are provided by ▇▇▇▇▇▇▇.
5.9 No Negotiation. Until such time, if any, as this
Agreement is terminated pursuant to ▇▇▇▇▇▇▇ ▇, ▇▇▇▇ of the Sellers
will, and each of the Sellers will cause the Company and each of
their Representatives not to, directly or indirectly solicit,
initiate, or encourage any inquiries or proposals from, discuss or
negotiate with, provide any non-public information to, or consider
the merits of any unsolicited inquiries or proposals from, any Person
(other than Buyer) relating to any transaction involving the sale of
the business or assets (other than in the Ordinary Course of
Business) of the Company, or any of the shares, or any merger,
consolidation, business combination, or similar transaction involving
the Company.
5.10 Filing of Tax Returns.
5.10.1 To the extent consistent with prior
practices, ▇▇▇▇▇▇▇ shall include the Company in the Federal and
state income Tax Returns filed by ▇▇▇▇▇▇▇, including any
consolidated, unitary or combined income tax returns filed by
▇▇▇▇▇▇▇ for periods ending prior to the Closing Date and
periods which include the Closing Date and shall include the
activity of the Company through the Closing Date in such Tax
Returns, and ▇▇▇▇▇▇▇ shall pay all Taxes due with respect to
such Tax Returns. The returns shall be prepared on a basis
consistent with past practices and shall not make or change any
election applicable to or which affect the Company without
Buyer's written consent. The returns to be prepared by ▇▇▇▇▇▇▇
under this Section 5.10 are referred to as the "▇▇▇▇▇▇▇
Returns."
5.10.2 ▇▇▇▇▇▇▇ shall deliver a separate pro forma
return for the Company for each ▇▇▇▇▇▇▇ Return to Buyer no
later than the date the Closing Financial Statements are
delivered to the Buyer.
5.11 Amended Returns. After the Closing, ▇▇▇▇▇▇▇ will
not file any amended Tax Returns or claims for refunds for the
Company for any periods ending on or before the Closing Date without
the prior written consent of Buyer, which consent will not be
unreasonably withheld. Sellers shall be entitled to retain any
refunds and any additional tax liability that results from such
amended return shall be borne by Sellers, regardless of whether such
additional tax liability is with respect to a tax period ending
before or after the Closing Date. Sellers shall reimburse Buyer for
any reduction of the Company's tax attributes that results from the
filing of such amended Tax Returns. In the case of tax credits, the
amount of reimbursement shall be the amount of the reduction of the
credit. In the case of a reduction of a loss carryover or asset
basis, the amount of reimbursement shall be the amount of the
reduction of loss carryover or basis multiplied by the highest
applicable federal income tax rate.
5.12 Credit and Loss Adjustments. If in any period
ending after the Closing Date, the Company earns any credit or
recognizes any loss which, because of a carry back of such credit or
loss to a period ending on or prior to the Closing Date, ▇▇▇▇▇▇▇
receives a tax reduction, then ▇▇▇▇▇▇▇ shall immediately remit to
Buyer an amount equal to the tax benefit realized by ▇▇▇▇▇▇▇ as a
result of such carry back.
5.13 Registration. In connection with the registration
pursuant to Section 6.4, the Sellers shall have the following
obligations:
5.13.1 Each Seller shall furnish to Buyer such
information regarding itself, the Registrable Shares held by it
and the intended method of disposition of the Registrable
Shares held by it as shall be reasonably required to effect the
registration of the Registrable Shares and shall execute such
documents in connection with any such registration as Buyer may
reasonably request. At least five (5) days prior to the first
anticipated filing date of the Registration Statement, Buyer
shall notify each Seller participating in the registration of
the information Buyer requires from such Seller (the "Requested
Information"). If within three (3) business days prior to the
filing date Buyer has not received the Requested Information
from a Seller, then Buyer may file the Registration Statement
without including Registrable Shares of such Seller.
5.13.2 Each Seller shall cooperate with Buyer as
reasonably requested by Buyer in connection with the
preparation and filing of the Registration Statement, unless
such Seller has notified Buyer in writing of such Seller's
election to exclude all of such Seller's Common Stock from the
Registration Statement.
5.13.3 In the event ▇▇▇▇▇▇▇ determines to engage
the services of an underwriter, each Seller agrees to enter
into and perform such Seller's obligations under an
underwriting agreement, in usual and customary form, including,
without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and
to take such other actions as are reasonably required in order
to expedite or facilitate the disposition of the Registrable
Shares, unless such Seller has notified Buyer and ▇▇▇▇▇▇▇ in
writing of such Seller's election to exclude all of such
Seller's Common Stock from the Registration Statement.
5.13.4 No Seller may participate in any
underwritten registration hereunder unless such Seller (i)
agrees to sell such Seller's Registrable Shares on the basis
provided in any underwriting arrangements, (ii) completes and
executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii)
agrees to pay its pro rata share of all Seller Costs.
5.13.5 If Buyer gives a notice to a Seller as
provided for in Section 6.4.5, such Seller will immediately
cease any disposition of Registrable Shares pursuant to the
Registration Statement until Buyer notifies such Seller that a
prospectus supplement has been filed or an amendment to the
Registration Statement has been declared effective by the SEC
or that any stop order or other suspension has been lifted.
5.13.6 If any Seller believes, or receives
information to the effect that, the prospectus (including any
supplements thereto) forming part of the Registration Statement
contains an untrue statement of material fact or omits to state
a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing, to the extent such facts or
statements relate to information provided to Buyer by, or on
behalf of, any of the Sellers for inclusion in the Registration
Statement, then Sellers will promptly notify Buyer in writing.
5.14 Closing Financial Statements. After the Closing,
the Sellers will cause the Closing Financial Statements to fairly
present the financial condition and results of operations, changes in
stockholders' equity, and cash flow of the Company as at the
respective dates of and for the periods referred to in such financial
statements, all in accordance with GAAP (other than as provided in
Section 2.6.1).
5.15 Estimate. The Sellers will, three (3) days prior
to the Closing Date, deliver to the Buyer the Sellers' best estimate
of the Adjustment Amount, which estimate shall be subject to Buyer's
reasonable approval.
5.16 Noncompetition. For a period of five (5) years
from the Closing, ▇▇▇▇▇▇▇ shall not directly, or indirectly through
any Subsidiary, engage in any business in the United States which
would compete with the Company. Further, during such five-year (5)
period, ▇▇▇▇▇▇▇ will not solicit or make unsolicited offers to employ
a current employee of the Company.
