STOCK PURCHASE AGREEMENT
by and among
PHILADELPHIA FOODS, INC.
as the "Company"
LIBERTY PROCESSING & DISTRIBUTION, INC.
as "Buyer"
and
▇▇▇▇▇▇ ▇▇▇▇
as "Seller"
Dated as of September 15, 2000
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STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement"), dated as of September
15, 2000, is by and among LIBERTY PROCESSING & DISTRIBUTION, INC., a Delaware
corporation ("Buyer"), PHILADELPHIA FOODS, INC., a New Jersey corporation (the
"Company"), and ▇▇▇▇▇▇ ▇▇▇▇, as the sole stockholder of the Company ( "Seller").
RECITALS
A. Seller owns all of the issued and outstanding capital stock (the
"Stock") of the Company.
B. Buyer desires to purchase from Seller, and Seller desires to sell to
Buyer, all of the Stock as of July 1, 2000, subject to the terms and conditions
of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Defined Terms. As used herein, the terms below shall have the
following meanings:
"Accounts Payable" means the accounts payable of the Company and the
Subsidiaries, including miscellaneous and accrued expenses incurred in the
ordinary course of business of such companies as of the Effective Closing Date.
"Accounts Receivable" shall mean the accounts receivable of the Company
and the Subsidiaries as of the Effective Closing Date.
"Affiliate" shall mean any person or entity that controls another person
or entity, that another person or entity controls, or that is under common
control with another person or entity. For purposes of the preceding sentence,
the term "control" means the power, direct or indirect, to direct or cause the
direction of the management and policies of a person or entity through voting
securities, contract or otherwise.
"Ancillary Documents" shall mean the Lease Agreements, the Note, the
Security Agreements, the Pledge Agreement, the Guarantees and the documents and
instruments delivered by the respective parties at the Closing pursuant to
Article III hereof.
"Assets" shall mean all properties, assets and rights of any kind, whether
tangible or intangible, real or personal, (a) owned by the Company or any of its
Subsidiaries and (b) in which the Company or any of its Subsidiaries has any
interest whatsoever, other than the Seller's office equipment indicated on
Schedule 4.6(a).
"Benefit Arrangement" shall mean any employment, consulting, bonus,
severance or other similar contract, arrangement or policy and each plan,
arrangement (written or oral), program, agreement or commitment providing for
insurance coverage (including, without limitation, any self-insured
arrangements), workers' compensation, disability benefits, supplemental
unemployment or retirement benefits, vacation benefits, retirement benefits,
life, health or accident benefits (including, without limitation, any "voluntary
employees' beneficiary association" as defined in Section 501(c)(9) of the Code
providing for the same or other benefits) or for deferred compensation,
profit-sharing bonuses, stock options, stock appreciation rights, stock
purchases or other forms of incentive compensation or post-retirement insurance,
compensation or benefits that (a) is not a Welfare Plan, Pension Plan or
Multiemployer Plan, (b) is entered into, maintained, contributed to or required
to be contributed to, as the case may be, by the Company, any Subsidiary of the
Company or any ERISA Affiliate, or under which the Company, any Subsidiary of
the Company or any ERISA Affiliate may incur any liability and (c) covers any
employee or former employee of the Company, any Subsidiary of the Company or any
ERISA Affiliate.
"Books and Records" shall mean all books, records, lists, ledgers, files,
reports, plans, drawings and operating records of every kind pertaining to the
Company and its Subsidiaries or the Assets, business, customers, suppliers,
distributors or Personnel of the Company and its Subsidiaries, including,
without limitation, (a) all disk or tape files, printouts, runs or other
computer-prepared information and all computer programs required to access, and
the equipment containing, all such computer-based information, (b) all product,
business and marketing plans, (c) all environmental control records and (d) all
sales, maintenance and production records.
"Break-Up Fee" shall mean the sum of Five Hundred Thousand ($500,000)
Dollars, which shall be due and payable in the event that the Demand Note is not
paid when due. The Break-Up Fee shall be secured by a letter of credit; if the
letter of credit is not in place within five (5) business days from the date
hereof, the Break-Up Fee shall be secured by the accounts receivable and
inventory owned by LGHI and LFG.
"Business" shall mean a processor and distributor of kosher meat, poultry
and groceries.
"Closing Cash Balance" shall mean the cash balance in the Company's ▇▇▇▇▇▇
United Bank and ▇▇▇▇ ▇▇▇▇▇▇ account as of the close of business on the day
preceding the Closing Date, as certified by said institutions immediately prior
to Closing.
"Closing Date" shall mean the date that is sixty (60) days from the date
hereof, or, if the parties hereto shall mutually agree upon a different date,
the date upon which they shall have mutually agreed in writing. If the parties
do not agree as to a different date, time shall be of the essence as to the
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contract" shall mean any agreement, contract, lease, note, loan, evidence
of indebtedness, purchase order, letter of credit or reimbursement agreement,
franchise agreement, undertaking, license, covenant not to compete, employment
agreement, license, instrument, obligation, commitment, purchase and sales order
and other executory commitment, whether oral or written, express or implied, (a)
to which the Company or any of its Subsidiaries is a party or (b) by which the
Company, any of its Subsidiaries or any of the Assets are bound or affected.
"Deposit Note" shall mean the Promissory Note dated hereof in the amount
of the Cash Payment, which shall be due and payable no later than 60 days from
the date hereof.
"EBITDA" shall mean the Combined Recast EBITDA attached as Exhibit A in
the amount of $1,419,000.
"Effective Closing Date" shall mean July 1, 2000.
"Employee Plans" shall mean all Benefit Arrangements, Multiemployer Plans,
Pension Plans and Welfare Plans.
"Encumbrance" shall mean any claim, lien, pledge, option, charge,
easement, security interest, deed of trust, mortgage, right-of-way,
encroachment, building or use restriction, conditional sales agreement,
encumbrance or other right of third parties, whether voluntarily incurred or
arising by operation of law, and includes, without limitation, any agreement to
give any of the foregoing in the future, and any contingent sale or other title
retention agreement or lease in the nature thereof.
"Environmental Claims" shall mean all accusations, allegations, notices of
violation, liens, claims, demands, suits or causes of action for any damage,
including, without limitation, personal injury, property damage (including,
without limitation, any depreciation or diminution of property values), lost use
of property or consequential damages, arising, directly or indirectly, out of
Environmental Conditions or Environmental Laws. By way of example only (and not
by way of limitation), Environmental Claims include (i) violations of or
obligations under any contract related to Environmental Laws or Environmental
Conditions between the Company and any other person, (ii) actual or threatened
damages to natural resources, (iii) claims for nuisance or its statutory
equivalent, (iv) claims for the recovery of response costs, or administrative or
judicial orders directing the performance of investigations, responses or
remedial actions under any Environmental Laws, (v) requirements to implement
"corrective action" pursuant to any order or permit issued pursuant to the
Resource Conservation and Recovery Act, as amended ("RCRA"), or similar
provisions of applicable state law, (vi) claims related to Environmental Laws or
Environmental Conditions for restitution, contribution or indemnity, (vii)
fines, penalties or liens of any kind against property related to Environmental
Laws or Environmental Conditions, (viii) claims related to Environmental Laws or
Environmental Conditions for injunctive relief or other orders or notices of
violation from federal, state or local agencies or courts, and (ix) with regard
to any present or former employees, claims relating to exposure to or injury
from Environmental Conditions.
"Environmental Conditions" shall mean the state of the environment,
including natural resources (e.g., flora and fauna), soil, surface water, ground
water, any present or potential drinking water supply, subsurface strata or
ambient air, relating to or arising out of (i) the use, handling, storage,
treatment, recycling, generation, transportation, release, spilling, leaking,
pumping, pouring, emptying, discharging, injecting, escaping, leaching,
disposal, dumping or threatened release of Hazardous Substances by the Company
or any of its Subsidiaries or their predecessors or successors in interest, or
by its agents, representatives, employees or independent contractors when acting
in such capacity on behalf of the Company or any of its Subsidiaries or (ii) a
violation of Environmental Laws. With respect to Environmental Claims by third
parties, Environmental Conditions also include the exposure of persons to
Hazardous Substances at the work place or the exposure of persons or property to
Hazardous Substances migrating from or otherwise emanating from or located on
any Facilities or Former Properties.
"Environmental Laws" shall mean all applicable federal, state, district,
local and foreign laws, all rules or regulations promulgated thereunder, and all
orders, consent orders, judgments, notices, permits or demand letters issued,
promulgated or entered pursuant thereto, in each case, relating to pollution or
protection of the environment (including, without limitation, ambient air,
surface water, ground water, land surface or subsurface strata), including,
without limitation, (i) laws relating to emissions, discharges, releases or
threatened releases of Hazardous Substances into the environment and (ii) laws
relating to the identification, generation, manufacture, processing,
distribution, use, treatment, storage, disposal, recovery, transport or other
handling of Hazardous Substances. Environmental Laws shall include, without
limitation, the Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended ("CERCLA"), the Toxic Substances Control Act, as
amended, the Hazardous Materials Transportation Act, as amended, RCRA, the Clean
Water Act, as amended, the Safe Drinking Water Act, as amended, the Clean Air
Act, as amended, the Atomic Energy Act of 1954, as amended, and the Occupational
Safety and Health Act, as amended.
"Environmental Reports" shall mean (i) any and all material written
reports and analyses prepared by any person employed by Seller, the Company or
any of its Subsidiaries and (ii) any and all other written reports and analyses,
in each case that are in the possession or control of Seller, the Company or any
of its Subsidiaries with regard to (x) any Environmental Conditions in, on or
about the Facilities or the Former Properties or (y) compliance by Seller, the
Company and each of its Subsidiaries with Environmental Laws with regard to the
past or present business and operations of the Company or any of the Assets.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall mean any entity that is (or at any relevant time
was) a member of a "controlled group of corporations" with, under "common
control" with, a member of an "affiliated service group" with, or otherwise
required to be aggregated with, the Company or any of its Subsidiaries as set
forth in Section 414(b), (c), (m) or (o) of the Code.
"Equity Securities" shall mean (i) shares of capital stock or other equity
securities, (ii) subscriptions, calls, warrants, options or commitments of any
kind or character (including pre-emptive rights) relating to, or entitling any
person or entity to purchase or otherwise acquire, any capital stock or other
equity securities and (iii) securities convertible into or exercisable or
exchangeable for shares of capital stock or other equity securities.
"Facilities" shall mean the real property and related facilities leased by
the Company or any of its Subsidiaries, including all plants, offices,
manufacturing facilities, stores, warehouses and administration buildings, the
addresses of which are indicated on Schedule 4.6(b)(ii).
"Financial Statements" shall mean the consolidated tax returns of the
Company and its Subsidiaries as of December 31, 1996, 1997, 1998 and 1999 and
the Combined Recast EBITDA.
"First Note" shall mean the Secured Promissory Note dated the Closing Date
in the original principal amount of $3,000,000 made by Buyer and payable to
Seller based on a 15-year payout with monthly payments and a 10-year balloon on
maturity in the form of Exhibit B.
"Fixtures and Equipment" shall mean all of the furniture, fixtures,
furnishings, machinery, equipment, spare parts, supplies, appliances, vehicles,
leasehold improvements, structures, related capitalized items and other tangible
personal property in which the Company or any of its Subsidiaries has any
interest.
"Former Properties" shall mean all plants, offices, manufacturing
facilities, stores, warehouses, administration buildings and all real property
and related facilities owned, leased or operated by the Company or any
Subsidiary at any time prior to the Closing Date but not owned, leased or
operated by the Company or any Subsidiary subsequent to the Closing Date.
"Guarantees" shall mean the guarantees of the obligations of Buyer under
the First Note and Second Note dated the Closing Date and executed by LGHI, the
Buyer, LFG, the Company and the Subsidiaries.
"Hazardous Substances" shall mean all pollutants, contaminants, chemicals,
industrial materials, wastes, and any other carcinogenic, ignitable, corrosive,
reactive, toxic or otherwise hazardous substances or materials (whether solids,
liquids or gases), in each case, subject to regulation, control or remediation
under Environmental Laws. By way of example only, the term Hazardous Substances
includes certain forms of petroleum, urea formaldehyde, flammable, explosive and
radioactive materials, PCBs, pesticides, herbicides, asbestos, sludge, slag,
acids, metals, solvents and waste waters.
"Insurance Policies" shall mean the insurance policies listed on Schedule
4.19.
"Inventory" shall mean (a) all stock in trade, merchandise, goods,
supplies and other products owned by the Company or any of its Subsidiaries for
resale in the ordinary course of business to its customers or otherwise under
the control of the Company or any of its Subsidiaries or carried on the books of
the Company or any of its Subsidiaries for the exclusive use by the Company or
any of its Subsidiaries and (b) all of the raw materials, work in process,
including without limitation, inventory in transit and inventory ordered prior
to Closing, finished goods, wrapping, supply and packaging items, promotional
materials and similar items of the Company or any of its Subsidiaries, wherever
located.
"Lease Agreements" shall mean (i) the lease agreement between ▇▇▇▇ Family
Partnership, L.P. and the Company attached hereto as Exhibit C and (ii) the
lease agreement between ▇▇▇▇ Family Partnership, L.P. and the Company attached
hereto as Exhibit D.
"LFG" shall mean Liberty Food Group, LLC, a Delaware limited liability
company.
"LGHI" shall mean Liberty Group Holdings, Inc. a Delaware corporation.
