Stock Purchase Agreement
by and among
Sun Northland, LLC
And
Northland Cranberries, Inc.
Dated as of November 6, 2001
TABLE OF CONTENTS
Page
1. Definitions............................................................ 1
2. Purchase and Sale of Shares............................................ 7
(a) Basic Transaction................................................. 7
(b) Consideration..................................................... 7
(c) The Closing....................................................... 7
(d) Deliveries at the Closing......................................... 7
3. Representations and Warranties of the Buyer............................ 8
(a) Organization of the Buyer......................................... 8
(b) Authorization of Transaction...................................... 8
(c) Noncontravention.................................................. 8
(d) Brokers' Fees..................................................... 8
(e) Investment........................................................ 8
4. Representations and Warranties of the Company.......................... 8
(a) Organization, Qualification, and Corporate Power.................. 9
(b) Capitalization and Issuance of Shares............................. 9
(c) Noncontravention.................................................. 10
(d) Brokers' Fees..................................................... 10
(e) Title to Assets................................................... 10
(f) Subsidiaries...................................................... 10
(g) Financial Statements.............................................. 11
(h) Events Subsequent to Most Recent Fiscal Year End.................. 11
(i) Undisclosed Liabilities........................................... 13
(j) Legal Compliance.................................................. 13
(k) Tax Matters....................................................... 14
(l) Real Property..................................................... 15
(m) Intellectual Property............................................. 18
(n) Tangible Assets................................................... 19
(o) Contracts......................................................... 20
(p) Notes and Accounts Receivable..................................... 21
(q) Powers of Attorney................................................ 21
(r) Insurance......................................................... 21
(s) Litigation........................................................ 22
(t) Employees......................................................... 22
(u) Employee Benefits................................................. 23
(v) Guaranties........................................................ 25
(w) Environment, Health, and Safety Matters........................... 25
(x) Certain Business Relationships With the Company
and its Subsidiaries............................................. 26
(y) SEC Documents..................................................... 26
(z) Relationships with Customers and Vendors.......................... 27
i
5. Conditions to Obligation to Close...................................... 28
(a) Conditions to Obligation of the Buyer............................. 28
(b) Conditions to Obligation of the Company........................... 31
6. Remedies for Breaches of This Agreement................................ 32
(a) Survival of Representations and Warranties........................ 32
(b) Indemnification Provisions for Benefit of the Buyer............... 33
(c) Determination of Adverse Consequences............................. 33
(d) Matters Involving Third Parties................................... 33
(e) Additional Matters................................................ 34
7. Tax Matters............................................................ 34
8. Miscellaneous.......................................................... 34
(a) Press Releases and Public Announcements........................... 34
(b) No Third-Party Beneficiaries...................................... 34
(c) Entire Agreement.................................................. 35
(d) Succession and Assignment......................................... 35
(e) Counterparts...................................................... 35
(f) Headings.......................................................... 35
(g) Notices........................................................... 35
(h) Governing Law..................................................... 36
(i) Amendments and Waivers............................................ 36
(j) Severability...................................................... 36
(k) Expenses.......................................................... 36
(l) Construction...................................................... 37
(m) Incorporation of Exhibits, Annexes, and Schedules................. 37
(n) Submission to Jurisdiction........................................ 37
(o) Legal Fees........................................................ 37
(p) Indemnification and Insurance..................................... 37
(q) ISRA Covenant..................................................... 38
(r) Tax Covenant...................................................... 38
(s) Severance Pay Covenant............................................ 39
Exhibit A - Historical Financial Statements
Exhibit B - Form of Opinion of Counsel to the Company
Exhibit C - Form of Stockholders' Agreement
Exhibit D - Form of Registration Agreement
Exhibit E - Agreements to be Entered Into With Vendors, Suppliers and Other
Creditors
Exhibit F - Stay Bonus and Management Agreement Payout Schedule
ii
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement is entered into as of November 6, 2001, by
and among Sun Northland, LLC, a Delaware limited liability company (the
"Buyer"), and Northland Cranberries, Inc., a Wisconsin corporation (the
"Company"). The Buyer and the Company are referred to collectively herein as the
"Parties" and individually as a "Party".
WHEREAS, the Buyer has entered into Assignment, Assumption and Release
Agreements with the Current Senior Lenders pursuant to which the Buyer or its
assignee will, at the Closing, acquire a portion of the Current Senior Lenders'
rights pursuant to the Firstar Facility upon payment to the Current Senior
Lenders of an aggregate of $38,388,000 in cash, the issuance to the Current
Senior Lenders of new notes in the aggregate amount of $25,714,000, and the
issuance to the Current Senior Lenders of Class A Common Stock, par value $0.01
per share "Class A Common Stock") representing an aggregate of 7.49% of the
Company's Class A Common Stock;
WHEREAS, the Company desires to issue and sell, and the Buyer desires to
purchase, in exchange for cash and the assignment of the Buyer's rights in the
Assignment, Assumption and Release Agreements (which will result in the
cancellation of at least $$86.8 million of the Company's indebtedness),
37,122,695.00 shares of the Company's Class A Common Stock, 1,668,885.00 shares
of the Company's Series A Preferred Stock, par value $.01 per share ("Series A
Preferred Stock") (which shall be convertible into 41,722,125.00 shares of the
Company's Class A Common Stock) and 100 shares of the Company's Series B
Preferred Stock, par value $0.01 per share ("Series B Preferred Stock"), upon
the terms and subject to the conditions contained in this Agreement;
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.
1. Definitions
"Adverse Consequences" means all actions, suits, proceedings, hearings,
investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages, dues, penalties, fines, costs, reasonable
amounts paid in settlement, liabilities, obligations, Taxes, liens, losses,
expenses, and fees, including court costs and reasonable attorneys' fees and
expenses.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person.
"Affiliated Group" means any affiliated group within the meaning of Code
ss.1504(a) or any similar group defined under a similar provision of state,
local, or foreign law.
"Assignment, Assumption and Release Agreements" means (i) that certain
Assignment, Assumption, and Release Agreement, dated as of the date hereof, by
and among the Buyer, LaSalle Bank National Association, St. ▇▇▇▇▇▇▇ Bank,
F.S.B., ARK CLO 2000-1 Limited, and U.S. Bank National Association; and (ii)
that certain Assignment, Assumption, and Release
Agreement, dated as of the date hereof, by and among the Buyer, ▇▇▇▇▇ Fargo,
Bank Minnesota, National Association, Endeavour, LLC, Bank One Wisconsin and M&I
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ Bank.
"Basis" means any past or present fact, situation, circumstance, status,
condition, activity, practice, plan, occurrence, event, incident, action,
failure to act, or transaction that forms or could reasonably be expected to
form the basis for any specified consequence.
"Bog Properties" means those portions of the Owned Real Property and Leased
Real Property enumerated under the heading "Bog Properties" in Sections 4(l)(i)
and 4(l)(ii) of the Disclosure Schedule.
"Buyer" has the meaning set forth in the preface above.
"Capital Stock" means stock, units, interests, securities, or other
instruments which (i) share in distributions either of earnings or assets or
(ii) have the right to vote for directors, officers or managers.
"Cash Purchase Price" has the meaning set forth in Section 2(b)(i) below.
"Class A Common Stock" has the meaning in the preface above.
"Class B Common Stock" has the meaning in Section 4(b) below.
"Closing" has the meaning set forth in Section 2(c) below.
"Closing Date" has the meaning set forth in Section 2(c) below.
"COBRA" means the requirements of Part 6 of Subtitle B of Title I of ERISA
and Code ss.4980B and of any similar state law.
"Code" means the Internal Revenue Code of 1986, as amended.
"Commission" or "SEC" means the Securities and Exchange Commission, or any
successor agency.
"Company" has the meaning set forth in the preface above.
"Current Senior Lenders" means LaSalle Bank National Association, St.
▇▇▇▇▇▇▇ Bank, F.S.B., ARK CLO 2000-1 Limited, U.S. Bank National Association,
▇▇▇▇▇ Fargo, Bank Minnesota, National Association, Endeavour, LLC, Bank One
Wisconsin, and M&I ▇▇▇▇▇▇▇▇ & Ilsley Bank.
"Disclosure Schedule" has the meaning set forth in Section 4 below.
"Employee Benefit Plan" means any "employee benefit plan" (including,
without limitations, "plans" as defined in ERISA ss.3(3)), profit sharing,
deferred compensation, bonus, stock option, stock purchase, vacation pay,
holiday pay, pension, retirement plans, medical and any other form of
compensation or benefit plan, program or arrangement of any kind regardless
2
of whether any such plan is written or oral or provided under an employment,
collective bargaining or other similar arrangement.
"Employee Pension Benefit Plan" has the meaning set forth in ERISA ss.3(2).
"Employee Welfare Benefit Plan" has the meaning set forth in ERISA ss.3(1).
"Environmental, Health, and Safety Requirements" shall mean all applicable
federal, state, local and foreign statutes, regulations, ordinances and similar
provisions having the force or effect of law, all judicial and administrative
orders and determinations, and all common law concerning public health and
safety, worker health and safety, pollution or protection of the environment,
including, without limitation, all those relating to wetlands protection or the
presence, use, production, generation, handling, transportation, treatment,
storage, disposal, distribution, labeling, testing, processing, discharge,
release, threatened release, control, or cleanup of any hazardous materials,
substances or wastes, chemical substances or mixtures, pesticides, pollutants,
contaminants, toxic chemicals, petroleum products or byproducts, asbestos,
polychlorinated biphenyls, noise or radiation, each as amended, and as now or
hereafter in effect.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" means each entity which is treated as a single employer
with the Company or its Subsidiaries for purposes of Code ss.414.
"Executive" shall mean any of ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, and
▇▇▇ ▇▇▇▇▇▇▇.
"Fiduciary" has the meaning set forth in ERISA ss.3(21).
"Financial Statement" has the meaning set forth in Section 4(g) below.
"Firstar Facility" means that certain Credit Agreement, dated as of March
15, 1999, by and between the Company and the financial institutions which are
signatories thereto, and all amendments thereto.
"Facility Properties" means those portions of the Owned Real Property
enumerated under the heading "Facility Properties" in Section 4(l)(i) of the
Disclosure Schedule.
"Fundamental Representations and Warranties" means those representations
and warranties made by the Company in Sections 4(a), (b), (c), (d), and (e)
below.
"GAAP" means United States generally accepted accounting principles as in
effect from time to time.
"Good Standing" means, when used with respect to the status of any
corporation or limited liability company domiciled or doing business in the
State of Wisconsin, that such corporation or limited liability company, as the
case may be, has filed its most recent required annual report (or similar
reports for non-corporate entities) and (i) if a domestic corporation or
3
limited liability company, has not filed articles of dissolution (or similar
dissolution documents for non-corporate entities), and (ii) if a foreign
corporation or limited liability company, has not applied for a certificate of
withdrawal and is not the subject of a proceeding to revoke its certificate of
authority (or similar certificates for non-corporate entities).
"Improvements" means all buildings (or portions thereof), structures,
fixtures, and building systems, and all components thereof, included in the Real
Property.
"Income Tax" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
"Income Tax Return" means any return, declaration, report, claim for
refund, or information return or statement relating to Income Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
"Indemnified Party" has the meaning set forth in Section 6(d)(i) below.
"Indemnifying Party" has the meaning set forth in Section 6(d)(i) below.
