Exhibit 10.1
AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
among
SOUTHERN PRIDE CATFISH COMPANY, INC.,
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.,
SOUTHERN PRIDE CATFISH LLC,
SOUTHERN PRIDE CATFISH TRUCKING INC.
and
AMERICAN SEAFOODS GROUP LLC
Dated as of December 16, 2002
Table of Contents
Page
ARTICLE I
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Sale and Purchase of Assets.............................................2
1.2 Acquired Assets.........................................................2
1.3 Excluded Assets.........................................................3
1.4 Closing.................................................................3
1.5 Purchase Price; Payment.................................................3
1.6 Allocation of Purchase Price............................................4
1.7 Assumption of Liabilities...............................................4
ARTICLE II
WARRANTIES OF THE SELLER AND THE SHAREHOLDER
2.1 Organization; Authority.................................................5
2.2 No Conflicts; Consents and Approvals, etc...............................6
2.3 Subsidiaries............................................................6
2.4 Financial Statements....................................................7
2.5 Absence of Undisclosed Liabilities......................................8
2.6 Conduct of the Business.................................................8
2.7 Taxes...................................................................8
2.8 Compliance With Applicable Law..........................................9
2.9 Contracts...............................................................9
2.10 Acquired Assets........................................................11
2.11 Real Property..........................................................12
2.12 Intellectual Property..................................................13
2.13 Employee Matters.......................................................14
2.14 Environmental Matters..................................................15
2.15 Litigation.............................................................17
2.16 Product Liability......................................................17
2.17 Insurance..............................................................17
2.18 Accounts Receivable....................................................18
2.19 Affiliate Transactions.................................................18
2.20 Brokers and Finders....................................................18
2.21 Books and Records......................................................18
2.22 No Knowledge of False Warranties of Seller.............................18
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ARTICLE III
WARRANTIES OF THE BUYER AND THE BUYER'S PARENT
3.1 Organization and Authority.............................................19
3.2 No Conflicts; Consents and Approvals, etc..............................19
3.3 Litigation.............................................................19
3.4 Brokers and Finders....................................................20
3.5 No Knowledge of False Warranties of Buyer..............................20
ARTICLE IV
COVENANTS
4.1 Conduct of Business of the Seller......................................20
4.2 Access to Information, etc.............................................22
4.3 Confidentiality........................................................23
4.4 Reasonable Best Efforts................................................24
4.5 No Solicitation........................................................24
4.6 Public Announcements...................................................25
4.7 Financial Statements...................................................25
4.8 Affiliate Transactions.................................................25
4.9 Consultation...........................................................25
4.10 Key Employees..........................................................26
4.11 Other Employee Matters.................................................27
4.12 Releases of Personal Guarantees........................................29
4.13 Tax Matters............................................................29
4.14 Insurance..............................................................30
4.15 Use of Business Name...................................................31
4.16 Non-Competition........................................................32
4.17 Notice of Proceedings..................................................32
4.18 Further Assurances.....................................................32
4.19 Right to Open Mail, etc................................................32
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Obligations of Each Party................................33
5.2 Conditions to the Obligations of the Buyer, Trucking, and the
Buyer's Parent.......................................................34
5.3 Conditions to the Obligations of the Seller............................36
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ARTICLE VI
TERMINATION
6.1 Termination............................................................36
6.2 Effect of Termination..................................................37
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Seller and the Shareholder......................37
7.2 Indemnification by the Buyer, Trucking, and the Buyer's Parent.........39
7.3 Indemnification Procedures for Third Party Claims......................40
7.4 Time in Which to Bring Claims Relating to Warranties...................41
7.5 Exclusive Remedy of Buyer and Trucking.................................41
7.6 Exclusive Remedy of Seller.............................................42
7.7 No Representations.....................................................42
7.8 Order of Payment.......................................................42
ARTICLE VIII
MISCELLANEOUS
8.1 Entire Agreement.......................................................43
8.2 Notices................................................................43
8.3 Expenses...............................................................44
8.4 Governing Law..........................................................45
8.5 Interpretation.........................................................45
8.6 Assignment.............................................................45
8.7 Parties in Interest....................................................45
8.8 Counterparts...........................................................45
8.9 Amendment..............................................................45
8.10 Exclusive Jurisdiction, etc............................................46
8.11 Severability...........................................................46
8.12 Remedies...............................................................46
ARTICLE IX
DEFINITIONS
9.1 Definition of Certain Terms............................................46
9.2 Other..................................................................57
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SCHEDULES
Schedule 1.3 Excluded Assets
Schedule 1.6(a) Allocation Schedule
Schedule 1.7(b) Excluded Liabilities
Schedule 2.1(b) Qualification To Do Business
Schedule 2.2(a) Seller Conflicts
Schedule 2.2(b) Seller Consents and Governmental Approvals
Schedule 2.4(a) Financial Statements
Schedule 2.5 Undisclosed Liabilities
Schedule 2.7(d) Election of S Corporation Treatment
Schedule 2.8 Compliance With Applicable Law
Schedule 2.9 Contracts
Schedule 2.10 Liens on Acquired Assets
Schedule 2.11(a) Real Property
Schedule 2.11(b) Leasehold Interests
Schedule 2.12(a) Intellectual Property
Schedule 2.12(b) Intellectual Property Rights
Schedule 2.12(d) Trademarks and Trade Names
Schedule 2.13(b) Seller Plans
Schedule 2.14(a) Environmental Permits
Schedule 2.14(b) Environmental Violations
Schedule 2.14(d) Other Environmental Matters
Schedule 2.15 Litigation
Schedule 2.16 Product Liability
Schedule 2.17(a) Insurance
Schedule 2.19 Affiliate Transactions
Schedule 3.2 Buyer Conflicts and Consents
Schedule 4.10(a) Key Employee Compensation
Schedule 4.11(d) Accrued Incentive Compensation
Schedule 4.19(b) Bank Accounts
Schedule 9.1 Seller Knowledge Group
Exhibit A Form of Escrow Agreement
Exhibit B June 30 Balance Sheet
Exhibit C Form of Assumption Agreement
Exhibit D Form of Employment and Non-Competition Agreement
Exhibit E Form of Alternative Employment Agreement
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AMENDED AND RESTATED
ASSET PURCHASE AGREEMENT
AMENDED AND RESTATED ASSET PURCHASE AGREEMENT, dated as of December 16,
2002 (this "Agreement"), by and among Southern Pride Catfish Company, Inc., an
Alabama corporation (the "Seller"), ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., an individual,
Southern Pride Catfish LLC, a Delaware limited liability company (the "Buyer"),
Southern Pride Catfish Trucking Inc., a Delaware corporation ("Trucking"), and
American Seafoods Group LLC, a Delaware limited liability company that is the
parent of the Buyer and the indirect parent of Trucking (the "Buyer's Parent").
Certain capitalized terms used herein are defined in Section 9.1.
RECITALS
WHEREAS, the Seller is engaged in the business of catfish harvesting,
processing and distribution;
WHEREAS, ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. is the sole shareholder of the Seller (the
"Shareholder") and owns all of the outstanding common stock of the Seller;
WHEREAS, the Seller, the Shareholder, the Buyer and the Buyer's Parent have
entered into an Asset Purchase Agreement, dated as of November 20, 2002 (the
"Existing Asset Purchase Agreement"), providing for, among other things, the
purchase and assumption by the Buyer, and the sale, assignment and transfer by
the Seller, of substantially all of the assets and properties of the Seller and
all of the Seller's liabilities related to the Business (other than the Excluded
Liabilities), all for the purchase price and on the terms and conditions set out
in the Existing Asset Purchase Agreement; and
WHEREAS, the Seller, the Shareholder, the Buyer, and the Buyer's Parent
have agreed that Trucking will become a party to the Existing Asset Purchase
Agreement and will buy the assets described on Schedule 1.6(a) and assume the
liabilities related to such assets.
NOW, THEREFORE, in consideration of the foregoing and for good and valuable
consideration, the parties hereto agree that the Existing Asset Purchase
Agreement be amended and restated in its entirety as of the date hereof to read
as set forth in this Agreement.
ARTICLE I
SALE AND PURCHASE OF ASSETS; ASSUMPTION OF LIABILITIES
1.1 Sale and Purchase of Assets. Subject to and in accordance with the
terms and conditions in this Agreement, at the Closing, the Seller agrees to
sell, transfer, convey, assign and deliver to the Buyer and Trucking, and the
Buyer and Trucking agree to purchase from the Seller, all of the Seller's right,
title and interest in and to all real and personal, tangible and intangible,
assets and properties (other than the Excluded Assets) owned by the Seller now
or as of the Closing (collectively, the "Acquired Assets"), free and clear of
all Liens other than Permitted Liens, in accordance with the allocation on the
Allocation Schedule.
1.2 Acquired Assets. The Acquired Assets shall include, without
limitation:
(a) all of the inventory of the Seller, including raw materials and
supplies, work-in-progress and finished goods;
(b) all of the accounts receivable of the Seller;
(c) all machinery and equipment, vehicles, software, computers,
supplies, desks, chairs, tables, furniture, fixtures and all other personal
property of the Seller;
(d) the Leases of personal property to which the Seller is a party in
the operation of the Business;
(e) all of the Seller's right, title and interest in and to all
contracts and agreements to which the Seller is a party and that were
entered into in connection with the operation of the Business as well as
all of the right, title and interest of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. in and to all
contracts and agreements to which he is a party and that were entered into
in connection with the operation of the Business;
(f) all of the Seller's Intellectual Property;
(g) all of the Seller's cash on hand and cash equivalents on hand as
of the Closing, including prepayments and deposits;
(h) all lists of customers served by the Seller, all lists of
suppliers, all records of accounts receivable and payable, all personnel
records, and all other business records of the Seller related to the
operation of the Business and not described in Section 1.3;
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(i) all Real Property and all licenses, permits, approvals and
qualifications relating to the Real Property issued to the Seller by any
Governmental Authority; and
(j) all telephone numbers, post office boxes, sales literature and
miscellaneous assets of every kind owned by the Seller.
1.3 Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the Acquired Assets shall not include, and the Seller shall not sell,
convey, assign, transfer or deliver, any of the following assets and properties
of the Seller (the "Excluded Assets"):
(a) the assets listed on Schedule 1.3; and
(b) all animal mounts and any other items of personal use, decoration,
or the like in the office of ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. that are (i) not identified
as an asset on the Seller's depreciation schedule or Financial Statements
and (ii) not material to the operation of the Business.
1.4 Closing.
The closing of the transactions contemplated by this Agreement (the
"Closing") shall take place at the offices of Debevoise & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 a.m. local time on the fifth business day
after all the conditions in ARTICLE V have been satisfied or waived (except to
the extent that they relate to documents to be delivered on the Closing Date),
or such other time and date as the parties hereto may agree (the "Closing
Date"). The Closing shall be effective for all tax, financial accounting, and
other purposes as of the close of business on the Closing Date.
1.5 Purchase Price; Payment.
(a) On the terms and subject to the conditions set forth in this
Agreement, the Buyer and Trucking agree (i) to pay or cause to be paid to
the Seller an aggregate amount equal to (x) $40,300,000, reduced by (y) the
amount of any cash paid or distributed to the Shareholder from and after
June 30, 2002 and prior to the Closing (other than regular wages or salary
and reimbursement of legitimate business expenses in the ordinary course of
business) in compliance with this Agreement, and increased by (z) the
Ordinary Income Adjustment (such aggregate amount, the "Purchase Price"),
and (ii) to assume the Assumed Liabilities as provided in Section 1.7.
(b) At the Closing, the Buyer and Trucking shall deliver to the Seller
the Purchase Price by (i) wire transfer of all but $1,000,000 of such
amount in immediately available funds to such bank account as the Seller
shall specify at least five
3
days prior to the Closing, and (ii) wire transfer of $1,000,000 in
immediately available funds to SouthTrust Bank or any other bank that is
mutually acceptable, as Escrow Agent (the "Escrow Agent"), to be held by
the Escrow Agent on deposit in an escrow account (the "Escrow Account") for
the benefit of the Seller and the Buyer, Trucking and any other Buyer
Indemnitees (as defined herein) to secure the potential obligations of the
Seller and the Shareholder under this Agreement to make indemnification
payments to the Buyer, Trucking, or any other Buyer Indemnitees as provided
in Section 7.1 and in the Escrow Agreement (the "Escrow Agreement") to be
executed at the Closing, substantially in the form attached hereto as
Exhibit A.
1.6 Allocation of Purchase Price.
(a) The aggregate amount of the Purchase Price plus the Assumed
Liabilities shall be allocated among the Acquired Assets in accordance with
an allocation schedule (the "Allocation Schedule") to be prepared by the
Buyer and Trucking, agreed to by the parties, and attached hereto as
Schedule 1.6(a). The Allocation Schedule shall reflect the allocation of
the Purchase Price, the Acquired Assets, and the Assumed Liabilities (i)
between the Buyer and Trucking and (ii) among various categories of assets
for income Tax and financial accounting purposes.
(b) The Seller and each of the Buyer and Trucking agree (i) to reflect
the Acquired Assets on their respective books for Tax reporting purposes in
accordance with the Allocation Schedule, (ii) to file all Tax Returns and
determine all Taxes (including for purposes of section 1060 of the Code) in
accordance with and based upon the Allocation Schedule and (iii) not to
take any position inconsistent with such Allocation Schedule in any audit
or judicial or administrative proceeding or otherwise.
1.7 Assumption of Liabilities.
(a) Subject to and in accordance with the terms and conditions in this
Agreement, at the Closing, in addition to paying the Purchase Price, the
Buyer and Trucking will assume, accept and agree to perform, pay and
discharge, in accordance with the respective terms thereof and with the
allocation on the Allocation Schedule, all liabilities, obligations and
commitments of the Seller (other than the Excluded Liabilities) relating to
the Business (collectively, the "Assumed Liabilities"), including (i) the
liabilities (to the extent still outstanding) set forth on the Seller's
balance sheet as of June 30, 2002 included in the Financial Statements, a
copy of which is attached hereto as Exhibit B (the "June 30 Balance
Sheet"), and (ii) any liabilities incurred in the ordinary course of
business and consistent with the provisions of this Agreement on and after
June 30, 2002 and prior to the Closing Date.
(b) Notwithstanding anything in this Agreement to the contrary,
neither the Buyer nor Trucking will assume or have responsibility for the
following
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liabilities, obligations or commitments of the Seller (collectively, the
"Excluded Liabilities"): (i) liabilities, obligations or commitments
arising under any Contract entered into in violation of the Seller's
covenants or warranties under this Agreement; (ii) liabilities, obligations
or commitments set forth on Schedule 1.7(b), including the NLRB Claim;
(iii) liabilities, obligations or commitments that do not relate to the
Business; (iv) liabilities, obligations or commitments directly relating to
the Excluded Assets; (v) liabilities for any indebtedness for borrowed
money in excess of $2,350,000 (plus accrued interest) in the aggregate;
(vi) liabilities for (A) any Taxes attributable to the Excluded Assets or
otherwise not related to the Acquired Assets or the Business, and (B) Taxes
of the Seller or attributable to the Business or the Acquired Assets,
measured by net or taxable income for any taxable period or any portion
thereof ending on or prior to the Closing Date; and (vii) liabilities
retained by the Seller pursuant to Section 4.10(a)(i) and (ii) and Section
4.11(b) relating to certain employees.
(c) At the Closing, each of the Buyer and Trucking shall, and the
Buyer's Parent shall cause each of the Buyer and Trucking to, assume and
agree to pay, discharge and perform the Assumed Liabilities allocated to it
pursuant to the Allocation Schedule, by executing and delivering to the
Seller and the Shareholder an assumption agreement (the "Assumption
Agreement"), substantially in the form attached hereto as Exhibit C.