"Losses" shall mean any costs or expenses (including, without limitation,
reasonable attorneys' and other professional fees, investigation costs and
remediation costs), judgments, demands, fees, fines, losses (including but not
limited to losses resulting from diminution of value), liabilities, actions,
claims, damages (including incidental, consequential and punitive damages),
settlements, interest, penalties and assessments of any nature.
"Material Adverse Effect," "Material Adverse Change" or a similar phrase
shall mean, with respect to any Person, any material adverse change or effect
with respect to: (a) the business, operations, prospects, assets (including
intangible assets), liabilities, condition (financial or otherwise), results of
operations or cash flow of such Person and its Subsidiaries, taken as a whole or
(b) the right or ability of such Person or any of its Subsidiaries to consummate
any of the transactions contemplated hereby to be consummated by such Person.
"Multiemployer Plan" shall mean any "multiemployer plan," as defined in
Section 4001(a)(3) or 3(37) of ERISA, that (a) the Company, any Subsidiary of
the Company or any ERISA Affiliate maintains, administers, contributes to or is
required to contribute to, or, after September 25, 1980, maintained,
administered, contributed to or was required to contribute to, or under which
the Company, any Subsidiary of the Company or any ERISA Affiliate may incur any
liability and (b) covers any employee or former employee of the Company, any
Subsidiary of the Company or any ERISA Affiliate.
"Notes" shall mean the First Note and Second Note.
"Pension Plan" shall mean any "employee pension benefit plan" as defined
in Section 3(2) of ERISA (other than a Multiemployer Plan) that (a) the Company,
any Subsidiary of the Company or any ERISA Affiliate maintains, administers,
contributes to or is required to contribute to, or, within the five years prior
to the Closing ate, maintained, administered, contributed to or was required to
contribute to, or under which the Company, any Subsidiary of the Company or any
ERISA Affiliate may incur any liability and (b) covers any employee or former
employee of the Company, any Subsidiary of the Company or any ERISA Affiliate.
"Permits" shall mean all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, or notifications to, any
governmental or regulatory authority, whether foreign, federal, state or local,
or any other person, necessary or desirable for the past or present conduct of,
or relating to the ownership, use, occupancy or operation of the business or
Assets of the Company or any of its Subsidiaries.
"Permitted Encumbrances" shall mean (a) statutory liens for Taxes not yet
due and payable, (b) statutory liens of landlords, liens of carriers,
warehousemen, mechanics and materialmen incurred in the ordinary course of
business, consistent with past practice, for sums not yet due and payable, (c)
liens incurred or deposits made in the ordinary course of business, consistent
with past practice, in connection with workers' compensation, unemployment
insurance and other types of social security or to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, performance and return of money bonds and similar
obligations and (d) purchase money liens incurred in the ordinary course of
business, consistent with past practice.
"Person" means any individual, corporation, partnership, trust,
association, governmental entity or other entity of any kind whatsoever.
"Personnel" shall mean, with respect to any Person, the directors,
officers and employees of such Person.
"PF Note" shall mean the note receivable from ▇▇▇▇▇ ▇▇▇▇▇ to the Company
in the amount of $100,000.
"Pledge Agreement" shall mean the Pledge Agreement dated the Closing Date
executed by the Buyer in the form of Exhibit E attached hereto.
"▇▇▇▇-▇▇▇▇▇▇" means ▇▇▇▇-▇▇▇▇▇▇, Inc., a New Jersey corporation and a
wholly-owned Subsidiary directly owned by the Company.
"RCRA" shall have the meaning set forth in the definition of
"Environmental Claims" in this Section 1.1.
"Representative" shall mean, with respect to any Person, any agent,
consultant or other representative of such Person.
"Required Cash Balance" shall mean the sum of all checks which have been
written by or against the account of the Company or its Subsidiaries which have
not cleared prior to the Closing Date.
"Second Note" shall mean the Secured Promissory Note dated the Closing
Date in the original principal amount of $3,150,000, as adjusted, made by Buyer
and payable to Seller with monthly interest payments with a 10-year balloon on
maturity in the form of Exhibit F. The original principal amount of the Second
Note shall be adjusted in accordance with Section 2.1(c) below.
"Security Agreements" shall mean the Security Agreements dated the Closing
Date executed by the Company, ▇▇▇▇-▇▇▇▇▇▇, SJL, LFG and the Buyer in the form of
Exhibit G attached hereto.
"Seller" shall have the meaning set forth in the introductory paragraph of
this Agreement.
"SJL" shall mean South Jersey Live Poultry, Inc., a New Jersey
corporation and a wholly-owned Subsidiary directly owned by the Company.
"Subsidiary" shall mean, with respect to any Person, (i) any corporation,
limited liability company, association or other business entity of which more
than 50% of the total voting power of shares of capital stock entitled (without
regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by such Person or one or more of the other Subsidiaries
of that Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or one or more Subsidiaries of such Person (or any combination thereof).
"Tax(es)" shall mean all taxes, estimated taxes, withholding taxes,
assessments, levies, imposts, fees and other charges, including any interest,
penalties, additions to tax or additional amounts that may become payable in
respect thereof, imposed by any foreign, federal, state, local or other
government or taxing authority, including, without limitation, all income taxes,
payroll and employee withholding taxes, unemployment insurance, social security,
sales and use taxes, value added taxes, excise taxes, franchise taxes, gross
receipts taxes, occupation taxes, real and personal property taxes, stamp taxes,
transfer taxes, real property transfer gains taxes, workers' compensation and
other obligations of the same or of a similar nature.
"Tax Refund" shall mean the $24,761.77 tax refund from the Internal
Revenue Service due to the Company and state tax refunds totaling $4,700 due to
the Company.
"Welfare Plan" shall mean any "employee welfare benefit plan" as defined
in Section 3(1) of ERISA that (a) the Company, any Subsidiary of the Company or
any ERISA Affiliate maintains, administers, contributes to or is required to
contribute to, or under which the Company, any Subsidiary of the Company or any
ERISA Affiliate may incur any liability and (b) covers any employee or former
employee of the Company, any Subsidiary of the Company or any ERISA Affiliate.
1.2 Other Defined Terms. In addition to the terms defined in the Recitals
to this Agreement and Section 1.1, the following terms shall have the meanings
defined for such terms in the Sections set forth below:
Term Section
---- -------
"Actions".............................................4.12
"Affiliated Groups"...................................4.18
"Buyer Indemnitee"....................................9.3
"Cash Payment"........................................2.1(b)
"Closing".............................................3.1
"Disclosure Schedule".................................Article IV Preamble
"HSR Act".............................................4.25
"Indemnified Party"...................................9.5(a)
"Indemnifying Party"..................................9.5(a)
"Leased Property".....................................4.6(ii)
"Proposed Acquisition Transaction"....................6.5(a)
"Purchase Price"......................................2.1(b)
"Seller Indemnitee"...................................9.4
"Stock"...............................................Recital A
"Tax Returns".........................................4.18
ARTICLE II
PURCHASE AND SALE OF THE STOCK
2.1 Purchase and Sale of the Stock.
(a) Transfer of the Stock. Upon the terms and subject to the conditions
contained herein, on the Closing Date, but effective as of the Effective Closing
Date, Seller shall sell, convey, transfer, assign and deliver to Buyer, and
Buyer shall purchase and accept from Seller, all of the Stock, free and clear of
any and all Encumbrances. Seller will pay all stock transfer taxes, recording
fees and other sales, transfer, use, purchase, stamp or similar taxes, if any,
resulting from the transactions contemplated hereby.
(b) Consideration for the Stock. Upon the terms and subject to the
conditions contained herein, as consideration for the purchase of the Stock, on
the Closing Date Buyer shall (A) pay to Seller (i) a cash payment of $2,000,000
(the "Cash Payment") by payment by the Buyer of the Deposit Note, (ii) the Tax
Refund, which shall be submitted to the Seller only upon receipt thereof by the
Company, (iii) the PF Note, and (iv) the Company's Closing Cash Balance less the
Required Cash Balance and (B) deliver to Seller the Notes (each of the items in
(A) and (B) shall hereinafter be referred to as the "Purchase Price").
(c) Purchase Price Adjustments. (i) If the Buyer determines that (A)(i)
the EBITDA as of December 31, 1999 is less than $1,219,000, (ii) the Accounts
Receivable is less than $2,100,000 (said amount being exclusive of any contra
accounts), and/or (iii) the Accounts Payable minus the $130,000 owed by SJL is
more than $880,000 and/or (B) the difference between (y) the collectible
accounts receivable of the Company and the Subsidiaries and (z) the accounts
payable of the Company and the Subsidiaries for the period commencing on the
Effective Closing Date through the business date which is immediately prior to
the Closing Date shall not be less than $1,000,000, the Buyer shall notify the
Seller thereof prior to the Closing. If the Seller agrees with the Buyer's
determination, then the principal amount of the Second Note shall be reduced
dollar for dollar by such amount; if the differential between the amounts of (y)
and (z) is greater than $1,000,000, the principal amount of the Second Note
shall be increased by said amount, provided, however, that notwithstanding the
foregoing, (a) if the EBITDA as of December 31, 1999 is less than $1,219,000,
the decrease in principal amount of the Second Note shall not be dollar for
dollar but shall be the amount less than $1,219,000 multiplied by 4 and (b) the
principal amount of the Second Note shall not be reduced more than $1,000,000
even if the adjustments provided in this Section exceed $1,000,000 in the
aggregate. In the event that the Buyer fails to notify the Seller as provided by
this Section 2.1(c) (i) then the principal amount of the Second Note shall not
change. If the Buyer and Seller cannot agree as to the purchase price adjustment
provided herein, such disagreement shall not be a reason to terminate this
Agreement and not close the transaction, but the dispute shall be submitted to
arbitration pursuant to Section 10.14.
(ii) If the Company determines that the taxable income of the Company for the
period commencing on January 1, 2000 and ending on December 31, 2000 is less
than $780,000, the principal amount of the Second Note shall be increased by the
dollar amount of such excess amount multiplied by the effective Tax rate of the
Company and decreased by such amount if the taxable income is more than
$780,000. The Seller shall have the right, at his own cost and expense, to
inspect the books and records of the Company to determine the amount of taxable
income of the Company and its Subsidiaries for said period as provided in
Section 9.1 below.
ARTICLE III
CLOSING
3.1 Closing. Upon the terms and conditions set forth herein, and subject
to Section 10.1, the closing of the transactions contemplated herein (the
"Closing") shall be held at 10:00 a.m. local time on the Closing Date at the
offices of the Company, or on such other date or at such other location as
mutually agreed by the parties hereto.
3.2 Deliveries at Closing. To effect the sale and purchase of the Stock
referred to in Section 2.1(a) and the delivery of the Purchase Price referred to
in Section 2.1(b), at the Closing: (a) Seller shall deliver to Buyer the various
certificates, instruments and documents referred to in Section 8.7 and cancel
the Demand Note; (b) Buyer shall deliver to Seller the various certificates,
instruments and documents referred to in Section 7.3; (c) Seller shall deliver
to Buyer stock certificates representing all of the Stock, free and clear of any
and all Encumbrances, duly endorsed in blank or accompanied by stock powers duly
executed in blank, in proper form for transfer, together with any other
documents and instruments, as shall be necessary or appropriate to warrant and
vest in Buyer good and marketable right, title and interest in and to the Stock;
and (d) Buyer shall deliver to Seller the Purchase Price by (i) transferring to
Seller the aggregate amount of the Cash Payment and the Closing Cash Balance
less the amount of the Required Cash Balance, and (ii) delivering to Seller the
Notes, the Security Agreements and the Pledge Agreement.
3.3 Other Closing Matters. Each of the parties shall take such other
actions required hereby to be performed by it prior to or on the Closing Date,
including, without limitation, satisfying the conditions set forth in Articles
VII and VIII. In addition, on or prior to the Closing Date, Seller shall take
all additional steps as may be necessary or desirable to put Buyer in possession
of, and in operational control of, the Assets.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
As an inducement to Buyer to enter into this Agreement, Seller hereby
makes, as of the date hereof and as of the Closing Date, the following
representations and warranties to Buyer, except as otherwise set forth in a
written disclosure schedule (the "Disclosure Schedule") executed by Seller and
delivered to Buyer prior to the date hereof, a copy of which is attached hereto,
that sets forth the exceptions to the representations and warranties contained
in this Article IV and certain other information called for by this Agreement
(unless otherwise specified, each reference in this Agreement to any numbered
schedule is a reference to the numbered schedule that is included in the
Disclosure Schedule):
4.1 Ownership of the Stock; Authorization of Seller.
------------------------------------------------
(a) Ownership. Seller owns of record and beneficially 1,000 shares of
Stock, representing all of the issued and outstanding shares of capital stock of
the Company, free and clear of any and all Encumbrances. Upon consummation of
the transactions provided for in this Agreement in accordance with the terms
hereof, Buyer will be the owner of such shares of Stock, free and clear of any
and all Encumbrances.
(b) Authorization. Seller is a natural person over eighteen years of age
and has all necessary right, power, capacity and authority to execute and
deliver this Agreement and the Ancillary Documents to which he is a party, to
consummate the transactions contemplated hereby and thereby and to perform his
obligations hereunder and thereunder, and no other action on the part of Seller
is necessary to authorize the execution, delivery and performance of this
Agreement or any such Ancillary Document and the consummation of the
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Documents to which Seller is a party have been duly executed and delivered by
Seller and are valid and binding obligations of Seller, enforceable against
Seller in accordance with their respective terms (except to the extent that
enforcement may be affected by applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance and similar laws affecting creditors' rights
and remedies generally and by general principles of equity, regardless of
whether enforcement is sought at law or in equity).