"Intellectual Property" means (a) all ideas, business methods, know-how,
inventions (whether patentable or unpatentable and whether or not reduced to
practice), all improvements thereto, and all patents, patent applications, and
patent disclosures, together with all reissues, continuations,
continuations-in-part, divisions, revisions, extensions, and reexaminations
thereof, (b) all trademarks, service marks, trade dress, logos, trade names,
domain names and corporate names, together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all applications for registration, registrations, and renewals in
connection therewith, (c) all copyrightable works, all copyrights, and all
applications for registration, registrations, and renewals in connection
therewith, (d) all mask works and all applications for registration,
registrations, and renewals in connection therewith, (e) all trade secrets and
confidential business information (including without limitation ideas, research
and development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, and business and
marketing plans and proposals), (f) all computer software (including, without
limitation, data and related documentation), (g) all other proprietary rights,
and (h) all copies and tangible embodiments thereof (in whatever form or medium
now known or later developed).
"Knowledge of the Company" means the actual knowledge of ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇.
"Leased Real Property" means all leasehold or subleasehold estates and
other rights to use or occupy any land, buildings, structures, improvements,
fixtures or other interest in real property held by any of the Company or its
Subsidiaries.
"Leases" means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties and other agreements with
4
respect thereto, pursuant to which any of the Company or its Subsidiaries holds
any Leased Real Property.
"Liability" means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
"Liens" means any mortgages, pledges, liens, claims, charges, security
interests, guarantees, conditional and installment sale agreements, activity and
use limitations, conservation easements, deed restrictions, and encumbrances of
any kind.
"Management Agreement" means that certain Amended and Restated Key
Executive Employment and Severance Agreement, dated as of April 14, 2000, by and
between the Company and ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇.
"Most Recent Balance Sheet" shall have the meaning set forth in Section
4(g) below.
"Multiemployer Plan" has the meaning set forth in ERISA ss.3(37).
"Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).
"Organizational Documents" means all documents relating to the formation,
organization and governance of any Person, including, without limitation,
charters, bylaws, operating agreements, and certifications of formation. "Owned
Real Property" means all land, together with all buildings, structures,
improvements, fixtures, trees, plants, and other crops located thereon, and all
easements, rights of way, servitudes, tenements, hereditaments, appurtenances,
privileges and other rights including, without limitation, oil, gas, mineral and
water rights, with respect thereto, owned by the Company or its Subsidiaries.
"Party" has the meaning set forth in the preface above.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permits" has the meaning set forth in Section 4(j) below.
"Permitted Encumbrances" means with respect to each parcel of Real
Property: (a) real estate Taxes, assessments and other governmental levies, fees
or charges imposed with respect to such Real Property which are not due and
payable as of the Closing Date, or which are being contested in good faith and
for which appropriate reserves have been established in accordance with GAAP;
(b) mechanics liens and similar liens for labor, materials or supplies provided
with respect to such Real Property incurred in the ordinary course of business
for amounts which are not due and payable and which would not, individually or
in the aggregate, have a material adverse effect on the business of the Company
and its Subsidiaries as currently conducted thereon; (c) zoning, building codes
and other land use laws regulating the use or occupancy of such Real Property or
the activities conducted thereon which are imposed by any governmental
5
authority having jurisdiction over such Real Property, which are not violated
by, or the violation of which would not have a material adverse effect on, the
current use or occupancy of such Real Property or the operation of the business
of the Company and its Subsidiaries as currently conducted thereon; (d)
easements, covenants, conditions, restrictions and other similar matters of
record, or other immaterial conditions as would be disclosed by an accurate
survey, affecting title to such Real Property which do not or would not
materially impair the use or occupancy of such Real Property in the operation of
the business of the Company and its Subsidiaries as currently conducted thereon;
and (e) the encumbrances set forth on Section 4 of the Disclosure Schedule.
"Person" means an individual, a partnership, a corporation, an association,
a joint stock company, a trust, a joint venture, an unincorporated organization,
or a governmental entity (or any department, agency, or political subdivision
thereof).
"Prohibited Transaction" has the meaning set forth in ERISA ss.406 and Code
ss.4975.
"Real Property" has the meaning set forth in Section 4(l)(iii) below.
"Real Property Permits" has the meaning set forth in Section 4(l)(vii)
below.
"Reportable Event" has the meaning set forth in ERISA ss.4043.
"SEC Documents" has the meaning set forth in Section 4(y) below.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Interest" means any mortgage, pledge, lien, encumbrance, charge,
or other security interest, other than (a) mechanic's, materialmen's, and
similar liens, (b) liens for Taxes not yet due and payable, (c) purchase money
liens and liens securing rental payments under capital lease arrangements, and
(d) other liens arising in the Ordinary Course of Business and not incurred in
connection with the borrowing of money.
"Series A Preferred Stock" has the meaning in the preface above.
"Series B Preferred Stock" has the meaning in the preface above.
"Severance and Stay Bonus Plan" means the Northland Cranberries, Inc.
Severance and Stay Bonus Plan, effective April 14, 2000.
"Shares" has the meaning set forth in Section 2(a) below.
"Subsidiary" means a Person of which another Person and/or their respective
Subsidiaries, as the case may be, own directly or indirectly, such number of
shares as have more than 50% of the ordinary voting power for the election of
directors or managers.
"Tangible Personal Property" means all equipment, machinery, and other
similar tangible personal property, with an individual original cost of $50,000
or more, which is owned by the Company and its Subsidiaries and used in their
respective business.
6
"Tax" means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation, premium,
windfall profits, environmental (including taxes under Code ss.59A), customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty,
or addition thereto, whether disputed or not, and any tax of any other Person
resulting from being a member of an Affiliated Group.
"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto, and including any amendment thereof.
"Third Party Claim" has the meaning set forth in Section 6(d)(i) below.
"WBCL" means the Wisconsin Business Corporation Law, Chapter 180 Wis.
Stats.
2. Purchase and Sale of Shares.
(a) Basic Transaction. On and subject to the terms and conditions of this
Agreement, the Buyer agrees to purchase from the Company, and the Company agrees
to sell to the Buyer, 37,122,695.00 shares of Class A Common Stock, 1,668,885.00
shares of Series A Preferred Stock and 100 shares of Series B Preferred Stock
(the "Shares") for the consideration specified below in this Section 2.
(b) Consideration. The Buyer agrees to deliver the following consideration
to the Company at the Closing:
(i) Wire transfer of immediately available funds equal to $7,000,000
(the "Cash Purchase Price");
(ii) The assignment of the Buyer's rights to each of the Assignment,
Assumption and Release Agreements (it being understood by the Parties that
such assignment will result in the cancellation of at least $86.8 million
of the Company's indebtedness).
(c) The Closing. The closing of the transactions contemplated by this
Agreement (the "Closing") shall take place as of the close of business on the
date this Agreement is signed by the Parties (the "Closing Date").
(d) Deliveries at the Closing.
(i) At the Closing, the Company will deliver to the Buyer: (A) the
various certificates, instruments, and documents referred to in Section
5(a) below, and (B) stock certificates representing the Shares, free and
clear of all Liens.
(ii) At the Closing, the Buyer will deliver to the Company: (i) the
various certificates, instruments, and documents referred to in Section
5(b) below and (ii) the consideration specified in Section 2(b) above.
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3. Representations and Warranties of the Buyer. The Buyer represents and
warrants to the Company that the statements contained in this Section 3 are
correct and complete as of the date of this Agreement, except as set forth in
Annex I attached hereto.
(a) Organization of the Buyer. The Buyer is a limited liability company
duly organized, validly existing, and in good standing under the laws of the
jurisdiction of its formation.
(b) Authorization of Transaction. The Buyer has full power and authority
to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Buyer, enforceable in accordance with its terms and conditions. The Buyer need
not give any notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency in order to
consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(A) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which the Buyer is subject or any provision of
its Organizational Documents or (B) conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which the Buyer is a party or by which it is bound or to which any of its
assets is subject.
(d) Brokers' Fees. The Buyer has no Liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which the Company could become
liable or obligated.
(e) Investment. The Buyer is not acquiring the Shares with a view to or
for sale in connection with any distribution thereof within the meaning of the
Securities Act.
4. Representations and Warranties of the Company. The Company represents
and warrants to the Buyer that the statements contained in this Section 4 are
correct and complete as of the date of this Agreement, except as set forth in
the disclosure schedule delivered by the Company to the Buyer on the date hereof
(the "Disclosure Schedule") or as set forth in the Company's SEC Documents.
Except for disclosures relating to environmental matters pursuant to Section
4(w), and made in Section 4(w) of the Disclosure Schedule, which may refer to
specific environmental surveys and reports, nothing in the Disclosure Schedule
shall be deemed adequate to disclose an exception to a representation or
warranty made herein, however, unless the Disclosure Schedule identifies the
exception with reasonable particularity and describes the relevant facts in
reasonable detail. Except for disclosures relating to environmental matters
pursuant to Section 4(w), and made in Section 4(w) of the Disclosure Schedule,
which may refer to specific environmental surveys and reports, the mere listing
(or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document
8
or other item itself). The Disclosure Schedule will be arranged in paragraphs
corresponding to the lettered and numbered paragraphs contained in this Section
4.
(a) Organization, Qualification, and Corporate Power. Each of the Company
and its Subsidiaries is a corporation, or limited liability company, duly formed
or organized, as the case may be, validly existing, and in Good Standing under
the laws of the jurisdiction of its incorporation or formation. Each of the
Company and its Subsidiaries is duly authorized to conduct business and is in
Good Standing under the laws of each jurisdiction where such qualification is
required, except where the failure to be so qualified or in Good Standing would
not have a material adverse effect on the Company or its Subsidiaries. Each of
the Company and its Subsidiaries has full corporate, or limited liability
company, power and authority and all licenses, permits, and authorizations
necessary to carry on the businesses in which it is engaged and to own and use
the properties owned and used by it, except where the failure to have any such
licenses, permits or authorizations would not have a material adverse effect on
the Company or its Subsidiaries. Section 4(a) of the Disclosure Schedule lists
the directors and officers of each of the Company and its Subsidiaries. The
Company has delivered to the Buyer correct and complete copies of the
Organizational Documents of each of the Company and its Subsidiaries. The minute
books (containing the records of meetings of the stockholders, the board of
directors, and any committees of the board of directors), the stock certificate
books, and the stock record books (or similar books and records for any of the
Company's Subsidiaries which is not a corporation) of each of the Company and
its Subsidiaries are correct and complete. None of the Company and its
Subsidiaries is in default under or in violation of any provision of its
Organizational Documents. The Company has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement and to
perform its obligations hereunder. This Agreement constitutes the valid and
legally binding obligation of the Company, enforceable in accordance with its
terms and conditions, except as such enforceability may be limited by
bankruptcy, insolvency, moratorium or other similar laws affecting or relating
to creditors' rights generally, and by general equitable principles.
(b) Capitalization and Issuance of Shares. Immediately prior to the
Closing, the entire authorized Capital Stock of the Company consists of
60,000,000 shares of Class A Common Stock, of which no greater than 5,100,000
shares are issued and outstanding and no shares are held in treasury; 4,000,000
shares of Class B Common Stock, par value $0.01 per share ("Class B Common
Stock"), of which no shares are issued and outstanding and no shares are held in
treasury, and 5,000,000 shares of preferred stock, par value $0.01 per share, of
which no shares are issued or outstanding. Immediately following the Closing,
the entire authorized Capital Stock of the Company will consist of 60,000,000
shares of Class A Common Stock, of which approximately 49,827,788.00 shares will
be issued and outstanding and no shares will be held in treasury; 4,000,000
shares of Class B Common Stock, of which no shares will be issued and
outstanding and no shares will held in treasury, and 5,000,000 shares of
preferred stock, of which 1,668,885.00 shares will be designated Series A
Preferred Stock and will be issued and outstanding and of which 100 shares will
be designated Series B Preferred Stock and will be issued and outstanding.