ARTICLE II
WARRANTIES OF THE SELLER AND THE SHAREHOLDER
The Seller and the Shareholder, jointly and severally, warrant to the
Buyer, Trucking, and the Buyer's Parent that:
2.1 Organization; Authority.
(a) The Seller is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of Alabama and has all
requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly and validly authorized and
approved by the board of directors of the Seller, and by the Shareholder as
the sole stockholder of the Seller, and no other further corporate or
stockholder proceedings is necessary to authorize, approve or consummate
the transactions contemplated by this Agreement. This Agreement constitutes
a valid and binding agreement of the Seller, enforceable against it in
accordance with its terms, except (x) as the same may be limited by
applicable bankruptcy, insolvency, moratorium or similar laws of general
application relating to or affecting creditors' rights, including the
effect of
5
statutory or other laws regarding fraudulent conveyances and preferential
transfers, and (y) for the limitations imposed by general principles of
equity.
(b) Except as set forth on Schedule 2.1(b), the Seller is qualified to
do business as a foreign corporation and is in good standing in each
jurisdiction where such qualification is necessary to conduct its business
and operations as presently conducted and to own and lease the property and
assets it owns or leases, except where the failure to so qualify,
individually or in the aggregate, could not reasonably be expected to have
a Material Adverse Effect. The Seller has all requisite corporate power and
authority to own, lease and operate its properties and to carry on the
Business as now being conducted and as will be conducted on the Closing
Date.
(c) The Shareholder is a U.S. citizen, resident in the State of
Alabama, and has full power and capacity to execute, deliver and perform
this Agreement and to consummate the transactions contemplated by this
Agreement. This Agreement constitutes the legally valid and binding
obligation of the Shareholder, enforceable against him in accordance with
its terms, except (x) as the same may be limited by applicable bankruptcy,
insolvency, moratorium or similar laws of general application relating to
or affecting creditors' rights, including the effect of statutory or other
laws regarding fraudulent conveyances and preferential transfers, and (y)
for the limitations imposed by general principles of equity.
2.2 No Conflicts; Consents and Approvals, etc.
(a) The execution and delivery of this Agreement by the Seller and the
Shareholder do not, and the consummation of the transactions contemplated
hereby by the Seller will not (i) violate or conflict with the articles of
incorporation or by-laws of the Seller; (ii) except as set forth on
Schedule 2.2(a), constitute a breach or default (or an event that with
notice or lapse of time or both would become a breach or default) of, any
Applicable Law or any mortgage, agreement, deed of trust, indenture or any
other instrument to which the Seller or the Shareholder is a party or by
which any of the Seller's assets or properties are bound; or (iii) result
in the creation or imposition of any Lien (other than Permitted Liens) on
any property or asset of the Seller.
(b) Except as set forth on Schedule 2.2(b) and for any applicable
requirements of the HSR Act, neither the execution and delivery of this
Agreement by the Seller and the Shareholder, nor the consummation of the
transactions contemplated hereby by the Seller will require any Consent,
approval or authorization of, or filing with or notification to, any Person
or Governmental Authority.
2.3 Subsidiaries. The Seller has no Subsidiaries or any other equity
interest in any entity.
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2.4 Financial Statements.
(a) The Buyer, Trucking, and the Buyer's Parent have heretofore been
furnished copies of (i) audited financial statements of the Seller as at
and for the fiscal year ended December 31, 2001 (the "Audited Financial
Statements"), (ii) unaudited financial statements of the Seller as at and
for the fiscal years ended December 31, 1999 and 2000 (except that the
balance sheet for December 31, 2000 was audited) (the "Annual Unaudited
Financial Statements"), (iii) unaudited financial statements of the Seller
as at and for the six-month period ended June 30, 2002 (the "Semi-Annual
Unaudited Financial Statements"), and (iv) unaudited financial statements
of the Seller as at and for the monthly periods ended July 31, 2002, August
31, 2002, September 30, 2002, October 31, 2002, and November 30, 2002 (the
"Monthly Unaudited Financial Statements" and, together with the Annual
Unaudited Financial Statements and the Semi-Annual Unaudited Financial
Statements, the "Unaudited Financial Statements"), including in each case
statements of income and retained earnings and a statement of cash flows
(the Audited Financial Statements, the Annual Unaudited Financial
Statements, the Semi-Annual Unaudited Financial Statements, the Monthly
Unaudited Financial Statements and, from and after the date of delivery
thereof, the Subsequent Monthly Financial Statements, collectively the
"Financial Statements"). The Financial Statements (other than Subsequent
Monthly Financial Statements) are attached hereto as Schedule 2.4(a).
(b) The Audited Financial Statements are complete and correct in all
material respects and have been prepared in accordance with GAAP
consistently applied throughout the periods covered thereby, except as
otherwise disclosed in the notes to the Audited Financial Statements. The
Unaudited Financial Statements have been prepared and, when delivered, the
Subsequent Monthly Financial Statements will have been prepared in all
material respects on a basis consistent with the Audited Financial
Statements, except that the Semi-Annual Unaudited Financial Statements, the
Monthly Unaudited Financial Statements and the Subsequent Monthly Financial
Statements do not or will not contain footnotes and may be subject to
normal audit adjustments and, in the case of the Monthly Unaudited
Financial Statements and the Subsequent Monthly Financial Statements,
normal annual adjustments. The balance sheets included in the Financial
Statements present fairly the financial position of the Seller as at the
respective dates thereof, and the statements of income and retained
earnings and the statements of cash flows included in the Financial
Statements present fairly the results of operations and changes in
financial position of the Seller for the respective periods indicated. As
at the respective dates of the balance sheets included in the Audited
Financial Statements, the Seller does not have any liabilities, whether
absolute, contingent or otherwise and whether due or to become due, that
have not been reflected or reserved against in such balance sheet or have
not been disclosed in the notes thereto included in the Financial
Statements that would, under GAAP, be required to be so disclosed. The
Unaudited
7
Financial Statements reflect all liabilities as part of the balance sheet
that are required by GAAP to be so reflected.
(c) The Buyer's Parent has retained KPMG to audit the Financial
Statements for certain fiscal periods of the Seller. The Seller and the
Shareholder agree to cooperate with the completion of the audits, including
signing representation letters customary in an audit conducted in
accordance with GAAP. The Seller and the Shareholder shall have no
liability under this Agreement with respect to any matters disclosed in
such certified Financial Statements, in the footnotes thereto, in the
report thereon or in any management letters associated therewith.
2.5 Absence of Undisclosed Liabilities. To the best of the Seller's
Knowledge, the Seller has no liabilities or obligations of any nature, whether
known or unknown, absolute, accrued, contingent or otherwise and whether due or
to become due, arising out of or relating to the Business, except:
(a) as set forth on Schedule 2.5;
(b) as and to the extent disclosed or adequately reserved against on
the June 30 Balance Sheet; and
(c) liabilities and obligations that (i) were incurred after June 30,
2002 in the ordinary course of business consistent with prior practice of
the Seller; and (ii) individually or in the aggregate are not material to
the Business and have not had or resulted in, and would not reasonably be
expected to have or result in, a Material Adverse Effect.
2.6 Conduct of the Business. Since December 31, 2001, the Seller has
carried on the Business in the usual, regular and ordinary course, in
substantially the same manner as conducted before the date of this Agreement,
and has not taken or omitted to take, as the case may be, any action that, if
taken or not taken, as the case may be, between the date of this Agreement and
the Closing, would breach any of the covenants set forth in Section 4.1, except
(x) as expressly contemplated or permitted by this Agreement, (y) as consented
to by the Buyer, Trucking, or the Buyer's Parent in writing, or (z) immaterial
actions or omissions.
2.7 Taxes.
(a) All Tax Returns relating to the Seller required to be filed on or
before the Closing Date (taking into account applicable extensions) have
(or by the Closing Date will have) been duly filed by the Seller.
(b) All Taxes shown to be due on such Tax Returns relating to the
Seller required to be filed on or before the Closing Date (taking into
account applicable
8
extensions) have been paid or will be paid prior to the Closing Date,
except for Taxes reflected or reserved against on the balance sheets
included in the Financial Statements.
(c) Neither the IRS nor any other taxing authority is now asserting in
writing against the Seller any material deficiency or claim for additional
Taxes relating to the Seller or any material adjustment of Taxes relating
to the Seller.
(d) The Seller has made valid elections under subchapter S of the Code
and the corresponding provision of Alabama law, and such elections have not
been revoked or otherwise terminated, by reason of ceasing to qualify as a
"small business corporation" or otherwise. Schedule 2.7(d) sets forth (i)
the date of incorporation of the Seller and the date from which it has
continuously been, and qualified to be, treated as an "S corporation" for
federal income Tax purposes, (ii) all state and local jurisdictions in
which the Seller files an income or franchise Tax Return and is treated as
an "S corporation" for income or franchise Tax purposes and the date from
which such treatment has continuously been in effect, and (iii) all state
and local jurisdictions in which the Seller files (or has filed) an income
or franchise Tax Return and is not (or, with respect to any prior taxable
period, was not) treated as an "S corporation" for income or franchise Tax
purposes.
(e) No Acquired Asset is subject to any Lien in respect of Taxes other
than inchoate Liens for Taxes not past due.
2.8 Compliance With Applicable Law. Except as set forth on Schedule
2.8, the Seller holds all licenses, franchises, certificates, Consents, permits,
qualifications and authorizations ("Authorizations") from all Governmental
Authorities necessary for the conduct of the Business as currently conducted,
and each such Authorization is valid and in full force and effect, except where
the failure to hold any of the foregoing or for any of the foregoing not to be
in full force and effect could not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect. The Seller has not received
written notice of any action taken by any Governmental Authority to terminate,
revoke or impair any such Authorization, except for any such action that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Seller is not in conflict with, or in default or violation
of any Applicable Law applicable to it or by which any of its properties or
assets is bound, except for any such conflicts, defaults or violations that
would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
2.9 Contracts.
(a) Schedule 2.9 sets forth a true and correct list of all material
agreements, contracts, commitments, and other instruments and arrangements
(whether
9
written or oral) to which the Seller or the Shareholder is a party (in the
case of the Shareholder, to the extent that such agreements, contracts,
commitments, instruments and arrangements were entered into in connection
with the operation of the Business) or by which the Seller, the Business or
any of the Acquired Assets are bound or affected as of the date hereof (the
"Contracts"), including the following:
(i) leases, licenses, permits, franchises, insurance policies,
Governmental Approvals and other contracts concerning or
relating to the Real Property;
(ii) employment, consulting, agency, collective bargaining or
other similar agreements, and other instruments and
arrangements relating to or for the benefit of current,
future or former employees, officers, directors, sales
representatives, distributors, dealers, agents,
independent contractors or consultants;
(iii) loan agreements, indentures, letters of credit, mortgages,
security agreements, pledge agreements, deeds of trust,
bonds, notes, guarantees, and other agreements and
instruments relating to the borrowing of money or
obtaining of or extension of credit;
(iv) licenses, licensing arrangements and other contracts
providing in whole or in part for the use of, or limiting
the use of, any Intellectual Property;
(v) brokerage or finder's agreements;
(vi) joint venture, partnership and similar agreements
involving a sharing of profits or expenses (including but
not limited to joint research and development and joint
marketing contracts);
(vii) stock purchase agreements, asset purchase agreements and
other acquisition or divestiture agreements, including but
not limited to any agreements relating to the acquisition,
sale, lease or disposal of any Acquired Assets (other than
sales of inventory in the ordinary course of business) or
involving continuing indemnity or other obligations;
(viii) orders and other contracts for the purchase or sale of
materials, supplies, products or services, each of which
involves aggregate payments in excess of $20,000;
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(ix) contracts with respect to which the aggregate amount that
could reasonably expected to be paid or received
thereunder in the future exceeds $20,000 per annum or
$200,000 in the aggregate;
(x) sales agency, manufacturer's representative, marketing or
distributorship agreements;
(xi) master lease agreements providing for the leasing of both
(A) personal property primarily used in, or held for use
primarily in connection with, the Business and (B) other
personal property;
(xii) contracts, agreements or commitments with any employee,
director, officer, stockholder or Affiliate of the Seller;
and
(xiii) any other contracts, agreements or commitments that are or
will be material to the Business.
(b) All Contracts are in full force and effect and enforceable against
each party thereto. The Seller has not (and, to the Knowledge of the
Seller, no other party thereto has) breached any provision of, or
defaulted, nor has the Seller received any written notice that it is in
default under the terms of any Contract, nor has there occurred any event
that, with notice or lapse of time, or both, would constitute a default by
the Seller under any such Contract. The Buyer, Trucking, and the Buyer's
Parent have been given access to a true and complete copy of each Contract.
Each of the Contracts is a legally enforceable obligation of the Seller,
except (x) as the same may be limited by applicable bankruptcy, insolvency,
moratorium or similar laws of general application relating to or affecting
creditors' rights, including the effect of statutory or other laws
regarding fraudulent conveyances and preferential transfers, and (y) for
the limitations imposed by general principles of equity.
(c) Except as set forth on Schedule 2.2(b), no Consent of any third
party is required under any Contract as a result of or in connection with,
and the enforceability of any Contract will not be affected in any manner
by, the execution, delivery and performance of this Agreement or the
consummation of the transactions contemplated hereby.
2.10 Acquired Assets. Except as disclosed on Schedule 2.10, the Seller
has good title to all the Acquired Assets free and clear of any and all Liens
other than Permitted Liens. The Acquired Assets comprise all assets and services
required for the continued conduct of the Business as currently conducted. The
Acquired Assets constitute all the assets, properties and rights used in or held
for use in connection with
11
the Business during the past twelve months (except inventory sold, cash disposed
of, accounts receivable collected, prepaid expenses realized, Contracts fully
performed, and properties or assets replaced by equivalent or superior
properties or assets or discarded as obsolete or unneeded, in each case in the
ordinary course of business, and except for the Excluded Assets). There are no
assets or properties used in the operation of the Business and owned by any
Person other than the Seller that will not be leased or licensed to the Buyer or
Trucking, in accordance with the allocation on the Allocation Schedule, under
valid, current leases or license arrangements. The Acquired Assets are in all
material respects adequate for the purposes for which such assets are currently
used or are held for use, reasonable wear and tear excepted. Except as set forth
on Schedule 2.10, to the Knowledge of the Seller, there are no facts or
conditions affecting the Acquired Assets that could, individually or in the
aggregate, interfere in any material respect with the use, occupancy or
operation thereof as currently used, occupied or operated, reasonable wear and
tear excepted. Except as herein provided, the Acquired Assets are being sold AS
IS AND WHERE IS.
2.11 Real Property.
(a) Schedule 2.11(a) lists all real property owned by the Seller (the
"Real Property"). The Real Property constitutes all of the real property
used in, held for use in, and necessary to conduct the Business as
currently conducted. The Seller has good and marketable fee simple title to
each parcel of Real Property, free of all Liens except for Permitted Liens.
The Real Property is sufficient and appropriate for the conduct of the
Business as currently conducted, reasonable wear and tear excepted. There
exist no pending or, to the Seller's Knowledge, threatened condemnation
proceedings of or relating to the Real Property or any part thereof. There
exist no outstanding options or rights of first refusal to purchase the
Real Property or any portion thereof or any rights or interests therein.