(c) Except as set forth on Schedule 4.1, no permits, approvals or consents
of or notifications to (i) any governmental entities or (ii) any other persons
or entities are necessary in connection with the execution, delivery and
performance by Seller of this Agreement and any Ancillary Documents, or the
consummation by Seller of the transactions contemplated hereby and thereby.
4.2 Organization; Capitalization of the Company.
(a) Organization. The Company is duly organized, validly existing and in
good standing under the laws of the State of New Jersey, has full corporate
power and authority to conduct its Business as it is now being conducted and to
own, operate and lease the Assets. The Company is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
such qualification is necessary under applicable law as a result of the conduct
of its business or the ownership of its properties. Each jurisdiction in which
the Company is qualified to do business as a foreign corporation is listed on
Schedule 4.2(a), and the Company does not own or lease property or have any
employees in any jurisdiction other than its jurisdiction of incorporation and
such jurisdictions listed on Schedule 4.2(a). The Company has delivered to Buyer
true, correct and complete copies of the Certificate of Incorporation (certified
by the Secretary of State of the state of its incorporation) and Bylaws
(certified by an officer or director of the Company) of the Company (in each
case, as amended to date). The Company is not in default under or in violation
of any provision of its Certificate of Incorporation or Bylaws. The minute books
of the Company contain the complete and correct copies of the minutes of each
meeting and each action by written consent of the Company's Board of Directors,
committees thereof or shareholders and the stock ledger of the Company contains
a complete and correct record of all issuances and transfers of capital stock of
the Company. Schedule 4.2(a) contains a complete and correct list of all of the
officers and directors of the Company and each Subsidiary.
(b) Capitalization. The Company's authorized capital stock consists solely
of 5,000 shares of Common Stock, no par value, of which 1,000 shares are issued
and outstanding. All of such outstanding shares have been duly authorized and
are validly issued and outstanding, fully paid and non-assessable, were issued
and sold pursuant to, and within the limitations (if any) contained in,
appropriate and effective consents of each governmental authority from whom any
such consent was required and were not issued in violation of any preemptive or
other similar rights. There are no (i) outstanding Equity Securities of the
Company or (ii) commitments or obligations of any kind or character for (A) the
issuance of Equity Securities of the Company or (B) the repurchase, redemption
or other acquisition of any Equity Securities of the Company.
(c) Voting Trusts; Proxies; Etc. There are no shareholder
agreements, voting trusts, proxies or other agreements or understandings with
respect to or concerning the Equity Securities of the Company.
4.3 Authorization. The Company has all necessary corporate power and
authority to, and has taken all corporate action necessary to, execute and
deliver this Agreement and the Ancillary Documents to which it is a party, to
consummate the transactions contemplated hereby and thereby and to perform its
obligations hereunder and thereunder, and no other corporate proceedings on the
part of the Company are necessary to authorize the execution, delivery and
performance of this Agreement or any such Ancillary Document, and the
consummation of the transactions contemplated hereby and thereby. This Agreement
and the Ancillary Documents to which it is a party have been duly executed and
delivered by the Company and are valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms
(except to the extent that enforcement may be affected by applicable bankruptcy,
reorganization, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights and remedies generally and by general principles of equity,
regardless of whether enforcement is sought at law or in equity). Except as set
forth on Schedule 4.3, no permits, approvals or consents of or notifications to
(i) any governmental entities or (ii) any other persons or entities are
necessary in connection with the execution, delivery and performance by the
Company of this Agreement and any Ancillary Documents, or the consummation by
the Company of the transactions contemplated hereby and thereby.
4.4 Subsidiaries.
(a) Ownership; Capitalization. The Company's only Subsidiaries are SJL and
▇▇▇▇-▇▇▇▇▇▇, and the Company has no equity ownership or membership or
partnership interest, investments in, outstanding loans or advances to, or other
interests in, any other person or entity. The Company is the beneficial owner of
all of the outstanding shares of capital stock of each of its Subsidiaries, in
each case free and clear of any and all Encumbrances. The authorized, issued and
outstanding capital stock, and the record ownership of all such shares of
capital stock, of each Subsidiary of the Company is as set forth on Schedule
4.4(a). All of the outstanding shares of capital stock of each Subsidiary of the
Company have been duly authorized and are validly issued and outstanding, fully
paid and non-assessable, were issued and sold pursuant to, and within the
limitations (if any) contained in, appropriate and effective consents of each
governmental authority from whom such consent was required, and were not issued
in violation of any pre-emptive or other similar rights. Except as set forth on
Schedule 4.4(a), there are no (i) outstanding Equity Securities of any
Subsidiary of the Company or (ii) commitments or obligations of any kind or
character for (A) the issuance of Equity Securities by any Subsidiary of the
Company or (B) the repurchase, redemption or other acquisition of any Equity
Securities of any Subsidiary of the Company. There are no shareholder
agreements, voting trusts, proxies or other agreements or understandings with
respect to or concerning the Equity Securities of any Subsidiary of the Company.
(b) Organization. Each Subsidiary of the Company is duly organized,
validly existing and in good standing under the laws of its respective state of
incorporation and has full corporate power and authority to conduct its business
as it is presently being conducted and to own, operate and lease its Assets.
Each Subsidiary of the Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is necessary under applicable law as a result of the conduct of
its business or the ownership of its properties, except where the failure to be
so qualified and in good standing would not have a Material Adverse Effect on
such Subsidiary. Each jurisdiction in which each Subsidiary of the Company is
qualified to do business as a foreign corporation is listed on Schedule 4.4(b),
and no Subsidiary owns or leases property or has any employees in any
jurisdiction other than its jurisdiction of incorporation and such jurisdictions
listed on Schedule 4.4(b). The Company has delivered to Buyer true, correct and
complete copies of the certificate or articles of incorporation (certified by
the Secretary of State of the state of its incorporation) and bylaws (certified
by an officer of the Company)(in each case, as amended to date) of each
Subsidiary of the Company. No Subsidiary of the Company is in default under or
in violation of any provision of its certificate or articles of incorporation or
bylaws.
(c) Authorization. Each Subsidiary of the Company has all necessary
corporate power and authority to, and has taken all corporate action necessary
to, consummate the transactions contemplated hereby, and no other corporate
proceedings on the part of any Subsidiary of the Company are necessary to
authorize the consummation of the transactions contemplated hereby.
4.5 Absence of Certain Changes or Events. Since January 1, 2000, (i) the
Company and its Subsidiaries have been operated in the ordinary course of
business, consistent with past practice, (ii) there has been no Material Adverse
Change in or with respect to the Company and (iii) to the knowledge of the
Company and Seller, (A) there has been no threatened Material Adverse Change
with respect to the Company, and (B) no event or development has occurred that
could be expected to result in a Material Adverse Change with respect to the
Company. Without limiting the generality of the foregoing, except as set forth
below or as listed on Schedule 4.5, since January 1, 2000, neither the Company
nor any Subsidiary of the Company has:
(a) sold, assigned, leased, transferred or otherwise disposed of any
Assets, material singly or in the aggregate, other than sales of Inventory in
the ordinary course of business, to persons who are not Affiliates of the
Company or any Subsidiary of the Company;
(b) (i) except in the ordinary course of business, canceled, terminated,
amended, modified or waived any material term of any Contract to which it is a
party or by which it or any of the Assets is bound, providing for aggregate
annual revenues to the Company and its Subsidiaries in excess of $5,000 or (ii)
entered into or amended any Contract (A) by or to which it or its Assets or
businesses are bound or subject, except in the ordinary course of business, or
(B) pursuant to which it agrees to indemnify any person or to refrain from
competing with any person;
(c) (i) increased the compensation payable or to become payable to any of
its directors or officers (including severance payments), (ii) increased the
base compensation payable or to become payable to any of the Personnel (other
than directors or officers), except for normal periodic increases in such base
compensation in the ordinary course of business, consistent with past practice,
(iii) increased the sales commission rate payable or to become payable to any of
the Personnel (other than directors or officers), (iv) granted, made or accrued
any loan, bonus, fee, incentive compensation (excluding sales commissions),
service award or other like benefit, contingently or otherwise, to or for the
benefit of any of the Personnel, except pursuant to the Employee Plans, or (v)
adopted or amended any Employee Plan, or caused or suffered any addition to or
modification thereof;
(d) made any capital expenditure, or commitment to make any capital
expenditure, or executed, or committed to execute, any lease or any option to
lease any assets or incurred any liability therefor in excess of $5,000 in the
aggregate;
(e) made any payments or given any other consideration to customers or
suppliers, other than payments under, and in accordance with the terms of,
Contracts in effect on the date hereof or in the ordinary course of business;
(f) (i) changed its accounting methods, principles or practices or (ii)
revalued any portion of its Assets, properties or businesses, including, without
limitation, any write-down of the value of inventory or other assets or any
write-off of notes or accounts receivable, other than in the ordinary course of
business in a manner consistent with past practice;
(g) (i) suffered any damage, destruction or loss (whether or not covered
by insurance) affecting its business or any of the Assets that exceeded $5,000
in any one instance or (ii) been notified by any supplier or customer of the
Business that such party does not intend to continue doing business with the
Company;
(h) (i) incurred indebtedness for borrowed money or entered into any
commitment to borrow money or (ii) incurred any obligations for any performance
bonds, payment bonds, bid bonds, surety bonds, letters of credit, guarantees or
similar instruments that exceeded $5,000 in the aggregate;
(i) paid, discharged or satisfied any liability other than any such
payment, discharge or satisfaction in the ordinary course of business,
consistent with past practice;
(j) (i) acquired (by merger, consolidation, acquisition of stock, other
securities or assets or otherwise), (ii) made a capital investment in, (iii)
made a loan, advance or agreement to loan or advance to, or (iv) guaranteed,
assumed, endorsed or otherwise as an accommodation became responsible for,
liabilities or indebtedness for borrowed money of, (A) any person or (B) any
portion of the assets of any person that constitutes a division or operating
unit of such person;
(k) mortgaged or pledged, or otherwise made or suffered any
Encumbrance on any Asset;
(l) canceled, waived or released any right or claim (or series of related
rights or claims) involving in excess of $5,000 individually or $10,000 in the
aggregate;
(m) settled or agreed to settle any litigation or other Action;
(n) adopted a plan of liquidation or resolutions providing for the
liquidation, dissolution, merger, consolidation or other reorganization of
the Company or any of its Subsidiaries; or
(o) entered into any Contract to do any of the foregoing.
4.6 Title to Assets; Absence of Liens and Encumbrances; Etc.
(a) General. The Company and its Subsidiaries own or lease all Assets
necessary for the conduct of their Business as now conducted. All of the Assets
have been maintained in accordance with normal industry practice and are in good
operating condition and repair (subject to normal wear and tear). Schedule
4.6(a) sets forth the Assets owned by SJL and ▇▇▇▇-▇▇▇▇▇▇. Seller agrees that
any checks written prior to the Closing Date which have not cleared the
Company's bank account (i.e., have not been paid) prior to the Closing Date
shall be the sole responsibility of Seller. Accordingly, Seller agrees that
notwithstanding anything contained herein to the contrary, Seller (ii) shall
leave no less than the Required Cash Balance in the Company's account located at
▇▇▇▇▇▇ United Bank on the Closing Date and (ii) shall pay, no later than 24
hours upon demand by the Company or any Affiliate thereof, any checks which have
not been paid prior to the Closing Date and the Required Cash Balance is not
sufficient to satisfy such payment.
(b) Real Property
(i) Neither the Company nor any Subsidiary of the Company owns
or ever owned any real property.
(ii) Schedule 4.6(b)(ii) sets forth all leases pursuant to which
Facilities are leased by the Company or any Subsidiary of the Company (as
lessee), true and correct copies of which have been delivered to Buyer. Such
leases constitute all leases, subleases or other occupancy agreements pursuant
to which the Company or any Subsidiary of the Company occupies or uses
Facilities. The Company or a Subsidiary of the Company has good and valid
leasehold title to, and enjoys peaceful and undisturbed possession of, all
leased property described in such leases (the "Leased Property"), free and clear
of any and all Encumbrances other than any Permitted Encumbrances not in
violation of the terms of the lease therefor. With respect to each such parcel
of Leased Property, (A) there are no pending or, to the knowledge of the Company
and Seller, threatened condemnation proceedings relating to, or any pending or,
to the knowledge of the Company and Seller, threatened Actions relating to, such
Leased Property, (B) none of the Company, any Subsidiary of the Company or
Seller or, to the knowledge of Seller and the Company, any third party has
entered into any sublease, license, option, right, concession or other agreement
or arrangement, written or oral, granting to any person the right to use or
occupy such Leased Property or any portion thereof or interest therein and (C)
none of the Company, any Subsidiary of the Company or any Seller has received
notice of any pending or threatened special assessment relating to such Leased
Property or otherwise has any knowledge of any pending or threatened special
assessment relating thereto.
(c) Personal Property. All Fixtures and Equipment and other personal
property of the Company and its Subsidiaries are in good operating condition and
repair (ordinary wear and tear excepted), and neither of the Company nor any
such Subsidiary has received any notice that it is in violation of any existing
statute, law or any health, safety or other ordinance, code, rule or regulation.
Each of the Company and each of its Subsidiaries owns outright and has good and
marketable title to all Fixtures and Equipment and all other personal property
owned by it, free and clear of any and all Encumbrances other than Permitted
Encumbrances. Except as set forth on Schedule 4.6(c), none of the Fixtures and
Equipment or other personal property of the Company or any Subsidiary is held
under any lease, security agreement, conditional sales contract or other title
retention or security arrangement or is located other than on the premises of
the Company. Each of the Company and each Subsidiary of the Company has good and
valid leasehold title to all Fixtures and Equipment and all other personal
property leased by it from third parties, free and clear of any and all
Encumbrances other than Permitted Encumbrances.