SECTION 6
COVENANTS OF BUYER; REGISTRATION
6.1 Approvals of Governmental Bodies. As promptly as
practicable after the date of this Agreement, Buyer will, and will
cause each of its Related Persons to, make all filings required by
Legal Requirements to be made by them to consummate the Contemplated
Transactions (including all filings under the HSR Act). Between the
date of this Agreement and the Closing Date, Buyer will, and will
cause each Related Person to, cooperate with Sellers with respect to
all filings that Sellers are required by Legal Requirements to make
in connection with the Contemplated Transactions, and cooperate with
Sellers in obtaining all consents identified in Part 3.2 of the
Disclosure Letter; provided that this Agreement will not require
Buyer to dispose of or make any change in any portion of its business
or to incur any other burden to obtain a Governmental Authorization
or consent to the Contemplated Transactions.
6.2 Best Efforts. Except as set forth in the proviso to
Section 6.1, between the date of this Agreement and the Closing Date,
Buyer will use its Best Efforts to cause the conditions in Sections 7
and 8 to be satisfied.
6.3 Employee Matters.
6.3.1 The Buyer will cause the Company, effective
as of the Closing Date, to assume all obligations and
liabilities for providing life insurance under the Employee
Plans to retired and disabled employees of the Company.
6.3.2 Effective as of the Closing Date, the Buyer
will cause ▇▇▇▇▇▇▇ to be released from any obligation or
liability with respect to the Company's Workmen's Compensation
Plan for the State of Washington.
6.4 Registration.
6.4.1 Buyer will prepare and file with the
Securities and Exchange Commission ("SEC") and file with any
state securities law agencies as ▇▇▇▇▇▇▇ may reasonably
request, and use its best efforts to cause to become effective
as of the Closing Date a registration statement (the
"Registration Statement") on Form S-3 (or such other form then
available for such registration) under and complying with the
Securities Act, covering all of the Common Stock issued to the
Sellers under Section 2.4.2 (collectively, the "Registrable
Shares").
6.4.2 With respect to the Registration Statement,
Buyer will prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus
forming part of the Registration Statement as may be necessary
to keep the Registration Statement effective for such period as
shall be necessary to complete the distribution of the
Registrable Shares, but in no event for longer than 120 days
after the Registration Statement has been declared effective by
the SEC (subject to extensions due to any order suspending the
effectiveness of the Registration Statement or otherwise).
6.4.3 Once the Registration Statement has been
declared effective by the SEC, Buyer will cause copies of the
prospectus forming a part of the Registration Statement, and
any supplement thereto, to be mailed or delivered to the New
York Stock Exchange so that the Sellers participating in such
registration may rely on Rule 153 under the Securities Act.
Notwithstanding the immediately preceding sentence, Buyer will
furnish to the participating Sellers such number of copies of
the prospectus forming part of the Registration Statement,
including, without limitation, a preliminary prospectus, in
conformity with the requirements of the Securities Act, and
such other documents as the participating Seller may reasonably
request in order to facilitate the sale of the Registrable
Shares subject to the Registration Statement.
6.4.4 Buyer will use reasonable effort: (i) to
register or qualify, not later than the effective date of the
Registration Statement, the Registrable Shares subject thereto
under the securities or Blue Sky laws of such jurisdictions
within the United States as ▇▇▇▇▇▇▇ may reasonably request, and
(ii) to do any and all other reasonable acts or things which
may be necessary or advisable to enable the participating
Sellers to consummate the public sale or other disposition in
such jurisdictions of such Registrable Shares; provided,
however, that Buyer will not be required to qualify generally
to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to
general service of process or taxation in any jurisdiction
where it is not then so subject.
6.4.5 Buyer will promptly notify Sellers whose
Registrable Shares are included therein in writing if (i) a
stop order has been issued by the SEC or any other suspension
of effectiveness of the Registration Statement has occurred, or
(ii) Buyer believes the prospectus (including any supplements
thereto) forming part of the Registration Statement may contain
an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the
circumstances then existing.
6.4.6 As soon after the occurrence of an event
specified in Section 6.4.5 as may be practicable, Buyer will
use reasonable efforts to cause the withdrawal of any order
suspending the effectiveness of the Registration Statement to
be obtained and prepare and file with the SEC and the New York
Stock Exchange, and provide copies to the Sellers participating
in such registration of, a supplement to the prospectus or an
amendment to the Registration Statement, as may be necessary to
meet the requirements of the Securities Act. After any order
suspending the effectiveness of the Registration Statement has
been withdrawn or any supplement to the prospectus has been
filed or any amendment to the Registration Statement, has been
declared effective, Buyer will immediately notify the
participating Sellers.
6.4.7 Buyer will enter into an underwriting
agreement with a managing underwriter retained by the Sellers
in connection with an offering pursuant to the Registration
Statement, which agreements will contain representations,
warranties and agreements customarily included by an issuer in
underwriting agreements with respect to a secondary
distribution.
6.4.8 Buyer shall be entitled to postpone the
filing with the SEC of the Registration Statement, or any
pre-effective amendment thereto, or a request for the acceleration
of the effectiveness of the Registration Statement for a period
to be specified by Buyer in a notice to ▇▇▇▇▇▇▇ if: (i) (1) in
the sole judgment of Buyer, based on advise of counsel, it
would be appropriate to disclose in the prospectus forming a
part of the Registration Statement information not otherwise
then required by law to be publicly disclosed, and (2) in
Buyer's sole judgment, such disclosure or the filing of the
Registration Statement, or any amendment thereto, is likely to
interfere with any existing or prospective business situation,
transaction or negotiation of Buyer or any of its Subsidiaries
or affiliates; or (ii) in Buyer's sole judgment, it would be
detrimental to a pending or proposed material equity financing
by Buyer to proceed with the filing of the Registration
Statement; provided, that the duration of all such
postponements, together with any postponements under Section
2.3.2, shall not exceed, in the aggregate, ninety (90) days;
and provided further, that Buyer shall promptly make such
filing as soon as the conditions which permit it to postpone
such filing no longer exist (or the 90-day aggregate
postponement period shall have otherwise expired).