Except as contemplated herein and by the transactions contemplated hereby, there
are no outstanding or authorized Liens, options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company or its Subsidiaries to issue, sell,
or otherwise cause to become
9
outstanding any of its Capital Stock. There are no outstanding or authorized
stock appreciation, phantom stock, profit participation, or similar rights with
respect to the Company or its Subsidiaries. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of the Capital
Stock of the Company or its Subsidiaries. The Shares have been duly authorized
and when issued, delivered and paid for pursuant to the terms of this Agreement,
will be duly and validly issued, fully paid and non-assessable, except as
otherwise provided in Section 180.0622(2)(b) of the WBCL.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which any of the Company or its Subsidiaries is
subject or any provision of their respective Organizational Documents or (ii)
conflict with, result in a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate, terminate, modify,
or cancel, or require any notice under any material agreement, contract, lease,
license, instrument, or other arrangement to which any of the Company or its
Subsidiaries is a party or by which it is bound or to which any of its assets is
subject (or result in the imposition of any Security Interest upon any of its
assets). None of the Company and its Subsidiaries needs to give any notice to,
make any filing with, or obtain any authorization, consent, or approval of any
government or governmental agency or other Person in order for the Parties to
consummate the transactions contemplated by this Agreement.
(d) Brokers' Fees. Except for fees and commissions owed to Rabobank
International, which shall not exceed $400,000 (plus expenses not to exceed
$75,000), and the fees and expenses pursuant to a management services agreement
to be entered into at Closing pursuant to Section 5(a)(xx), none of the Company
and its Subsidiaries has any Liability or obligation to pay any fees or
commissions to any broker, finder or agent with respect to the transactions
contemplated by this Agreement.
(e) Title to Assets. Except for Permitted Encumbrances, the Company and
its Subsidiaries have good and marketable title to, or a valid leasehold
interest in, the properties and assets used by them, located on their premises,
or shown on the Most Recent Balance Sheet or acquired after the date thereof,
free and clear of all Security Interests, except for properties and assets
disposed of in the Ordinary Course of Business since August 31, 2001. The
Company and its Subsidiaries own, or as of the Closing will own, all of the
assets necessary for the conduct of their respective businesses in the same
manner as they have been conducted since the August 31, 2001.
(f) Subsidiaries. Section 4(f) of the Disclosure Schedule sets forth for
each Subsidiary of the Company (i) its name and jurisdiction of incorporation or
formation, (ii) the number of shares or membership interests, as applicable, of
authorized Capital Stock of each class of its Capital Stock, (iii) the number of
issued and outstanding shares or membership interests, as applicable, of each
class of its Capital Stock, the names of the holders thereof as such names are
reflected in the Company's records, and the number of shares or membership
interests, as applicable, held by each such holder, and (iv) the number of
shares or membership interests, as applicable, of its Capital Stock held in
treasury. All of the issued and outstanding shares or membership interests, as
applicable, of Capital Stock of each Subsidiary and each
10
Affiliate of the Company have been duly authorized and are validly issued, fully
paid, and nonassessable, except as otherwise provided in Section 180.0622(2)(b)
of the WBCL. One of the Company or its Subsidiaries holds of record and owns
beneficially all of the outstanding shares or membership interests, as
applicable, of each Subsidiary of the Company, free and clear of any
restrictions on transfer (other than restrictions under the Securities Act and
state securities laws), Liens, Taxes, Security Interests, options, warrants,
purchase rights, contracts, commitments, equities, claims, and demands. There
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require the Company to sell, transfer, or otherwise
dispose of any Capital Stock of any of its Subsidiaries or that could require
any Subsidiary of the Company to issue, sell, or otherwise cause to become
outstanding any of its own Capital Stock. There are no outstanding stock
appreciation, phantom stock, profit participation, or similar rights with
respect to any Subsidiary of the Company. There are no voting trusts, proxies,
or other agreements or understandings with respect to the voting of any Capital
Stock of any Subsidiary of the Company. None of the Company and its Subsidiaries
controls directly or indirectly or has any direct or indirect equity
participation in any corporation, partnership, trust, or other business
association which is not a Subsidiary of the Company and its Subsidiaries.
(g) Financial Statements. Attached hereto as Exhibit A are the following
financial statements (collectively, including the notes thereto, the "Financial
Statements"): audited consolidated balance sheet as of August 31, 2000 and
unaudited consolidated balance sheet as of August 31, 2001 (the "Most Recent
Balance Sheet") and audited consolidated statements of operations, changes in
shareholders' equity, and cash flows for the fiscal years ended August 31, 1999
and August 31, 2000, and unaudited consolidated statements of operations,
changes in shareholders' equity, and cash flows for the fiscal year ended August
31, 2001, for the Company and its Subsidiaries. The Financial Statements have
been prepared in accordance with GAAP applied on a consistent basis throughout
the periods covered thereby, present fairly the financial condition of the
Company and its Subsidiaries as of such dates and the results of operations of
the Company and its Subsidiaries for such periods, are correct and complete in
all material respects, and are consistent in all material respects with the
books and records of the Company and its Subsidiaries (which books and records
are correct and complete in all material respects).
(h) Events Subsequent to Most Recent Fiscal Year End. Since August 31,
2001, there has not been any material adverse change in the business, financial
condition, operations, or results of operations of the Company and its
Subsidiaries taken as a whole. Without limiting the generality of the foregoing,
except with respect to the transactions contemplated hereby, since that date:
(i) none of the Company and its Subsidiaries has sold, leased,
transferred, or assigned any material assets, tangible or intangible,
outside the Ordinary Course of Business;
(ii) none of the Company and its Subsidiaries has entered into any
material agreement, contract, lease, or license outside the Ordinary Course
of Business;
(iii) no party (including any of the Company or its Subsidiaries) has
accelerated, terminated, made material modifications to, or canceled any
material agreement,
11
contract, lease, or license to which any of the Company or its Subsidiaries
is a party or by which any of them is bound nor will any party have a right
to do the same due to this transaction;
(iv) none of the Company and its Subsidiaries has imposed any Security
Interest upon any of its assets, tangible or intangible including, but not
limited to, its Intellectual Property;
(v) none of the Company and its Subsidiaries has made any capital
expenditures outside the Ordinary Course of Business;
(vi) none of the Company and its Subsidiaries has made any capital
investment in, or any loan to, any other Person outside the Ordinary Course
of Business;
(vii) the Company and its Subsidiaries have not created, incurred,
assumed, or guaranteed any indebtedness for borrowed money and capitalized
lease obligations;
(viii) none of the Company and its Subsidiaries has delayed or
postponed the payment of accounts payable and other Liabilities outside the
Ordinary Course of Business;
(ix) none of the Company and its Subsidiaries has granted any license
or sublicense of any material rights under or with respect to any of its
Intellectual Property;
(x) there has been no change made or authorized in the Organizational
Documents of any of the Company or its Subsidiaries;
(xi) none of the Company and its Subsidiaries has issued, sold, or
otherwise disposed of any of its Capital Stock, or granted any options,
warrants, or other rights to purchase or obtain (including upon conversion,
exchange, or exercise) any of its Capital Stock;
(xii) none of the Company and its Subsidiaries has declared, set
aside, or paid any dividend or made any distribution with respect to its
Capital Stock (whether in cash or in kind) or redeemed, purchased, or
otherwise acquired any of its Capital Stock;
(xiii) none of the Company and its Subsidiaries has experienced any
damage, destruction, or loss (whether or not covered by insurance) to its
property that is material to the Company or its Subsidiaries;
(xiv) none of the Company and its Subsidiaries has made any loan to,
or entered into any other transaction with, any of its directors, officers,
and employees outside the Ordinary Course of Business;
(xv) none of the Company and its Subsidiaries has entered into any
employment contract or collective bargaining agreement, written or oral, or
modified the terms of any existing such contract or agreement;
(xvi) none of the Company and its Subsidiaries has granted any
increase in the base compensation of any of its directors, officers, and
employees outside the Ordinary Course of Business;
12
(xvii) none of the Company and its Subsidiaries has adopted, amended,
modified, or terminated any bonus, profit sharing, incentive, severance, or
other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees (or taken any such action with respect
to any other Employee Benefit Plan);
(xviii) none of the Company and its Subsidiaries has made any other
change in employment terms for any of its directors, officers, and
employees outside the Ordinary Course of Business;
(xix) none of the Company and its Subsidiaries has made or pledged to
make any charitable or other capital contribution outside the Ordinary
Course of Business;
(xx) except as otherwise disclosed in this Section 4(h), there has not
been any other occurrence, event, incident, action, failure to act, or
transaction outside the Ordinary Course of Business involving any of the
Company and its Subsidiaries;
(xxi) none of the Company and its Subsidiaries has committed to any of
the foregoing; and
(xxii) none of the Company and its Subsidiaries has entered into any
agreement to buy any shares of Capital Stock (or other equity interests of
entities other than corporations) of any partnership, joint venture, trust,
corporation, limited liability company or other entity.
(i) Undisclosed Liabilities. None of the Company and its Subsidiaries has
any Liability, except for (i) liabilities set forth in the Financial Statements
or disclosed in the Company's filings with the SEC and (ii) liabilities which
have arisen after August 31, 2001 in the Ordinary Course of Business.
(j) Legal Compliance.
(i) Each of the Company and its Subsidiaries has complied with all
applicable laws (including rules, regulations, codes, plans, injunctions,
judgments, orders, decrees, rulings, and charges thereunder) of federal,
state, local, and foreign governments (and all agencies thereof), and no
action, suit, proceeding, hearing, investigation, charge, complaint, claim,
demand, or notice has been filed or commenced against any of them alleging
any failure so to comply, except where the failure to comply would not have
a material adverse effect on the business, financial condition, operations
or results of operations of the Company or its Subsidiaries.
(ii) To the Knowledge of the Company, the Company and its Subsidiaries
hold and are in compliance in all material respects, or will be in
compliance in all material respects as of the Closing, with all permits,
certificates, licenses, approvals, registrations and authorizations
required by them in connection with the conduct of their respective
businesses and the ownership and operation of their respective assets under
all federal, state, local and foreign laws, rules and regulations (the
"Permits"). All of the Permits are, and as of the Closing of the
transactions contemplated hereby will be, in full force and effect in all
respects in accordance with their respective terms.
13
(k) Tax Matters.
(i) Each of the Company and its Subsidiaries (and any Affiliated
Groups of which any of the Company or its Subsidiaries has been a member at
any time) has filed all Tax Returns that it was required to file. All such
Tax Returns were correct and complete in all respects. All Taxes owed by
any of the Company or its Subsidiaries (and any Affiliated Groups of which
any of the Company or its Subsidiaries has been a member at any time)
(whether or not shown on any Tax Return) have been paid or fully accrued
for in the Financial Statements. None of the Company and its Subsidiaries
(or any Affiliated Groups of which any of the Company or its Subsidiaries
has been a member at any time) currently is the beneficiary of any
extension of time within which to file any Tax Return.