(d) Inventories. No Inventory is stored at any location other than at the
Facilities, except as shown on Schedule 4.6(d). The values at which the
Inventory is shown on Schedule 4.6(d) have been determined in accordance with
the normal valuation policy of the Company, each consistently applied
throughout, with adequate provisions or adjustments for excess Inventory,
slow-moving Inventory and Inventory obsolescence and shrinkage. The Inventory
consists, and will as of the Closing Date consist, only of items of quality and
quantity commercially usable in the ordinary course of business.
4.7. Contracts and Commitments.
(a) Schedule 4.7 sets forth a complete and accurate list of all Contracts
to which the Company or any of its Subsidiaries is a party or is bound, and
Seller has delivered to Buyer a true copy of each such Contract.
(b) Absence of Breaches or Defaults in General. With respect to each
Contract (i) there is no default by the Company or any of its Subsidiaries and,
to the best knowledge of the Company, by any other party to any Contract; (ii)
such Contract is valid, binding and enforceable against the Company and its
Subsidiaries, and to the knowledge of the Company and Seller, against each other
party thereto (except to the extent that enforcement may be affected by
applicable bankruptcy, reorganization, insolvency, fraudulent conveyance and
similar laws affecting creditors' rights and remedies generally and by general
principles of equity, regardless of whether enforcement is sought at law or in
equity); (iii) no action has been taken by the Company or any of its
Subsidiaries and no event has occurred that, with notice or lapse of time or
both, would permit termination, modification or acceleration by a party thereto
other than the Company or any of its Subsidiaries under any Contract, and to the
knowledge of the Company and Seller, no action has been taken by any party other
than the Company or any of its Subsidiaries and no event has occurred that, with
notice or lapse of time or both, would reasonably be expected to permit the
termination, modification or acceleration by the Company or any of its
Subsidiaries under any Contract; and (iv) neither the Company, any of its
Subsidiaries nor, to the knowledge of the Company, any other party has
repudiated any term thereof or threatened to terminate, cancel or not renew any
such Contract.
4.8 Permits. The Company and its Subsidiaries have all Permits required to
conduct their business as now being conducted or proposed to be conducted and to
own and operate the Assets and the Facilities. Schedule 4.8 sets forth a
complete and accurate list of all such Permits. All such Permits are valid and
in full force and effect and the Company and its Subsidiaries are in compliance
with, and have not violated, any such Permits. No notice to, declaration, filing
or registration with, or Permit from, any domestic or foreign governmental or
regulatory body or authority, or any other person or entity, is required to be
made or obtained by the Company or any of its Subsidiaries in connection with
the execution, delivery or performance of this Agreement and the consummation of
the transactions contemplated hereby.
4.9 No Conflict or Violation. Neither the execution, delivery and
performance of this Agreement or any Ancillary Documents to which the Company or
any Subsidiary is a party nor the consummation of the transactions contemplated
hereby and thereby will result in (i) a violation of any provision of its
certificate or articles of incorporation or bylaws, (ii) a breach of, or a
default (or an event that, with notice or lapse of time or both, would
constitute a default) under, or the creation of any right of any party to
accelerate, modify, terminate or cancel, any term or provision of any material
Contract, Permit, authorization or concession to which it is a party or by which
any Assets are bound, (iii) a conflict with or violation of any statute, rule,
regulation, ordinance, code, order, permit, judgment, writ, injunction, decree
or award binding upon Seller, the Company or any of its Subsidiaries or their
respective Assets, (iv) its being required to obtain any consent, waiver or
approval or authorization of, or to deliver notice to, any person, (v)
impairment of any right of the Company or any of its Subsidiaries under any
Contract or Permit or (vi) an imposition of any Encumbrance, restriction or
charge on the Business of the Company or any of its Subsidiaries or on the Stock
or any of the Assets.
4.10 Consents and Approvals. No consent, waiver, agreement, approval or
authorization of, or declaration, filing, notice or registration to or with, any
foreign, United States federal or any state or local governmental or regulatory
authority is required to be made or obtained by Seller, the Company or any of
its Subsidiaries in connection with the execution, delivery and performance of
this Agreement and the Lease Agreements and the consummation of the transactions
contemplated hereby and thereby, other than those consents, waivers, agreements,
approvals, authorizations, declarations, filings, notices or registrations, that
have been, or will be prior to the Closing Date, obtained or made, all of which
are set forth on Schedule 4.10. The Assets of the Company and its Subsidiaries
are transferable and assignable without the waiver of any right of first refusal
of any other person or entity being obtained, and there exist no preferential
rights of purchase with respect to any of the Assets of the Company or its
Subsidiaries in favor of any Person.
4.11 Financial Statements; Earnings. The Company has heretofore delivered
to Buyer the Financial Statements. The Financial Statements (i) are in
accordance with the accounting and financial records of the Company and its
Subsidiaries and (ii) fairly and accurately present in all respects the
consolidated assets, liabilities (including, without limitation, all reserves)
and financial position of the Company and its Subsidiaries as of the respective
dates thereof and the consolidated results of operations and cash flows for the
periods then ended. The accounting and financial records of the Company and its
Subsidiaries have been prepared and maintained consistently applied throughout
the periods indicated, and sound bookkeeping practices. Seller represents and
warrants that the EBITDA for the year ended December 31, 1999 shall not be less
than $1,419,000.
4.12 Litigation. Except as set forth on Schedule 4.12, there is no
allegation or charge and there is no action, order, writ, injunction, judgment
or decree outstanding or any claim, suit, litigation, proceeding, labor dispute,
arbitration, governmental audit or investigation (collectively, "Actions") of
any nature, civil, criminal, regulatory or otherwise, in law or in equity,
pending or, to the knowledge of the Company and Seller, threatened or
anticipated against, related to or affecting Seller (and related to the Company,
any of its Subsidiaries or the Assets), or the Company, any of its Subsidiaries
(or against any of the officers, directors or key employees of the Company or
its Subsidiaries with respect to their business or business activities on behalf
of the Company or its Subsidiaries) or the Assets, or the transactions
contemplated hereby. Neither the Company nor Seller are aware of any basis for
any claim that might result in any Action, not set forth on Schedule 4.12. The
Company and its Subsidiaries are not subject to or involved in any judgment,
ruling, writ, injunction, order or decree of any court, arbitral tribunal or
governmental agency. Neither the Company nor any of its Subsidiaries is in
default with respect to any Action. All contingent or unasserted claims
regarding the Company and its Subsidiaries known to any Seller are listed on
Schedule 4.12.
4.13 Liabilities. Neither the Company nor any Subsidiary has any
liabilities, obligations or commitments of any nature (whether known or unknown,
absolute or contingent, liquidated or unliquidated, due or to become due,
accrued or unaccrued, matured or unmatured) (collectively, "Liabilities") and
there is no basis for any present or future charge, complaint, action, suit,
proceeding, hearing, investigation, claim or demand against the Company or any
of its Subsidiaries giving rise to any such Liability, other than current
Liabilities incurred since January 1, 2000 in the ordinary course of the
business, consistent with past practice (none of which relates to any breach of
Contract, breach of warranty, tort, infringement or violation of law or that
arose out of any Action); as of the date of this Agreement and as of the Closing
Date, such Liabilities, do not and shall not exceed $690,000.00 in the
aggregate. None of the Liabilities described in the preceding sentence,
individually or in the aggregate, is or would be material to the Company or any
of its Subsidiaries. To Seller's knowledge, there are no circumstances,
conditions, events or arrangements that may hereafter give rise to any
Liabilities that would have a Material Adverse Effect. The accounts payable of
the Company and its Subsidiaries as of July 31, 2000 is not greater than
$650,000.
4.14 Compliance with Law. Each of the Company and its Subsidiaries (i) has
not violated and is in compliance with, (ii) has filed in a timely manner all
reports and documents it is required to file (and the information contained
therein was correct and complete in all material respects) under, and (iii) has
possession of all records and documents it is required to retain under, all
applicable laws, statutes, ordinances, regulations, codes, rules and orders of
any foreign, federal, state or local government and any federal, state, local or
foreign court or other governmental agency, department, authority or
instrumentality, and any judgment, decision, decree, award, writ, injunction,
requirement or order of any court or governmental agency, department, authority
or instrumentality, relating to the Assets and its operations and Business,
except to the extent that such violations, failures to comply, failures to file,
misstatements of information or failures to possess would not, singly or in the
aggregate, be reasonably likely to result in losses, costs, expenses, damages,
liabilities or obligations (including, without limitation, fines and penalties
in excess of $5,000). None of the Company or any of its Subsidiaries or any
Seller has received any notice to the effect that, or otherwise been advised
that, it is not in compliance with any such statutes, regulations, codes, rules,
judgments, decisions, decrees, orders, ordinances, awards, writs, injunctions,
requirements or any other laws, and the Company and Seller have no knowledge of
any currently existing circumstances that would reasonably be expected to result
in a violation of any of the foregoing.
4.15 No Brokers. Other than ▇. ▇▇▇▇▇▇▇▇ and Company, Inc. whose fees shall
be paid solely by Seller, none of Seller, the Company or any of their respective
officers, directors, employees, stockholders or Affiliates have employed or made
any agreement with any broker, finder or similar agent or any person or firm to
pay, and no such intermediary, including EQ Corporation or any Affiliate
thereof, is entitled to, any finder's fee, brokerage fees or commission or
similar payment in connection with the transactions contemplated hereby. Seller
represents and warrants that no claim has been made by EQ Corporation or any
Affiliate thereof for any fees or expenses in connection with a contemplated
transaction with the Seller or the Company and any Losses as a result thereof
shall be the sole responsibility of the Seller.
4.16 Intellectual Property. The Company and its Subsidiaries do not own or
license any patents, trademarks, trade names, service marks, service names,
brands, logos, copyrights, formulas, brand names or trade secrets.
4.17 Employee Plans.
(a) Disclosure; Delivery of Copies of Relevant Documents and Other
Information. Schedule 4.17 contains a complete list of all Employee Plans.
Neither the Company, any Subsidiary nor any ERISA affiliate has any plan or
commitment, whether legally binding or not, to establish any new Employee Plan,
or to modify or terminate any Employee Plan (except to the extent required by
law), nor has any intention to do any of the foregoing been communicated to
Employees. True and complete copies of each of the following documents have been
delivered by the Company to Buyer: (i) each Welfare Plan and each Pension Plan
(and, if applicable, related trust agreements) and all amendments thereto, all
summary plan descriptions, summary of material modifications (as defined in
ERISA) and a complete description of any Welfare Plan and any Pension Plan that
is not in writing, (ii) all Benefit Arrangements that cover any employee or
former employee of the Company or any of its Subsidiaries and a complete
description of any Benefit Arrangement that is not in writing, (iii) the most
recent determination letter issued by the Internal Revenue Service and any
opinion letter issued by the Department of Labor with respect to each Employee
Plan (other than a Multiemployer Plan) and each voluntary employees' beneficiary
association as defined under Section 501(c)(9) of the Code, (iv) for the three
most recent plan years, Annual Reports on Form 5500 Series required to be filed
with any governmental agency for each Employee Plan, (v) all actuarial reports
prepared for the last three plan years for each Employee Plan; (vi) all material
communications to any Employee or Employees relating to each Employee Plan; and
(vii) with respect to each Employee Plan that is funded, the most recent annual
and periodic accounting of Employee Plan assets.
(b) (i) No Employee Plan is now, or ever has been, subject to the minimum
funding standards of Section 412 of the Code or Section 302 of ERISA or Title IV
of ERISA; nor has the Company or any Subsidiary or ERISA Affiliate ever
maintained or contributed to or incurred any liability with respect to any such
a plan.
(ii) At no time since September 25, 1980 has the Company, any
subsidiary or any ERISA Affiliate contributed to or been required to contribute
to, or incurred any withdrawal liability (within the meaning of Section 4201 of
ERISA) to any Multiemployer Plan.
(iii) Each Employee Plan has been maintained in compliance with its
terms and, both as to form and operation, complies in all material respects with
any terms prescribed by any and all statutes, laws, orders, rules and
regulations that are applicable to such Employee Plan, including, without
limitation, ERISA and the Code. Except as set forth on Schedule 4.17, the
employment of all persons presently employed or retained by the Company or any
of its Subsidiaries is terminable at will.
(iv) No liability has been or will be incurred by the Company, any
Employee Plan or any ERISA Affiliate (either directly or indirectly, including
as a result of an indemnification obligation), under or pursuant to Titles I or
IV of ERISA or the penalty, excise tax or joint and several liability provisions
of the Code relating to any Employee Plan, that has or will create any
obligation by, or result in any liability to, any Employee Plan, the Company or
any of its Subsidiaries or Buyer or any employee benefit plan established or
contributed to by Buyer, and to the knowledge of Seller and the Company, no
event, transaction or condition exists or has occurred that could result in such
liability to, or obligation of, any Employee Plan, the Company or any of its
Subsidiaries, or following the Closing, Buyer.
(v) The execution of, and performance of the transactions
contemplated in, this Agreement will not (either alone or upon the occurrence of
any additional or subsequent events) (X) constitute an event under any Employee
Plan, trust or loan that will or may result in any payment (whether of severance
pay or otherwise), acceleration, forgiveness of indebtedness, vesting,
distribution, increase in benefits or obligation to fund benefits with respect
to any Employee, or (Y) result in the triggering or imposition of any
restrictions or limitations on the right of the Company or the Buyer to amend or
terminate any Employee Plan and receive the full amount of any excess assets
remaining or resulting from such amendment or termination, subject to applicable
taxes. No payment or benefit which will or may be made by the Company, any
Subsidiary, the Buyer or any of their respective affiliates with respect to any
Employee will be characterized as an "excess parachute payment," within the
meaning of Section 280G(b)(1) of the Code.