6.5 Costs and Expenses.
6.5.1 With respect to the registration under
Section 6.4, Buyer shall bear all Preparation Costs, and
Registration Costs, and the Sellers shall bear all Seller
Costs. For purposes hereof, (i) "Preparation Costs" means the
entire cost and expense of preparing the Registration
Statement, including, without limitation, all printing
expenses, the fees and expenses of Buyer's counsel and its
independent accountants, all other out-of-pocket expenses
incident to the preparation and printing of the Registration
Statement and all amendments and supplements thereto, the cost
of furnishing copies of each preliminary prospectus, each final
prospectus and each amendment or supplement thereto to
underwriters, brokers and dealers and other purchasers of the
Registrable Shares included in the Registration Statement and
the costs and expenses incurred in connection with the
qualification of the Registrable Shares included in the
Registration Statement under Blue Sky or other state securities
laws of such jurisdictions within the United States as ▇▇▇▇▇▇▇
may request under Section 6.4.1, (ii) "Registration Costs"
means all registration and filing fees payable to the SEC or
any state securities law agency, and (iii) "Seller Costs" means
the fees and expenses of counsel and accountants of any or all
of the Sellers and all transfer taxes, and all underwriting
discounts and commissions and other fees and expenses of
investment bankers and managers, and all discounts and
commissions charged by any broker engaged by Sellers to effect
a block trade which are not paid by Buyer under Section 6.6.
6.6 Block Trade. If Sellers, at their option, during
the period that the Registration Statement is effective, elect to
sell all or part of the Registrable Shares to one or more persons
subject to the Registration Statement in a block trade transaction,
such block trade transaction shall be conducted on the following
terms: (i) ▇▇▇▇▇▇▇ shall provide Buyer not less than four (4)
business days written notice of Sellers' desire to sell a designated
number of the Registrable Shares subject to the Registration
Statement in a block trade transaction, which shall specify when such
transaction is to occur (which may be the Closing Date whenever it
occurs); (ii) not more than one (1) such notice shall have been
provided by ▇▇▇▇▇▇▇ to Buyer; (iii) any Registrable Shares that are
not designated to be sold in such block trade in the notice may only
be sold thereafter under the provisions of SEC Rule 144; (iv) such
block trade transaction must be conducted as an after hours
transaction after trading has ceased on a business day (the "Trade
Date"), and before trading commences on the next business day, on
Buyer's stock on the New York Stock Exchange; provided that if all
the designated shares are not sold in such time, Sellers must use
their best efforts to sell the remaining Registrable Shares on the
next business day (or, if required, on successive subsequent business
days) on the same basis as set forth in clauses (i) through (vi) of
this sentence using each such applicable business day as the Trade
Date; (v) Sellers shall use their best efforts to sell all stock in a
single day, and all designated Registrable Shares salable for broker
commission and discount of five percent (5%) (or such percentage
greater than five percent (5%) as Buyer and ▇▇▇▇▇▇▇ are willing to
consent to) or less of the closing sales price of the Buyer's common
stock on the New York Stock Exchange Composite Tape on the Trade Date
(the "Closing Price") shall be sold; and (vi) the broker engaged by
▇▇▇▇▇▇▇ to arrange such block trade transaction shall be the broker
designated by Buyer which broker shall be reasonably acceptable to
▇▇▇▇▇▇▇; then, if and only if the sale of the designated Registrable
Shares fully complies with each of the terms set forth in clauses (i)
through (vi), the Buyer will pay to or on behalf of the appropriate
Sellers (a) one-half (1/2) of the amount of the broker commission and
discount per Registrable Share applicable to the sale of any
designated Base Shares, up to a maximum payment of three percent (3%)
of the Closing Price per Registrable Share, and (b) the full amount
of the broker commission and discount per Registrable Share
applicable to the sale of any designated Adjustment Shares.
6.7 Tax Returns. Buyer shall prepare, or cause the
Company to prepare, and file all tax returns of the Company, other
than the ▇▇▇▇▇▇▇ Returns, which have not yet been filed prior to the
Closing Date and shall be responsible for and make any remaining tax
payments due with such returns, if any. All such returns shall be
prepared on a basis consistent with the tax returns of the Company
for all previous years.
6.8 Insurance. After the Closing Date, Buyer will
reimburse, or cause the Company to reimburse, ▇▇▇▇▇▇▇ for the amount
paid by ▇▇▇▇▇▇▇ to the insurance carrier after the Closing Date with
respect to up to the $250,000 deductible amount and claim handling
fee due under the terms of the insurance policy with respect to any
claims made against the Company that are covered by any of the
insurance policies identified in Section 3.17.
6.9 Reports. Buyer will deliver to Seller true and
complete copies and results of any reports, studies, analyses, tests,
or monitoring possessed or initiated by the Buyer pertaining to
Hazardous Materials or Hazardous Activities in, on, or under the
Facilities, or concerning compliance by the Company with
Environmental Laws.
SECTION 7
CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Shares and to take the
other actions required to be taken by Buyer at the Closing is subject
to the satisfaction, at or prior to the Closing, of each of the
following conditions (any of which may be waived by Buyer, in whole
or in part):
7.1 Accuracy of Representations.
7.1.1 All of Sellers' representations and
warranties in this Agreement (considered collectively), and
each of the Sellers' representations and warranties (considered
individually), must have been accurate in all material respects
as of the date of this Agreement, and must be accurate in all
material respects as of the Closing Date as if made on the
Closing Date, without giving effect to any supplement to the
Disclosure Letter.
7.1.2 Each of Sellers' representations and
warranties in Sections 3.3 and 3.11 must have been accurate in
all respects as of the date of this Agreement, and must be
accurate in all respects as of the Closing Date as if made on
the Closing Date, without giving effect to any supplement to
the Disclosure Letter.
7.2 Sellers' Performance.
7.2.1 All of the covenants and obligations that any
or all of the Sellers are required to perform or to comply with
pursuant to this Agreement at or prior to the Closing
(considered collectively), and each of these covenants and
obligations (considered individually), must have been duly
performed and complied with in all material respects.
7.2.2 Each document required to be delivered to
Buyer pursuant to Section 2.4 must have been delivered to
Buyer.
7.3 Consents. Each of the Consents identified in
Part 3.2 of the Disclosure Letter, and each Consent identified in
Schedule 4.2, must have been obtained and must be in full force and
effect.