The use and operation of the Real Property in the conduct of the Business
does not violate in any material respect any instrument of record or
agreement affecting the Real Property. There is no violation of any
covenant, condition, restriction, easement or order of any Governmental
Authority having jurisdiction over such property or of any other Person
entitled to enforce the same affecting the Real Property or the use or
occupancy thereof. No damage or destruction has occurred with respect to
any of the Real Property since December 31, 2001 that would, individually
or in the aggregate, have a Material Adverse Effect. The Real Property is
in material compliance with all applicable building, zoning, subdivision
and other land use and similar Applicable Laws affecting the Real Property
(collectively, the "Real Property Laws"), and the Seller has not received
any notice of violation or claimed violation of any Real Property Law. To
the Knowledge of the Seller, there is no pending or anticipated change in
any Real Property Law that would reasonably be expected to have or result
in a material adverse effect upon the ownership, alteration, use, occupancy
or operation of the Real Property or any portion thereof. No current use by
the Seller of the Real Property is dependent on a nonconforming use or
other Governmental Approval
12
the absence of which would materially limit the use of such properties or
assets held for use in connection with, necessary for the conduct of, or
otherwise material to, the Business. Except as herein provided, the Real
Property is being sold AS IS AND WHERE IS.
(b) Schedule 2.11(b) contains a complete and correct list of all
Leases setting forth the address, landlord and tenant for each Lease. The
Seller has delivered to the Buyer and Trucking correct and complete copies
of the Leases. Each Lease is legal, valid, binding, enforceable, and in
full force and effect, except as may be limited by bankruptcy, insolvency,
reorganization and similar Applicable Laws affecting creditors generally
and by the availability of equitable remedies. Neither the Seller nor any
other party is in default, violation or breach in any respect under any
Lease, and no event has occurred and is continuing that constitutes or,
with notice or the passage of time or both, would constitute a default,
violation or breach in any respect under any Lease. Each Lease grants the
tenant under the Lease the exclusive right to use and occupy the demised
premises thereunder. The Seller has good and valid title to the leasehold
estate under each Lease, free and clear of all Liens other than Permitted
Liens, and enjoys peaceful and undisturbed possession under each Lease.
2.12 Intellectual Property.
(a) Schedule 2.12(a) contains a complete and correct list of all
Intellectual Property that is related to, used in, held for use in
connection with, or necessary for the conduct of, or otherwise material to
the Business, other than:
(i) inventions, trade secrets, processes, formulas,
compositions, designs and confidential business and
technical information; and
(ii) other Intellectual Property that is neither registered nor
subject to application for registration and is not material
to the Business.
(b) Except as set forth on Schedule 2.12(b), the Seller owns or has
the exclusive right to use pursuant to license, sublicense, agreement or
permission all of the Intellectual Property that is related to, used in,
held for use in connection with, or necessary for the conduct of, or
otherwise material to the Business, free from any Liens (other than
Permitted Liens) and free from any requirement of any past, present or
future royalty payments, license fees, charges or other payments, or
conditions or restrictions whatsoever.
(c) The conduct of the Business does not infringe or otherwise
conflict with any rights of any Person in respect of any Intellectual
Property. To the Knowledge
13
of the Seller, none of the Seller's Intellectual Property is being
infringed or otherwise used or available for use, by any other Person. No
claim or demand of any Person has been made nor is there any proceeding
that is pending, or to the Knowledge of the Seller, threatened, nor is
there a reasonable basis therefor, which (i) challenges the rights of the
Seller in respect of any Intellectual Property or (ii) asserts that the
Seller is infringing or otherwise in conflict with, or is required to pay
any royalty, license fee, charge or other amount with regard to, any
Intellectual Property. None of the Seller's Intellectual Property is
subject to any outstanding order, ruling, decree, judgment or stipulation
by or with any court, arbitrator, or administrative agency, or has been the
subject of any litigation within the last five years, whether or not
resolved in favor of the Seller.
(d) Immediately after the Closing, the Buyer or Trucking, in
accordance with the allocation on the Allocation Schedule, will own all of
the Intellectual Property owned by the Seller as of the date hereof,
including the ▇▇▇▇ "Southern Pride Catfish" and the marks listed on
Schedule 2.12(d), and will have a right to use all other Intellectual
Property used by the Seller in connection with the Business, free from any
Liens (other than Permitted Liens) and on the same terms and conditions as
in effect prior to the Closing. There are, and immediately after the
Closing will be, no contractual restriction or limitations pursuant to any
orders, decisions, injunctions, judgments, awards or decrees of any
Governmental Authority on the right of the Buyer or Trucking to use the
name and ▇▇▇▇ "Southern Pride Catfish" or any of the names and marks listed
on Schedule 2.12(d) in the conduct of the Business as presently carried on
by the Seller or as such Business may be extended by the Buyer or Trucking.
2.13 Employee Matters.
(a) Except as set forth in Section 2.13(b), the Seller has no written
agreements with its employees or representatives of its employees,
including collective bargaining agreements, employment agreements, deferred
or executive compensation plans, or bonus plans. Each of the agreements
listed on Schedule 2.13(b) is in full force and effect, and neither the
Seller nor any other party thereto is in breach or default under any such
agreement, nor has an event occurred or does a condition exist that, with
the giving of notice or passage of time, or both, would result in such
breach or default. The Seller has not received any petition for, or written
notice of any action being taken with respect to, any collective bargaining
representation or any unfair labor practice charge, grievance or
arbitration or jurisdictional dispute; nor are there any other labor
disputes pending with respect to the Seller's employees.
(b) Each Seller Plan is set forth on Schedule 2.13(b) and a copy of
each Seller Plan has been made available to the Buyer, Trucking, and the
Buyer's Parent. The Seller has performed the obligations required to be
performed by it under, and has complied with the provisions of, all such
Seller Plans, except where such non-compliance would not reasonably be
expected to have a Material Adverse Effect, and to the Seller's
14
Knowledge, all such Seller Plans are in full force and effect and
constitute the valid and legally binding obligations of the parties
thereto. Each of the Seller Employee Plans has been operated in compliance
with applicable provisions of the Code and ERISA, except where such
non-compliance would not reasonably be expected to have a Material Adverse
Effect. No condition exists and no event has occurred with respect to any
of the Seller's Multiemployer Plans that presents a material risk of a
complete or partial withdrawal under subtitle E of Title IV of ERISA. None
of the Seller's Multiemployer Plans is in "reorganization" or "insolvent."
The Seller has no liability for any retiree medical benefits or any other
post-retirement or post-employment benefit arrangements or obligations for
any employee, former employee or other Person, or any beneficiaries
thereof, except as otherwise required by Part 6 of Subtitle B of Title I of
ERISA and section 4980B of the Code and then only to the extent such Person
pays the applicable premiums for such benefit or otherwise pays the full
cost of such benefit.
(c) The Seller has no liabilities for (i) any disability benefits
(other than workers compensation) to any employee or former employee of the
Seller or (ii) wages, salary, incentive compensation or employee benefits
to any employee who is not on active duty due to disability.
2.14 Environmental Matters.
(a) All Environmental Permits are identified on Schedule 2.14(a), and
the Seller currently holds, and at all times has held, all such
Environmental Permits necessary to the Business, and all such Environmental
Permits shall be validly transferred to the Buyer or Trucking on the
Closing Date. The Seller has not been notified by any relevant Governmental
Authority that any Environmental Permit will be modified, suspended,
canceled or revoked, or cannot be renewed in the ordinary course of
business.
(b) The Seller and its Affiliates have complied and are in compliance
in all material respects with all Environmental Permits and all applicable
Environmental Laws pertaining to the Real Property (and the use, ownership
or transferability thereof) and the Business. Except as set forth on
Schedule 2.14(b), no Person has alleged any violation by the Seller or any
of its Affiliates of any Environmental Permits or any applicable
Environmental Law relating to the conduct of the Business or the use,
ownership or transferability of the Real Property.
(c) Neither the Seller nor any of its Affiliates has caused or taken
any action that has resulted or may result in, or has been or is subject
to, any liability or obligation relating to (i) the environmental
conditions on, under, or about any Real Property, the Acquired Assets or
other properties or assets used in, held for use in connection with,
necessary for the conduct of, or otherwise material to, the Business, or
(ii) the past or present use, management, handling, transport, treatment,
generation, storage or Release of any Hazardous Substances.
15
(d) Except as set forth on Schedule 2.14(d):
(i) None of current or past operations, or any by-product
thereof, and none of the currently or formerly owned
property or assets of the Seller used in or held for use in
connection with the Business, including the Acquired Assets
and the Real Property, is related to or subject to any
investigation or evaluation by any Governmental Authority,
as to whether any Remedial Action is needed to respond to a
Release or threatened Release of any Hazardous Substances.
(ii) The Seller is not subject to any outstanding order,
judgment, injunction, decree or writ from, or contractual
or other obligation to or with, any Governmental Authority
or other Person in respect of which the Buyer or Trucking
may be required to incur any Environmental Liabilities or
costs arising from the Release or threatened Release of a
Hazardous Substance.
(iii) None of the Real Property is, and neither the Seller nor
any of its Affiliates has transported or arranged for
transportation (directly or indirectly) of any Hazardous
Substances relating to the Acquired Assets or the Real
Property to any location that is, listed or proposed for
listing under CERCLA, or on any similar state list, or the
subject of federal, state or local enforcement actions or
investigations or Remedial Action.
(iv) No work, repair, construction or capital expenditure is
required or planned in respect of the Acquired Assets
pursuant to or to comply with any Environmental Law, nor
has the Seller or any of its Affiliates received any notice
of any such requirement, except for such work, repair,
construction or capital expenditure as is not material to
the Business and is in the ordinary course of business.
(e) The Seller has disclosed and made available to the Buyer,
Trucking, and the Buyer's Parent all information, including all studies,
analyses and test results, in the possession, custody or control of the Seller
and its Affiliates (including the Shareholder) relating to (i) the environmental
conditions on, under or about the Real Property, and (ii) Hazardous Substances
used, managed, handled, transported, treated, generated, stored or Released by
any Seller or any other Person at any time on any Real
16
Property, or otherwise in connection with the use or operation of the properties
or assets used in or held for use in connection with the Business.
2.15 Litigation. Except as set forth on Schedule 2.15, (a) there are
no judgments outstanding against the Seller or to or by which the Seller is or
may be subject or bound which could reasonably be expected to have a Material
Adverse Effect; (b) there is no suit, action or proceeding pending against or,
to the Knowledge of the Seller, threatened against the Seller or any of its
properties that, individually or in the aggregate, could reasonably be expected
to have a Material Adverse Effect; and (c) there is no suit, claim, action,
proceeding or investigation to restrain, prohibit or otherwise challenge the
legality or propriety of the transactions contemplated by this Agreement
pending, or to the Knowledge of the Seller, threatened against the Seller as of
the date of this Agreement which would be reasonably likely to prevent or delay
the consummation of the transactions contemplated by this Agreement
(collectively, "Material Adverse Litigation").
2.16 Product Liability. Except as set forth on Schedule 2.16, the
Seller has no liability or obligation of any nature (whether known or unknown,
accrued, absolute, contingent or otherwise, and whether due or to become due),
whether based on strict liability, negligence, breach of warranty (express or
implied), breach of contract or otherwise, in respect of any product, component
or other item manufactured, sold, designed or produced prior to the Closing by,
or service rendered prior to the Closing by or on behalf of, the Seller or any
predecessor thereto, that (i) is not fully and adequately covered by policies of
insurance or by indemnity, contribution, cost sharing or similar agreements or
arrangements by or with other Persons, and (ii) is not otherwise fully and
adequately reserved against as reflected in the Financial Statements and (iii)
will not otherwise be fully and adequately reserved against as reflected in the
Subsequent Monthly Financial Statements.
2.17 Insurance.
(a) Schedule 2.17(a) lists all material policies of insurance and
surety bonds in force maintained, owned or held by the Seller on the date
hereof. All such policies are with financially sound insurers and are in
full force and effect and insure against risks and liabilities to an extent
and in a manner customary in the catfish processing and distribution
business. All premiums due on such policies have been paid, and the Seller
has complied in all material respects with the provisions of such policies.
(b) The product liability insurance policies listed on Schedule
2.17(a) provide product liability coverage for the Seller on an occurrence
basis, cover all claims for injuries which may occur on or prior to the
Closing Date, and will cover payment of any adverse judgment rendered
against the Buyer or Trucking or any costs of defense of the Buyer or
Trucking to the extent that the Buyer or Trucking, as the case may be, is
17
named as a defendant in any claim arising out of a product liability
occurrence occurring on or prior to the Closing Date.
2.18 Accounts Receivable. As of the date hereof, the Seller has no
accounts receivable of more than $10,000 that are unpaid for more than 70 days
after the invoice date. To the Knowledge of the Seller, all accounts receivable
of the Seller reflected on the June 30 Balance Sheet (except those collected
since June 30, 2002) and any additional accounts receivable reflected on the
books of the Seller are collectible and are not subject to offset except to the
extent adequately reserved against thereon. All such accounts receivable have
been generated in the ordinary course of business and reflect a bona fide
obligation for the payment of goods or services provided by the Seller.
2.19 Affiliate Transactions. Except as set forth on Schedule 2.19, the
Seller is not a party to any agreement or arrangement with (a) the Shareholder,
his spouse, children or any trust established primarily for the benefit of the
foregoing Persons; (b) any of the directors or officers of the Seller or (c) any
Affiliate of one or any group of the foregoing Persons.
2.20 Brokers and Finders. Neither the Seller not any of its officers,
directors, employees or Affiliates (including the Shareholder) has employed any
investment banker, broker or finder or incurred any liability for any brokerage
fees, commissions or finder's fees in connection with the transactions
contemplated herein.
2.21 Books and Records. The books of account, minute books, stock
record books and other records and documents that have been made available to
the Buyer, Trucking, and the Buyer's Parent are true, correct and complete
copies thereof in all material respects, and all records of the Seller have been
maintained in accordance with sound business practices.
2.22 No Knowledge of False Warranties of Seller. To the Knowledge of
the Seller and the Shareholder all of the warranties of the Seller and the
Shareholder in this Agreement are true and correct in all material respects as
of the Closing Date and there are no material errors in, or material omissions
from, the Seller's Disclosure Schedules.
ARTICLE III
WARRANTIES OF THE BUYER AND THE BUYER'S PARENT
The Buyer, Trucking, and the Buyer's Parent, jointly and severally,
warrant to the Seller that:
18
3.1 Organization and Authority. Each of the Buyer and the Buyer's
Parent is a limited liability company duly organized, validly existing and in
good standing under the laws of the State of Delaware and has all requisite
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. Trucking is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all requisite corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated hereby.
The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by each of the Buyer, Trucking, and the Buyer's
Parent have been duly and validly authorized and approved by all requisite
corporate action of the Buyer, Trucking, and the Buyer's Parent. This Agreement
has been duly executed and delivered by each of the Buyer, Trucking, and the
Buyer's Parent and constitutes a valid and binding agreement of the Buyer,
Trucking, and the Buyer's Parent, enforceable against the Buyer, Trucking, and
the Buyer's Parent in accordance with its terms, except (x) as the same may be
limited by applicable bankruptcy, insolvency, moratorium or similar laws of
general application relating to or affecting creditors' rights, including the
effect of statutory or other laws regarding fraudulent conveyances and
preferential transfers and (y) for the limitations imposed by general principles
of equity.
3.2 No Conflicts; Consents and Approvals, etc.
(a) The execution and delivery of this Agreement by each of the Buyer,
Trucking, and the Buyer's Parent do not, and the consummation by each of
them of the transactions contemplated hereby, will not (i) violate or
conflict with the organization documents of the Buyer, Trucking, or the
Buyer's Parent; or (ii) constitute a breach or default (or an event which
with notice or lapse of time or both would become a breach or default) of
any Applicable Law or any mortgage, agreement, deed of trust, indenture or
any other instrument to which the Buyer, Trucking, the Buyer's Parent, or
any of their respective Subsidiaries is bound.
(b) Except as set forth on Schedule 3.2 and for any applicable
requirements of the HSR Act, neither the execution and delivery of this
Agreement by each of the Buyer, Trucking, and the Buyer's Parent, nor the
consummation by them of the transactions contemplated hereby, will require
any Consent, approval or authorization of, or filing with or notification
to, any Person or Governmental Authority, except such other Consents,
approvals, authorizations, filings or notifications as, if not obtained or
made, individually or in the aggregate, would not reasonably be expected to
have a material adverse effect on the ability of the Buyer, Trucking or the
Buyer's Parent to consummate the transactions contemplated hereby (a "Buyer
Material Adverse Effect").