(vi) With respect to each Pension Plan that is intended to be
qualified under Section 401 (a) (or 403 (a), as appropriate) and 501 (a) of the
Code, each such Pension Plan is so qualified and has from inception, been so
qualified and the Company or its Subsidiaries have received favorable
determination letters from the Internal Revenue Service that say that each
Pension Plan and each related trust agreement, annuity contract or other funding
instrument that covers or has covered employees or former employees of the
Company or any of its Subsidiaries, is qualified and tax-exempt under the
provisions of Code Sections 401(a) (or 403(a), as appropriate) and 501(a), and
since the date of such determination, no event or condition has occurred that
would adversely affect such determination.
(vii) Neither the Company, any subsidiary nor any ERISA Affiliate
(X) maintains or contributes to any Employee Plan which provides, or has any
liability to provide, life insurance, medical, severance or other employee
welfare benefits to any Employee upon his retirement or termination of
employment, except as may be required by Section 4980B of the Code; or (Y) has
ever represented, promised or contracted (whether in oral or written form) to
any Employee (either individually or to Employees as a group) that such
Employee(s) would be provided with life insurance, medical, severance or other
employee welfare benefits upon their retirement or termination of employment,
except to the extent required by Section 4980B of the Code.
(viii) Neither the Company nor any ERISA Affiliate has incurred any
liability with respect to any Welfare Plan that is a "multiemployer plan,"
defined in Section 3(37) of ERISA, under the terms of such Welfare Plan, any
collective bargaining agreement or otherwise resulting from any cessation of
contributions, cessation of obligation to make contributions or other form of
withdrawal from such Welfare Plan.
(ix) Validity and Enforceability. Each Welfare Plan, Pension Plan,
related trust agreement, annuity contract or other funding instrument and
Benefit Arrangement is legally valid and binding and in full force and effect
and may be amended, terminated or otherwise discontinued without liability to
the Company, any Subsidiary or ERISA Affiliate.
(x) No Amendments. Neither the Company nor any ERISA Affiliate has
any announced plan or legally binding commitment to create any additional
Employee Plans that are intended to cover employees or former employees of the
Company or any of its Subsidiaries or to amend or modify any existing Employee
Plan.
(xi) Insurance Contracts. Neither Seller nor any Employee Plan
(other than a "multiemployer plan," as defined in Section 3(37) of ERISA) holds
as an asset of any Employee Plan any interest in any annuity contract,
guaranteed investment contract or any other investment or insurance contract
issued by an insurance company that is the subject of bankruptcy,
conservatorship or rehabilitation proceedings.
(xii) Payments. As of the Closing Date, no former or current
Personnel or Representative of either the Company or the Subsidiaries of the
Company are owed any monies or other compensation, whether as any special bonus,
fee or commission or otherwise.
(xiii) The Company and each Subsidiary and ERISA Affiliate have made
all payments with respect to all periods through the date hereof, and will make
a pro-rata payment for the period ending as of the Closing Date, in each case
which are required by each Employee Plan, each related trust or by law to be
made to, or with respect to each Employee Plan.
(xiv) No Employee Plan is under audit or investigation by the
Internal Revenue Service, the Department of Labor or the Pension Benefit
Guaranty Corporation, and to the knowledge of Seller the Company, any Subsidiary
or any ERISA Affiliate, no such audit or investigation is pending or threatened.
(xv) Welfare Plan Funding. With respect to each Welfare Plan, all
claims incurred (including claims incurred but not reported) by Employees
thereunder for which the Company is, or will become, liable are (X) insured
pursuant to a contract of insurance whereby the insurance company bears any risk
of loss with respect to such claims; (Y) covered under a contract with a health
maintenance organization (an "HMO") pursuant to which the HMO bears the
liability for such claims, or (Z) reflected as a liability or accrued for on the
Books and Records of the Company.
(xvi) Controlled Group Liability. The Company has no liability,
contingent or otherwise, to, or with respect to any Benefit Arrangement, Welfare
Plan or Pension Plan (other than the Employee Plans which are listed on Schedule
4.17, which is now or previously has been sponsored, maintained, contributed to,
or required to be contributed to, by any Subsidiary or any ERISA Affiliate.
4.18 Tax Matters.
(a) Filing of Tax Returns. The Company (and, if applicable, each of its
Subsidiaries) and each affiliated, combined, consolidated or unitary group of
which the Company or any of its Subsidiaries is or has been a member (each, an
"Affiliated Group") has timely filed with the appropriate taxing authorities all
returns, reports, statements and forms required to be filed in respect of Taxes
("Tax Returns") through December 31, 1999. All such Tax Returns are complete and
accurate in all material respects. Except as set forth on Schedule 4.18, neither
the Company nor any Subsidiary of the Company nor any Affiliated Group has
requested any extension of time within which to file any Tax Return, which Tax
Return has not yet been filed. The Company has delivered to Buyer complete and
accurate copies of the Company's federal, state and local Tax Returns for the
years 1996, 1997, 1998 and 1999.
(b) Payment of Taxes. All Taxes (whether accrued or estimated) for which
the Company or any Subsidiary of the Company is liable (including but not
limited to all Taxes that the Company or any Subsidiary is obligated to withhold
from amounts paid or payable to or benefits conferred upon employees, creditors
or other third parties), in respect of periods (or portions thereof) ending on
or before December 31, 1999, have been timely paid, and the Company and its
Subsidiaries do not have any liability for Taxes in excess of the amounts so
paid with respect to such periods.
(c) Audits, Investigations or Claims. No deficiencies for Taxes have been
claimed, proposed or assessed by any taxing or other governmental authority
against the Company, any Subsidiary of the Company or any Affiliated Group.
Schedule 4.18 sets forth a complete list of (i) all Tax Returns filed by the
Company or any Subsidiary that have been examined or audited by any federal,
state or local taxing authority during the five (5) years preceding the date of
this Agreement, and (ii) all adjustments resulting from each such examination or
audit. There are no pending or, to the knowledge of Seller or the Company,
threatened, audits, investigations or claims for or relating to any liability of
the Company or any of its Subsidiaries in respect of Taxes.
(d) Liens. There are no liens or Encumbrances for Taxes (other than
for current Taxes not yet due and payable) on the Assets.
(e) Safe Harbor Lease Property. None of the Assets is property that is
required to be treated as being owned by any other person pursuant to the
so-called safe harbor lease provisions of former Section 168(f)(8) of the Code.
(f) Security for Tax-Exempt Obligations. None of the Assets directly or
indirectly secures any debt the interest on which is tax-exempt under Section
103(a) of the Code.
(g) Tax-Exempt Use Property. None of the Assets is "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(h) Foreign Person. Seller is a United States person within the
meaning of the Code.
(i) Tax Election. All elections with respect to Taxes affecting the
Company or any Subsidiary of the Company as of the date hereof are set forth on
Schedule 4.18. None of the Company or any Subsidiary of the Company has
consented at any time under Section 341(f)(1) of the Code to have the provisions
of Section 341(f)(2) of the Code apply to any disposition of any Assets. None of
the Company or any Subsidiary of the Company has agreed to make, or is required
to make, any adjustment under Section 481(a) of the Code, by reason of a change
in accounting method or otherwise.
(j) Tax Sharing Agreements. There are no tax sharing agreements or
similar arrangements with respect to or involving the Company or any
Subsidiary of the Company.
(k) Affiliated Group. Except as set forth on Schedule 4.18, the Company
has not been a member of an affiliated group that has filed a consolidated
return or any group that has filed a combined consolidated or unitary state or
local return, and neither the Company nor any Subsidiary of the Company has any
liability for Taxes of any person under Section 1.1502-6 of the Treasury
Regulations, or any similar provision of state, local or foreign Tax law, as a
transferee, successor, indemnitor or guarantor, by contract or otherwise, other
than the group of which currently the Company is the parent and the Subsidiaries
are the members.
(l) Partnerships. Neither the Company nor any Subsidiary of the Company is
a party to any joint venture, partnership or other arrangement or contract that
is treated as a partnership for federal income tax purposes.
4.19 Insurance. Schedule 4.19 contains a complete and accurate list of all
policies or binders for business interruption, fire, liability, title, worker's
compensation, product liability, errors and omissions and other forms of
insurance maintained by the Company and each Subsidiary of the Company,
specifying the insurer, the insured, the policy number or covering note number
with respect to binders, the amounts of coverage, the expiration date and a
description of each pending claim thereunder. Such insurance provides, and
during its term has provided, coverage to the extent and in the manner (a)
adequate for the conduct of the business of the Company and its Subsidiaries and
(b) as may be required by law and by any and all Contracts to which the Company
or any Subsidiary of the Company is a party. All such policies and binders are
in full force and effect on the date hereof.
4.20 Accounts Receivable. The accounts receivable as set forth on Schedule
4.20 represent and will represent bona fide claims of the Company and its
Subsidiaries against third-party debtors for arms' length sales made, services
performed or other charges for valid consideration arising on or before the
Closing Date and will require no additional performance by the Company or any of
its Subsidiaries to render them valid after the Closing Date. Said accounts
receivable are subject to no defenses, counterclaims or rights of setoff and are
fully collectible in the ordinary course of business consistent with past
practice and in accordance with their terms at their recorded amounts without
any costs in collection efforts therefor. As of July 31, 2000, the accounts
receivable of the Company and the Subsidiary, exclusive of the contra accounts,
is not less than $2,100,000.
4.21 Affiliate Transactions. Schedule 4.21 contains an accurate and
complete list of all Contracts, arrangements, understandings, transfers of
assets or liabilities or other commitments or transactions relating to the
Business or the Assets, whether or not entered into in the ordinary course of
business, to or by which the Company or any Subsidiary of the Company, on the
one hand, and the Seller or any Affiliate of the Seller, on the other hand, is
or has been a party or otherwise bound or affected at any time during the past
two years. Each Contract, arrangement, understanding, transfer of assets or
liabilities or other commitment or transaction set forth or required to be set
forth on Schedule 4.21 was on terms and conditions as favorable to the Company
or applicable Subsidiary as would have been obtainable by it at the time in a
comparable arms'-length transaction with a person other than Seller or an
Affiliate of Seller. Seller covenants and agrees that all Contracts and
transactions indicated on Schedule 4.21 shall continue in full force and effect
on substantially the same terms for no less than three years after the Closing
Date.
4.22 Compliance with Environmental Laws.
(a) Except as set forth on Schedule 4.22, the Company and its Subsidiaries
are currently in compliance in all respects with all Environmental Laws.
(b) Except as set forth on Schedule 4.22, there are no existing or, to the
knowledge of Seller and the Company, potential Environmental Claims against the
Company or any Subsidiary of the Company, nor has any of them received any
notification or knowledge of any allegation of any actual, or potential
responsibility for, or any inquiry or investigation regarding, any disposal,
release or threatened release at any location of any Hazardous Substance
generated or transported by the Company or any Subsidiary of the Company.
(c) Except as set forth on Schedule 4.22, (i) no underground tank or other
underground storage receptacle for Hazardous Substances is currently located on
the properties of the Company or any Subsidiary of the Company and there have
been no releases of any Hazardous Substances from any such underground tank or
related piping and (ii) there have been no releases (i.e., any past or present
releasing, spilling, leaking, pumping, pouring, emitting, emptying, discharging,
injecting, escaping, leaching, disposing, or dumping) of Hazardous Substances in
quantities exceeding the reportable quantities as defined under federal or state
law by the Company or any Subsidiary of the Company on, upon or into the
properties of the Company or any Subsidiary of the Company, other than those
authorized by Environmental Laws, including, without limitation, the Permits
required thereunder.
d) Except as set forth on Schedule 4.22, there are no PCBs or asbestos
located at or on the properties of the Company or any Subsidiary of the Company.
(e) Except as set forth on Schedule 4.22, there are no consent decrees,
consent orders, judgments, judicial or administrative orders, agreements with
(other than Permits) or Encumbrances by, any governmental authority or quasi
governmental entity relating to any Environmental Laws that regulate, obligate
or bind the Company or any Subsidiary of the Company.
(f) Except as set forth on Schedule 4.22, true and correct copies of the
Environmental Reports, as well as all other written environmental reports,
audits or assessments that have been conducted, either by the Company, any
Subsidiary of the Company or any person engaged by the Company or any Subsidiary
of the Company for such purpose, at any facility owned or formerly owned by the
Company or any Subsidiary of the Company have been delivered to Buyer and a list
of all such reports, audits and assessments is set forth on Schedule 4.22.
4.23 Banking Relationships. Schedule 4.23 sets forth a complete and
accurate description of all arrangements that the Company and each Subsidiary of
the Company has with any banks or other financial institutions providing for any
accounts, including, without limitation, checking accounts, cash contribution
accounts, safe deposit boxes, borrowing arrangements, certificates of deposit or
otherwise, indicating in each case account numbers, if applicable, and the
person or persons authorized to act or sign on behalf of the Company or such
Subsidiary in respect of any of the foregoing. No person holds any power of
attorney or similar authority from the Company or any Subsidiary of the Company.
4.24 Other Information. Assuming the "person" within which Buyer is
included, for purposes of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended (the "HSR Act"), does not have total assets or annual net sales
of $100,000,000 or more, no filing is required under the HSR Act in connection
with the transactions contemplated hereby as a result of the status of the
Company.