7.4 Additional Documents. Each of the following
documents must have been delivered to Buyer:
7.4.1 an opinion of Cerruti & ▇▇▇▇▇, dated the
Closing Date, in a form reasonably acceptable to Buyer; and
7.4.2 such other documents as Buyer may reasonably
request for the purpose of (i) enabling its counsel to provide
the opinion referred to in Section 8.4.1, (ii) evidencing the
accuracy of any of Sellers' representations and warranties,
(iii) evidencing the performance by each Seller of, or the
compliance by each Seller with, any covenant or obligation
required to be performed or complied with by such Seller,
(iv) evidencing the satisfaction of any condition referred to
in this Section 7, or (v) otherwise facilitating the
consummation or performance of any of the Contemplated
Transactions.
7.5 No Proceedings. Since the date of this Agreement,
there must not have been commenced or Threatened against or involving
the Company, any Seller, or Buyer, or against any Person affiliated
with Buyer, any Proceeding (i) involving any challenge to, or seeking
damages or other relief in connection with, any of the Contemplated
Transactions, or (ii) that may have the effect of preventing,
delaying, making illegal, or otherwise interfering with any of the
Contemplated Transactions.
7.6 No Claim Regarding Stock Ownership or Sale Proceeds.
There must not have been made or Threatened by any Person any claim
asserting that such Person (i) is the holder or the beneficial owner
of, or has the right to acquire or to obtain beneficial ownership of,
any of the shares or any other voting, equity, or ownership interest
in, the Company, or (ii) is entitled to all or any portion of the
Purchase Price payable for the Shares.
7.7 No Prohibition. Neither the consummation nor the
performance of any of the Contemplated Transactions will, directly or
indirectly (with or without notice or lapse of time), materially
contravene, or conflict with, or result in a material violation of,
or cause Buyer or any Person affiliated with Buyer to suffer any
material adverse consequence under, (i) any applicable Legal
Requirement or Order, or (ii) any Legal Requirement or Order that has
been published, introduced, or otherwise formally proposed by or
before any Governmental Body.
7.8 Mortgages. Sellers shall have recorded releases on
the mortgages on the New Plymouth property as listed in the
Disclosure Letter.
SECTION 8
CONDITIONS PRECEDENT TO SELLERS' OBLIGATION TO CLOSE
Sellers' obligation to sell the Shares and to take the
other actions required to be taken by Sellers at the Closing is
subject to the satisfaction, at or prior to the Closing, of each of
the following conditions (any of which may be waived by Sellers, in
whole or in part):
8.1 Accuracy of Representations.
8.1.1 All of Buyer's representations and warranties
in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must
have been accurate in all material respects as of the date of
this Agreement and must be accurate in all material respects as
of the Closing Date as if made on the Closing Date.
8.2 Buyer's Performance.
8.2.1 All of the covenants and obligations that
Buyer is required to perform or to comply with pursuant to this
Agreement at or prior to the Closing (considered collectively),
and each of these covenants and obligations, other than the
obligations under Section 6.4 (considered individually), must
have been performed and complied with in all material respects.
8.2.2 The obligations of the Buyer under Section
6.4 have been complied with, and the Registration Statement has
been declared effective.
8.2.3 Buyer must have delivered to Sellers the
payment and the documents required to be delivered by Buyer to
Sellers pursuant to Section 2.4.
8.3 Consents. Each of the Consents identified in
Part 3.2 of the Disclosure Letter, and each Consent identified in
Schedule 4.2, must have been obtained and must be in full force and
effect.
8.4 Additional Documents. Buyer must have caused the
following documents to be delivered to Sellers:
8.4.1 an opinion of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., Senior
Vice President and General Counsel of Buyer, dated the Closing
Date, in a form reasonably acceptable to ▇▇▇▇▇▇▇; and
8.4.2 such other documents as Sellers may
reasonably request for the purpose of (i) enabling their
counsel to provide the opinion referred to in Section 7.4.1,
(ii) evidencing the accuracy of any representation or warranty
of Buyer, (iii) evidencing the performance by Buyer of, or the
compliance by Buyer with, any covenant or obligation required
to be performed or complied with by Buyer, (iv) evidencing the
satisfaction of any condition referred to in this Section 8, or
(v) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.5 No Injunction. There must not be in effect any
Legal Requirement or any injunction or other Order that (i) prohibits
the sale of the Shares by Sellers to Buyer, and (ii) has been adopted
or issued, or has otherwise become effective, since the date of this
Agreement.
SECTION 9
TERMINATION
9.1 Termination Events. This Agreement may, by notice
given prior to or at the Closing, be terminated:
9.1.1 by either Buyer or Sellers if a material
Breach of any provision of this Agreement has been committed by
the other party and such Breach has not been waived;
9.1.2 by Buyer if any of the conditions in Section
7 has not been satisfied as of December 31, 1997 or if
satisfaction of such a condition is or becomes impossible
(other than through the failure of Buyer to comply with its
obligations under this Agreement) and Buyer has not waived such
condition on or before December 31, 1997;
9.1.3 by Sellers, if any of the conditions in
Section 8 has not been satisfied as of December 31, 1997 or if
satisfaction of such a condition is or becomes impossible
(other than through the failure of Sellers to comply with their
obligations under this Agreement) and Sellers have not waived
such condition on or before December 31, 1997;
9.1.4 by mutual consent of Buyer and Sellers; or
9.1.5 by either Buyer or Sellers if the Closing has
not occurred (other than through the failure of any party
seeking to terminate this Agreement to comply fully with its
obligations under this Agreement) on or before December 31,
1997, or such later date as the parties may agree upon.
9.2 Effect of Termination. Each party's right of
termination under Section 9.1 is in addition to any other rights it
may have under this Agreement or otherwise, and the exercise of a
right of termination will not be an election of remedies. If this
Agreement is terminated pursuant to Section 9.1, all further
obligations of the parties under this Agreement will terminate,
except that the obligations in Sections 11.1 and 11.3 will survive;
provided, however, that if this Agreement is terminated by a party
because of the Breach of the Agreement by the other party or because
one or more of the conditions to the terminating party's obligations
under this Agreement is not satisfied as a result of the other
party's failure to comply with its obligations under this Agreement,
the terminating party's right to pursue all legal remedies will
survive such termination unimpaired.