3.3 Litigation. There are no judicial or administrative actions,
proceedings or investigations pending or, to the Knowledge of the Buyer,
Trucking, and
19
the Buyer's Parent, threatened, which (i) individually or in the aggregate,
would reasonably be expected to have a Buyer Material Adverse Effect or (ii)
question the validity of this Agreement or any action taken or to be taken by
the Buyer, Trucking or the Buyer's Parent in connection herewith.
3.4 Brokers and Finders. None of the Buyer, Trucking, the Buyer's
Parent, or any of their respective officers, directors, employees or Affiliates
has employed any investment banker, broker or finder or incurred any liability
for any brokerage fees, commissions or finder's fees in connection with the
transactions contemplated herein.
3.5 No Knowledge of False Warranties of Buyer. To the Knowledge of the
Buyer, Trucking, and the Buyer's Parent all of the warranties of the Buyer,
Trucking, and the Buyer's Parent in this Agreement are true and correct in all
material respects as of the Closing Date.
ARTICLE IV
COVENANTS
4.1 Conduct of Business of the Seller. During the period from the date
hereof to the Closing Date, except as (x) contemplated or permitted by this
Agreement or (y) otherwise consented to by the Buyer, Trucking or the Buyer's
Parent in writing (which consent shall not be unreasonably withheld with respect
to capital expenditures designed to expand the Business), the Seller will, and
the Shareholder will cause the Seller to:
(a) conduct the Business in the usual, regular and ordinary course, in
substantially the same manner as conducted before the date of this
Agreement;
(b) pay accounts payable in a manner consistent with past practice and
pay other obligations when they become due and payable in the ordinary
course of business (except for any accounts payable or other obligations
disputed in good faith);
(c) perform in all material respects its obligations under the
Contracts;
(d) maintain its books of account and records in a manner consistent
with prior practice;
(e) comply in all respects with all Applicable Laws;
20
(f) not merge or consolidate with (or agree to merge or consolidate
with), buy substantially all of the assets of, or otherwise acquire a
business, corporation, partnership, association or other business
organization or division;
(g) not incur any indebtedness for borrowed money or agree to cancel
debts owing, except in the ordinary course of business consistent with
prior practice;
(h) not incur any obligation or liability, absolute, accrued,
contingent or otherwise, whether due or to become due, except current
liabilities for trade or business obligations incurred in connection with
the purchase of goods or services in the ordinary course of business
consistent with prior practice;
(i) not discharge or satisfy any Lien other than those required to be
discharged or satisfied, or pay any obligation or liability, absolute,
accrued, contingent or otherwise, whether due or to become due, other than
current liabilities shown on the June 30 Balance Sheet and current
liabilities incurred after June 30, 2002 in the ordinary course of business
consistent with prior practice;
(j) not sell, transfer, lease to others or otherwise dispose of any of
its property or assets (except for inventory sold in the ordinary course of
business);
(k) not assign, mortgage, pledge or otherwise subject to Lien, any
property or assets, whether tangible or intangible;
(l) not forgive, cancel or compromise any material debt or claim, or
waive or release any material right;
(m) not enter into, terminate, modify or breach any Contract, Lease or
other agreement or commitment;
(n) not transfer or grant any rights or licenses under, or enter into
any settlement regarding the breach or infringement of, any Intellectual
Property, or modify any existing rights with respect thereto;
(o) not make any change in the rate of compensation, commission, bonus
or other direct or indirect remuneration payable, or pay or agree or orally
promise to pay, conditionally or otherwise, any bonus, incentive, retention
or other compensation, retirement, welfare, fringe or severance benefit or
vacation pay, to or in respect of any shareholder, director, officer,
employee, salesman, distributor or agent of the Seller;
(p) not make any cash distributions to (i) the Shareholder, his spouse
or widow, children, any trust established primarily for the benefit of any
of the
21
foregoing Persons, (ii) any of the officers or directors of the Seller
(iii) or any Affiliate of any of the foregoing Persons;
(q) replenish its inventories and supplies in a normal and customary
manner consistent with its prior practice and prudent business practices
prevailing in the catfish processing and distribution industry, not make
any purchase commitment in excess of the normal, ordinary and usual
requirements of the Business or at any price in excess of the then current
market price or upon terms and conditions more onerous than those usual and
customary in the industry, and not make any change in its selling, pricing,
advertising or personnel practices inconsistent with its prior practice and
prudent business practices prevailing in the industry;
(r) (i) not purchase or make a commitment to purchase at a premium
above the market price (applied consistently to other vendors) any amount
of ▇▇▇▇▇▇ Catfish in excess of an average amount of 350,000 pounds per
calendar month; (ii) not increase the purchase price at which ▇▇▇▇▇▇
Catfish has been purchased prior to the date of this Agreement; and (iii)
not purchase any ▇▇▇▇▇▇ Catfish that does not meet the quality standards
that have been consistently applied by the Seller to other vendors prior to
the date of this Agreement;
(s) not make any capital expenditures or capital additions or
improvements in excess of an aggregate of $100,000;
(t) not institute, settle or agree to settle any litigation, action or
proceeding before any court or Governmental Authority relating to the
Business, the Acquired Assets or the Assumed Liabilities (other than in the
ordinary course of business consistent with past practices, but in each
case not involving amounts in excess of $100,000);
(u) not make any material changes in policies or practices relating to
selling practices, returns, discounts or other terms of sale or accounting
therefor or in policies of employment;
(v) use best efforts to keep in full force and effect insurance,
including product liability insurance, comparable in amount and scope of
coverage to insurance now carried in connection with the Business.
4.2 Access to Information, etc.
(a) Subject to the provisions of Section 4.3 and the terms and
conditions of the Confidentiality Agreement (which shall remain in full
force and effect after the date of this Agreement), between the date of
this Agreement and the Closing Date, the Seller will (i) give the Buyer,
Trucking, the Buyer's Parent and their authorized
22
representatives reasonable access, during regular business hours upon
reasonable notice, to all offices and other facilities and books and
records of the Seller, (ii) permit the Buyer, Trucking, and the Buyer's
Parent to make such reasonable inspections of the offices, facilities,
books and records of the Seller as the Buyer, Trucking or the Buyer's
Parent may reasonably require and (iii) cause its officers to furnish the
Buyer, Trucking, and the Buyer's Parent with such financial and operating
data and other information with respect to the Business and properties of
the Seller as the Buyer, Trucking or the Buyer's Parent may from time to
time reasonably request.
(b) All access to information pursuant to Section 4.2(a) shall be
coordinated through ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. or one or more representatives that
he may from time to time designate. From the date of this Agreement, the
Buyer, Trucking, and the Buyer's Parent (and all of their respective
agents, employees, directors, officers, Subsidiaries and Affiliates) may
contact and communicate with any employees, partners, customers, suppliers,
lenders or licensors of the Seller in connection with the transactions
contemplated by this Agreement only with the prior written consent of the
Seller or the Shareholder, which consent shall not be unreasonably withheld
or delayed.
4.3 Confidentiality.
(a) All information provided or obtained under Section 4.2(a) shall be
held by the Buyer, Trucking, the Buyer's Parent, and their officers,
directors, employees, Subsidiaries and Affiliates in accordance with and
subject to the terms of the Confidentiality Agreement, and each of the
Buyer, Trucking, and the Buyer's Parent hereby agrees that the provisions
of the Confidentiality Agreement will apply to any properties, books,
records, data, documents and other information relating to the Seller or
the Business that is provided to the Buyer, Trucking, the Buyer's Parent,
or any of their advisers, officers, directors, employees or Affiliates
pursuant to this Agreement.
(b) Without limiting any obligations set forth in the Confidentiality
Agreement, the Buyer, Trucking, and the Buyer's Parent shall not, and shall
cause their officers, directors, employees, Subsidiaries and Affiliates not
to, disclose to any third party or entity in any manner whatsoever the
Confidential Information or any portion thereof (except as may be required
by Applicable Law and after compliance with this Section 4.3), without the
prior written consent of the Seller. In the event the Buyer, Trucking, the
Buyer's Parent, any of their officers, directors, employees, Subsidiaries
or Affiliates, or any Person to whom the Buyer, Trucking or the Buyer's
Parent disclose the Confidential Information become compelled by Applicable
Law to disclose the Confidential Information or any portion thereof, the
Buyer, Trucking, and the Buyer's Parent shall use reasonable efforts to
provide the Seller with prompt notice before such Confidential Information
is disclosed so that the Seller may if it so chooses seek an appropriate
protective order, injunctive relief or other appropriate relief. If
requested by the Seller, the Buyer, Trucking, and the Buyer's Parent will
exercise reasonable efforts to
23
assist the Seller in obtaining a protective order, injunctive relief, or
other appropriate relief. If in the absence of such relief, the Buyer,
Trucking, the Buyer's Parent, any of their officers, directors, employees,
Subsidiaries or Affiliates, or any Person to whom the Buyer, Trucking or
the Buyer's Parent disclose the Confidential Information become required to
disclose the Confidential Information or any portion thereof by Applicable
Law, such Person may disclose the Confidential Information without
liability hereunder, provided that such Person discloses only that portion
of the Confidential Information that it is advised by outside counsel is
required.
4.4 Reasonable Best Efforts. Each of the parties hereto agrees to use
its reasonable best efforts to take, or cause to be taken, all appropriate
action, and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make
effective the transactions contemplated by this Agreement in the most
expeditious manner practicable, including, but not limited to, the
satisfaction of all conditions to the Closing. Without limiting the
generality of the foregoing, each of the Seller, the Buyer and Trucking
shall make or cause to be made all required filings with or applications to
Governmental Authorities which are necessary to consummate the transactions
contemplated by this Agreement and will use their reasonable best efforts
to obtain all necessary Consents from applicable third parties to the
transactions contemplated hereby.
4.5 No Solicitation.
(a) During the term of this Agreement, the Seller, any of its
Affiliates (including the Shareholder), or any Person acting on their
behalf shall not (i) solicit or encourage any inquiries or proposals for,
or enter into any discussions with respect to, the acquisition of any
properties and assets held for use in connection with, necessary for the
conduct of, or otherwise material to, the Business or (ii) furnish or cause
to be furnished any non-public information concerning the Business to any
Person (other than the Buyer, Trucking, the Buyer's Parent, and their
respective Subsidiaries, Affiliates, agents and representatives), other
than
(A) in the ordinary course of business or
(B) pursuant to Applicable Law and after prior written notice to
the Buyer, Trucking, and the Buyer's Parent.
(b) During the term of this Agreement, the Seller, the Shareholder, or
any Person acting on their behalf shall not sell, transfer or otherwise
dispose of, grant any option or proxy to any Person with respect to, create
any Lien upon, or transfer any interest in, any of the Seller's properties
and assets, other than in the ordinary course of business consistent with
prior practice and this Agreement.
24
4.6 Public Announcements. So long as this Agreement is in effect, the
parties hereto agree that, except as may be otherwise required by Applicable
Law, any press release or other public announcement or statement, whether
written or oral, with respect to this Agreement or the transactions contemplated
hereby shall be subject to mutual agreement and consent prior to the
dissemination thereof, provided, however, that nothing in this Section 4.6 shall
prevent the Seller from notifying its employees, directors, accountants,
attorneys, bankers or consultants of the execution and delivery of this
Agreement. Except to the extent required by Applicable Law, the parties hereto
shall agree to the timing and the text of the initial press release announcing
the execution and delivery of this Agreement; provided, however, that nothing in
this Section 4.6 shall prevent the Buyer's Parent from filing with the
Securities and Exchange Commission a report on Form 8-K with respect to this
Agreement upon its execution and after the Closing.
4.7 Financial Statements. Until the Closing, on or before the 21st day
of each month, the Seller shall deliver to the Buyer, Trucking, and the Buyer's
Parent unaudited financial statements of the Seller as at and for the monthly
period ending the last day of the preceding month (the "Subsequent Monthly
Financial Statements"), which shall include a balance sheet and statement of
income. At the time that the Subsequent Monthly Financial Statements are
delivered to the Buyer, Trucking, and the Buyer's Parent, the Seller shall by
such delivery be deemed to have made to the Buyer, Trucking, and the Buyer's
Parent with respect to such Subsequent Monthly Financial Statements the
warranties set forth in Section 2.4.
4.8 Affiliate Transactions.
(a) Between the date of this Agreement and the Closing Date, without
the prior written consent of the Buyer, Trucking or the Buyer's Parent, the
Seller shall not enter into any agreements or arrangements, or modify the
terms or conditions of any existing agreements or arrangement, with (a) the
Shareholder, his spouse or widow, children or any trust established
primarily for the benefit of any such Persons; (b) any of the directors or
officers of the Seller; or (c) any Affiliate of one or any group of the
foregoing Persons; provided, however, that the Seller may agree to pay,
after the Closing, severance or change of control bonuses payable out of
the proceeds of the Purchase Price to any Key Employees.
(b) Notwithstanding anything in Section 4.8(a) to the contrary, at or
prior to the Closing, the Seller may pay or distribute to ▇▇. ▇▇▇▇▇▇, in
addition to any other wages or salary to which ▇▇. ▇▇▇▇▇▇ may be entitled
in the ordinary course, an amount not to exceed $2,000,000.
4.9 Consultation. From and after the Closing, the Buyer and Trucking
will retain ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. as president of the Buyer and Trucking, for a
period of time
25
and on the terms and subject to the conditions set forth in an employment and
non-competition agreement (the "Employment and Non-Competition Agreement") to be
entered into by ▇▇. ▇▇▇▇▇▇ at the Closing, substantially in the form attached
hereto as Exhibit D.
4.10 Key Employees.
(a) Effective as of the Closing Date, the Buyer or Trucking shall
offer employment to each Key Employee for at least the 18-month period
following the Closing Date (the "Retention Period"), at a salary (including
incentive compensation and fringe benefits) not less than such Key
Employee's salary (including incentive compensation and fringe benefits)
for the twelve months ending as of the month most recently ended prior to
the date of this Agreement, as set forth on Schedule 4.10(a). Effective as
of the Closing Date, the Buyer or Trucking shall assume the liability of
the Seller in respect of those Key Employees who accept such offers of
employment (the "Transferred Key Employees") for accrued but unpaid
salaries, wages, vacation and sick pay and 2002 incentive compensation.
Notwithstanding anything in this Agreement to the contrary, the Seller
shall remain responsible for payment of (i) any and all severance, change
in control or other similar compensation or benefits which are or may
become payable in connection with the consummation of the transactions
contemplated by this Agreement and (ii) any liabilities to or in respect of
Key Employees who do not become Transferred Key Employees accruing after
the Closing Date.
(b) In the event that, during the Retention Period, the Buyer or
Trucking terminates the employment of a Transferred Key Employee without
cause or a Transferred Employee resigns following (i) a reduction in
salary, fringe benefits or incentive compensation or (ii) a requirement
that such Transferred Key Employee relocate out of ▇▇▇▇ County, Alabama,
the Buyer or Trucking, as the case may be, will pay such Transferred Key
Employee a severance benefit equal to two times the total wages reflected
on the Transferred Key Employee's IRS Forms W-2 for the twelve months
immediately preceding the Closing (determined by prorating any amount shown
on such forms ratably over the employment period covered by such forms),
multiplied by a fraction the numerator of which is 24 minus the number of
months the Transferred Key Employee was employed by the Buyer or Trucking,
as the case may be, and the denominator of which is 24.