4.25 Processing Recipes; Vendors. Schedule 4.25, which shall be provided
at Closing, sets forth a complete and accurate description of all the processing
procedures, recipes utilized in Business and a list of all vendors, suppliers
and customers of the Business.
4.26 Material Facts. No representation or warranty by the Company or
Seller contained in this Agreement or any other written statement, information,
material or certificate furnished or to be furnished to Buyer pursuant hereto or
in connection with the transactions contemplated hereby by the Company or Seller
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained therein or herein not
misleading, when all are taken together as a whole (it being understood that, in
the event of any inconsistency between this Agreement and any other writings,
this Agreement shall control). Neither Seller nor the Company knows of any
information or fact that has or would have a Material Adverse Effect on the
Company that has not been disclosed to Buyer.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby makes the following representations and warranties as of the
date hereof and as of the Closing Date:
5.1 Organization of Buyer. Buyer is duly organized, validly existing and
in good standing under the laws of the State of Delaware.
5.2 Authorization. Buyer has all necessary corporate power and authority
to enter into this Agreement and has taken all corporate action necessary to
execute and deliver this Agreement, to consummate the transactions contemplated
hereby and to perform its obligations hereunder, and no other corporate
proceedings on the part of Buyer are necessary to authorize the execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and thereby. This Agreement and the Ancillary
Documents to which it is a party has been duly executed and delivered by Buyer
and is a valid and binding obligation of Buyer, enforceable against it in
accordance with its terms (except to the extent that enforcement may be affected
by applicable bankruptcy, reorganization, insolvency and similar laws affecting
creditors' rights and remedies generally and by general principles of equity
(regardless of whether enforcement is sought at law or in equity)).
5.3 Consents and Approvals. Other than those that have been, or will be
prior to the Closing Date, obtained, no consent, approval or authorization of,
or declaration, filing or registration with, any United States federal or state
governmental or regulatory authority is required to be made or obtained by Buyer
in connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby.
5.4 No Brokers. Neither Buyer nor any of its officers, directors,
employees, stockholders or Affiliates has employed or made any agreement with
any broker, finder or similar agent or any person or firm that will result in
the obligation of Seller to pay, and no such intermediary is entitled to any
finder's fee, brokerage fees or commission or similar payment in connection with
the transactions contemplated hereby.
5.5 No Conflict or Violation. Neither the execution, delivery and
performance of this Agreement and any Ancillary Document to which it is a party,
nor the consummation of the transactions contemplated hereby or thereby by Buyer
will result in (a) a violation of or a conflict with any provision of the
certificate of incorporation or bylaws of Buyer, (b) a breach of, or a default
(or an event that, with notice or lapse of time or both, would constitute a
default) under any term or provision of, any contract, indebtedness, lease,
commitment, license, franchise, permit, authorization or concession to which
Buyer is a party, which breach, default or creation of any such right would have
a Material Adverse Effect on Buyer or (c) a violation by Buyer of any statute,
rule, regulation, ordinance, code, order, judgment, writ, injunction, decree or
award, which violation would have a Material Adverse Effect on Buyer.
5.6 Acquisition of the Stock. Buyer is purchasing the Stock for its own
account for investment and not with a view to, or for sale in connection with,
any distribution of the Stock. Buyer will not offer to sell or otherwise dispose
of the Stock in violation of any requirements of any applicable securities laws
or regulations.
5.7 Other Information. Assuming the "person" within which the Company is
included for purposes of the HSR Act does not have total assets or annual net
sales of $100,000,000 or more, no filing is required under the HSR Act in
connection with the transactions contemplated hereby as a result of the status
of Buyer.
ARTICLE VI
COVENANTS OF BUYER, THE COMPANY AND SELLER
Each of the Company and Seller and, where applicable, Buyer, covenants and
agrees with each other that from the date hereof through the Closing:
6.1 Maintenance of Business Prior to Closing.
(a) Seller shall cause the Company and each of its Subsidiaries to,
operate its business in the ordinary course, consistent with past practice, and
not take any action inconsistent therewith or with the consummation of the
transactions contemplated hereby. Without limiting the generality of the
foregoing, Seller shall cause the Company and each of its Subsidiaries to (i)
maintain the Assets in their current state of repair, excepting normal wear and
tear; (ii) maintain the insurance covering the Assets in effect on the date
hereof; (iii) maintain the current business organization of the Company's
business; (iv) use its reasonable best efforts to keep available the services of
the current Personnel of the Company's business; (v) use its reasonable best
efforts to preserve its current business relationships with customers,
suppliers, distributors and others having business dealings with the Company;
(vi) collect accounts receivable and pay accounts payable in the ordinary course
of business, consistent with past practice; and (vii) comply in all material
respects with all applicable laws.
(b) Buyer shall not engage in any practice, or take, or fail or omit to
take, any action or enter into any transaction that would cause or result in any
of its representations and warranties set forth in Article V to be untrue at any
time after the date hereof through the Closing Date.
6.2 Consents
(a) The Company and Seller shall obtain at the earliest practicable date,
and prior to the Closing Date, all consents, Permits, waivers, approvals,
authorizations and agreements of, and promptly to give all notices and effect
all registrations pursuant to and to make all other filings with or submissions
to, any third parties, including, without limitation, governmental and
regulatory authorities and landlords, necessary or advisable to authorize,
approve or permit the consummation of the transactions contemplated hereby.
Buyer shall furnish to the Company such necessary information and reasonable
assistance as the Company may request in connection with their efforts to obtain
such consents, Permits, waivers, approvals, authorizations and agreements and to
prepare all necessary filings with or submissions to, any third parties,
including, without limitation, governmental and regulatory authorities.
(b) It will use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary or advisable to
consummate and make effective the transactions contemplated hereby in accordance
with the terms hereof. Notwithstanding anything in this Agreement to the
contrary, nothing contained herein shall require Buyer to enter into any
agreement or other arrangement for the financing of the transactions
contemplated hereby on terms that are not satisfactory to Buyer, in its sole
discretion.
6.3 Notification of Certain Matters. Between the date hereof and the
Closing Date, each party shall give prompt written notice to the other of (i)
the occurrence, or failure to occur, of any event which occurrence or failure
would be likely to cause any representation or warranty contained in this
Agreement or in any exhibit or schedule hereto, if made on or as of the date of
such event or as of the Closing Date, to be untrue or inaccurate; (ii) any
Material Adverse Change with respect to such party; (iii) any failure of any
party or any of its Affiliates, stockholders or Representatives to comply with,
perform or satisfy any covenant, condition or agreement to be complied with,
performed by or satisfied by it under this Agreement or any exhibit or schedule
hereto; (iv) any event that will result in, or has a reasonable prospect of
resulting in, the failure to satisfy the conditions specified in Article VII or
VIII hereof; (v) any notice of, or other communication relating to, a default
(or event that, with notice or lapse of time or both, would constitute a
default), received by the Company or any of its Subsidiaries subsequent to the
date hereof and prior to the Closing Date, under any material Contract; (vi) any
notice or other communication from any person alleging that the consent of such
person is or may be required in connection with the transactions contemplated
hereby; (vii) any notice or other communication from any foreign, federal,
state, county or local government or any other governmental, regulatory or
administrative agency or authority in connection with the transactions
contemplated hereby; (viii) any change having a Material Adverse Effect, or the
occurrence of any event that, so far as can be foreseen at the time of its
occurrence, could result in a change having a Material Adverse Effect; or (ix)
any matter hereafter arising that, if existing, occurring or known at the date
hereof, would have been required to be disclosed to the other parties; provided
that such disclosure shall not be deemed to cure, or to relieve any party of any
liability or obligation with respect to, any breach of a representation,
warranty, covenant or agreement or to satisfy any condition hereunder.
6.4 No Solicitation; Notification.
(a) No Solicitation. From the date of this Agreement until the Closing,
Seller and the Company shall have the right to, directly or indirectly, enter
into, solicit, initiate or continue any discussions or negotiations with, or
encourage or respond to any inquiries or proposals by, or participate in any
negotiations with, or provide any information to, or otherwise cooperate in any
other way with, any Personwith respect to any sale of all or any portion of the
Assets (other than sales of Inventory in the ordinary course of business,
consistent with past practices) or the business of, or of any shares of capital
stock of, the Company or any of its Subsidiaries, or any merger, consolidation,
liquidation, dissolution or similar transaction involving the Company or any of
its Subsidiaries (a "Proposed Acquisition Transaction"), provided, however that
the Seller and the Company shall not consummate any Proposed Acquisition
Transaction unless this Agreement is terminated by the mutual written consent of
the Buyer and the Seller. Each of the Company and Seller hereby represents that
it is not now engaged in discussions or negotiations with any party other than
Buyer with respect to a Proposed Acquisition Transaction. The Company agrees not
to, and agrees to cause each of its Subsidiaries not to, release any third party
from, or waive any provision of, any confidentiality or standstill agreement to
which the Company or any of its Subsidiaries is a party.
(b) Notification. Seller and the Company will (i) immediately notify Buyer
(orally and in writing) if any written offer is made, any discussions or
negotiations are sought to be initiated, any inquiry, proposal or contact is
made or any information is requested with respect to any Proposed Acquisition
Transaction, (ii) notify Buyer of the terms of any proposal that it may receive
in respect of any such Proposed Acquisition Transaction, including, without
limitation, the identity of the prospective purchaser or soliciting party, (iii)
provide Buyer with a copy of any such offer, if written, and (iv) keep Buyer
informed of the status of any negotiations regarding any such offer.
Notwithstanding the terms of any Proposed Acquisition Transaction, Seller shall
consummate the transactions contemplated by this Agreement with the Buyer as
provided herein.
6.6 Access to Information.
(a) From the date of this Agreement until the Closing Date, Seller
and the Company will give Buyer and its authorized Representatives (including
counsel, environmental and other consultants, accountants and auditors) full
access during normal business hours to all facilities, personnel and operations
and to all Books and Records (other than a list of vendors, customer lists and
recipes involved with the Business), will permit Buyer to make such inspections
as it may reasonably require and will cause its officers and those of its
Subsidiaries to furnish Buyer with such financial and operating data and other
information with respect to the business and properties of the Company and its
Subsidiaries as Buyer may from time to time reasonably request. Seller will
cause the officers, employees, agents and consultants of the Company and its
Subsidiaries to keep the officers of Buyer informed as to the affairs of the
Company and its Subsidiaries.
(c) Notwithstanding any right of Buyer to fully investigate the
affairs of the Company and its Subsidiaries, and notwithstanding any knowledge
of facts determined or determinable by Buyer pursuant to such investigation or
right of investigation, Buyer has the right to rely fully upon the
representations, warranties, covenants and agreements of Seller, the Company and
its Subsidiaries contained in this Agreement.
ARTICLE VII
CONDITIONS TO SELLER'S OBLIGATIONS
The obligations of Seller to sell the Stock to Buyer on the Closing Date
and to consummate the transactions contemplated hereby are subject to the
satisfaction, on or prior to the Closing Date, of each of the following
conditions, any of which may be waived by Seller in accordance with Section
10.5:
7.1 Representations, Warranties and Covenants. All representations and
warranties of Buyer contained in this Agreement and in any Ancillary Documents
to which it is a party shall be true and correct in all material respects at and
as of the Closing Date as if such representations and warranties were made at
and as of the Closing Date, and Buyer shall have performed in all material
respects all agreements and covenants required hereby or thereby to be performed
by it prior to or at the Closing Date.
7.2 No Proceedings or Litigation. No Actions by any governmental authority
or other person shall have been instituted or threatened for the purpose of
enjoining or preventing, or that question the validity or legality of, the
transactions contemplated hereby and that could reasonably be expected
materially to damage Seller if the transactions contemplated hereby are
consummated.
7.3 Closing Deliveries. Seller shall have received, at or prior to
the Closing, the following:
(a) the Security Agreements and related financing statements executed
by Buyer, the Company, LFG, ▇▇▇▇-▇▇▇▇▇▇ and SJL;
(b) a certificate executed by the Secretary of Buyer certifying as of the
Closing Date as to (i) a true and correct copy of the Certificate of
Incorporation of Buyer, (ii) a true and correct copy of the Bylaws of Buyer, and
(iii) a true and correct copy of the resolutions of the board of directors of
Buyer authorizing the execution, delivery and performance of this Agreement by
Buyer and the consummation of the transactions contemplated hereby;
(c) a certificate executed by and authorized officer of Buyer certifying
that, as of the Closing Date, the conditions set forth in Sections 7.1 and 7.2
have been satisfied;
(d) a copy of the Certificate of Incorporation of Buyer and all
amendments thereto, certified as of a recent date by the Secretary of State
of the State of Delaware;
(e) a certificate of the Secretary of State of the State of Delaware
certifying as of a recent date the good standing of Buyer in Delaware;
(f) a certificate of the Secretary of State of the State of Delaware
certifying as of a recent date the good standing of LGHI in Delaware; and
(g) the Guarantees executed by all the requisite parties.
ARTICLE VIII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to purchase the Stock and to consummate the
transactions contemplated hereby are subject to the satisfaction, on or prior to
the Closing Date, of each of the following conditions, any of which may be
waived by Buyer in accordance with Section 10.5:
8.1 Representations, Warranties and Covenants.
(a) All representations and warranties of Seller and the Company contained
in this Agreement and in any Ancillary Documents to which either is a party
shall be true and correct in all material respects at and as of the Closing
Date.
(b) Seller and the Company shall have performed in all material respects
all obligations arising under the agreements and covenants required hereby or by
any Ancillary Documents to be performed by either of them prior to or at the
Closing Date.