SECTION 10
INDEMNIFICATION; REMEDIES
10.1 Survival; Right to Indemnification Not Affected by
Knowledge. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Letter, the supplements
to the Disclosure Letter, the certificates delivered pursuant to
Sections 2.4.1(c) and 2.4.2(b), and any other certificate or document
delivered pursuant to this Agreement will survive the Closing. The
right to indemnification, payment of Damages or other remedy based on
such representations, warranties, covenants, and obligations will not
be affected by any investigation conducted with respect to, or any
Knowledge acquired (or capable of being acquired) at any time,
whether before or after the execution and delivery of this Agreement
or the Closing Date, with respect to the accuracy or inaccuracy of or
compliance with, any such representation, warranty, covenant, or
obligation.
10.2 Indemnification and Payment of Damages by Sellers.
Sellers, severally but not jointly, will defend, indemnify and hold
harmless Buyer, the Company, and their respective Representatives,
stockholders, controlling persons, and affiliates (collectively, the
"Indemnified Persons") for, from and against, and will pay to the
Indemnified Persons the amount of, any loss, liability, claim, damage
(excluding incidental and consequential damages), costs, including
attorney fees and costs, and reasonable costs of investigation and
engineering studies, remediation costs, and interest, at the
prejudgment statutory rate, on amounts paid by the Indemnified
Person, incurred by the Indemnified Person, whether or not involving
a third-party claim (collectively, "Damages"), arising, directly or
indirectly, from or in connection with:
10.2.1 any Breach of any representation or warranty
made by Sellers in this Agreement (giving full effect to any
supplement to the Disclosure Letter that was delivered by the
Sellers to the Buyer prior to the Closing Date), the Disclosure
Letter, or the supplements to the Disclosure Letter, or in any
certificate or document delivered by Sellers pursuant to this
Agreement;
10.2.2 any Breach of any representation or warranty
made by Sellers in this Agreement as if such representation or
warranty were made on and as of the Closing Date (giving full
effect to any supplement to the Disclosure Letter that was
delivered by the Sellers to the Buyer prior to the Closing
Date);
10.2.3 any claim or event that would be a Breach of
the representations and warranties made by Sellers in Sections
3.9, 3.13 and 3.16.3 if such representations and warranties
were not limited to the Knowledge of any of the Sellers or the
Company.
10.2.4 any claim, suit, action, arbitration, or
legal, administrative, governmental or other proceeding that
relates to the ownership, lease or use of any Facility prior to
the Closing under any Environmental Law in effect as of the
Closing Date, anything disclosed in the Disclosure Letter or
any of the environmental reports referred to in the Disclosure
Letter, or any Breach of the representations and warranties
made by Sellers in Section 3.18 as if not limited to the
Knowledge of any of the Sellers or the Company ("Seller
Environmental Matters").
10.2.5 any Breach by any Seller of any covenant or
obligation of such Seller in this Agreement;
10.2.6 any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by any
such Person with any of the Sellers or the Company (or any
Person acting on behalf of any of them) in connection with this
Agreement or any of the Contemplated Transactions.
The indemnification provided in this Section 10.2,
Section 10.4, and Section 10A will be the exclusive remedy that is
available to Buyer or the other indemnified Persons for any claims
relating to the sale of the Shares.
10.3 Indemnification and Payment of Damages by Buyer.
Buyer will defend, indemnify and hold harmless Sellers, and will pay
to Sellers the amount of any Damages arising, directly or indirectly,
from or in connection with:
10.3.1 any Breach of any representation or warranty
made by Buyer in this Agreement or in any certificate delivered
by Buyer pursuant to this Agreement,
10.3.2 any Breach by Buyer of any covenant or
obligation of Buyer in this Agreement,
10.3.3 any claim by an employee or former employee
of the Company resulting from the employee's termination after
the Closing Date or from any change after the Closing Date of
benefits provided to Company employees,
10.3.4 any claim by any Person for brokerage or
finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such
Person with Buyer (or any Person acting on its behalf) in
connection with this Agreement or any of the Contemplated
Transactions.
10.4 Indemnification and Payment of Damages by ▇▇▇▇▇▇▇.
▇▇▇▇▇▇▇ will defend, indemnify and hold harmless Buyer and the
Company for, from and against, and will pay to the Indemnified
Persons, any Damages incurred by the Indemnified Person arising,
directly or indirectly, from or in connection with any current or
potential withdrawal liability, under the applicable provisions of
ERISA, as a result of a complete or partial withdrawal from any
multiemployer plan by ▇▇▇▇▇▇▇.
10.5 Time Limitations.
10.5.1 If the Closing occurs, (i) Sellers will have
no liability (for indemnification or otherwise) under Sections
10.2.1, 10.2.2 or 10.2.3 with respect to any representation or
warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, other than those in
Sections 3.3 and 3.10 as set forth in this Agreement and as
renewed as of the Closing Date, unless on or before eighteen
(18) months after the Closing Date Buyer notifies Sellers of a
claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer; (ii) Sellers will
have no liability (for indemnification or otherwise) with
respect to any Seller Environmental Claim, including, but not
limited to, Breaches of the representations and warranties
contained in Section 3.18, unless on or before three (3) years
after the Closing Date Buyer notifies Sellers of a claim
specifying the factual basis of that claim in reasonable detail
to the extent then known by Buyer; (iii) a claim under Sections
10.2.1 or 10.2.2 with respect to the representations and
warranties contained in any or all of Sections 3.3 or 3.10, a
claim under Sections 10.2.5, 10.2.6, or 10.4 or a claim for
indemnification or reimbursement not based upon any
representation or warranty or any covenant or obligation to be
performed and complied with prior to the Closing Date, may be
made at any time.
10.5.2 If the Closing occurs, (i) Buyer will have
no liability (for indemnification or otherwise) under Sections
10.3.1 or 10.3.2 with respect to any representation or
warranty, or covenant or obligation to be performed and
complied with prior to the Closing Date, unless on or before
eighteen (18) months after the Closing Date Sellers notify
Buyer of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Sellers; (ii)
Buyer will have no liability (for indemnification or otherwise)
under Section 10.3.3, including, but not limited to, a Breach
of Buyer's obligations under Section 6.3.1, unless on or before
five (5) years after the Closing Date Sellers notify Buyer of a
claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Sellers; (iii) a claim under
Sections 10.3.4 or a claim not based on any representation or
warranty, or covenant or obligation to be performed or complied
with prior to the Closing Date, may be made at any time.