(ii) There is no dispute or claim concerning any Tax Liability of any
of the Company or its Subsidiaries either (A) claimed or raised by any
authority in writing or (B) as to which the Company and the directors and
officers of the Company and its Subsidiaries has Knowledge based upon
personal contact with any agent of such authority.
(iii) Section 4(k) of the Disclosure Schedule lists all federal,
state, local, and foreign Income Tax Returns filed with respect to each of
the Company and its Subsidiaries for taxable periods ended on or after
August 31, 1998 (including any returns filed by the parent of a
consolidated, combined, unitary or similar group which includes any of the
Company and its Subsidiaries for such periods), indicates all Tax Returns
for taxable periods ended on or after August 31, 1998 that have been
audited, and indicates all Tax Returns for taxable periods ended on or
after August 31, 1998 that currently are the subject of audit. The Company
has delivered to the Buyer correct and complete copies of all federal
Income Tax Returns, examination reports, and statements of deficiencies
with respect to each of the Company and its Subsidiaries since August 31,
1998. None of the Company and its Subsidiaries (or any Affiliated Group of
which any of the Company or its Subsidiaries has been a member at any time)
has waived any statute of limitations in respect of Taxes or agreed to any
extension of time with respect to a Tax assessment or deficiency.
(iv) None of the Company and its Subsidiaries has made any payments,
is obligated to make any payments, or is a party to any agreement that
under certain circumstances could obligate it to make any payments that
will not be deductible under Code ss.280G. None of the Company and its
Subsidiaries is a party to any Tax allocation or sharing agreement. None of
the Company and its Subsidiaries (A) has been a member of an Affiliated
Group filing a consolidated federal Income Tax Return (other than a group
the common parent of which was the Company) or (B) has any Liability for
the Taxes of any Person (other than any of the Company or its Subsidiaries)
under Reg. ss.1.1502-6 (or any similar provision of state, local, or
foreign law), as a transferee or successor, by contract, or otherwise.
(v) The unpaid Taxes of the Company and its Subsidiaries did not, as
of August 31, 2001, exceed the reserve for Tax Liability (rather than any
reserve for deferred Taxes established to reflect timing differences
between book and Tax income) set forth in the Financial Statements and will
not exceed that reserve as adjusted for operations and transactions through
the Closing Date.
14
(vi) None of the Company and its Subsidiaries will be required to
include any item of income in, or exclude any item of deduction from,
taxable income for any taxable period (or portion thereof) ending after the
Closing Date as a result of any (A) change in method of accounting for a
taxable period ending on or prior to the Closing Date under Code ss.481(c)
(or any corresponding or similar provision of state, local or foreign
Income Tax law); (B) "closing agreement" as described in Code ss.7121 (or
any corresponding or similar provision of state, local or foreign Income
Tax law) executed on or prior to the Closing Date; (C) deferred
intercompany gain or any excess loss account described in Treasury
Regulations under Code ss.1502 (or any corresponding or similar provision
of state, local or foreign Income Tax law); (D) installment sale or open
transaction disposition made on or prior to the Closing Date; or (E)
prepaid amount received on or prior to the Closing Date.
(vii) There are no Liens for Taxes (other than Taxes not yet due and
payable) upon the assets of any of the Company and its Subsidiaries (and
any Affiliated Group of which any of the Company or its Subsidiaries has
been a member at any time).
(viii) None of the Company and its Subsidiaries has been a United
States real property holding corporation within the meaning of Code
ss.897(c)(2) during the applicable period specified in Code
ss.897(c)(1)(A)(ii).
(l) Real Property.
(i) Section 4(l)(i) of the Disclosure Schedule sets forth the address
and description of each parcel of Owned Real Property. With respect to each
parcel of Owned Real Property:
(A) the Company or one of its Subsidiaries has good and
marketable fee simple title, free and clear of all liens and
encumbrances, except Permitted Encumbrances;
(B) none of the Company or its Subsidiaries has leased or
otherwise granted to any Person the right to use or occupy such Owned
Real Property or any portion thereof; and
(C) there are no outstanding options, rights of first offer or
rights of first refusal to purchase such Owned Real Property or any
portion thereof or interest therein.
(ii) Section 4(l)(ii) of the Disclosure Schedule sets forth the
address of each parcel of Leased Real Property, and a true and complete
list of all Leases for each such Leased Real Property (including the date
and name of the parties to such Lease document). The Company has delivered
to the Buyer a true and complete copy of each such Lease document
(including all amendments, extensions, renewals, guaranties and other
documents with respect thereto), and in the case of any oral Lease, a
written summary of the material terms of such Lease. With respect to each
of the Leases:
(A) such Lease is legal, valid, binding, enforceable and in full
force and effect;
15
(B) the transaction contemplated by this Agreement does not
require the consent of any other party to such Lease, will not result
in a breach of or default under such Lease, and will not otherwise
cause such Lease to cease to be legal, valid, binding, enforceable and
in full force and effect on identical terms following the Closing;
(C) to the Knowledge of the Company, no party to such Lease has
repudiated any provision thereof, and there are no disputes, oral
agreements or forbearance programs in effect with respect to such
Lease;
(D) to the Knowledge of the Company, none of the Company and its
Subsidiaries, or any other party to the Lease, is in breach or default
under such Lease, and, to the Knowledge of the Company, no event has
occurred or circumstance exists which, with the delivery of notice,
the passage of time or both, would constitute such a breach or
default, or permit the termination, modification or acceleration of
rent under such Lease;
(E) no security deposit or portion thereof deposited with respect
to such Lease has been applied in respect of a breach or default under
such Lease which has not been redeposited in full;
(F) none of the Company and its Subsidiaries owes, or will owe in
the future, any brokerage commissions or finder's fees with respect to
such Lease;
(G) the other party to such Lease is not an Affiliate of, and
otherwise does not have any economic interest in, any of the Company
or its Subsidiaries;
(H) none of the Company and its Subsidiaries has subleased,
licensed or otherwise granted any Person the right to use or occupy
such Leased Real Property or any portion thereof; and
(I) none of the Company and its Subsidiaries has collaterally
assigned or granted any other security interest in such Lease or any
interest therein.
(iii) The Owned Real Property identified in Section 4(l)(i) of the
Disclosure Schedule, and the Leased Real Property identified in Section
4(l)(ii) of the Disclosure Schedule (the "Real Property") comprise all of
the real property used or intended to be used in the business of the
Company and its Subsidiaries; and none of the Company and its Subsidiaries
is a party to any agreement or option to purchase any real property or
interest therein.
(iv) To the Knowledge of the Company, (A) all buildings (or portions
thereof), structures, fixtures and building systems, included in the Real
Property are in condition and repair sufficient for the operation of the
business of the Company and its Subsidiaries, and (B) those building
systems which are not included in the Real Property and all equipment, and
all components thereof, are in good condition and repair, reasonable wear
and tear excepted, and sufficient for the operation of the business of the
Company and its Subsidiaries. To the Knowledge of the Company, there are no
facts or conditions affecting any of the Improvements which would,
individually or in the aggregate, interfere in any material respect with
the use or
16
occupancy of the Improvements or any portion thereof in the operation of
the business of the Company and its Subsidiaries as currently conducted
thereon.
(v) None of Company or its Subsidiaries has received written notice of
any condemnation, expropriation or other proceeding in eminent domain,
affecting any parcel of Owned Real Property or any portion thereof or
interest therein. There is no injunction, decree, order, writ or judgment
outstanding, nor any claims, litigation, administrative actions or similar
proceedings, pending, or, to the Knowledge of the Company, threatened,
relating to the ownership, lease, use or occupancy of the Owned Real
Property or any portion thereof, or the operation of the business of the
Company or its Subsidiaries as currently conducted thereon and will not
exceed that reserve as adjusted for operations and transactions through the
Closing Date.
(vi) To the Knowledge of the Company, the Real Property is in material
compliance with all applicable building, zoning, subdivision, health and
safety and other land use Laws, including The Americans with Disabilities
Act of 1990, as amended, and all insurance requirements affecting the Real
Property (collectively, the "Real Property Laws"). None of Company or its
Subsidiaries has received any notice of violation of any Real Property Law
and, to the Knowledge of the Company, there is no basis for the issuance of
any such notice or the taking of any action for such violation.
(vii) To the Knowledge of the Company, all certificates of occupancy,
permits, licenses, franchises, approvals and authorizations (collectively,
the "Real Property Permits") of all governmental authorities having
jurisdiction over the Real Property, required or appropriate to have been
issued to the Company or its Subsidiaries to enable the Real Property to be
lawfully occupied and used for all of the purposes for which it is
currently occupied and used have been lawfully issued and are in full force
and effect. Neither the Company nor any Subsidiary has received or been
informed by a third party of the receipt by it of any notice from any
governmental authority having jurisdiction over the Real Property
threatening a suspension, revocation, modification or cancellation of any
Real Property Permit and, to the Knowledge of the Company, there is no
basis for the issuance of any such notice or the taking of any such action.
(viii) Each parcel of Real Property has direct access to a public
street adjoining the Real Property or has access to a public street via
insurable easements benefitting such parcel of Real Property, and such
access is not dependent on any land or other real property interest which
is not included in the Real Property. None of the Improvements or any
portion thereof is dependent for its access, use or operation on any land,
building, improvement or other real property interest which is not included
in the Real Property.
(ix) To the Knowledge of the Company, all water, oil, gas, electrical,
steam, compressed air, telecommunications, sewer, storm and waste water
systems and other utility services or systems for the Real Property have
been installed and are operational and sufficient for the operation of the
business of the Company and its Subsidiaries as currently conducted
thereon.
(x) To the Knowledge of the Company, the Company and its Subsidiaries'
use or occupancy of the Real Property or any portion thereof and the
operation of the business of the
17
Company and its Subsidiaries as currently conducted thereon is not
dependent on a "permitted nonconforming use" or "permitted non-conforming
structure" or similar variance, exemption or approval from any governmental
authority.
(xi) To the Knowledge of the Company, the current use and occupancy of
the Owned Real Property and the operation of the business of the Company
and its Subsidiaries as currently conducted thereon does not violate any
easement, covenant, condition, restriction or, similar provision in any
instrument of record or other unrecorded agreement affecting such Owned
Real Property, the violation of which would have a material adverse effect
on the operation of the business of the Company or its Subsidiaries.
(m) Intellectual Property.
(i) To the Knowledge of the Company, none of the Company and its
Subsidiaries has interfered with, infringed, misappropriated, or violated
any Intellectual Property rights of third parties that are currently not
resolved, and neither the Company nor the directors, officers or employees
of the Company and its Subsidiaries has received any correspondence,
charge, complaint, claim, demand, or notice alleging any such non-resolved
interference, infringement, misappropriation, or violation (including any
offer for a license or any claim that any of the Company or its
Subsidiaries must refrain from using any Intellectual Property rights of
any third party). To the Knowledge of the Company, no third party has
interfered with, infringed, misappropriated, or violated any Intellectual
Property rights of any of the Company or its Subsidiaries that are
currently not resolved.