8.2 Consents. All consents, approvals, waivers and Permits from third
parties and governmental and regulatory authorities required to consummate the
transactions set forth herein or contemplated hereby shall have been obtained.
8.3 No Proceedings or Litigation. No Actions by any governmental authority
or other person shall have been instituted or threatened for the purpose of
enjoining or preventing, or that question the validity or legality of, the
transactions contemplated hereby and that could reasonably be expected
materially to damage the Company or materially adversely affect the value of or
Buyer's right to own, operate or control after the Closing, the Stock or the
Assets, business or operations of the Company and its Subsidiaries if the
transactions contemplated hereby are consummated.
8.4 Material Changes. Except as specifically set forth on Schedule 4.5,
since January 1, 2000 (i) there shall have been no Material Adverse Change and
(ii) there shall have been no event or development that could be expected to
result in such a Material Adverse Change.
8.5 Indebtedness. All indebtedness for borrowed money of the Company and
its Subsidiaries outstanding on the Closing Date (together with all interest
accrued thereon and any prepayment premiums, penalties or fees) shall have been
repaid in full and canceled, other than as set forth on Schedule 8.5, and Buyer
shall have received evidence satisfactory to it of such termination. All
Encumbrances shall be terminated and the relevant holder shall have delivered to
the Company and Buyer an acknowledgment of payment and release and other
evidence satisfactory to Buyer of such termination, cancellation and
extinguishment of Encumbrances.
8.6 Resignations. Each member of the board of directors and each officer
of the Company and of each Subsidiary of the Company shall have tendered their
registrations.
8.7 Closing Deliveries. Buyer shall have received, at or prior to
the Closing, the following:
(a) a certificate executed by the Secretary of the Company certifying as
of the Closing Date as to true and correct copies of the certificate or articles
of incorporation and the bylaws of the Company and of each Subsidiary of the
Company;
(b) a certificate executed by Seller certifying that, as of the Closing
Date, the conditions set forth in Article VIII have been satisfied;
(c) a copy of the Certificate of Incorporation of the Company and all
amendments thereto, certified as of a recent date by the Secretary of State of
the State of New Jersey;
(d) a certificate of the appropriate Secretary of State certifying the
good standing of the Company and of each of its respective Subsidiaries in its
state of incorporation and any other states where it is required to be qualified
to do business;
(e) a waiver of spousal rights, in form and substance satisfactory to
Buyer, with respect to the sale of the Stock, executed by Seller's spouse;
(f) a general release, in form and substance reasonably satisfactory to
Buyer and its counsel, subject to the rights of the Seller pursuant to this
Agreement and the Ancillary Documents, dated as of the Closing Date and executed
by Seller, of any and all claims that Seller may have against the Company, its
directors, officers, agents or employees;
(g) all documentation necessary to change the Company's and each
Subsidiary's bank and other depository accounts and safe deposit arrangements,
borrowing authorizations and the persons authorized to sign thereon, as well as
all documentation necessary to change the trustees on all the Employee Plans, to
such names as Buyer shall have designated;
(h) physical possession of all stock records of the Company certified
as true and correct and complete by the Secretary of the Company;
(i) physical possession of the minute books and corporate seal of the
Company;
(j) an executed copy of both Lease Agreements, which shall be in form
and substance satisfactory to Buyer;
(k) physical possession of all Books and Records, tangible Assets, Permits,
policies, Contracts or other instruments owned by or pertaining to the Company
and its current or former Subsidiaries that are in the possession of Seller
(other than the corporate minute books of the Subsidiaries);
(l) the Consulting Agreement with the Seller in the form of Exhibit G
----------
attached hereto;
(m) a letter, in form and substance satisfactory to Buyer, from Empire Kosher
Chicken stating that it agrees to continue to do business with the Company so
long as all accounts payable owed by the Company or the Seller are paid in full,
notwithstanding anything contained herein to the contrary, the failure of the
delivery of said letter shall not be a reason for the Buyer to claim that the
Seller is not entitled to the Break-Up Fee; and
(n) the opinion of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, P.C. dated the Closing
Date, substantially in the form of Exhibit H attached hereto.
ARTICLE IX
ACTIONS BY SELLER AND BUYER AFTER THE CLOSING
9.1 Books and Records. Seller and Buyer agree that each will cooperate
with and make available to the other party, during normal business hours, all
books and records, information and Personnel (without any disruption of
employment) retained and remaining in existence after the Closing Date that are
necessary in connection with any tax inquiry, audit, investigation or dispute,
any litigation or investigation or any other matter requiring any such books and
records, information or Personnel for any reasonable business purpose. The party
requesting access to any such books and records, information or Personnel shall
bear all of the out-of-pocket costs and expenses (including without limitation,
attorneys' fees, but excluding reimbursement for salaries and employee benefits)
reasonably incurred in connection with providing access to such books and
records, information and Personnel.
9.2 Survival of Representations; Etc. All statements contained herein and
in all documents and agreements related hereto or contemplated hereby and in the
Disclosure Schedule and in any certificate or instrument or document delivered
by or on behalf of the parties pursuant to this Agreement or in connection with
the transactions contemplated hereby shall be deemed to be representations and
warranties by the parties hereunder. The representations and warranties of
Seller contained herein and as provided in the preceding sentence shall survive
the Closing until the third anniversary of the Closing Date, unless Buyer
notifies Seller in writing prior to such date of any specific claim or claims
for alleged breach of any such representation or warranty, in which case such
representation or warranty shall survive with respect to such claim until the
final resolution by settlement, arbitration, litigation or otherwise of any such
claim arising from such alleged breach; provided that (i) the representations
and warranties contained in Sections 4.1, 4.2, 4.3, 4.4, 4.6 and 4.12 shall
survive indefinitely and (ii) the representations and warranties contained in
Sections 4.17, 4.18 and 4.22 shall survive through the applicable statute of
limitations. The representations and warranties of Buyer contained herein shall
survive the Closing, until the third anniversary of the Closing Date, unless
Seller notifies Buyer in writing prior to such date of any specific claim or
claims for alleged breach of any such representation or warranty, in which case
such representation or warranty shall survive with respect to such claim until
the final resolution by settlement, arbitration, litigation or otherwise of any
such claim arising from such alleged breach. The covenants and agreements of the
parties contained herein shall survive the Closing indefinitely, except as
provided herein.
9.3 Seller's Agreement to Indemnify. Subject to the terms, conditions and
limitations set forth in this Article IX, from and after the Closing, Seller
shall defend, indemnify and hold harmless Buyer, its Affiliates (including the
Company and its Subsidiaries) and, if applicable, their respective directors,
officers, employees, attorneys, representatives and agents, and each of the
successors and assigns of any of the foregoing (each, a "Buyer Indemnitee"),
from and against any Losses imposed on, sustained, incurred or suffered by or
asserted against any Buyer Indemnitee that arise out of or result from any
breach of any of the representations, warranties, covenants or agreements made
by Seller in this Agreement, or in any certificate, exhibit or other instrument
contemplated by this Agreement and delivered by Seller in connection herewith,
as well as any Losses arising directly or indirectly as a result of action by a
third party (on its own initiative without any guidance or assistance from the
Buyer) in connection with the contra accounts (said agreement by the Seller
shall survive until the applicable statute of limitations for each particular
contra account); provided, however, that Losses resulting from any breach of the
representations made in Section 4.18 (relating to Taxes and related matters)
shall be governed by Section 9.6 and the remedies therein shall be exclusive.
The indemnity provided for in this Section 9.3 is not limited to matters
asserted by third parties against any Buyer Indemnitee, but includes claims for
Losses incurred or sustained by any Buyer Indemnitee in the absence of
third-party claims.
9.4 Buyer's Agreement to Indemnify. Subject to the terms, conditions and
limitations set forth in this Article IX, from and after the Closing, Buyer
shall defend, indemnify and hold harmless Seller and his Affiliates, and, if
applicable, their respective directors, officers, attorneys, representatives and
agents and each of the successors and assigns of any of the foregoing (each, a
"Seller Indemnitee"), from and against any Losses imposed on, sustained,
incurred or suffered by or asserted against (i) any Seller Indemnitee that arise
out of or result from any breach of any of the representations, warranties,
covenants or agreements made by Buyer in this Agreement, or in any certificate,
exhibit or other instrument contemplated by this Agreement and delivered by
Buyer in connection herewith and (ii) against the Seller by reason of or in
connection with a claim of a third party arising out of any action, inaction,
event, condition or liability occurring after the Closing Date.
9.5 Claim Procedures.
(a) Promptly after receipt by any person of notice of the commencement of
any action or claim in respect of which such person (referred to herein as the
"Indemnified Party") intends to seek indemnification hereunder, such Indemnified
Party shall notify the other party hereto (referred to herein as the
"Indemnifying Party") thereof in writing, and the Indemnifying Party shall
notify the Indemnified Party in writing promptly (but in any event not later
than seven (7) days) after receipt of such notice whether it agrees to undertake
the defense thereof. Upon its giving such notice, the Indemnifying Party shall
be entitled to assume control of the defense of such action or claim with
counsel reasonably satisfactory to the Indemnified Party; provided, however,
that:
(i) the Indemnified Party shall be entitled to participate in the
defense of any such action or claim and to employ counsel at its own expense to
assist in the handling of such action or claim, provided that, if the named
parties in connection with any such action or claim (including any impleaded
parties) include both an Indemnified Party and an Indemnifying Party and the
Indemnified Party shall have been advised by its own counsel that there may be
one or more legal defenses available to it that are different from or additional
to those available to any Indemnifying Party, then in such case the Indemnified
Party shall have the right (at the expense of the Indemnifying Party) to assume
control of such defense on its own behalf, it being understood, however, that
the Indemnifying Party shall not, in connection with such action or claim, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel); and
(ii) without the consent of an Indemnified Party, no Indemnifying
Party shall consent to the entry of any judgment or enter into any settlement
that does not include as an unconditional term thereof the giving by each
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect of such action or claim or if, pursuant to or as a result of such
consent or settlement, injunctive or other equitable relief would be imposed
against such Indemnified Party or such judgment or settlement could in its
reasonable opinion materially interfere with the business, operations or assets
of such Indemnified Party.
(b) If the Indemnifying Party does not assume control of the defense of
such claim in accordance with the foregoing provisions, the Indemnified Party
shall have the right to defend such claim in such manner as it may deem
appropriate at the reasonable cost and expense of the Indemnifying Party, and
the Indemnifying Party will promptly reimburse the Indemnified Party therefor in
accordance with this Article IX; provided that the Indemnified Party shall not
be entitled to consent to the entry of any judgment or enter into any settlement
of such claim without the prior written consent of the Indemnifying Party if,
pursuant to or as a result of such consent or settlement, injunctive or other
suitable relief would be imposed against the Indemnifying Party or such judgment
or settlement could in its reasonable opinion materially interfere with the
business, operations or assets of the Indemnifying Party.
(c) Notwithstanding the foregoing, the Indemnified Party, during the
period the Indemnifying Party is determining whether to elect to assume the
defense of a matter covered by this Section 9.5, may take such reasonable
actions (at the expense of the Indemnifying Party) as it deems necessary to
preserve any and all rights with respect to the matter, without such actions
being construed as a waiver of the Indemnified Party's rights to defense and
indemnification pursuant to this Agreement. No failure to provide any notice
required by this Section 9.5 shall relieve the Indemnifying Party of any
obligation to indemnify the Indemnified Party hereunder, except to the extent
that the Indemnifying Party is actually prejudiced thereby.
(d) The Indemnifying Party shall pay all costs and expenses, including but
not limited to reasonable attorneys' fees, incurred by any Indemnified Party in
enforcing its indemnification rights as provided in this Agreement.
(e) The indemnification obligations of Seller and Buyer, respectively,
under this Article IX, shall be limited to claims made prior to the last date of
survival thereof referred to in Section 9.2.
(f) Characterization of Payment. Any indemnity payment made pursuant to
this Article IX shall be treated by Buyer and Seller as an adjustment to the
Purchase Price.
9.6 Tax Indemnification and Other Tax Matters.
(a) Seller shall indemnify, save and hold harmless each Buyer Indemnitee
from and against any and all Losses incurred in connection with or arising out
of (i) the inaccuracy or breach of any representation or warranty of or by the
Company or Seller contained in Section 4.18 and (ii) Taxes with respect to all
Tax periods ending on or prior to December 31, 1999. Notwithstanding anything
contained herein to the contrary, all Taxes and filings in connection therewith
(other than corporate income tax) have been timely paid and/or filed prior to
the Closing Date.
(b) In the event that Buyer, the Company or any Subsidiary of the Company
receives notice of a claim against the Company or any Subsidiary with regard to
a Tax period that ends prior to December 31, 1999 from any taxing authority, the
Company shall promptly notify Seller of such claim. Notwithstanding the
foregoing, the failure to give such notice shall not relieve Seller of the
obligation to indemnify Buyer, the Company or any such Subsidiary, unless the
failure to provide such notice shall prelude the contest of such claim. The
Company shall at Seller's expense provide, as promptly as practicable, such
information and assistance as is reasonably necessary in defense of the claim or
audit.
(c) Buyer or the Company shall have control over the conduct of any audit
or other proceeding with respect to Taxes of the Company or any of its
Subsidiaries.
(d) Buyer and the Company, on the one hand, and Seller, on the other hand,
agree not to enter into any agreement or settlement with a Tax jurisdiction with
respect to any audit or dispute with respect to any Tax as to which Seller is
required to indemnify any Buyer Indemnitee pursuant to this Section 9.6 without
written consent from the other party, which shall not be unreasonably withheld.