10.6 Limitations on Amount -- Sellers.
10.6.1 Sellers will have no liability (for
indemnification or otherwise) under Sections 10.2.1, 10.2.2,
10.2.3, or 10.2.5 (to the extent relating to any failure to
perform or comply prior to the Closing Date) unless the Damages
for an individual claim, or a series of related claims, exceed
$5,000 and until the total of all Damages with respect to such
claims exceeds $250,000, and then only for the amount by which
such Damages exceed $250,000. Provided, this limitation shall
not apply to any claim under Section 3.10 for any Taxes which
are due with respect to any Tax Return filed and signed by
▇▇▇▇▇▇▇.
10.6.2 Sellers' liability (for indemnification or
otherwise) with respect to Seller Environmental Matters,
including, but not limited to, Breaches of the representations
and warranties contained in Section 3.18, shall not exceed
one-half (1/2) of the Damages.
10.6.3 The Sellers' liability (for indemnification
or otherwise) under Section 10.2, except for claims based on a
covenant or obligation to be performed after the Closing Date,
to Buyer shall not exceed one-half (1/2) of the Purchase Price.
10.6.4 The limitations of Sections 10.6.1 and
10.6.3 will not apply to any Breach of any of Sellers'
representations and warranties of which ▇▇▇▇▇▇▇ had Knowledge
at any time prior to the date on which such representation and
warranty is made or any intentional Breach by ▇▇▇▇▇▇▇ of any
covenant or obligation.
10.7 Procedure for Indemnification -- Third Party
Claims.
10.7.1 Promptly after receipt by an indemnified
party under Section 10.2 or 10.3 of notice of the commencement
of any Proceeding against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such
Section, give notice to the indemnifying party of the
commencement of such claim; the failure to give timely notice
to the indemnifying party to enable it to assume the defense
will relieve the indemnifying party of liability that it may
have to any indemnified party only to the extent that the
indemnifying party's failure to receive such notice prejudices
the indemnifying party.
10.7.2 If any Proceeding referred to in Section
10.7.1 is brought against an indemnified party and it gives
notice to the indemnifying party of the commencement of such
Proceeding, the indemnifying party shall have sole control
over, and shall assume all expenses with respect to, the
defense or settlement of such claim; provided, however, that
(i) the indemnified party shall be entitled to participate in
(but not control) the defense of such claim and to employ
counsel at its own expense to assist in the handling of such
claim; (ii) the indemnifying party shall obtain the prior
written approval of the indemnified party before entering into
any settlement of such claim or ceasing to defend against such
claim, if pursuant to or as a result of such settlement or
cessation, injunctive or other equitable relief would be
imposed against the indemnified party or the indemnified party
would be required to pay any funds, which approval will not be
unreasonably withheld; and (c) the indemnifying party shall not
permit any lien, encumbrance or other adverse change to exist
upon any asset of the indemnified party or its Subsidiaries.
Provided, if an indemnifying party assumes defense of a claim,
such assumption shall not be an admission that such party is
obligated to indemnify any unindemnified party under the terms
of this Agreement with respect to such claim. If notice is
given to an indemnifying party of the commencement of any
Proceeding and the indemnifying party does not, within thirty
days after the indemnified party's notice is given, give notice
to the indemnified party of its election to assume the defense
of such Proceeding, the indemnifying party, if it is determined
that such party has an obligation to indemnify under this
Agreement, will be bound by any determination made in such
Proceeding or any compromise or settlement effected by the
indemnified party.
10.7.3 Sellers hereby consent to the non-exclusive
jurisdiction of any court in which a Proceeding is brought
against any Indemnified Person for purposes of any claim that
an Indemnified Person may have under this Agreement with
respect to such Proceeding or the matters alleged therein, and
agree that process may be served on Sellers with respect to
such a claim anywhere in the world.
10.8 Procedure for Indemnification -- Other Claims. A
claim for indemnification for any matter not involving a third-party
claim may be asserted by notice to the party from whom
indemnification is sought.
SECTION 10A
SECURITIES INDEMNIFICATION
In the event any Registrable Shares are included in the
Registration Statement under this Agreement:
10A.1 Buyer Indemnification. To the extent permitted by
law, Buyer will indemnify and hold harmless each Seller who holds
such Registrable Shares, the directors and officers, if any, of such
Seller, each person, if any, who controls any Seller within the
meaning of the Securities Act, any underwriter (as defined in the
Securities Act) for the Sellers, the directors, if any, of such
underwriter and the officers, if any, of such underwriter, and each
person, if any, who controls any such underwriter within the meaning
of the Securities Act or the Exchange Act (each, an "Indemnified
Registration-Related Person"), against any losses, claims, damages,
expenses or liabilities (joint or several) (collectively, "Claims")
to which any of them become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such Claims (or actions or
proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon any of the following statements,
omissions or violations in the Registration Statement, or any
post-effective amendment thereof, or any prospectus included therein:
(i) any untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, or any post-effective
amendment thereof or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading; (ii) any untrue statement
or alleged untrue statement of a material fact contained in any
preliminary prospectus if used prior to the effective date of such
Registration Statement, or contained in the final prospectus (as
amended or supplemented, if Buyer files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission
to state therein, in light of the circumstances under which the
statements therein were made, not misleading; or (iii) any violation
or alleged violation by Buyer of the Securities Act, the Exchange Act
or any state securities law or any rule or regulation (the matters in
the foregoing clauses (i) through (iii) being, collectively,
"Violations"). Subject to the restrictions set forth in Section
10A.4 with respect to the number of legal counsel, Buyer shall
reimburse the Sellers and each such underwriter or controlling
person, promptly as such expenses are incurred and are due and
payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 10A.1: (1) shall
not apply to a Claim arising out of or based upon a Violation which
occurs in reliance upon and in conformity with information furnished
in writing to Buyer by any Indemnified Registration-Related Person or
underwriter for such Indemnified Registration-Related Person
expressly for use in connection with the preparation of the
Registration Statement or any such amendment thereof or supplement
thereto, if the prospectus forming a part of such Registration
Statement was made available by Buyer; (2) with respect to any
preliminary prospectus shall not inure to the benefit of any such
person from whom the person asserting any such Claim purchased the
Registrable Shares that are the subject thereof (or to the benefit of
any person controlling such person) if the untrue statement or
omission of material fact contained in the preliminary prospectus was
corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by Buyer; and (3) shall not
apply to amounts paid in settlement of any Claim if such settlement
is effected without the prior written consent of Buyer, which consent
shall not be unreasonably withheld. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Indemnified Registration-Related Persons.