(ii) Section 4(m)(ii) of the Disclosure Schedule identifies each
issued patent and each trademark, service ▇▇▇▇, copyright, trade name and
domain name registration that has been issued to any of the Company or its
Subsidiaries with respect to any of its and their Intellectual Property,
identifies each pending patent application and all applications for
registration of any trademark, service ▇▇▇▇, copyright and trade name that
any of the Company or its Subsidiaries has made with respect to any of its
Intellectual Property, and identifies each license, agreement, or other
permission that any of the Company or its Subsidiaries has granted to any
third party with respect to any of its Intellectual Property (together with
any exceptions). The Company has delivered to the Buyer correct and
complete copies of all such patents, registrations, applications for
registration and patent, licenses, agreements, and permissions (as
amended). Section 4(m)(ii) of the Disclosure Schedule also identifies each
trade name, unregistered trademark, and unregistered copyright used by any
of the Company or its Subsidiaries in connection with any of its
businesses. With respect to each item of Intellectual Property required to
be identified in Section 4(m)(ii) of the Disclosure Schedule:
(A) the Company and its Subsidiaries possess all right, title,
and interest in and to such item, free and clear of any Security
Interest, license, or other restriction or Liens;
(B) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling, or charge;
18
(C) no action, suit, proceeding (administrative or judicial),
hearing, investigation, charge, complaint, claim, or demand is pending
or, to the Knowledge of the Company is threatened which challenges the
legality, validity, enforceability, use, or ownership of the item;
(D) all maintenance and other fees for Intellectual Property
registrations have been paid and are up to date, and all applications
for registration of the Intellectual Property are in good standing and
are being diligently prosecuted; and
(E) none of the Company and its Subsidiaries has ever agreed to
indemnify any Person for or against any use, interference,
infringement, misappropriation or other conflict with respect to the
item.
(iii) Section 4(m)(iii) of the Disclosure Schedule identifies each
material item of Intellectual Property that any third party owns and that
any of the Company or its Subsidiaries uses pursuant to license,
sublicense, lease, agreement, or permission. The Company has delivered to
the Buyer correct and complete copies of all such licenses, sublicenses,
leases, agreements, and permissions (as amended). With respect to each item
of Intellectual Property required to be identified in Section 4(m)(iii) of
the Disclosure Schedule:
(A) the license, sublicense, agreement, or permission covering
the item is legal, valid, binding, enforceable, and in full force and
effect in all respects;
(B) no party to the license, sublicense, agreement, or
permission is in breach or default, and no event has occurred which
with notice or lapse of time would constitute a breach or default or
permit termination, modification, or acceleration thereunder;
(C) no party to the license, sublicense, lease, agreement, or
permission has repudiated any provision thereof nor shall have a right
to do the same as a result of this transaction; and
(D) none of the Company and its Subsidiaries has granted any
sublicense or similar right with respect to such license, sublicense,
lease, agreement, or permission.
(n) Tangible Assets. The Company and its Subsidiaries have good and
marketable title to and are in possession of all items of tangible personal
property used in their respective businesses (other than leased property), and
such property is free and clear of all Security Interests. The buildings,
machinery, equipment and other tangible assets that the Company and its
Subsidiaries own or lease are free from material defects (patent and latent),
have been maintained in accordance with normal industry practice, and are in
good operating condition and repair (subject to normal wear and tear). Section
4(n) of the Disclosure Schedule hereto describes all sales of Tangible Personal
Property by the Company and its Subsidiaries since August 31, 2001 outside the
Ordinary Course of Business and sets forth (i) the date of any such sale, (ii) a
description of the Tangible Personal Property sold in any such sale, (iii) the
sales price of the Tangible Personal Property sold in any such sale and (iv) the
reason(s) for such sale.
19
(o) Contracts. Section 4(o) of the Disclosure Schedule lists the following
contracts and other agreements, whether written or oral, to which any of the
Company or its Subsidiaries is a party or otherwise bound (except those
agreements contemplated by this Agreement or in connection with the
restructuring in connection therewith):
(i) any agreement (or group of related agreements) for the lease of
personal property to or from any Person providing for lease payments which
extend over a period of more than 180 days or include consideration in
excess of $250,000;
(ii) any agreement (or group of related agreements) for the purchase
or sale of raw materials, commodities, supplies, products, or other
personal property, or for the furnishing or receipt of services, the
performance of which will extend over a period of more than 180 days or
involve consideration in excess of $250,000;
(iii) any agreement concerning a partnership or joint venture;
(iv) any agreement (or group of related agreements) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed
money, or any capitalized lease obligation, or under which it has imposed a
Security Interest on any of its assets, tangible or intangible;
(v) any material agreement imposing confidentiality obligations on the
Company or its Subsidiaries;
(vi) any contract or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world;
(vii) any agreement with the Company and its Affiliates (other than
the Company and its Subsidiaries);
(viii) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or
arrangement for the benefit of its current or former directors, officers,
and employees;
(ix) any collective bargaining agreement;
(x) any agreement for the employment of any individual on a full-time,
part-time, consulting, or other basis providing annual compensation in
excess of $50,000 or providing material severance benefits;
(xi) any contract, agreement or other arrangement with any officer or
director of the Company or any of its Subsidiaries;
(xii) any agreement under which it has advanced or loaned any amount
to any of its directors, officers, and employees;
20
(xiii) any agreement under which the consequences of a default or
termination could have a material adverse effect on the business, financial
condition, operations or results of operations of the Company or its
Subsidiaries; or
(xiv) any other agreement (or group of related agreements) the
performance of which involves consideration in excess of $250,000.
The Company has delivered to the Buyer a correct and complete copy of each
written agreement (as amended) listed in Section 4(o) of the Disclosure Schedule
and a written summary setting forth the material terms and conditions of each
oral agreement referred to in Section 4(o) of the Disclosure Schedule. With
respect to each such agreement: (A) the agreement is legal, valid, binding,
enforceable (except as enforceability may be limited by bankruptcy, insolvency,
moratorium or other similar laws affecting or relating to creditors' rights
generally, and by general equitable principles) and in full force and effect;
(B) the agreement will continue to be legal, valid, binding, enforceable (except
as enforceability may be limited by bankruptcy, insolvency, moratorium or other
similar laws affecting or relating to creditors' rights generally, and by
general equitable principles), and in full force and effect on identical terms
following the consummation of the transactions contemplated hereby, (C) the
Company is not, and to the Knowledge of the Company, no other party is in breach
or default, and no event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination, modification, or
acceleration, under the agreement; and (D) the Company has not, and to the
Knowledge of the Company, no other party has repudiated any material provision
of the agreement.
(p) Notes and Accounts Receivable. Section 4(p) of the Disclosure Schedule
is an accounts receivable aging report which shows (i) the accounts receivable
of the Company and its Subsidiaries, (ii) the name of each account debtor, (iii)
the aging of each account receivable and the nature of the transaction in which
it arose if other than an account receivable arising in the Ordinary Course of
Business and (iv) a list of the provisions for reserves for doubtful accounts
receivable or write-offs of accounts receivable made by the Company and its
Subsidiaries since August 31, 1999. The accounts receivable of the Company and
its Subsidiaries represent bona fide indebtedness incurred by account debtors
and arose in the Ordinary Course of Business. No event has occurred that would,
under practices in effect when the Most Recent Balance Sheet was prepared,
require an increase in the reserves for any accounts receivable and, to the
Knowledge of the Company, there is no contest, claim or right of set-off with
any account debtor relating to the amount or validity of any account receivable
other than those which do not exceed, in the aggregate, the reserve for
uncollectible accounts contained in the Financial Statements. The Company and
its Subsidiaries have good and marketable title to their respective accounts
receivable reflected on the Most Recent Balance Sheet and to each of the
accounts receivables that arose after August 31, 2001, free and clear of all
Security Interests.
(q) Powers of Attorney. To the Knowledge of the Company, there are no
outstanding powers of attorney executed on behalf of any of the Company or its
Subsidiaries.
(r) Insurance. Section 4(r) of the Disclosure Schedule sets forth the
following information with respect to each insurance policy (including policies
providing property, casualty, liability, and workers' compensation coverage and
bond and surety arrangements)
21
currently in effect with respect to which any of the Company or its Subsidiaries
is a party, a named insured, or otherwise the beneficiary of coverage:
(i) the name, address, and telephone number of the agent;
(ii) the name of the insurer, the name of the policyholder, and the
name of each covered insured;
(iii) the policy number and the period of coverage;
(iv) the scope (including an indication of whether the coverage is on
a claims made, occurrence, or other basis) and amount (including a
description of how deductibles and ceilings are calculated and operate) of
coverage; and
(v) a description of any retroactive premium adjustments or other
material loss-sharing arrangements.
With respect to each such insurance policy: (A) the policy is legal, valid,
binding, enforceable, and in full force and effect in all material respects; (B)
the policy will continue to be legal, valid, binding, enforceable, and in full
force and effect on identical terms following the consummation of the
transactions contemplated hereby; (C) neither any of the Company or its
Subsidiaries nor, to the Knowledge of the Company, any other party to the policy
is in breach or default (including with respect to the payment of premiums or
the giving of notices), and, to the Knowledge of the Company, no event has
occurred which, with notice or the lapse of time, would constitute such a breach
or default, or permit termination, modification, or acceleration, under the
policy; and (D) no party to the policy has repudiated any material provision
thereof. Section 4(r) of the Disclosure Schedule describes any material
self-insurance arrangements affecting any of the Company or its Subsidiaries.
(s) Litigation. Section 4(s) of the Disclosure Schedule sets forth each
instance in which any of the Company or its Subsidiaries (i) is subject to any
outstanding injunction, judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Knowledge of the Company, is threatened to be made a party to
any action, suit, proceeding, hearing, or investigation of, in, or before any
court or quasi-judicial or administrative agency of any federal, state, local,
or foreign jurisdiction or before any arbitrator. None of the actions, suits,
proceedings, hearings, and investigations set forth in Section 4(s) of the
Disclosure Schedule could reasonably be expected result in any material adverse
change in the business, financial condition, operations or results of operations
of any of the Company and its Subsidiaries. To the Knowledge of the Company,
there is no reason to believe that any such action, suit, proceeding, hearing,
or investigation may be brought or threatened against any of the Company and its
Subsidiaries.
(t) Employees. To the Knowledge of the Company, no executive, key
employee, or significant group of employees plans to terminate employment with
any of the Company or its Subsidiaries during the next 12 months. None of the
Company and its Subsidiaries is a party to or bound by any collective bargaining
agreement, nor has any of them experienced any strike or material grievance,
claim of unfair labor practices, or other collective bargaining dispute within
the past three years. None of the Company and its Subsidiaries has committed any
material
22
unfair labor practice. To the Knowledge of the Company, there are no
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of any of the Company or its Subsidiaries.
(u) Employee Benefits.