(c) After the expiration of the Retention Period, any Transferred Key
Employee may remain employed by the Buyer or Trucking, as the case may be,
if such employment is mutually agreed to by the Transferred Key Employee
and the Buyer or Trucking, in which case the Buyer or Trucking, as the case
may be, will provide the Transferred Key Employee with severance benefits
equivalent to the severance benefits available to other similarly situated
employees of the Buyer or Trucking, as the case may be.
26
(d) Notwithstanding anything in this Agreement to the contrary, the
foregoing paragraphs (a), (b) and (c) shall not apply to any Key Employee
who shall have executed at or prior to the Closing an employment agreement
(an "Alternative Employment Agreement"), substantially in the form attached
hereto as Exhibit E, setting forth different terms and conditions of
employment and expressly providing that paragraphs (a), (b) and (c) of this
Section shall not apply to such Key Employee. In the event that a Key
Employee chooses not to enter into an Alternative Employment Agreement, the
Buyer and Trucking agree to offer the Key Employees the opportunity to
execute an employment agreement with the Buyer or Trucking, containing
provisions inclusive of provisions of the foregoing paragraphs (a), (b) and
(c) (a "Conforming Employment Agreement").
4.11 Other Employee Matters.
(a) The Buyer or Trucking shall offer employment, effective as of the
Closing Date and contingent upon the Closing, to those employees of the
Seller employed in the operations of the Business who, immediately prior to
the Closing Date, are employed by the Seller and on active duty, including
those on vacation or short-term sick leave or those who are disabled but
receiving wages, salary, or disability benefits from the Seller, and whom
the Buyer or Trucking is legally permitted to hire. Those employees
(including the Key Employees) who accept such offers of employment
effective as of the Closing Date shall be referred to herein as the
"Transferred Employees." Effective as of the Closing Date, the Buyer or
Trucking shall assume the liability of the Seller in respect of the
Transferred Employees for accrued but unpaid salaries, wages, vacation and
sick pay and incentive compensation for the fiscal year in which the
Closing occurs.
(b) Notwithstanding anything in this Agreement to the contrary, the
Seller shall remain responsible for payment of (i) any and all severance,
change in control or other similar compensation or benefits which are or
may become payable in connection with the consummation of the transactions
contemplated by this Agreement and (ii) any liabilities to or in respect of
employees who do not become Transferred Employees after having been offered
employment by the Buyer or Trucking in accordance with the terms hereof,
accruing after the Closing Date.
(c) Effective as of the Closing Date and contingent upon the Closing,
the Buyer or Trucking may, but shall not be required to, assume sponsorship
of the Seller Plans. In the case of those Seller Plans for which the Buyer
or Trucking does not so assume sponsorship effective as of the Closing
Date, the Transferred Employees shall cease to participate in such Seller
Plans and the Buyer or Trucking shall permit such Transferred Employees to
participate in or be eligible to participate in employee benefit plans or
arrangements that are maintained by the Buyer or Trucking, as the case may
be, and that shall be comparable in all material respects to those provided
by the Seller as of
27
the date hereof. Transferred Employees shall receive credit for all
purposes (including for purposes of eligibility and vesting provisions and
provisions relating to waiting periods) under the employee benefit plans
and programs of the Buyer or Trucking, as the case may be, for such
Transferred Employees' service with the Seller, and shall receive credit
for all deductibles and co-payments incurred under the Seller's health or
other welfare Plans before the Closing Date. In the event the Buyer or
Trucking, as the case may be, sponsors a tax-deferred savings plan (the
"Buyer's 401(k) Plan"), (i) all eligible Transferred Employees who were
participants in the Seller's tax-deferred savings plan or plans (the
"Seller's 401(k) Plan") on the Closing Date shall commence participation in
the Buyer's 401(k) Plan as of the Closing Date; and (ii) as soon as
practicable following the expiration of a 30-day period following the date
of filing of any required notices with the IRS by both the Seller and the
Buyer or Trucking, the Seller shall cause the transfer from the Seller's
401(k) Plan to the Buyer's 401(k) Plan of the value of the account balances
of the Transferred Employees in cash on the date of transfer. The Seller
will give all Transferred Employees who are ineligible to participate in
the Buyer's 401(k) Plan the opportunity to participate in the deferred
compensation plan of the Buyer's Parent.
(d) At the Closing, the Buyer or Trucking shall pay to all Transferred
Employees their accrued 2002 incentive compensation, to the extent not
previously paid by the Seller, in the amounts set forth on Schedule
4.11(d).
(e) The Buyer, Trucking, and the Seller shall (i) treat the Buyer,
Trucking, or any Affiliate of the Buyer or Trucking becoming an employer of
Transferred Employees as a "successor employer" and the Seller as a
"predecessor," within the meaning of sections 3121(a)(1) and 3306(b)(1) of
the Code, with respect to Transferred Employees to be employed by the
Buyer, Trucking, or an Affiliate of the Buyer or Trucking for purposes of
Taxes imposed under the United States Federal Unemployment Tax Act ("FUTA")
or the United States Federal Insurance Contributions Act ("FICA"), and (ii)
cooperate with each other to avoid the filing of more than one IRS Form W-2
with respect to each Transferred Employee for the calendar year in which
the Closing Date occurs. The parties agree to report wages under Section 4
of Rev. Proc. 96-60. The parties shall cooperate to provide one another
Forms ▇-▇, ▇-▇, or other withholding forms, wage records, and such other
information as any party may reasonably require to meet its filing
obligations with respect to wages paid during 2002. The Buyer or Trucking
shall make available to the Seller all payroll, tax, or other information
acquired by the Buyer or Trucking from the Seller to allow the Seller to
meet its filing, payment, and audit requirements in a timely manner. The
Buyer and Trucking shall prepare all Forms W-2 and payroll returns for
2002, or any portion thereof, that come due after the Closing, as limited
agents for the Seller to the extent such reports reflect activities of the
Seller prior to the Closing. All payroll Taxes coming due after the Closing
shall be paid by the Buyer or Trucking.
28
The parties shall further cooperate in the filing of Forms 940 with
respect to FUTA and similar forms with respect to state unemployment
compensation. In particular, all such forms that come due after the Closing
shall be prepared by the Buyer, but shall be filed in the name of the Buyer,
Trucking, or the Seller, as appropriate, such that the Seller shall report wages
paid by the Seller prior to the Closing, and the Buyer or Trucking shall report
wages paid by the Buyer or Trucking after the Closing. However, should an
election be available under Applicable Law to combine such filings, the Buyer
may elect to do so. To the extent permissible under Applicable Law, the Buyer
and Trucking shall be entitled to a credit for FUTA and state unemployment
compensation premiums paid by the Seller. With respect to those returns
reflecting wages paid by the Seller, the Buyer is authorized to prepare such
returns as limited agent for the Seller.
To the extent permitted under applicable state unemployment
compensation laws, the Buyer is entitled to assume the unemployment compensation
contribution rate for the Seller, and the Seller shall cooperate with the Buyer
in providing appropriate records and information to the Buyer to facilitate the
foregoing.
The Buyer, Trucking, and the Buyer's Parent shall defend, indemnify,
and hold the Seller and the Shareholder harmless from and against any and all
claims, interest, or penalties arising out of errors or omissions of the Buyer,
Trucking or the Buyer's Parent in preparing Tax returns, Forms W-2, or filing
such or related documentation with the IRS or the various departments of revenue
of the affected states.
Trucking hereby appoints the Buyer as its agent with respect to the
preparation of payroll Tax returns, filing of Forms W-2, and the preparation of
payroll checks, and agrees to file appropriate state and federal forms so
notifying the Tax authorities, including IRS Form 2678. With respect to the time
period from the Closing Date through December 31, 2002, Trucking authorizes the
Buyer, as its limited agent, to file FICA Form 941, Forms W-2, and the like in
the name of the Seller.
4.12 Releases of Personal Guarantees. The Buyer, Trucking, and the
Buyer's Parent shall use commercially reasonable efforts to cause the
Shareholder to be released from liability under all personal guarantees issued
by the Shareholder in connection with the Seller's indebtedness for borrowed
money to be assumed by the Buyer or Trucking under this Agreement (it being
understood that such efforts shall not include the modification of the terms
thereof in a fashion adverse to the Buyer or Trucking).
4.13 Tax Matters.
(a) The Buyer or Trucking shall pay or cause to be paid all Taxes
relating to the Acquired Assets and the Assumed Liabilities, measured by
net or taxable income for any taxable period, or portion thereof, beginning
after the Closing Date. The
29
Seller shall pay or cause to be paid all Taxes of the Seller or the
Business that constitute Excluded Liabilities.
(b) With respect to any employee of the Business to whom a sufficient
amount of wages is paid by the Seller in the 2002 fiscal year of the Seller
to claim the maximum per-employee credit under section 1400H of the Code,
the Buyer and Trucking will not claim any portion of such credit for the
2002 fiscal year. With respect to any other employee of the Business to
whom wages are paid by the Seller during the 2002 fiscal year of the
Seller, the Seller may claim the maximum per-employee credit permitted to
be claimed by the Seller under section 1400H of the Code with respect to
such wages paid by the Seller. If the Buyer or Trucking pays any wages to
an employee of the Seller who becomes a Transferred Employee during 2002,
and if such employee has been paid less than $10,000 in wages by the Seller
in 2002, then the Buyer or Trucking, as the case may be, may claim the
credit under section 1400H of the Code on the lesser or (i) the amount of
wages paid by the Buyer or Trucking, as the case may be, during the 2002
fiscal year of the Seller or (ii) $10,000 minus the amount of wages paid by
the Seller to such employee during the 2002 fiscal year of the Seller.
(c) The Seller shall pay or cause to be paid out of the proceeds of
the transactions contemplated hereby all excise, sales, use, value added,
transfer (including real property transfer), transfer gains, gross
receipts, stamp, documentary, registration, conveyance, license and other
similar taxes, together with any interest, additions or penalties with
respect thereto and any interest in respect of such additions or penalties
arising out of or in connection with or attributable to the transactions
contemplated by this Agreement ("Transfer Taxes"). Notwithstanding the
foregoing, the Buyer or Trucking shall pay or cause to be paid (i) all
filing and recording Taxes and fees with respect to any deed conveying any
Real Estate to the Buyer or Trucking, (ii) any sales or use Taxes with
respect to any titled vehicles that are being purchased under this
Agreement as part of the Acquired Assets and (iii) any Taxes or fees
associated with the Buyer's or Trucking's financing of the purchase of the
Acquired Assets under this Agreement. The Seller, the Buyer, and Trucking
shall cooperate with each other in minimizing Transfer Taxes, including by
providing each other all applicable exemption certificates with respect to
such Transfer Taxes available under Applicable Law.
4.14 Insurance.
(a) From and after the Closing Date, the Buyer and Trucking shall, at
their option, take one of the following actions: (i) continue all "claims
made" insurance policies (including products liability insurance) held by
the Seller as of the date hereof and naming the Seller and ▇▇. ▇▇▇ ▇.
▇▇▇▇▇▇, ▇▇. as an insured for so long as ▇▇. ▇▇▇▇▇▇ is employed by the
Buyer or Trucking pursuant to Section 4.9 and for the relevant period of
limitations thereafter; (ii) obtain appropriate "claims tail" policies
providing continuing coverage for the Seller and ▇▇. ▇▇▇▇▇▇ for such
period; or (iii) obtain or
30
continue its own policies insuring such risks naming the Seller and ▇▇.
▇▇▇▇▇▇ as an additional named insured, covering acts occurring within two
years prior to the Closing Date, for a period at least equal to the
relevant period of limitations, with coverage limits not lower than the
limits and deductibles under the policies insuring such risks that are held
by the Seller as of the Closing Date. The Buyer and Trucking shall, at the
request of ▇▇. ▇▇▇▇▇▇, from time to time provide certificates issued by the
insurer, certifying that insurance policies satisfying these requirements
have been obtained or continued by the Buyer and Trucking, and that 30
days' advance written notice to ▇▇. ▇▇▇▇▇▇ is required to terminate such
insurance policies.
(b) Notwithstanding the foregoing, the Seller shall, at the sole cost
and expense of the Seller, at the Seller's option, either:
(i) (A) obtain "claims tail" insurance coverage, effective from
the Closing Date and for a period of two years thereafter,
under the Seller's employment practices liability insurance
policy existing on the date hereof, (B) increase the
coverage limit under such policy from $3,000,000 to
$6,000,000 effective as of the Closing Date, either by
procuring an additional policy or by reimbursing the Buyer
or Trucking for the cost of additional coverage to its
insurance; and (C) add the Buyer and Trucking as additional
named insureds under such insurance policy (it being
understood that the Seller shall provide to the Buyer a
certificate issued by the insurer, certifying that an
insurance policy that satisfies these requirements has been
obtained by the Seller); or
(ii) pay the incremental insurance premium resulting from causing
the Buyer's existing employment practices liability
insurance policy to be endorsed to cover such prior acts
occurring within two years prior to the Closing Date as are
within the scope of coverage under the Seller's existing
employment practices liability insurance policy for acts
occurring with respect to the Seller prior to the Closing
Date.
4.15 Use of Business Name.
(a) After the Closing, the Seller and the Shareholder will not,
directly or indirectly, use or do business, or allow any Affiliate to use
or do business, or assist any third party in using or doing business, under
the name and ▇▇▇▇ "Southern Pride" or
31
"Southern Pride Catfish" (or any other name confusingly similar to such
names and marks).
(b) The Seller shall provide such written consents to the formation of
the Buyer and Trucking as may be required for the Buyer and Trucking to be
formed under such names and to qualify to do business in the State of
Alabama or any other states in which such qualification is necessary. As
soon as practicable after the Closing, the Seller shall amend its Articles
of Incorporation to change its name to a name not confusingly similar to
Southern Pride Catfish. In the event the Closing does not occur or this
Agreement is terminated for any reason, the Buyer shall, as soon as
practicable after such termination, either change the names of the Buyer
and Trucking to names not confusingly similar to the name of the Seller, or
shall cause the Buyer and Trucking to be dissolved and liquidated.
4.16 Non-Competition. The Seller agrees that, for the five-year period
following the Closing, neither the Seller nor the Seller's Affiliates,
successors or assigns will be in Competition with the Business as now conducted
by the Seller.
4.17 Notice of Proceedings. Each party will promptly notify the other
in writing upon (a) becoming aware of any order or decree or any complaint
seeking an order or decree (or any threat to seek any of the foregoing)
restraining or enjoining the consummation of the transactions contemplated
hereby or (b) receiving any notice from any court or Governmental Authority of
its intention to (i) commence an investigation into, or commence a suit or
proceeding to restrain or enjoin, the consummation of the transactions
contemplated hereby or (ii) nullify or render ineffective the transactions
contemplated hereby if such transactions are consummated.
4.18 Further Assurances. Following the Closing, the Seller shall, from
time to time, execute and deliver such additional instruments, documents,
conveyances or assurances and take such other actions as shall be necessary, or
otherwise reasonably requested by the Buyer, Trucking or the Buyer's Parent, to
confirm and assure the rights and obligations provided for in this Agreement and
render effective the consummation of the transactions contemplated hereby.
4.19 Right to Open Mail, etc.
(a) Following the Closing, the Buyer and Trucking shall be entitled to
receive mail addressed to the Seller at the Seller's post office box or
business address, and to open such mail, and to read the contents thereof,
and to the extent that checks or other funds are received with respect to
accounts receivable or other obligations acquired by the Buyer or Trucking,
to endorse and deposit the same in accounts of the Buyer or Trucking, as
appropriate. The Seller agrees to issue such powers of attorney or other
authorizations as may be useful or necessary to permit the appropriate
banks to accept
32
such endorsements. Any mail that is clearly personal mail of the
Shareholder or that clearly relates to the Excluded Assets, Excluded
Liabilities, or otherwise clearly does not relate to the Acquired Assets or
the Business, shall be immediately provided by the Buyer or Trucking to the
Shareholder without opening. If, upon opening any mail, it appears to be
personal mail of the Shareholder or mail that relates to the Excluded
Assets, Excluded Liabilities, or otherwise does not relate to the Acquired
Assets or the Business, the Buyer or Trucking shall provide such mail
promptly to the Seller or the Shareholder, as appropriate.