10A.2 Seller Indemnification. In connection with the
Registration Statement in which a Seller is participating, each such
Seller agrees to indemnify and hold harmless, to the same extent and
in the same manner set forth in Section 10A.1, Buyer, each of its
directors, each of its officers who signs the Registration Statement,
each person, if any, who controls Buyer within the meaning of the
Securities Act or the Exchange Act, any underwriter and any other
stockholder selling securities pursuant to the Registration
Statement, or any of its directors or officers or any person who
controls such stockholder or underwriter within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified
Registration-Related Party"), against any Claim to which any of them
may become subject, under the Securities Act, the Exchange Act or
otherwise insofar as such Claim arises out of or is based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished to Buyer by such Seller expressly for use in
connection with the Registration Statement; and such Seller will
promptly reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this
Section 10A.2 shall not apply to amounts paid in settlement of any
Claim if such settlement is affected without the prior written
consent of such Seller, which consent shall not be unreasonably
withheld; provided, further, however, that a Seller shall be liable
under this Section 10A.2 for only that amount of a Claim as does not
exceed the net proceeds to such Seller as a result of the sale of
Registrable Shares pursuant to the Registration Statement. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified
Registration-Related Party. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this
Section 10A.2 with respect to any preliminary prospectus shall not
inure to the benefit of any Indemnified Registration-Related Party if
the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the
prospectus, as then amendment or supplemented.
10A.3 Underwriters. Buyer shall be entitled to receive
indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in any
distribution, to the same extent as provided above, with respect to
information furnished in writing by such persons expressly for
inclusion in the Registration Statement.
10A.4 Claims. Promptly after receipt by an Indemnified
Registration-Related Person or Indemnified Registration-Related Party
under this Section 10A of notice of the commencement of any action
(including any governmental action), such Indemnified
Registration-Related Person or Indemnified Registration-Related Party
shall, if a Claim in respect thereof is made against any indemnifying
party under this Section 10A, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying parties;
provided, however, that an Indemnified Registration-Related Person or
Indemnified Registration-Related Party shall have the right to retain
its own counsel, with the fees and expenses to be paid by the
indemnifying party, if, in the reasonable opinion of counsel retained
by the indemnifying party, the representation by such counsel of the
Indemnified Registration-Related Person or Indemnified
Registration-Related Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between
such Indemnified Registration-Related Person or Indemnified
Registration-Related Party and other party represented by such
counsel in such proceeding. Buyer shall pay for only one separate
legal counsel for all of the Sellers; such legal counsel shall be
selected by the Sellers holding a majority in interest of the
Registrable Shares. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any
liability to the Indemnified Registration-Related Person or
Indemnified Registration-Related Party under this Section 10A,
except to the extent that the indemnifying party is prejudiced in its
ability to defend such action. The indemnification required by this
Section 10A shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as such expense,
loss, damage or liability is incurred and is due and payable.
10A.5 Limits. To the extent any indemnification
provided for is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts
for which it would otherwise be liable under this Section 10A to the
fullest extent permitted by law; provided, however, that (i) no
contribution shall be made under circumstances where the maker would
not have been liable for indemnification under the fault standards
set forth in this Section 10A, (b) no seller of Registrable Shares
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from
any seller of Registrable Shares who was not guilty of such
fraudulent misrepresentation, and (iii) contribution by any seller of
Registrable Shares shall be limited in amount to the net amount of
proceeds received by such seller form the sale of such Registrable
Shares.
SECTION 11
GENERAL PROVISIONS
11.1 Expenses. Except as otherwise expressly provided
in this Agreement, each party to this Agreement will bear its
respective expenses incurred in connection with the preparation,
execution, and performance of this Agreement and the Contemplated
Transactions, including all fees and expenses of agents,
representatives, counsel, and accountants. The Company will pay all
amounts payable to ▇.▇. ▇▇▇▇▇▇ Securities, Inc. in connection with
this Agreement and the Contemplated Transactions only to the extent
that such amounts are fully accrued and reflected on the Closing
Financial Statements. Buyer shall have no liability for any amounts
payable to ▇.▇. ▇▇▇▇▇▇ Securities, Inc. Buyer will pay one-half and
Sellers will pay one-half of the HSR Act filing fee. In the event of
termination of this Agreement, the obligation of each party to pay
its own expenses will be subject to any rights of such party arising
from a breach of this Agreement by another party.
11.2 Public Announcements. Except as otherwise required
by any Legal Requirements, any public announcement or similar
publicity with respect to this Agreement or the Contemplated
Transactions will be issued, if at all, at such time and in such
manner as agreed to by the Buyer and ▇▇▇▇▇▇▇. Unless consented to by
Buyer in advance or required by Legal Requirements, prior to the
Closing, Sellers shall, and shall cause the Company to, keep this
Agreement strictly confidential and may not make any disclosure of
this Agreement to any Person. Sellers and Buyer will consult with
each other concerning the means by which the Company's employees,
customers, and suppliers and others having dealings with the Company
will be informed of the Contemplated Transactions, and Buyer will
have the right to be present for any such communication.
11.3 Confidentiality. Between the date of this
Agreement and the Closing Date (and from and after the date of this
Agreement if the Contemplated Transactions are not consummated),
Buyer and Sellers will maintain in confidence, and will cause the
directors, officers, employees, agents, and advisors of Buyer,
▇▇▇▇▇▇▇ and the Company to maintain in confidence, and not use to the
detriment of another party or the Company any written, oral, or other
information obtained in confidence from another party or the Company
in connection with this Agreement or the Contemplated Transactions,
unless (a) such information is already known to such party or to
others not bound by a duty of confidentiality or such information
becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any
filing or obtaining any consent or approval required for the
consummation of the Contemplated Transactions, or (c) the furnishing
or use of such information is required by legal proceedings.
If the Contemplated Transactions are not consummated,
each party will return or destroy as much of such written information
as the other party may reasonably request.