(e) After the Closing, except as required by law, neither the Company, any
of its Subsidiaries, nor Buyer shall, without the prior written consent of
Seller, (i) file or permit to be filed any amended Tax Return by or on behalf of
the Company and/or any such Subsidiary for any period for which the original Tax
Return was filed before the Closing or (ii) take any other action affecting the
Company's and/or any such Subsidiary's Taxes for any such period; provided,
however, that the Company or any of its Subsidiaries or Buyer may take actions
described in clauses (i) or (ii) if it would not hold Seller liable for any
Taxes or other liability to the extent such Taxes or other liability result
solely from any such action.
9.7 Further Assurances. Each of Buyer, Seller and the Company shall use
commercially reasonable efforts to take all actions and to do all things
necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement (including, without limitation,
satisfying the closing conditions in Articles VII and VIII hereto). Following
the Closing, Seller agrees to execute such documents, instruments or
conveyances and take such actions as may be requested by Buyer and otherwise
cooperate in a reasonable manner with Buyer, its successors and assigns, its
Affiliates and their respective Representatives in connection with any action
that may be necessary or advisable to carry out the provisions hereof or
transactions contemplated hereby.
9.8 Remedies Cumulative; Offset. The remedies provided in this Article IX shall
be cumulative and shall not preclude assertion by any party hereto of any other
rights or the seeking of any other remedies against and the party hereto.
Without limiting any remedy otherwise available to Buyer under this Agreement
or at law or equity, Buyer shall be entitled to offset against any amounts due
Seller, including, without limitation, any amounts due Seller under the Notes.
9.9 Financial Information; Default. The Company agrees that for as long as the
Notes shall remain outstanding, every month, no later than the twenty-first
(21st) day of the month, Buyer shall provide to Seller complete financial
statements for the Buyer, Company, LFG, SJL and ▇▇▇▇-▇▇▇▇▇▇ for the preceding
month. The Buyer warrants that the net worth (as determined in accordance with
generally accepted accounting principles) of all of said companies shall not be
less than the "Permitted Value". The Permitted Value shall be the net worth of
said companies on the Closing Date as determined by ▇▇ ▇▇▇▇ LLP prior to the
Closing. If the net worth (as determined in accordance with generally accepted
accounting principles) of said companies falls more than 10% below the
Permitted Value, Seller shall give Buyer notice of the shortfall and Buyer
shall have three (3) months from receipt of the notice to correct such
deficiency. If, within three (3) months, net worth of said companies is still
below the Permitted Value, such failure shall be deemed a default hereunder and
under the Ancillary Documents. Additionally, Seller shall have the right, from
to time to time, during regular business hours, at Buyer's office, on notice to
Buyer, to review the books and records of the Buyer, LFG, Company, SJL and
▇▇▇▇-▇▇▇▇▇▇; and (ii) the Company shall not make any distributions to its
stockholders. The provisions of Section 9.9 shall survive the Closing.
ARTICLE X
MISCELLANEOUS
10.1 Termination.
(a) Termination. This Agreement may be terminated at any time prior
to Closing:
(i) By mutual written consent of Buyer and Seller;
(ii) By Seller if the Closing does not occur on or prior to the
sixtieth (60) day from the date hereof unless the failure of
the Closing to occur shall be due to the failure of the Seller
to observe the covenants and agreements set forth in this
Agreement. If Seller disputes the reasons for the failure of
Closing to occur, the dispute shall be submitted to
arbitration pursuant to paragraph 10.14;
(iii) Without any action on the part of Buyer or Seller, if on the
due date of the Deposit Note said Note is not paid in full; or
(iv) By either Buyer or Seller if a court of competent jurisdiction
or other governmental authority or instrumentality shall have
issued an order, decree or ruling, or shall have taken any
other action, having the effect of restraining, enjoining or
otherwise prohibiting the Closing.
(b) In the Event of Termination. In the event of termination of this
Agreement:
(i) Each party shall redeliver all documents, work papers and other
material of any other party relating to the transactions contemplated hereby,
whether obtained before or after the execution hereof, to the party furnishing
the same;
(ii) No confidential information received by any party with respect
to the business of any other party or its Affiliates shall be disclosed to any
third party, unless required by law;
(iii) If this Agreement shall be terminated pursuant to Section 10.l
hereof, all obligations of the parties hereto under this Agreement shall
terminate and there shall be no liability of any party hereto to any other
party, and in any event each party hereto shall bear its own fees and expenses
incurred in connection with the examination, negotiation, preparation, execution
and performance of this Agreement and the transactions contemplated hereby,
except as expressly provided in Section 10.1(b)(iv) below; provided that
notwithstanding anything contained herein to the contrary, neither party shall
be relieved or released from any liabilities or damages arising out of its
willful breach of any provision of this Agreement.
(iv) Notwithstanding anything contained herein to the contrary, in
the event that this Agreement is terminated as described in Section
10.1(a)(iii), Seller shall be entitled to the Break-Up Fee as his sole and
exclusive remedy of the termination of this Agreement.
10.2 Assignment. Neither this Agreement nor any of the rights or
obligations hereunder may be assigned by any party without the prior written
consent of all other parties to this Agreement, except that Seller hereby
consents to the assignment by Buyer of its rights pursuant to this Agreement
(and all other Ancillary Documents), in whole or in part to any Affiliate,
successor in interest or Subsidiary of Buyer. Subject to the foregoing, this
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective Affiliates, Representatives, heirs, legatees, successors
and permitted assigns, and no other person shall have any right, benefit or
obligation hereunder.
10.3 Notices. All notices, requests, demands and other communications that
are required or may be given under this Agreement shall be in writing and shall
be deemed to have been duly given when received if personally delivered; when
transmitted if transmitted by Telecopy, electronic or digital transmission
method, upon receipt of telephonic or electronic confirmation; the day after it
is sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service (e.g., Federal Express); and upon receipt, if sent by
certified or registered mail, return receipt requested. In each case notice
shall be sent to:
If to Seller or to the Company (prior to Closing) , addressed to:
▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: 856-429-0020
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
If to Buyer or (subsequent to the Closing) to the Company, addressed to:
Liberty Processing & Distribution, Inc.
c/o Liberty Group Holdings, Inc.
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇, President
With a copy to:
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ LLP
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇, Esq.
or to such other place and with such other copies as either party may designate
as to itself by written notice to the others.
10.4 Choice of Law. This Agreement shall be construed and interpreted, and
the rights of the parties determined, in accordance with the laws of the State
of New Jersey (without reference to its choice of law provisions).
10.5 Entire Agreement; Amendments and Waivers. This Agreement, together
with all exhibits and schedules hereto and any other Ancillary Documents
(including the Disclosure Schedule), constitutes the entire agreement among the
parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties. No amendment, supplement, modification or waiver of
this Agreement shall be binding unless executed in writing by the party to be
bound thereby. No waiver of any of the provisions of this Agreement shall be
deemed or shall constitute a waiver of any other provision hereof (whether or
not similar), nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided.
10.6 Multiple Counterparts; Facsimiles. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument. Facsimile
signatures to this Agreement shall be of the same force and effect as original
signatures.
10.7 Invalidity. In the event that any one or more of the provisions
contained in this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
10.8 Titles. The titles, captions or headings of the Articles and Sections
herein are inserted for convenience of reference only and are not intended to be
a part of or to affect the meaning or interpretation of this Agreement.
10.9 [Intentionally Omitted].
10.10 Confidential Information. The parties acknowledge that the
transaction described herein is of a confidential nature and shall not be
disclosed except to their consultants, advisors, lenders or other financial
sources and Affiliates, or as required by law, or to any prospective transferee
referred to in Section 10.2, until such time as the parties make a public
announcement regarding the transaction. In connection with the negotiation of
this Agreement, the preparation for the consummation of the transaction
contemplated hereby, and the performance of obligations hereunder, each party
acknowledges that it will have access to confidential information relating to
the other party. Each party shall treat such information as confidential,
preserve the confidentiality thereof and not disclose such information, except
to any of the persons referred to in the first sentence of this Section in
connection with the transactions contemplated hereby, and except as required by
law.
10.11 Fees and Expenses. Concurrently with the Closing, (a) Seller shall
pay all of the fees, costs and expenses incurred by Seller and the Company
incident to or in connection with the negotiation, preparation, execution,
delivery and performance of this Agreement and the consummation of the
transactions contemplated hereby and any transfer taxes (including, without
limitation, with respect to real property, if any) and any sales, use, recording
or other taxes imposed by reason of the transactions contemplated hereby and any
deficiency, interest or penalty asserted with respect thereto and (b) Buyer
shall pay all of the fees, costs and expenses incurred by Buyer and its
Affiliates incident to or in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby.
10.12 Cumulative Remedies. All rights and remedies of either party hereto
are cumulative of each other and of every other right or remedy such party may
otherwise have at law or in equity, and the exercise of one or more rights or
remedies shall not prejudice or impair the concurrent or subsequent exercise of
other rights or remedies.
10.13 Jurisdiction and Consent to Service. Without limiting the
jurisdiction or venue of any other court, each of the parties hereby (i) agrees
that any suit, action or proceeding arising out of or relating to this Agreement
may be brought solely in the state or federal courts of New Jersey; (ii)
consents to the exclusive jurisdiction of each such court in any suit, action or
proceeding relating to or arising out of this Agreement; (iii) waives any
objection that is may have to the laying of venue in any suit, action or
proceeding in any such court; and (iv) agrees that service of any court paper
may be made in such manner as may be provided under applicable laws or court
rules governing service of process.
10.14 Arbitration. (a) Any controversy, claim or dispute arising out of or
relating to this Agreement or the breach, termination, enforceability or
validity hereof, including without limitation the determination of the scope or
applicability of the agreement to arbitrate set forth in this Section 10.14,
shall be determined exclusively by binding arbitration in New Jersey, which
arbitration shall be governed by the rules of the American Arbitration
Association (the "AAA"). There shall be a single arbitrator who shall be
mutually selected by the parties.
(b) It is the express desire of the parties hereto that the
arbitration hearing will be held and a determination will be rendered by the
arbitrator in as expeditious and economical manner as is feasible. Thus, if the
subject matter of the dispute that is submitted to the arbitrator is addressed
by, or arises in connection with this Agreement, or any certificate, schedule,
document or other writing delivered pursuant hereto (collectively, the
"Transaction Documents"), then no discovery shall be conducted by any party
other than as to the express provisions of such documents and, although the
parties may file with the arbitrator such briefs and affidavits ( the
"Supporting Documents") as each party hereto may deem appropriate, the parties
agree to limit their respective presentations of the dispute at the arbitration
hearing to the Transaction Documents and the Supporting Documents. Furthermore,
the arbitrator shall be limited in rendering a determination of the dispute to
reviewing the Transaction Documents and the Supporting Documents. If the
arbitrator determines that testimony is required in connection with the review
of the Transaction Documents and the Supporting Documents, then testimony shall
be taken at the arbitration hearing, as permitted by the arbitrator, in his or
her sole discretion.
(c) No provision of, nor the exercise of any rights under, this
Section 10.14 shall limit the right of any party to request and obtain from a
court of competent jurisdiction in New Jersey (which shall have exclusive
jurisdiction for purposes of this Section 10.14 (c)) before, during or after the
pendency of any arbitration, provisional or ancillary remedies and relief,
including, but not limited to, injunctive or mandatory relief or the appointment
of a receiver. The institution and maintenance of an action or judicial
proceeding for, or pursuit of, provisional or ancillary remedies shall not
constitute a waiver of the right of any party, even if it is the plaintiff, to
submit the dispute to arbitration if such party would otherwise have such a
right. Each of the parties hereby submits unconditionally to the exclusive
jurisdiction of the state and the federal courts located in New Jersey for the
purposes of this provision, waives objection to the venue of any proceeding in
any such court or that any such court provides an inconvenient forum and
consents to the service of process upon it in connection with any proceeding
instituted under this Section 10.14 (c) in the same manner as provided for the
giving of notice hereunder.
(d) Judgment upon the award rendered may be entered in any court
having jurisdiction. The parties hereby expressly consent to the nonexclusive
jurisdiction of the state and federal courts situated in New Jersey for this
purpose and waive objection to the venue of any proceeding in such court or that
such court provides an inconvenient forum.
(e) Each of the parties, shall, subject to the award of the
arbitrator, pay an equal share of the arbitrators' fees. The arbitrator shall
have the power to award recovery of all costs (including attorneys' fees,
administrative fees, arbitrator's fee and court costs) to the prevailing party.
10.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY LAW, THE
PARTIES HERETO HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM
OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. THE PARTIES
HERETO ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND THAT MIGHT, BUT
FOR THIS WAIVER, BE REQUIRED OF ANY OF THE OTHER PARTIES. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE PARTIES HERETO
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE PARTIES HERETO FURTHER WARRANT AND REPRESENT THAT EACH HAS
REVIEWED THIS WAIVER AND VOLUNTARILY WAIVES ITS HIS, AS THE CASE MAY BE, JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT AND TO ANY OTHER DOCUMENTS OR AGREEMENTS
RELATING TO THE TRANSACTION CONTEMPLATED HEREBY. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
[Remainder of page intentionally omitted; signature pages follow]
IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase
Agreement to be duly executed on their respective behalves, by their respective
officers thereunto duly authorized, all as of the day and year first above
written.
COMPANY:
PHILADELPHIA FOODS, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: President
BUYER:
LIBERTY PROCESSING & DISTRIBUTION, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: President
SELLER:
/s/ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