(b) To facilitate the transition of operations from the Seller to the
Buyer and Trucking, the Seller hereby authorizes the Buyer and Trucking to
use the checks printed on the Seller's check stock bearing the name of the
Seller and in form to be drawn on existing accounts of the Seller until
January 31, 2003, provided that the Buyer and Trucking shall proceed with
all due diligence to establish their own accounts and acquire their own
check stock and to transfer all funds held in the Seller's accounts being
hereby sold, to accounts of the Buyer or Trucking, as appropriate. The
Buyer and Trucking shall indemnify, defend, and hold the Seller and the
Shareholder harmless from any liabilities arising from the Buyer's or
Trucking's use of the accounts and check stock of the Seller, which
indemnity, defense, and holding harmless shall not be limited as provided
in ARTICLE VII. The Seller hereby authorizes the Buyer and Trucking, as its
limited agents, to draw checks on the bank accounts listed on Schedule
4.19, to make deposits therein, to endorse checks for deposit therein, and
to draw checks for the making of payroll, the payment of payables, and
otherwise in pursuit of the Business acquired by the Buyer and Trucking.
Promptly upon the obtaining of check stock for the Buyer and Trucking and
the establishment of appropriate bank accounts for the Buyer and Trucking,
the Buyer and Trucking shall return all unused checks and check stock to
the Seller, and the Seller shall be authorized to close the foregoing bank
accounts. Those persons presently authorized to draw checks on the bank
accounts listed on Schedule 4.19 shall remain authorized to do so after the
Closing. However, at the request of the Buyer or Trucking, as appropriate,
the Seller shall execute new signature cards changing the persons
authorized to sign on such accounts, or otherwise modifying the form of
signature to facilitate the transition.
ARTICLE V
CONDITIONS PRECEDENT
5.1 Conditions to Obligations of Each Party. The obligations of the
parties to consummate the transactions contemplated hereby shall be subject to
the satisfaction on or before the Closing Date of the following conditions:
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(a) All necessary or appropriate Governmental Approvals shall have
been obtained and shall be in full force and effect.
(b) Any applicable waiting period required by the HSR Act, if any,
shall have expired or been terminated.
(c) There shall not have been issued and be in effect any order,
injunction, decree or judgment of or in any court or tribunal of competent
jurisdiction restraining, enjoining or otherwise prohibiting consummation
of the transactions contemplated hereby.
(d) The Exhibits and the Disclosure Schedules shall have been
delivered by the Seller to the Buyer and Trucking or by the Buyer and
Trucking to the Seller, as the case may be, in form and substance
reasonably satisfactory to the Seller, the Buyer and Trucking.
(e) The Buyer and the Shareholder shall have entered into commercial
arrangements governing the purchase and sale of catfish following the
Closing, which arrangement shall be satisfactory to the Buyer and the
Shareholder.
5.2 Conditions to the Obligations of the Buyer, Trucking, and the
Buyer's Parent. The obligations of the Buyer, Trucking, and the Buyer's Parent
to consummate the transactions contemplated hereby shall be subject to the
satisfaction (or waiver by the Buyer), on or before the Closing Date, of the
following additional conditions:
(a) The warranties of the Seller and the Shareholder contained in this
Agreement shall be true and correct in all material respects as of the
Closing Date with the same effect as if made on and as of the Closing Date
(except to the extent such warranties speak as of a certain date, in which
case such warranties shall be true and correct as of that date), and at the
Closing each of the Seller and the Shareholder shall have delivered to the
Buyer and Trucking a certificate to that effect, dated the Closing Date and
signed by duly authorized officers of the Seller or by the Shareholder, as
the case may be.
(b) Subject to the provisions of Section 4.2, (i) the Buyer, Trucking,
and their accountants, legal counsel and other authorized representatives
shall have been given reasonable access during normal business hours to and
been permitted to review the properties, books and records of the Seller
and such other information as shall have been reasonably requested by and
provided to the Buyer or Trucking (including site inspection, financial
review, legal review of Contracts and other documentation, environmental
audit, review of such employee information as the Buyer or Trucking deems
necessary, and satisfactory interviews with any partners, employees,
customers,
34
suppliers, lenders and licensors of the Seller), so that the Buyer and
Trucking may have the opportunity to make such further due diligence
investigation as it shall desire to make of the Seller and the Business,
and (ii) the results of such due diligence investigation shall be
reasonably satisfactory to the Buyer and Trucking.
(c) The Buyer and Trucking shall have obtained funds from the bank
lending group of the Buyer's Parent, sufficient to enable the Buyer and
Trucking to consummate the transactions contemplated by this Agreement on
such terms as are reasonably satisfactory to the Buyer and Trucking.
(d) The Seller shall have executed and delivered to the Buyer and
Trucking a ▇▇▇▇ of Sale in form and substance reasonably satisfactory to
the Buyer and Trucking, and such other deeds, assignments and instruments
of transfer and assignment as the Buyer or Trucking may reasonably request,
transferring to the Buyer or Trucking the Acquired Assets free and clear of
all Liens other than Permitted Liens.
(e) Each of the covenants and agreements hereunder of the Seller or
the Shareholder to be performed on or before the Closing Date pursuant to
the terms of this Agreement shall have been duly performed in all material
respects on or before the Closing Date, and at the Closing each of the
Seller and the Shareholder shall have delivered to the Buyer and Trucking a
certificate to that effect, dated the Closing Date and signed by duly
authorized officers of the Seller or by the Shareholder, as the case may
be.
(f) The Seller shall have obtained and shall have delivered to the
Buyer and Trucking copies of all Consents set forth on Schedule 2.2(b).
(g) No event, occurrence, fact, condition, change, development or
effect shall have occurred, exist or come to exist since June 30, 2002
that, individually or in the aggregate, has constituted or resulted in, or
could reasonably be expected to constitute or result in, a Material Adverse
Effect.
(h) There shall be no Material Adverse Litigation.
(i) The Employment and Non-Competition Agreement has been executed and
delivered to the Buyer, Trucking, and the Buyer's Parent by ▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇.
(j) The Buyer and Trucking shall have received affidavits of the
Seller, dated the Closing Date and sworn to under penalty of perjury,
setting forth the name, address and federal tax identification number of
the Seller and stating that the Seller is not a "foreign person" within the
meaning of section 1445 of the Code.
35
(k) Each of the Key Employees shall have entered into a Conforming
Employment Agreement or an Alternative Employment Agreement with the Buyer
or Trucking, as contemplated by Section 4.10(d).
5.3 Conditions to the Obligations of the Seller. The obligations of
the Seller and the Shareholder to effect the transactions contemplated hereby
shall be subject to the satisfaction (or waiver by the Seller), on or prior to
the Closing Date, of the following additional conditions:
(a) The warranties of the Buyer, Trucking, and the Buyer's Parent
contained in this Agreement shall be true and correct in all material
respects as of the Closing Date with the same effect as if made on and as
of the Closing Date (except to the extent such warranties speak as of a
certain date, in which case such warranties shall be true and correct as of
that date), and at the Closing each of the Buyer, Trucking, and the Buyer's
Parent shall have delivered to the Seller a certificate to that effect,
dated the Closing Date and signed by duly authorized officers of the Buyer,
Trucking, and the Buyer's Parent.
(b) Each of the covenants and agreements hereunder of the Buyer,
Trucking, and the Buyer's Parent to be performed on or before the Closing
pursuant to the terms of this Agreement shall have been duly performed in
all material respects on or before the Closing, and at the Closing the
Buyer, Trucking, and the Buyer's Parent shall have delivered to the Seller
a certificate to that effect, dated the Closing Date and signed by duly
authorized officers of the Buyer, Trucking, and the Buyer's Parent.
(c) The Seller and the Shareholder shall have received from the Buyer
and Trucking the Assumption Agreement.
(d) Releases shall have been executed in form and substance reasonably
satisfactory to the Shareholder, whereby the Shareholder has been released
from any personal guarantees of indebtedness for borrowed money being
assumed by the Buyer or Trucking under this Agreement.
ARTICLE VI
TERMINATION
6.1 Termination. This Agreement may be terminated before the Closing
Date:
(a) by the written agreement of the Seller, the Buyer and Trucking;
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(b) by either the Buyer, Trucking or the Seller by written notice to
the other parties if the transactions contemplated hereby shall not have
been consummated pursuant hereto by 5:00 p.m. New York City time on January
15, 2003, unless such date shall be extended by the mutual written consent
of the Seller, the Buyer, and Trucking;
(c) by the Buyer or Trucking by written notice to the Seller if any of
the conditions set forth in Section 5.1 or Section 5.2 shall not have been,
or if it becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. New York City time on January 15, 2003, unless such
failure shall be due to the failure of the Buyer, Trucking or the Buyer's
Parent to perform or comply with any of the covenants, agreements or
conditions hereof to be performed or complied with by it on or prior to the
Closing; or
(d) by the Seller by written notice to the Buyer and Trucking if any
of the conditions set forth in Section 5.1 or Section 5.3 shall not have
been, or if it becomes apparent that any of such conditions will not be,
fulfilled by 5:00 p.m. New York City time on January 15, 2003, unless such
failure shall be due to the failure of the Seller or the Shareholder to
perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it on or prior to the Closing.
6.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to the provisions of Section 6.1, this Agreement shall become
void and have no effect, without any liability to any Person in respect hereof
or of the transactions contemplated hereby on the part of any party hereto, or
any of its directors, officers, employees, agents, consultants, representatives,
advisers, stockholders or Affiliates, provided, however, that the
Confidentiality Agreement, this Section 6.2, Section 8.3, the public
announcement provisions of Section 4.6, and the confidentiality provisions of
Section 4.3 shall survive such termination and shall remain in full force and
effect.
ARTICLE VII
INDEMNIFICATION
7.1 Indemnification by the Seller and the Shareholder.
(a) The Seller and the Shareholder, jointly and severally, covenant
and agree to defend, indemnify and hold harmless the Buyer, Trucking, the
Buyer's Parent, and their respective officers, directors, employees,
agents, advisers, representatives, Subsidiaries and Affiliates
(collectively, the "Buyer Indemnitees," it being understood
37
that no Buyer Indemnitee who is an officer, director, employee, agent,
adviser, representative, Subsidiary or Affiliate of the Buyer, Trucking or
the Buyer's Parent prior to the Closing shall lose such Buyer Indemnitee's
entitlement to indemnity as a result of loss of status as such after the
Closing) from and against, and pay or reimburse the Buyer Indemnitees for,
any and all claims, liabilities, obligations, losses, fines, costs,
royalties, proceedings, deficiencies or damages (whether absolute, accrued,
conditional or otherwise and whether or not resulting from third party
claims), including out-of-pocket expenses and reasonable attorneys' and
accountants' fees incurred in the investigation or defense of any of the
same or in asserting any of their respective rights hereunder
(collectively, "Losses," except that the amount of any "Losses" shall be
net of (x) any liability insurance proceeds paid to the Indemnified Party
(as defined herein) under one or more insurance policies on which the
Indemnified Party is an insured, or (y) any liability insurance proceeds
under one or more such insurance policies that reduce a third party claim
against the Indemnified Party), resulting from or arising out of:
(i) any inaccuracy of any warranty when made or deemed made by
the Seller or the Shareholder under this Agreement or in
connection herewith;
(ii) any failure of the Seller of the Shareholder (A) to perform
any covenant or agreement hereunder or (B) other than as
described in Section 7.1(a)(i), to fulfill any other
obligation in respect hereof;
(iii) any deductibles under the EPLI Policy; or
(iv) the Excluded Liabilities or the Excluded Assets.
(b) Other than with respect to any Losses (w) resulting from or
arising out of an intentionally false warranty of the Seller or the
Shareholder, (x) directly relating to any Excluded Liability, (y) arising
primarily with respect to any Excluded Assets or (z) resulting from or
arising out of liabilities not related to the Business or the Acquired
Assets, the obligation of the Seller and the Shareholder to indemnify the
Buyer Indemnitees under Section 7.1(a) shall be subject to all of the
following limitations (it being understood that the amount of any
indemnification made by the Seller or the Shareholder with respect to any
such Losses described in clauses (w), (x), (y) or (z) shall not count
towards the Claim Limit described in subparagraph (ii) below):
(i) the Seller and the Shareholder shall not be required to
make any indemnification until the aggregate amount of
Losses resulting from or arising out of the matters
referred to in Section 7.1(a) exceeds $100,000, and then
only to the extent such Losses exceed $100,000; and
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(ii) the aggregate amount the Seller and the Shareholder shall
be obligated to indemnify and hold harmless all the Buyer
Indemnitees shall not exceed $1,000,000 (the "Claim
Limit").
(c) The Seller or the Shareholder shall not be required to make any
indemnification under Section 7.1(a) in excess of the Purchase Price in the
aggregate.
7.2 Indemnification by the Buyer, Trucking, and the Buyer's Parent.
(a) The Buyer, Trucking, and the Buyer's Parent, jointly and
severally, covenant and agree to defend, indemnify and hold harmless the
Seller, the Shareholder, and any of their respective officers, directors,
employees, agents, advisers, representatives and Affiliates (collectively,
the "Seller Indemnitees," it being understood that no Seller Indemnitee who
is an officer, director, employee, agent, adviser, representative,
Subsidiary or Affiliate of the Seller prior to the Closing shall lose such
Seller Indemnitee's entitlement to indemnity as a result of loss of status
as such after the Closing) from any and all Losses resulting from or
arising out of:
(i) any inaccuracy of any warranty when made or deemed made by
the Buyer, Trucking or the Buyer's Parent under this
Agreement or in connection herewith;
(ii) any failure of the Buyer, Trucking or the Buyer's Parent to
perform any covenant or agreement hereunder or fulfill any
other obligation in respect hereof, other than an Assumed
Liability;
(iii) any Assumed Liabilities; or
(iv) the operation of the Business by the Buyer or Trucking, or
the ownership, operation or use of the Acquired Assets by
the Buyer or Trucking following the Closing Date,
except, in the case of clauses (iii) and (iv), to the extent such Losses
constitute Losses for which the Seller or the Shareholder is required (or,
in the absence of the limitations set forth in Section 7.1(b) and (c) would
be required) to indemnify the Buyer Indemnitees under Section 7.1(a).
(b) Other than with respect to any Losses (x) resulting from or
arising out of an intentionally false warranty of the Buyer, Trucking or
the Buyer's Parent, (y) directly relating to any Assumed Liabilities, or
(z) resulting from or arising out of the operation of the Business or use
of the Acquired Assets after the Closing, the obligation of the Buyer,
Trucking, and the Buyer's Parent to indemnify the Seller Indemnitees under
39
Section 7.2(a) shall be subject to all of the following limitations (it
being understood that the amount of any indemnification made by the Buyer,
Trucking or the Buyer's Parent with respect to any such Losses described in
clauses (x), (y) or (z) shall not count towards the Claim Limit described
in subparagraph (ii) below):
(i) the Buyer, Trucking, and the Buyer's Parent shall not be
required to make any indemnification until the aggregate
amount of Losses resulting from or arising out of the
matters referred to in Section 7.2(b) exceeds $100,000, and
then only to the extent such Losses exceed $100,000; and
(ii) the aggregate amount for which the Buyer, Trucking, and the
Buyer's Parent shall be obligated to indemnify and hold
harmless all the Seller Indemnitees shall not exceed the
Claim Limit.