(i) Section 4(u) of the Disclosure Schedule sets forth an accurate and
complete list of each material Employee Benefit Plan that any of the
Company or its Subsidiaries or ERISA Affiliates maintains, has any
Liability or potential Liability, or to which any of the Company or its
Subsidiaries or ERISA Affiliates contributes or has any obligation to
contribute on behalf of any current or former employees of the Company and
its Subsidiaries; and, with respect to each such Employee Benefit Plan:
(A) such Employee Benefit Plan (and each related trust, insurance
contract, or fund) has been maintained, funded and administered
substantially in accordance with the terms of such Employee Benefit
Plan and complies in form and in operation in all material respects
with the applicable requirements of ERISA, the Code, and other
applicable laws;
(B) all required reports and descriptions (including annual
reports (IRS Form 5500), summary annual reports, and summary plan
descriptions) have been timely filed and/or distributed in accordance
with the applicable requirements of ERISA and the Code with respect to
each such Employee Benefit Plan. The requirements of COBRA have been
met in all material respects with respect to each such Employee
Benefit Plan which is an Employee Welfare Benefit Plan subject to
COBRA;
(C) all contributions (including all employer contributions and
employee salary reduction contributions) which are due for any period
ending on or before the Closing Date have been made within the time
periods prescribed by ERISA and the Code to each such Employee Benefit
Plan which is an Employee Pension Benefit Plan and all contributions
for any period ending on or before the Closing Date which are not yet
due have been made to each such Employee Pension Benefit Plan or
accrued by the Company and its Subsidiaries. All premiums or other
payments for all periods ending on or before the Closing Date have
been paid with respect to each such Employee Benefit Plan which is an
Employee Welfare Benefit Plan;
(D) each such Employee Benefit Plan which is intended to meet the
requirements of a "qualified plan" under Code ss.401(a) has received a
favorable determination letter from the Internal Revenue Service that
such Employee Benefit Plan is so qualified, and there are no facts or
circumstances which exist that could reasonably be expected to
adversely affect the qualified status of any such Employee Benefit
Plan;
(E) the market value of assets under each such Employee Benefit
Plan which is an Employee Pension Benefit Plan (other than any
Multiemployer Plan) equals or exceeds the present value of all vested
and nonvested liabilities thereunder (determined on a plan termination
basis using interest rates, factors and other methods specified by the
Pension Benefits Guaranty Corporation (including its regulations) for
the valuation of benefits upon a plan termination);
23
(F) the Company has delivered or made available to the Buyer or
its agents correct and complete copies of the plan documents and
summary plan descriptions, the most recent favorable determination
letter received from the Internal Revenue Service, the most recent
annual report (IRS Form 5500, with all applicable attachments), and
all related trust agreements, insurance contracts, and other funding
arrangements which implement or form a part of each such Employee
Benefit Plan; and
(G) no employee or former employee of the Company and its
Subsidiaries will become entitled to any bonus, severance, job
security, or similar benefit or any enhanced benefit (including,
without limitation, the acceleration of vesting or exercise of an
incentive award) solely as a result of the transactions contemplated
hereby.
(ii) With respect to each Employee Benefit Plan that any of the
Company or its Subsidiaries and any ERISA Affiliate maintains, to which any
of them contributes, or has any obligation to contribute, or with respect
to which any of them has any Liability or potential Liability:
(A) no such Employee Benefit Plan which is an Employee Pension
Benefit Plan (other than any Multiemployer Plan) has been completely
or partially terminated or been the subject of a Reportable Event as
to which notices would be required to be filed with the PBGC. No
proceeding by the PBGC to terminate any such Employee Pension Benefit
Plan (other than any Multiemployer Plan) has been instituted or, to
the Knowledge of the Company, threatened;
(B) there have been no Prohibited Transactions with respect to
any such Employee Benefit Plan. No Fiduciary has any Liability for any
breach of fiduciary duty or any other failure to act or comply in
connection with the administration or investment of the assets of any
such Employee Benefit Plan nor do the transactions contemplated by
this agreement constitute transactions which would subject any such
party to either a civil penalty assessed pursuant to ERISA ss.502(i)
or the Tax or penalty on prohibited transactions imposed by Code
ss.4975. No action, suit, proceeding, hearing, or investigation with
respect to the administration or the investment of the assets of any
such Employee Benefit Plan (other than routine claims for benefits) is
pending or, to the Knowledge of the Company, threatened which could
result in any Liability to the Company and its Subsidiaries and, to
the Knowledge of the Company, there are no circumstances which could
give rise to any such action, suit, proceeding, hearing, or
investigation;
(C) none of the Company and its Subsidiaries has incurred any
Liability (whether known or unknown, whether asserted or unasserted,
whether absolute or contingent, whether accrued or unaccrued, whether
liquidated or unliquidated, and whether due or to become due) to the
PBGC (other than with respect to PBGC premium payments not yet due) or
otherwise under Title IV of ERISA (including any withdrawal liability
as defined in ERISA ss.4201) or under the Code with respect to any
such Employee Benefit Plan which is an Employee Pension Benefit Plan,
or under COBRA with respect to any such Employee Benefit Plan which is
an Employee Welfare Benefit Plan;
24
(iii) none of the Company and its Subsidiaries or any ERISA Affiliate
contributes to, has any obligation to contribute to, or has any Liability
(whether known or unknown, whether asserted or unasserted, whether absolute
or contingent, whether accrued or unaccrued, whether liquidated or
unliquidated, and whether due or to become due), including any withdrawal
liability (as defined in ERISA ss.4201), under or with respect to any
Multiemployer Plan; and
(iv) none of the Company and its Subsidiaries maintains, contributes
to or has an obligation to contribute to, or has any Liability or potential
Liability with respect to, any Employee Welfare Benefit Plan providing
medical, health, or life insurance or other welfare-type benefits for
current or future retired or terminated employees of the Company and its
Subsidiaries (or any spouse or other dependent thereof) other than in
accordance with COBRA.
(v) Guaranties. None of the Company and its Subsidiaries is a guarantor or
otherwise is responsible for any Liability or obligation (including
indebtedness) of any other Person.
(w) Environment, Health, and Safety Matters.
(i) Each of the Company and its Subsidiaries and their respective
predecessors and Affiliates and all of the Real Property and the use and
development thereof has complied in all material respects and is in
compliance in all material respects with all Environmental, Health, and
Safety Requirements.
(ii) Without limiting the generality of the foregoing, each of the
Company and its Subsidiaries and their respective Affiliates, has obtained,
has complied, and is in compliance in all material respects with all
permits, licenses and other authorizations that are required pursuant to
Environmental, Health, and Safety Requirements for the occupation of its
facilities, the development and use of the Real Property, and the operation
of its business.
(iii) None of the Company and its Subsidiaries or their respective
Affiliates has received any written or oral notice, report or other
information regarding any actual or alleged violation of Environmental,
Health, and Safety Requirements, or any Liabilities or potential
Liabilities (whether accrued, absolute, contingent, unliquidated or
otherwise), including any investigatory, remedial or corrective
obligations, relating to any of them or their facilities (including without
limitation the Real Estate) arising under Environmental, Health, and Safety
Requirements.
(iv) None of the following exists at any property or facility owned or
operated by the Company or its Subsidiaries: (1) underground storage tanks,
(2) asbestos-containing material in any friable and damaged form or
condition, (3) materials or equipment containing polychlorinated biphenyls,
or (4) solid waste landfills, solid waste surface impoundments, or solid
waste disposal areas.
(v) To the Knowledge of the Company, none of the Company and its
Subsidiaries or any of their respective predecessors or Affiliates has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any substance, including without
limitation any hazardous substance, or owned or operated any property or
25
facility (and no such property or facility is contaminated by any such
substance) in a manner that has given or would give rise to Liabilities,
including any Liability for response costs, corrective action costs,
personal injury, property damage, natural resources damages or attorney
fees or any remedial or corrective obligation, pursuant to the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended ("CERCLA") or the Solid Waste Disposal Act, as amended
("SWDA") or any other Environmental, Health, and Safety Requirements.
(vi) Except as set forth in Section 8(q) hereof, neither this
Agreement nor the consummation of the transaction that is the subject of
this Agreement will result in any obligations for site investigation or
cleanup, or notification to or consent of government agencies or third
parties, pursuant to any of the so-called "transaction-triggered" or
"responsible property transfer" Environmental, Health, and Safety
Requirements.
(vii) None of the Company and its Subsidiaries has assumed,
undertaken, or otherwise become subject to, any Liability, including
without limitation any obligation for corrective or remedial action, of any
other person or entity relating to Environmental, Health, and Safety
Requirements.
(viii) The Company has provided to the Buyer copies of all
environmental reports, audits, assessments, and investigations, all
wetlands related studies or sampling documents, and any other material
environmental documents, related to the past or present facilities,
properties or operations of the Company and its Subsidiaries or any of
their respective predecessors, to the extent the foregoing are in the
possession, custody, or control of the Company or any of the Company and
its Subsidiaries.
(x) Certain Business Relationships With the Company and its Subsidiaries.
Neither the Company nor its Subsidiaries has entered into any agreements with
any Affiliate of the Company or its Subsidiaries which is still in force, and no
Affiliate of the Company or its Subsidiaries owns any asset, tangible or
intangible, which is used in the business of the Company or its Subsidiaries.
(y) SEC Documents.
(i) The Company has filed all required forms, reports and documents
with the Commission since September 30, 1998, including all exhibits
thereto (collectively, the "SEC Documents"), each of which complied in all
material respects with all applicable requirements of the Securities Act
and the Exchange Act as in effect on the dates so filed. None of the SEC
Documents (as of their respective filing dates or, if amended, as of the
date of the last such amendment filed prior to the date hereof) contained
any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
(ii) To the Company's Knowledge, there are no facts that could,
individually or in the aggregate, reasonably be expected to have a material
adverse effect and that have not been disclosed in the SEC Documents or
this Agreement (including the Disclosure Schedule)
26
other than the transactions contemplated hereby and the related
restructuring in connection herewith.
(z) Relationships with Customers and Vendors. Section 4(z) of the
Disclosure Schedule sets forth a complete and correct list of the names and
addresses of the ten (10) largest vendors and the ten (10) largest customers of
each of the Company and its Subsidiaries during the twelve-month period ended on
August 31, 2001 and the total sales to or purchases from such customers or
vendors made by the Company and its Subsidiaries during each such twelve-month
period. No such vendor or customer of the Company and its Subsidiaries has
advised the Company and its Subsidiaries, formally or, to the Knowledge of the
Company, informally, and to the Knowledge of the Company no such vendor or
customer intends to terminate, discontinue or reduce its business with the
Company and its Subsidiaries by reason of the transactions contemplated by this
Agreement or otherwise.
(aa) Accounts Payable and Other Accrued Expenses. The accounts payable,
premiums payable to carriers, commissions payable and other accrued expenses of
the Company and its Subsidiaries represent bona fide obligations incurred by the
Company and its Subsidiaries which arose in the Ordinary Course of Business. Set
forth on Section 4(aa) of the Disclosure Schedule is a list of all accounts
payable, premiums payable to carriers and other accrued expenses as of August
31, 2001, in each case indicating the name of each payee, the relationship (if
any) of the payee to the Company and its Subsidiaries, the amount payable to
each payee, the date each such payment is due, the aging of such payable and the
nature of the transaction in which it was incurred if other than a trade payable
incurred in the Ordinary Course of Business consistent with past practice.
(bb) Bank Accounts. Section 4(bb) of the Disclosure Schedule sets forth:
(a) the name of each bank in which the Company and its Subsidiaries have an
account or safe deposit box used in their respective businesses and the names of
all persons authorized to draw thereon or to have access thereto; and (b) the
name of each person, corporation, firm, association or business organization,
entity or enterprise holding a general or special power of attorney from the
Company and its Subsidiaries with respect to such accounts and safe deposits
boxes.
(cc) Information Accurate and Complete; Reliance. Without limiting the
specific language of any other representation or warranty in this Section 4, all
information furnished or to be furnished by the Company and its Subsidiaries to
the Buyer in this Agreement, and in exhibits or schedules attached hereto, is or
will be accurate and complete, includes or will include, to the Knowledge of the
Company, all material facts required to be stated therein, and to the Knowledge
of the Company, does not or will not contain any untrue statement of a material
fact or omit any material fact necessary to make the statements therein not
misleading. Notwithstanding any right of the Buyer fully to investigate the
affairs of the Company and its Subsidiaries, and notwithstanding any knowledge
of facts determined or determinable by the Buyer pursuant to such investigation
or right of investigation, the Buyer has the right to rely fully upon the
representations and warranties of the Company, contained herein, in the exhibits
or the schedules hereto or in any other document delivered in connection with
the transactions contemplated hereby.