11.4 Notices. All notices, consents, waivers, and other
communications under this Agreement must be in writing and will be
deemed to have been duly given when (a) delivered by hand (with
written confirmation of receipt), (b) sent by telecopier (with
written confirmation of receipt), provided that a copy is mailed by
registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery
service (receipt requested), in each case to the appropriate
addresses and telecopier numbers set forth below (or to such other
addresses and telecopier numbers as a party may designate by notice
to the other parties):
SELLERS:
▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Cerruti & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
BUYER:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Senior Vice President and General Counsel
▇▇▇▇▇▇▇▇ Brands International, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
WITH A COPY TO:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇, Stettinius & Hollister
1800 Star Bank Center
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
11.5 Jurisdiction; Service of Process. Any action or
proceeding seeking to enforce any provision of, or based on any right
arising out of, this Agreement may be brought against any of the
parties in the courts of the State of Idaho, County of Ada, or, if it
has or can acquire jurisdiction, in the United States District Court
of Idaho, and each of the parties consents to the jurisdiction of
such courts (and of the appropriate appellate courts) in any such
action or proceeding and waives any objection to venue laid therein.
Process in any action or proceeding referred to in the preceding
sentence may be served on any party anywhere in the world.
11.6 Further Assurances.
11.6.1 The parties agree (a) to furnish upon
request to each other such further information, (b) to execute
and deliver to each other such other documents, and (c) to do
such other acts and things, all as the other party may
reasonably request for the purpose of carrying out the intent
of this Agreement and the documents referred to in this
Agreement.
11.6.2 Sellers and Buyer agree to furnish or cause
to be furnished to each other upon request, as promptly as
practicable, such information, records and assistance
(including access to books and records) relating to the Company
as is reasonably necessary for the preparation of any Tax
Return, audit or examination, claim for refund or audit, and
the prosecution or defense of any claim, suit or proceeding
relating to any proposed tax adjustment. Such assistance shall
include making employees available on a mutually convenient
basis to provide additional information and explanation of any
material to be provided hereunder and shall include furnishing
to or permitting the copying by the requesting party of any
records, returns, schedules, documents, workpapers or other
relevant materials which might reasonably be expected to be of
use in connection with such return, audit, examination or
proceedings. The party requesting assistance hereunder shall
reimburse the party whose assistance is requested for the
reasonable out-of-pocket expenses incurred by it in providing
such assistance, but shall not be required to reimburse the
party providing such assistance with respect to time of
employees made available pursuant to this section.
11.7 Waiver. The rights and remedies of the parties to
this Agreement are cumulative and not alternative. Neither the
failure nor any delay by any party in exercising any right, power, or
privilege under this Agreement or the documents referred to in this
Agreement will operate as a waiver of such right, power, or
privilege, and no single or partial exercise of any such right,
power, or privilege will preclude any other or further exercise of
such right, power, or privilege or the exercise of any other right,
power, or privilege. To the maximum extent permitted by applicable
law, (i) no claim or right arising out of this Agreement or the
documents referred to in this Agreement can be discharged by one
party, in whole or in part, by a waiver or renunciation of the claim
or right unless in writing signed by the other party; (ii) no waiver
that may be given by a party will be applicable except in the
specific instance for which it is given; and (iii) no notice to or
demand on one party will be deemed to be a waiver of any obligation
of such party or of the right of the party giving such notice or
demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.8 Entire Agreement and Modification. This Agreement
constitutes (along with the documents referred to in this Agreement)
a complete and exclusive statement of the terms of the agreement
between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed
by the party to be charged with the amendment.
11.9 Assignments, Successors, and No Third-Party Rights.
Neither party may assign any of its rights under this Agreement
without the prior consent of the other parties, except that Buyer may
assign any of its rights under this Agreement to any Subsidiary of
Buyer. Subject to the preceding sentence, this Agreement will apply
to, be binding in all respects upon, and inure to the benefit of the
successors and permitted assigns of the parties. Nothing expressed
or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or
any provision of this Agreement. This Agreement and all of its
provisions and conditions are for the sole and exclusive benefit of
the parties to this Agreement and their successors and assigns.
11.10 Severability. If any provision of this Agreement
is held invalid or unenforceable by any court of competent
jurisdiction, the other provisions of this Agreement will remain in
full force and effect. Any provision of this Agreement held invalid
or unenforceable only in part or degree will remain in full force and
effect to the extent not held invalid or unenforceable.
11.11 Section Headings, Construction. The headings of
Sections in this Agreement are provided for convenience only and will
not affect its construction or interpretation. All references to
"Section" or "Sections" refer to the corresponding Section or
Sections of this Agreement. All words used in this Agreement will be
construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including"
does not limit the preceding words or terms.
11.12 Time of Essence. With regard to all dates and
time periods set forth or referred to in this Agreement, time is of
the essence.
11.13 Governing Law. This Agreement will be governed by
the laws of the State of Utah without regard to conflicts of laws
principles.
11.14 Counterparts. This Agreement may be executed in
one or more counterparts, each of which will be deemed to be an
original copy of this Agreement and all of which, when taken
together, will be deemed to constitute one and the same agreement.
11.15 Attachments Incorporated. All exhibits,
schedules, and appendices and other attachments hereto are deemed a
part of this Agreement and are incorporated herein and made a part
hereof.
11.16 Parties in Interest. Nothing in this Agreement,
whether express or implied, is intended to confer any rights or
remedies under or by reason of this Agreement on any persons other
than the parties to it and their respective successors and assigns,
nor is anything in this Agreement intended to relieve or discharge
the obligation or liability of any third persons to any party to this
Agreement, nor shall any provision give any third persons any right
of subrogation or action over and against any party to this
Agreement.
11.17 Specific Performance. Sellers acknowledge and
agree that the Shares are a unique asset and that in the event any of
the Sellers should refuse to perform under the provisions of this
Agreement, monetary damages alone will not be adequate. Buyer shall
therefore be entitled, in addition to any other remedies which may be
available, including money damages, to obtain specific performance of
the terms of this Agreement. In the event of any action to enforce
this Agreement, each of the Sellers hereby waives the defense that
there is an adequate remedy at law.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
BUYER
▇▇▇▇▇▇▇▇ BRANDS INTERNATIONAL, INC.
By /s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Its Senior Vice President
SELLERS
▇▇▇▇▇▇▇ CORPORATION
By /s/▇.▇.▇▇▇▇▇▇▇
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Its President
/s/▇▇▇▇▇▇ ▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇
/s/▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