7.3 Indemnification Procedures for Third Party Claims.
(a) If a third party asserts a claim against a party entitled to
indemnification with respect to such claim under this Agreement
("Indemnified Party"), the Indemnified Party shall give notice to the party
required to provide indemnification ("Indemnifying Party") promptly after
the Indemnified Party has actual Knowledge (without any obligation to
conduct due inquiry) of the claim as to which indemnity may be sought, and
the Indemnified Party shall permit the Indemnifying Party (at the
Indemnifying Party's expense) to assume the defense of the claim or
litigation resulting from it at the sole cost and expense of the
Indemnifying Party. In such a case, the Indemnifying Party may select
counsel of its choosing, who shall be lead counsel and shall have control
of any litigation, subject to the terms of this Section 7.3; provided,
however, that the Indemnified Party may continue to participate, subject to
the remaining terms of this Section 7.3, by counsel of the Indemnified
Party's choosing, provided that counsel to the Indemnified Party shall be
at the sole cost and expense of the Indemnified Party.
(b) No Indemnifying Party, in defending such a claim or litigation,
shall, except with the Indemnified Party's prior written consent (not to be
unreasonably withheld), consent to entry of judgment or enter into a
settlement that provides for injunctive or other non-monetary relief
affecting the Indemnified Party or that does not include as an
unconditional term each claimant or plaintiff releasing the Indemnified
Party from all liability with respect to the claim or litigation.
(c) If the Indemnifying Party does not accept the defense of a matter
as provided in this Section 7.3, the Indemnified Party may defend against
the claim and,
40
with the Indemnifying Party's prior written consent (not to be unreasonably
withheld), settle or agree to pay the claim.
(d) The Parties will cooperate in defending claims or litigation
subject to this Section 7.3 and make their records available to the others
in connection with the defense.
(e) If an Indemnified Party recovers an amount under this ARTICLE VII
in respect of Losses, the Indemnifying Party or Parties shall be
subrogated, to the extent of that recovery, to the Indemnified Party's
rights against third parties (except an insurer providing insurance
coverage under one of its policies) with respect to those Losses.
(f) If an Indemnified Party is insured with respect to a Loss, and if
the insurer provides counsel with respect to a claim arising out of the
Loss, such counsel shall have control of the defense of such claim in
preference to counsel for the Indemnifying Party, provided that the insurer
acknowledges that the insurer has no subrogation or similar claim against
the Indemnifying Party. Notwithstanding the foregoing, if the amount of
such Loss could reasonably be expected to exceed the amount of available
insurance coverage, counsel for the Indemnifying Party shall be permitted
to fully participate in the defense of the claim, and such counsel and
counsel selected by the insurer shall fully cooperate and coordinate their
efforts in defending such claim.
7.4 Time in Which to Bring Claims Relating to Warranties. The
warranties in ARTICLE II and ARTICLE III are made only as of the date of this
Agreement and as of the Closing Date (or, in some cases, as of another date
specified in the warranty). No claim, arbitration, lawsuit, action or proceeding
for indemnification under Section 7.1(a)(i) or Section 7.2(a)(i) can be brought
in respect of those warranties after 12:01 a.m., New York time, immediately
following the 18-month anniversary of the Closing Date, unless written notice of
the claim, given in accordance with this Agreement, was provided to the
pertinent party prior to such date, such notice to describe the subject matter
of the claim in reasonable detail.
7.5 Exclusive Remedy of Buyer and Trucking. Following the Closing, the
indemnification rights set forth in Section 7.1 shall be the exclusive remedy of
the Buyer, Trucking, the Buyer's Parent or any other Person claiming in their
name or right for any breach of this Agreement or any instrument delivered
pursuant to this Agreement by the Seller, the Shareholder, or any of their
respective officers, directors, employees, agents, advisers, representatives,
Subsidiaries or Affiliates (other than the Employment and Non-Competition
Agreement, the Employment Agreements, and the Assumption Agreement), for any
cause of action arising with respect to this Agreement or any instrument
delivered pursuant to this Agreement by the Seller, the Shareholder, or any of
their respective officers, directors, employees, agents, advisers,
representatives,
41
Subsidiaries or Affiliates (other than the Employment and Non-Competition
Agreement, the Employment Agreements, and the Assumption Agreement). By way of
example and not by way of limitation, the Buyer, Trucking, the Buyer's Parent,
and their respective officers, directors, employees, agents, advisers,
representatives, Subsidiaries and Affiliates shall have no recourse or claim,
other than a contractual indemnity claim, if any, under Section 7.1, against the
Seller, the Shareholder or their respective officers, directors, employees,
agents, advisers, representatives, Subsidiaries and Affiliates for fraud,
misrepresentation, bad faith, outrage, breach of fiduciary duty, or failure to
negotiate in good faith.
7.6 Exclusive Remedy of Seller. Following the Closing, the
indemnification rights set forth in Section 7.2 shall be the exclusive remedy of
the Seller, the Shareholder or any other person claiming in their name or right
for any breach of this Agreement or any instrument delivered pursuant to this
Agreement by the Buyer, Trucking, the Buyer's Parent, or any of their respective
officers, directors, employees, agents, advisers, representatives, Subsidiaries
or Affiliates (other than the Employment and Non-Competition Agreement, the
Employment Agreements, and the Assumption Agreement) for any cause of action
arising with respect to this Agreement or any instrument delivered pursuant to
this Agreement by the Buyer, Trucking, the Buyer's Parent, or any of their
respective officers, directors, employees, agents, advisers, representatives,
Subsidiaries or Affiliates (other than the Employment and Non-Competition
Agreement, the Employment Agreements, and the Assumption Agreement). By way of
example and not by way of limitation, the Seller, the Shareholder, and their
respective officers, directors, employees, agents, advisers, representatives,
Subsidiaries and Affiliates shall have no recourse or claim, other than a
contractual indemnity claim, if any, under Section 7.2, against the Buyer,
Trucking, the Buyer's Parent or their respective officers, directors, employees,
agents, advisers, representatives, Subsidiaries and Affiliates for fraud,
misrepresentation, bad faith, outrage, breach of fiduciary duty, or failure to
negotiate in good faith.
7.7 No Representations. All warranties made by the parties hereto or
their respective officers, directors, employees, agents, advisers,
representatives, Subsidiaries and Affiliates in this Agreement or in any
instrument delivered pursuant to this Agreement shall be deemed warranties and
not representations. Any breach of any such warranty shall sound in contract,
not tort, and shall be compensable exclusively under Sections 7.1 or 7.2 hereof.
All recitals to this Agreement or any instrument delivered pursuant to this
Agreement shall be deemed neither representations nor warranties. The parties to
this Agreement acknowledge that it is their intention that no statement
contained in this Agreement or in any instrument delivered pursuant to this
Agreement be deemed a representation.
7.8 Order of Payment. Any indemnification claims under Section 7.1
shall be paid first out of the funds held in the Escrow Account established
pursuant to
42
Section 1.5(b). In the event such funds are exhausted, any remaining claims or
unpaid claim balances shall be paid by the Seller, to the extent the assets of
the Seller are sufficient to pay such claims. In the event the assets of the
Seller are insufficient or unavailable, the Shareholder shall be liable for any
remaining claims or unpaid claim balances, provided, however, that nothing in
this Section 7.8 shall constitute an expansion of, or a waiver or release of,
any limitation on liability set forth in this ARTICLE VII.
ARTICLE VIII
MISCELLANEOUS
8.1 Entire Agreement. Other than the Confidentiality Agreement, the
Escrow Agreement, the Assumption Agreement, the Employment and Non-Competition
Agreement, the Alternative Employment Agreements (collectively, the "Collateral
Agreements") and the Schedules and Exhibits hereto, this Agreement constitutes
the entire agreement among the parties with respect to the subject matter hereof
and supersedes all prior written and oral and all contemporaneous oral
agreements and understandings with respect to the subject matter hereof. No
representations or warranties not expressly made in this Agreement or any of the
Collateral Agreements were relied on by any Person in entering into this
Agreement.
8.2 Notices.
(a) All notices, requests, demands and other communications hereunder
shall be in writing (including, but not limited to, facsimile/telecopied
communications) and shall be given by (i) personal delivery, (ii)
registered or certified mail in the United States, return receipt
requested, with first class postage prepaid, (iii) delivery overnight by a
reputable overnight air courier (such as Federal Express, UPS, DHL or
United States Postal Service next day delivery), or (iv) by facsimile with
a copy mailed on the same day in the manner provided in clause (ii) or
(iii) above, addressed as follows:
(i) If to the Seller or to the Shareholder, to either at:
c/o Southern Pride Catfish Company, Inc.
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
43
with a copy (which shall not by itself constitute notice) to:
▇▇▇▇▇▇ & ▇▇▇▇, LLC
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇. (35401)
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇, Esq. and ▇▇▇▇ ▇. ▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to the Buyer, Trucking or to the Buyer's Parent,
to either at:
c/o American Seafoods Group LLC
Marketplace Tower
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy (which shall not by itself constitute notice) to:
Debevoise & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or, in each case, to such other address as may be specified in writing to the
other parties in accordance with this Section 8.2.
(b) Such notices, requests, demands and other communications shall be
deemed to have been received: (i) if personally delivered, when delivered,
(ii) if sent by registered or certified mail in the United States, return
receipt requested, with first class postage prepaid, upon receipt; (iii) if
sent overnight with a reputable overnight air courier (such as Federal
Express, UPS, DHL or United States Postal Service next day delivery), one
business day after sending; or (iv) if sent by facsimile transmission, with
a copy mailed on the same day in the manner provided in (ii) or (iii)
above, when transmitted and a transmission receipt is obtained.
8.3 Expenses. Except as otherwise provided for in this Agreement, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses, whether or
not the transactions contemplated herein shall be consummated.
44
8.4 Governing Law. This Agreement shall be governed in all respects
(including as to validity, interpretation and effect) by the internal laws of
the State of Alabama, without giving effect to its conflict of laws rules to the
extent that these are not mandatorily applicable by statute and would require or
permit the application of another jurisdiction's laws.
8.5 Interpretation. The section headings in this Agreement are for
convenience of reference only and shall not be deemed to alter or affect the
meaning or interpretation of any provision hereof. Any reference to a party's
"best efforts", "reasonable efforts" or "commercially reasonable efforts" shall
not include any obligation of such party to pay or guarantee the payment of any
fee or other consideration, other than normal out-of-pocket expenses, to any
third party, or to agree to the imposition on such party or its Affiliates of
any conditions reasonably considered by such party to be materially burdensome
to such party or its Affiliates.
8.6 Assignment. No party hereto can assign this Agreement without the
other parties' prior written consent. Notwithstanding the foregoing, the Buyer
and Trucking may assign this Agreement without the consent of the Seller or the
Shareholder to (a) their respective wholly-owned Subsidiaries or a wholly-owned
Subsidiary of the Buyer's Parent or (b) to the lenders providing financing for
the transactions contemplated hereby; provided, however, that no such assignment
shall relieve the Buyer, Trucking, and the Buyer's Parent of their obligation to
pay the Purchase Price or of their indemnity obligations under ARTICLE VII.
8.7 Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party signatory hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement. Notwithstanding the foregoing, Section 7.1 and Section 7.2 grant
certain indemnity rights to certain officers, directors, employees, agents,
advisers, representatives and Affiliates, which rights are intended to be
enforceable by such Persons.
8.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all of which
together constitute one instrument.
8.9 Amendment. No provision of this Agreement may be amended or
modified except by an instrument in writing signed by all the parties hereto. No
provision of this Agreement may be waived, discharged or terminated other than
by an instrument in writing signed by the party against whom the enforcement of
such waiver, discharge or termination is sought.
45
8.10 Exclusive Jurisdiction, etc. Each party irrevocably submits to
the exclusive jurisdiction of any court in the State of Alabama or any courts of
the United States of America located in the State of Alabama, and each party
hereby agrees that all suits, actions and proceedings brought by such party
hereunder shall be brought in any such court. Each party irrevocably waives, to
the fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding brought
in any such court, any claim that any such suit, action or proceeding brought in
such a court has been brought in an inconvenient forum and the right to object,
with respect to any such suit, action or proceeding brought in any such court,
that such court does not have jurisdiction over such party or the other party.
In any such suit, action or proceeding, each party waives, to the fullest extent
it may effectively do so, personal service of any summons, complaint or other
process and agrees that the service thereof may be made by certified or
registered mail accompanied by first class prepaid ordinary postage, addressed
to such party at its address specified in Section 8.2(a). Each party agrees that
a final non-appealable judgment in any such suit, action or proceeding brought
in such a court shall be conclusive and binding.
8.11 Severability. If a provision of this Agreement is invalid,
inoperative or unenforceable for any reason, it shall not be invalid,
inoperative or unenforceable in any other case or circumstance, and no other
provision in this Agreement will be invalid, inoperative, or unenforceable as a
result to any extent, so long as this Agreement, taken as a whole, still
expresses the parties' material intent.
8.12 Remedies. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not to be
performed in accordance with their specific terms. Accordingly, the parties
agree that money damages are not a sufficient remedy for any breach of the
provisions of this Agreement and that the non-breaching party shall be entitled
to specific performance of the terms hereof as a remedy for any such breach.
Such remedy shall not be the exclusive remedy for the breach of the provisions
of this Agreement, but shall be in addition to all other rights and remedies
available at law or in equity. In the event that the non-breaching party
enforces its rights hereunder, the breaching party shall reimburse the other
party for all costs and expenses, including reasonable attorney's fees, incurred
by the non-breaching party.
ARTICLE IX
DEFINITIONS
9.1 Definition of Certain Terms. The terms defined in this Section
9.1, when capitalized in this Agreement (including in the Exhibits and Schedules
hereto), shall have the respective meanings indicated below:
46
Acquired Assets as defined in Section 1.1.
Affiliate of a Person means a Person that (directly or
indirectly through one or more
intermediaries) controls, is controlled by,
or is under common control with, the first
Person, including a Subsidiary of the first
Person, a Person of which the first Person is
a Subsidiary, or another Subsidiary of a
Person of which the first Person is also a
Subsidiary. "Control" means possessing,
directly or indirectly, the power to direct
or cause the direction of a Person's
management policies, through owning voting
securities, by contract or credit
arrangement, as trustee or executor, or
otherwise (and "controlled by" and "under
common control with" have corresponding
meanings).
Agreement this Asset Sale and Purchase Agreement,
including its Schedules and Exhibits (which
by this reference are incorporated into and
made a part of this Agreement), as amended
from time to time.
Allocation Schedule as defined in Section 1.6.
Alternative Employment as defined in Section 4.10(d).
Agreement
Annual Unaudited as defined in Section 2.4(a).
Financial Statements
Applicable Law (i) constitutions, treaties, statutes,
laws (including the common law),
regulations, rules, ordinances or
orders of a Governmental Authority
having jurisdiction over the
relevant Person;
(ii) Governmental Approvals; and
(iii) orders, decisions, injunctions,
judgments, awards, requirements and
decrees of, or agreements with, a
Governmental Authority having
jurisdiction over that Person.
Assumed Liabilities as defined in Section 1.7(a).
Assumption Agreement as defined in Section 1.7(b).
47
Audited Financial Statements as defined in Section 2.4(a).
Authorizations as defined in Section 2.8.
Business the business acquired or to be acquired by
the Buyer and Trucking pursuant to this
Agreement, consisting of the Acquired Assets
and the Assumed Liabilities, but not
including the Excluded Assets and the
Excluded Liabilities, and relating generally
to the harvesting, processing and
distribution of catfish.
Buyer as defined in the first paragraph of this
Agreement.
Buyer Indemnitees as defined in Section 7.1(a).
Buyer Material Adverse Effect as defined in Section 3.2(b).
Buyer's Parent as defined in the first paragraph of this
Agreement
Buyer's 401(k) Plan as defined in Section 4.11(c).
CERCLA the Comprehensive Environmental Response,
Compensation and Liability Act, as amended,
42 U.S.C. (S)9601 et seq.
Claim Limit as defined in Section 7.1(b).
Closing as defined in Section 1.4.