27
5. Conditions to Obligation to Close.
(a) Conditions to Obligation of the Buyer. The obligation of the Buyer to
consummate the transactions to be performed by it in connection with the Closing
is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in Section 4 above
shall be true and correct in all material respects (except to the extent
that any such representation or warranty is qualified by any materiality
standard, in which case such representation and warranty shall be true and
correct in all respects) at and as of the Closing Date;
(ii) the Company shall have provided notices to third parties, and
shall have procured any third party consents, that the Buyer reasonably
requested in connection with the matters referred to in Section 4(c) above;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement, (B)
cause any of the transactions contemplated by this Agreement to be
rescinded following consummation, (C) affect adversely the right of the
Buyer to own the Shares and to control the Company and its Subsidiaries, or
(D) affect materially and adversely the right of any of the Company or its
Subsidiaries to own its assets and to operate its businesses (and no such
injunction, judgment, order, decree, ruling, or charge shall be in effect);
(iv) the Buyer, the Company, and the other parties thereto shall have
entered into a Stockholders' Agreement in the form of Exhibit C attached
hereto and the same shall be in full force and effect;
(v) the Buyer, the Company, and the other parties thereto shall have
entered into a Registration Agreement in the form of Exhibit D attached
hereto and the same shall be in full force and effect;
(vi) the Parties shall have received all other material
authorizations, consents, and approvals of governments and governmental
agencies referred to in Section 3(b), and Section 4(c) above;
(vii) the Company shall have furnished the Buyer with the following
certificates:
(A) certificates, executed by the proper official of each
jurisdiction, as to the Good Standing and qualification to do business
of the Company and its Subsidiaries in each jurisdiction where the
Company or its Subsidiaries is currently qualified to do business;
(B) a certificate from the Secretary of the Company confirming
the existence, incorporation and Good Standing of the Company on the
Closing Date, and attaching copies of its Organizational Documents,
and resolutions authorizing the execution, delivery and
28
performance of this Agreement and all other documents and the taking
of all action required thereunder or in connection therewith on behalf
of the Company and its Subsidiaries;
(viii) the Buyer shall have received from ▇▇▇▇▇ & ▇▇▇▇▇▇▇ an opinion
in form and substance as set forth in Exhibit B attached hereto, addressed
to the Buyer, and dated as of the Closing Date;
(ix) the Buyer shall have received the written resignations, effective
as of the Closing, of each director of each of the Company's Subsidiaries
(other than NCI Foods, LLC and W.S.C. Water Management Corp., and the two
directors of Northland Cranberries Sales Corp. who reside in the U.S.
Virgin Islands) and of each director, other than ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, of the
Company;
(x) the Company shall have taken such action so that: (i) ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ shall be been appointed to the Board of Directors of the Company,
(ii) ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall each have been appointed
Vice-Chairmen of the Board, (iii) ▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall
have been appointed as the sole members of the Board of Directors of each
of the Company's Subsidiaries (other than NCI Foods, LLC, W.S.C. Water
Management Corp. and Northland Cranberries Sales Corp.) and (iv) ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ shall have been appointed to
the Board of Directors of Northland Cranberries Sales Corp., all in
accordance with any applicable Organizational Documents and in compliance
with all applicable laws;
(xi) all actions to be taken by the Company in connection with
consummation of the transactions contemplated hereby and all certificates,
opinions, instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in form
and substance to the Buyer;
(xii) the Company shall have obtained, in preparation for Closing, at
the Company's own cost and expense, and shall have delivered to the Buyer,
a commitment for an ALTA Owners Policy of Title Insurance, Form B-1970 (or
other form of policy reasonably acceptable to the Buyer), for each parcel
of Owned Real Property identified in Section 4(l)(i) of the Disclosure
Schedule (the "Title Commitments"), issued by a title insurer satisfactory
to the Buyer (the "Title Insurer"), in such amount as the Buyer and the
Company reasonably determine to be the fair market value (including all
improvements thereon), insuring the Buyer's interest in such parcel as of
Closing, subject only to the Permitted Encumbrances and standard title
insurance exceptions and requirements, which will be removed or satisfied
on or before the Closing except as the same relate to matters appearing in
title to the Bog Properties that require a survey for removal. The Company
shall deliver at the time of delivery of the Title Commitments, copies of
all documents of record referred to therein. The Company will provide the
Buyer with title insurance policies ("Title Policies") on or before the
Closing, from the Title Insurer based upon the Title Commitments. The
Company will deliver to the Title Insurer all affidavits, undertakings and
other title clearance documents reasonably necessary to issue the Title
Policies and endorsements thereto. Each such Title Policy will be dated as
of the date of closing and (a) insure title to the applicable parcels of
real estate and all recorded easements benefitting such parcels, subject
only to Permitted Encumbrances, (b) contain an "extended
29
coverage endorsement" insuring over the general exceptions contained
customarily in such policies, excepting survey matters with respect to the
Bog Properties, (c) with respect to the Facility Properties, contain an
ALTA Zoning Endorsement 3.1, with parking (or equivalent) to the extent
available in the jurisdiction in which the property is located, (d) with
respect to the Facility Properties, contain an endorsement insuring that
the parcel described in such Title Policy is the parcel shown on the survey
delivered with respect to such parcel and a survey accuracy endorsement,
(e) contain an endorsement insuring that each street adjacent to such
parcel is a public street and that there is direct and unencumbered
pedestrian and vehicular access to such street from such parcel, (f) with
respect to the Facility Properties, if the real estate covered by such
policy consists of more than one record parcel, contain a "contiguity"
endorsement insuring that all of the record parcels are contiguous to one
another, (g) contain a non-imputation endorsement, (h) contain a tax number
endorsement and (i) contain such other endorsements as the Buyer and the
Buyer's lender, if any, may reasonably request.
(xiii) The Company has procured, at its own cost and expense, in
preparation for the Closing, and shall have delivered to the Buyer, current
surveys or existing surveys accompanied with Affidavits of no change of
each parcel of the Owned Real Property identified in Section 4(l)(i) of the
Disclosure Schedule constituting a Facility Property, prepared by a
licensed surveyor, satisfactory to the Buyer, and conforming to 1999
ALTA/ACSM Minimum Detail Requirements for Urban Land Title Surveys, and
such standards as the Title Insurer may require as a condition to the
removal of any survey exceptions from the Title Policy, and certified to
the Buyer, the Buyer's lender and the Title Insurer.
(xiv) the Company and its Subsidiaries shall have obtained and
delivered to the Buyer an estoppel certificate with respect to each of the
Leases, dated no more than 30 days prior to the Closing Date, from the
other party to such Lease, in form and substance satisfactory to the Buyer;
(xv) no damage, destruction, infestation or other change or casualty
has occurred with respect to any of the Real Property or any portion
thereof that, individually or in the aggregate, would have a material
adverse effect on the use or occupancy of the Real Property or the
operation of the business of the Company and its Subsidiaries;
(xvi) the Company shall have effected a one for four (1:4) reverse
stock split of its Class A Common Stock and Class B Common Stock;
(xvii) each holder of Class B Common Stock shall have converted all of
his, her or its shares of Class B Common Stock into Class A Common Stock,
such that immediately following the Closing there are no issued or
outstanding shares of Class B Common Stock;
(xviii) the Company shall have entered into written agreements with
the vendors, suppliers or other creditors set forth on Exhibit E attached
hereto, which agreements shall be in form and substance satisfactory to the
Buyer in its sole discretion;
(xix) the Company's Board of Directors and / or Special Committee
thereof shall have received a fairness opinion from Rabobank International;
30
(xx) the Company and the Buyer (or its Affiliate) shall have executed
a management services agreement in form and substance satisfactory to the
Buyer in its sole discretion;
(xxi) since August 31, 2001, no change, occurrence or development with
respect to the Company or its Subsidiaries that was not disclosed in the
SEC Documents filed prior to the date of this Agreement or in the
Disclosure Schedule shall have occurred or become known to the Buyer that
has had or could reasonably be expected to have a material adverse effect
on the Company's or any of its Subsidiaries' business, properties, assets,
results, operations, or conditions (financial or other), either alone or in
the aggregate.
(xxii) the Management Agreement shall have been terminated;
(xxiii) the Severance and Stay Bonus Plan shall have been terminated;
(xxiv) the Buyer shall have received delivery of certificates for the
Shares as set forth hereunder;
(xxv) the Company shall have obtained on terms and conditions
satisfactory to the Buyer all of the financing it needs in order to
consummate the transactions contemplated hereby and, together with the Cash
Purchase Price, fund the working capital requirements of the Company and
its Subsidiaries after the Closing;
(xxvi) the results of the Buyer's conversations with the Company's
customers shall be satisfactory to the Buyer in the Buyer's sole
discretion;
(xxvii) the Company's Bylaws shall have been amended in form and
substance satisfactory to the Buyer in its sole discretion;
(xxviii) the Company shall have taken such action so that ▇▇▇▇ ▇.
▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, M. ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and C. ▇▇▇▇▇ ▇▇▇▇▇ shall have been appointed officers of the Company;
(xxix) the Company shall deliver to the Buyer Phase I reports for the
Facility Properties satisfactory to the Buyer in the Buyer's sole
discretion; and
(xxx) the Company and the other parties to the Assignment, Assumption
and Release Agreements shall have executed the Assignment, Assumption and
Release Agreements in form and substance satisfactory to the Buyer in its
sole discretion.
The Buyer may waive any condition specified in this Section 5(a) if it executes
a writing so stating at or prior to the Closing.
(b) Conditions to Obligation of the Company. The obligation of the Company
to consummate the transactions to be performed by them in connection with the
Closing is subject to satisfaction of the following conditions:
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(i) the representations and warranties set forth in Article 3 above
shall be true and correct in all material respects (except to the extent
that any such representation or warranty is qualified by any materiality
standard, in which case such representation and warranty shall be true and
correct in all respects) at and as of the Closing Date;
(ii) the Buyer shall have delivered to the Company the consideration
required under Section 2(b) hereof and shall have performed and complied
with all of its covenants hereunder in all material respects through the
Closing;
(iii) no action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable
injunction, judgment, order, decree, ruling, or charge would (A) prevent
consummation of any of the transactions contemplated by this Agreement or
(B) cause any of the transactions contemplated by this Agreement to be
rescinded following consummation (and no such injunction, judgment, order,
decree, ruling, or charge shall be in effect);
(iv) the Buyer shall have received all other material authorizations,
consents, and approvals of governments and governmental agencies referred
to in Section 3(b) and Section 4(c) above;
(v) the Buyer shall have assigned all of the Assignment, Assumption
and Release Agreements to the Company and the same shall be in full force
and effect;
(vi) the Management Agreement and the Severance and Stay Bonus Plan
shall be terminated and, in consideration therefor, the persons set forth
on Exhibit F attached hereto shall have received the payments set forth
opposite their respective names on such Exhibit F;
(vii) the Company's 2001 Stock Option Plan shall have been adopted and
options for 4.929% of the fully diluted post transaction equity ownership
of the Company shall have been granted; and
(viii) Rabobank International shall have been paid its fees, and
reimbursed its expenses, as described in Section 4(d) hereof.