Closing Date as defined in Section 1.4.
Code the Internal Revenue Code of 1986, as
amended.
Collateral Agreements as defined in Section 8.1.
Competition directly or indirectly owning, managing,
operating, joining or controlling, or
participating (other than by owning less than
five percent (5%) of a class of securities
publicly traded and registered under Section
12 of the Securities Exchange Act of 1934) in
the ownership, management, operation or
control of, any business entity engaging in
the business of catfish harvesting (in the
geographic area where the Buyer offers such
service after the Closing Date), catfish
processing, or catfish
48
distribution anywhere in the United States or
Canada; provided, however, that "Competition"
does not include catfish farming or the
manufacture or sale of catfish feed or
supplies, or the harvesting of catfish
outside the geographic area where the Buyer
offers such service after the Closing Date.
Confidential Information any business, financial, or technical
information, whether or not stored in any
medium, relating to the Business (and the
businesses of the Seller's suppliers and
customers), including but not limited to,
equipment used, business operations and
strategies, trade secrets, financial
condition or history, plans for future
product offerings, business methods, fish
processing and packaging methods, recipes,
product design and development plans,
projections, marketing plans, pricing
information, information relating to
existing, previous, and potential suppliers,
customers and contracts, inventions,
applications, methodologies, and other
know-how. "Confidential Information" includes
original information supplied by the Seller
as well as all copies and any reports,
analysis, products, and other materials
derived from or containing such original
information. "Confidential Information" does
not include: (i) information that was known
by the Buyer, Trucking, the Buyer's Parent,
or any of their Subsidiaries or Affiliates or
that was in their possession prior to
disclosure by the Seller, (ii) information
that is, was or becomes in the public domain
without disclosure by the Buyer or Trucking
in violation of this Agreement, and (iii)
information that was independently acquired
or developed by the Buyer, Trucking, the
Buyer's Parent, or any of their Subsidiaries
or Affiliates without violating this
Agreement, or that is obtained from a third
party who, to the Knowledge of the Buyer and
Trucking, has acquired or developed such
information without violating any
confidentiality agreement with the Seller.
Confidentiality Agreement the Confidentiality Agreement, dated as of
February 22, 2002, by and between the Seller
and the Buyer.
Conforming Employment Agreement as defined in Section 4.10(d).
Consent any consent, approval, authorization, waiver,
permit, grant, franchise, concession,
agreement, license, exemption or order of,
registration, declaration or filing with, or
report or notice to,
49
any Person (including but not limited to any
Governmental Authority).
Contracts as defined in Section 2.9(a).
Disclosure Schedules the disclosure schedules attached to this
Agreement at the time of its signing, as from
time to time amended or supplemented, or to
be delivered by the Seller and the
Shareholder to the Buyer and Trucking at the
Closing under this Agreement.
Employment and Non-Competition as defined in Section 4.9.
Agreement
Environmental Laws all Applicable Laws relating to the
protection of the environment, to human
health and safety, or to any emission,
discharge, generation, processing, storage,
holding, abatement, existence, Release,
threatened Release or transportation of any
Hazardous Substances, including (i) CERCLA,
the Resource Conservation and Recovery Act,
and the Occupational Safety and Health Act,
(ii) all other requirements pertaining to
reporting, licensing, permitting,
investigation or remediation of emissions,
discharges, releases or threatened releases
of Hazardous Materials into the air, surface
water, groundwater or land, or relating to
the manufacture, processing, distribution,
use, sale, treatment, receipt, storage,
disposal, transport or handling of Hazardous
Substances, and (iii) all other requirements
pertaining to the protection of the health
and safety of employees or the public.
Environmental Liabilities all liabilities, obligations and commitments,
whether direct or indirect, known or unknown,
current or potential, past, present or
future, imposed by, under or pursuant to
Environmental Laws (including all
liabilities, obligations and commitments
related to Remedial Actions) based on,
arising out of or otherwise in respect of:
(i) the ownership or operation of the
Business and the Acquired Assets, in each
case, prior to the Closing; (ii) the
environmental conditions existing on the
Closing Date on, under, above, or about any
Real Property; and (iii) actions necessary to
cause any Real Property or any aspect of the
Business to be in compliance with any and all
requirements of Environmental Laws including
all Environmental Permits issued under or
pursuant to such Environmental Laws and
reasonably necessary to the operation
50
of the Business.
Environmental Permits any federal, state and local permit, license,
registration, consent, order, administrative
consent order, certificate, approval or other
authorization with respect to the Seller
necessary for the conduct of the Business as
currently conducted or previously conducted
under any Environmental Law.
EPLI Policy the existing employment practices liability
insurance policy of the Buyer's Parent,
effective from April 4, 2002 through April 4,
2003.
ERISA the Employee Retirement Income Security Act
of 1974, as amended from time to time, and
the rules and regulations of the Department
of Labor and the IRS promulgated under it.
ERISA Affiliate any Person and/or such Person's Subsidiary or
any trade or business (whether or not
incorporated) which is under common control
with such entity or such entity's
Subsidiaries or which is treated as a single
employer with such Person or any Subsidiary
of such Person under section 414(b), (c), (m)
or (o) of the Code or section 4001(b)(f) of
ERISA.
Escrow Account as defined in Section 1.5(b).
Escrow Agent as defined in Section 1.5(b).
Escrow Agreement as defined in Section 1.5(b).
Excluded Assets as defined in Section 1.3.
Excluded Liabilities as defined in Section 1.7(b).
Exhibits the exhibits referenced in this Agreement, to
be delivered at the Closing by the Seller and
the Shareholder to the Buyer and Trucking, or
by the Buyer and Trucking to the Seller and
the Shareholder, as the case may be.
FICA as defined in Section 4.11(e).
Financial Statements as defined in Section 2.4(a).
51
FUTA as defined in Section 4.11(e).
GAAP as defined in Section 1.6(a).
▇▇▇▇▇▇ Catfish any catfish produced on a farm or farms owned
by:
(i) ▇▇. ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.;
(ii) a legal entity the majority ownership
of which is held by him, his spouse or
widow, or one or more of his lineal
descendants; or
(iii) one or more trusts established
primarily for the benefit of any of the
Persons described in clauses (i) or
(ii) above.
Governmental Approval a Consent of, with or to a Governmental
Authority (including the expiration of a
waiting or other time period required to
pass before governmental consent
or acquiescence may be assumed or relied on).
Governmental Authority (i) a nation or government;
(ii) a state or other political subdivision
of a nation or government;
(iii) an entity exercising legislative,
executive, judicial, regulatory or
administrative functions of or relating
to government (including a government
authority, agency, department, board,
commission or instrumentality of the
United States or a State of the United
States);
(iv) a tribunal or arbitrators of competent
jurisdiction; or
(v) a self-regulatory organization.
52
Hazardous Substance any substance that: (i) is or contains
asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum or
petroleum-derived substances or wastes, radon
gas or related materials, (ii) requires
investigation, removal or remediation under
any Environmental Law, or is defined, listed
or identified as a "hazardous waste" or
"hazardous substance" thereunder, or (iii) is
toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic,
mutagenic, or otherwise hazardous and is
regulated by any Governmental Authority or
Environmental Law.
HSR Act the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements
Act of 1976, as amended.
Indemnified Party as defined in Section 7.4(a).
Indemnifying Party as defined in Section 7.4(a).
Intellectual Property any and all (a) patents (including design
patents, industrial designs and utility
models) and patent applications (including
docketed patent disclosures awaiting filing,
reissues, divisions, continuations-in-part
and extensions), patent disclosures awaiting
filing determination, inventions and
improvements thereto; (b) trademarks, trade
names, service marks, trade dress, logos,
business and product names, slogans, domain
names, and registrations and applications for
registration thereof; (c) copyrights
(including software) and registrations
thereof; (d) inventions, processes, designs,
formulae, trade secrets, know-how, industrial
models, confidential and technical
information, manufacturing, engineering and
technical drawings, product specifications
and confidential business information; (e)
intellectual property rights similar to any
of the foregoing; (g) copies and tangible
embodiments thereof (in whatever form or
medium, including electronic media).
IRS the Internal Revenue Service.
June 30 Balance Sheet as defined in Section 1.7(a).
Key Employees ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇.
Knowledge the actual knowledge of the executive
officers of a corporation or other business
entity or, when referring to an individual,
of
53
such individual; provided, however, that in
the case of the Seller, "Knowledge" shall
mean the actual knowledge of the individuals
set forth on Schedule 9.1.
Lien any mortgage, pledge, hypothecation, right of
others, claim, security interest,
encumbrance, title defect, title retention
agreement, voting trust agreement, interest,
option, lien, charge, or other restriction on
transfer or assignment (it being understood
that all references to a "Lien" (other than
in the definition of "Permitted Lien")
exclude Permitted Liens, unless specifically
stated otherwise).
Leases the real property leases, subleases, licenses
and occupancy agreements pursuant to which
the Seller or any Subsidiary is the lessee,
sublessee, licensee or occupant.
Losses as defined in Section 7.1.
Material Adverse Effect any event, occurrence, fact, condition,
change or effect that is materially adverse
to the Business or to the operations, results
of operations, prospects, condition
(financial or otherwise), properties
(including intangible properties), assets
(including intangible assets) or liabilities
of the Seller or the ability of the Seller to
consummate the transactions contemplated by
this Agreement.
Material Adverse Litigation as defined in Section 2.15.
Monthly Unaudited as defined in Section 2.4(a).
Financial Statements
Multiemployer Plan any multiemployer plan, as defined in
sections 3(37) and 4001(a)(3) of ERISA.
NLRB Claim that certain action presently pending in the
United States Eleventh Circuit Court of
Appeals, styled National Labor Relations
Board v. Southern Pride Catfish Company,
Inc., Case No. 00-15284-J, alleging unfair
labor practices against the Seller.
54
Ordinary Income an amount equal to the quotient of (x) the
Adjustment incremental state and federal income Taxes
payable by the Shareholder as a result of the
characterization of any portion of the
Purchase Price as ordinary income as opposed
to capital gain (by virtue of depreciation
recapture, the allocation of a portion of the
Purchase Price to inventory in excess of the
Seller's Tax basis in such inventory or the
allocation of a portion of the Purchase Price
to fees) divided by (y) 0.76.
Permitted Liens (i) Liens reserved against in the Financial
Statements, to the extent so reserved, (ii)
Liens for Taxes not yet due and payable or
which are being contested in good faith and
by appropriate proceedings if adequate
reserves with respect thereto are maintained
on the books of the Seller in accordance with
GAAP, (iii) Liens that, individually and in
the aggregate, do not and would not
materially detract from the value of any of
the property or assets of the Business or
materially interfere with the use thereof as
currently used or reasonably contemplated to
be used, (iv) Liens shown on a title
commitment, opinion or survey with respect to
Real Property received by the Buyer or
Trucking at or prior to the Closing, or (v)
Liens incurred in the ordinary course of
business (including landlord liens, inchoate
liens for unpaid sales taxes and purchase
money liens).
Person a natural person, firm, partnership,
association, corporation, company, trust,
business trust, Governmental Authority or
other entity.
Purchase Price as defined in Section 1.5(a).
Real Property as defined in Section 2.11(a).
Real Property Law as defined in Section 2.11(a).
Release any releasing, disposing, discharging,
injecting, spilling, leaking, leaching,
pumping, dumping, emitting, escaping,
emptying, seeping, dispersal, migration,
transporting, placing and the like, including
the moving of any materials through, into or
upon, any land, soil, surface water, ground
water or air, or otherwise entering into the
environment.
Remedial Action all actions required to (i) clean up, remove,
treat or in any other way remediate any
Hazardous Substances; (ii) prevent the
55
release of Hazardous Substances so that they
do not migrate or endanger or threaten to
endanger public health or welfare or the
environment; or (iii) perform studies,
investigations and care related to any such
Hazardous Substances.
Retention Period as defined in Section 4.10(a).
Seller as defined in the first paragraph of this
Agreement.
Seller Employee Plan any employee benefit plan, as defined in
section 3(3) or ERISA, that is sponsored or
contributed to by the Seller or any of its
ERISA Affiliates covering any employees or
former employees, directors or former
directors of the Seller and the beneficiaries
of any of them.
Seller Indemnitees as defined in Section 7.2(a).
Seller Plan any Seller Employee Plan or any material
benefit arrangement (whether or not written)
of the Seller that is not a Seller Employee
Plan, including (i) any employment or
consulting agreement, (ii) any arrangement
providing for insurance coverage or workers'
compensation benefits, (iii) any incentive
bonus or deferred bonus arrangement, (iv) any
arrangement providing termination allowance,
severance or similar benefits, (v) any equity
compensation plan, (vi) any deferred
compensation plan and (vii) any compensation
policy and practice, in each case that is
maintained by the Seller or any of its ERISA
Affiliates covering any employees, former
employees, directors or former directors of
the Seller, and the beneficiaries of any of
them.
Seller's 401(k) Plan as defined in Section 4.11(c).
Semi-Annual Unaudited as defined in Section 2.4(a).
Financial Statements
Shareholder as defined in the second recital to this
Agreement.
Subsequent Monthly as defined in Section 4.7.
Financial Statements
Subsidiary a corporation or other Person in which a
Person owns or controls, directly or
indirectly, capital stock or other equity
56
interests representing more than 50% of the
outstanding voting stock or other equity
interests.
Tax Authority with respect to any Tax, the Governmental
Authority that imposes that Tax, and the
agency (if any) charged with the collection
of that Tax for that Governmental Authority.
Tax Return a report, return, statement or other written
information required to be supplied to a Tax
Authority in connection with Taxes.
Taxes or Tax taxes, levies or other similar assessments,
charges or fees (including estimated taxes,
charges and fees), including income,
corporation, add-on minimum, ad valorem,
advance corporation, gross receipts,
transfer, excise, property, sales, use,
value-added, license, payroll, employment,
severance, withholding, social security and
franchise or other governmental taxes,
imposed by the United States or a state,
local or foreign government (or subdivision
or agency of any of these), and also
including interest and penalties attributable
to these payments, and additions to them.
Transfer Taxes as defined in Section 4.14(c).
Transferred Employees as defined in Section 4.11(a).
Transferred Key Employees as defined in Section 4.10(a).
Unaudited Financial Statements as defined in Section 2.4(a).
9.2 Other. The headings in this Agreement do not affect its
interpretation. References to "includes" or "including" are deemed to be
followed by "without limitation." Unless otherwise specified, references to a
Section, Schedule or Exhibit mean a Section of, or Schedule or Exhibit to, this
Agreement. A matter disclosed on a Schedule is deemed to be disclosed for all
purposes of this Agreement to which that matter could reasonably relate, but
will not extend the scope of the representations and warranties in this
Agreement or imply that the matter is required to be disclosed for the purposes
of this Agreement.
[Remainder of page intentionally left blank]
57
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
Seller:
SOUTHERN PRIDE CATFISH COMPANY, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
Shareholder:
/s/ ▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
----------------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Buyer:
SOUTHERN PRIDE CATFISH LLC
By: AMERICAN SEAFOODS GROUP LLC,
its sole Member
By: AMERICAN SEAFOODS CONSOLIDATED LLC,
its Managing Member
By: AMERICAN SEAFOODS HOLDINGS LLC,
its sole Member
By: AMERICAN SEAFOODS, L.P.,
its Managing Member
By: ASC MANAGEMENT, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President
Trucking:
SOUTHERN PRIDE CATFISH TRUCKING INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Buyer's Parent:
AMERICAN SEAFOODS GROUP LLC
By: AMERICAN SEAFOODS CONSOLIDATED LLC,
its Managing Member
By: AMERICAN SEAFOODS HOLDINGS LLC,
its sole Member
By: AMERICAN SEAFOODS, L.P.,
its Managing Member
By: ASC MANAGEMENT, INC.,
its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: President