The Company may waive any condition specified in this Section 5(b), except the
condition specified in Section 5(b)(viii) if they execute a writing so stating
at or prior to the Closing.
6. Remedies for Breaches of This Agreement.
(a) Survival of Representations and Warranties. All of the representations
and warranties of the Company contained in Section 4 above shall survive the
Closing hereunder (even if the Buyer knew or had reason to know of any
misrepresentation or breach of warranty at the time of Closing) and continue in
full force and effect through the fifteenth (15th) day after the date of the
issuance by the Company's auditors of its audit opinion/report on the
consolidated financial statements of the Company for the fiscal year ended
August 31, 2002; provided, however, that the representations and warranties
contained in Section 3(b) and Sections 4(a), (b), (c), (d), (e), (k), and (w)
above shall survive the Closing hereunder (even if the Buyer knew or
32
had reason to know of any misrepresentation or breach of warranty at the time of
Closing) and continue in full force and effect until expiration of the
applicable period or statute of limitations (including any extensions thereto).
(b) Indemnification Provisions for Benefit of the Buyer. In the event the
Company breaches any of its representations, warranties, and covenants contained
herein, and, if there is an applicable survival period pursuant to Section 6(a)
above, provided that the Buyer makes a written claim for indemnification against
the Company within such survival period, then the Company agrees to indemnify
the Buyer from and against the entirety of any Adverse Consequences the Buyer
may suffer through and after the date of the claim for indemnification
(including any Adverse Consequences the Buyer may suffer after the end of any
applicable survival period) resulting from, arising out of, relating to, in the
nature of, or caused by the breach provided, however, that the Company shall not
have any obligation to indemnify the Buyer from and against any Adverse
Consequences resulting from, arising out of, relating to, in the nature of, or
caused by the breach of any representation or warranty of the Company other than
the Fundamental Representations and Warranties until the Buyer has suffered
Adverse Consequences by reason of all such breaches in excess of a $500,000
aggregate threshold at which point the Company will be obligated to indemnify
the Buyer from and against all such Adverse Consequences in excess of a $175,000
aggregate deductible.
(c) Determination of Adverse Consequences. The Parties shall make
appropriate adjustments for tax benefits actually realized and insurance
coverage proceeds actually received by the Buyer in determining Adverse
Consequences for purposes of this Section 6. For the purposes of determining
whether the Buyer is able to seek indemnification from the Company under this
Section 6 for a breach by the Company of any representation and warranty, the
use of the terms "material", "materially", materiality", "material adverse
effect" or any similar words or phrases in this Agreement and on any schedule or
exhibit hereto shall be disregarded and any and all claims for such
indemnification shall be determined as if no such terms were present in the
representation or warranty with respect to which such indemnification is sought.
(d) Matters Involving Third Parties.
(i) If any third party shall notify any Party (the "Indemnified
Party") with respect to any matter (a "Third Party Claim") which may give
rise to a claim for indemnification against any other Party (the
"Indemnifying Party") under this Section 6, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in writing; provided,
however, that no delay on the part of the Indemnified Party in notifying
the Indemnifying Party shall relieve the Indemnifying Party from any
obligation hereunder unless (and then solely to the extent) the
Indemnifying Party thereby is prejudiced.
(ii) The Indemnifying Party will have the right to assume the defense
of the Third Party Claim with counsel of its choice reasonably satisfactory
to the Indemnified Party at any time within 15 days after the Indemnified
Party has given notice of the Third Party Claim; provided, however, that
the Indemnifying Party must conduct the defense of the Third Party Claim
actively and diligently thereafter in order to preserve its rights in this
regard; and provided further that the Indemnified Party may retain separate
co-counsel at its sole cost and expense and participate in the defense of
the Third Party Claim.
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(iii) So long as the Indemnifying Party has assumed and is conducting
the defense of the Third Party Claim in accordance with Section 6(d)(ii)
above, (A) the Indemnified Party may retain separate co-counsel at its sole
cost and expense and participate in the defense of the Third Party Claim,
(B) the Indemnifying Party will not consent to the entry of any judgment or
enter into any settlement with respect to the Third Party Claim without the
prior written consent of the Indemnified Party (not to be withheld
unreasonably) unless the judgment or proposed settlement involves only the
payment of money damages by one or more of the Indemnifying Parties and
does not impose an injunction or other equitable relief upon the
Indemnified Party and (C) the Indemnified Party will not consent to the
entry of any judgment or enter into any settlement with respect to the
Third Party Claim without the prior written consent of the Indemnifying
Party (not to be withheld unreasonably).
(iv) In the event none of the Indemnifying Parties assumes and
conducts the defense of the Third Party Claim in accordance with Section
6(d)(ii) above, however, (A) the Indemnified Party may defend against, and
consent to the entry of any judgment or enter into any settlement with
respect to, the Third Party Claim in any manner it reasonably may deem
appropriate (and the Indemnified Party need not consult with, or obtain any
consent from, any Indemnifying Party in connection therewith), (B) the
Indemnifying Parties will reimburse the Indemnified Party promptly and
periodically for the costs of defending against the Third Party Claim
(including attorneys' fees and expenses), and (C) the Indemnifying Parties
will remain responsible for any Adverse Consequences the Indemnified Party
may suffer resulting from, arising out of, relating to, in the nature of,
or caused by the Third Party Claim to the fullest extent provided in this
Section 6.
(e) Additional Matters. All indemnification obligations of the Company,
other than Third Party Claims, shall be satisfied by the payment of cash or, at
the sole option of the Buyer in each instance, the issuance of additional shares
of Class A Common Stock, valued at a price per share equal to the original cost
of the Shares (on a per share basis) without taking into consideration the value
of Assignment, Assumption and Release Agreements.
7. Tax Matters. All transfer, documentary, sales, use, stamp,
registration and other such Taxes, and all conveyance fees, recording charges
and other fees and charges (including any penalties and interest) incurred in
connection with the consummation of the transactions contemplated by this
Agreement shall be borne by the Company.
8. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement without the prior written approval of the Buyer and the Company;
provided, however, that any Party may make any public disclosure it believes in
good faith is required by applicable law (in which case the disclosing Party
will use its best efforts to advise the other Parties prior to making the
disclosure).
(b) No Third-Party Beneficiaries. Except as provided pursuant to Section
8(p) hereof, this Agreement shall not confer any rights or remedies upon any
Person other than the Parties and their respective successors and permitted
assigns.
34
(c) Entire Agreement. This Agreement (including the documents referred to
herein) constitutes the entire agreement among the Parties and supersedes any
prior understandings, agreements, or representations by or among the Parties,
written or oral, to the extent they related in any way to the subject matter
hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests, or obligations hereunder without the prior written approval
of the Buyer and the Company; provided, however, that the Buyer may (i) assign
any or all of its rights and interests hereunder to one or more of its
Affiliates and (ii) designate one or more of its Affiliates to perform its
obligations hereunder (in any or all of which cases the Buyer nonetheless shall
remain responsible for the performance of all of its obligations hereunder).
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice, request, demand, claim,
or other communication hereunder shall be deemed duly given if (and then two
business days after) it is sent by registered or certified mail, return receipt
requested, postage prepaid, and addressed to the intended recipient as set forth
below:
If to the Company:
Northland Cranberries, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇ & Lardner
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
35
If to the Buyer:
Sun Northland, LLC
c/o Sun Capital Partners, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Copy to:
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any Party may send any notice, request, demand, claim, or other communication
hereunder to the intended recipient at the address set forth above using any
other means (including personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no such notice,
request, demand, claim, or other communication shall be deemed to have been duly
given unless and until it actually is received by the intended recipient. Any
Party may change the address to which notices, requests, demands, claims, and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the domestic laws of the State of Wisconsin without giving
effect to any choice or conflict of law provision or rule (whether of the State
of Wisconsin or any other jurisdiction) that would cause the application of the
laws of any jurisdiction other than the State of Wisconsin.
(i) Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by the
Buyer and the Company. No waiver by any Party of any default, misrepresentation,
or breach of warranty or covenant hereunder, whether intentional or not, shall
be deemed to extend to any prior or subsequent default, misrepresentation, or
breach of warranty or covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Expenses. The Company shall pay or cause to be paid at Closing (i) all
reasonable out-of-pocket fees and expenses incurred by the Buyer and its
Affiliates and (ii) the reasonable out-of-pocket legal fees of the Company each
in connection with the transactions contemplated by this Agreement (including,
without limitation, reasonable fees and disbursements of counsel and
consultants). The fees and expenses covered by this Section 8(k)
36
are separate from and in addition to, and in no way shall limit, the fees and
expenses to be paid to the Buyer pursuant to the management services agreement.
(l) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or
foreign statute or law shall be deemed also to refer to all rules and
regulations promulgated thereunder, unless the context requires otherwise. The
word "including" shall mean including without limitation. The parties intend
that each representation, warranty, and covenant contained herein shall have
independent significance. If any Party has breached any representation,
warranty, or covenant contained herein in any respect, the fact that there
exists another representation, warranty, or covenant relating to the same
subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty, or covenant.
(m) Incorporation of Exhibits, Annexes, and Schedules. The Exhibits,
Annexes, and Schedules identified in this Agreement are incorporated herein by
reference and made a part hereof.
(n) Submission to Jurisdiction. Each Party hereto submits to the
jurisdiction of any state or federal court sitting in Chicago, Illinois, in any
action or proceeding arising out of or relating to this Agreement and agrees
that all claims in respect of the action or proceeding may be heard and
determined in any such court. Each Party also agrees not to bring any action or
proceeding arising out of or relating to this Agreement in any other court. Each
Party hereto waives any defense of inconvenient forum to the maintenance of any
action or proceeding so brought and waives any bond, surety, or other security
that might be required of any other Party with respect thereto. Any Party may
make service on any other Party by sending or delivering a copy of the process
to the Party to be served at the address and in the manner provided for the
giving of notices in Section 8(g) above. Nothing in this Section 8(n), however,
shall affect the right of any Party to bring any action or proceeding arising
out of or relating to this Agreement in any other court or to serve legal
process in any other manner permitted by law or at equity. Each Party agrees
that a final judgment in any action or proceeding so brought shall be conclusive
and may be enforced by suit on the judgment or in any other manner provided by
law or at equity.
(o) Legal Fees. If any party to this Agreement seeks to enforce the terms
and provisions of this Agreement, then the prevailing party in such action shall
be entitled to recover from the non-prevailing party, all costs incurred in
connection with such action, including without limitation reasonable fees,
expenses and costs incurred at the trial court, all appellate courts and during
negotiations.
(p) Indemnification and Insurance. The Buyer agrees that for a period of
six years from the Closing Date it will maintain all rights to indemnification
now existing in favor of the current or former directors, officers, and
employees of the Company as provided in the Company's articles of incorporation
and bylaws or otherwise in effect under any agreement on the date of this
Agreement. In addition, the Buyer agrees that the articles of incorporation and
37
bylaws of the Company shall contain the provisions with respect to
indemnification set forth in the Company's articles of incorporation and bylaws
on the date hereof, which provisions shall not be amended, repealed or otherwise
modified for a period of six years after the Closing Date in any manner that
would adversely affect the rights thereunder of individuals who at any time
prior to the Closing Date were directors or officers of the Company in respect
of actions or omissions occurring at or prior to the Closing Date (including,
without limitation, the transactions contemplated by this Agreement), unless
such modification is required by law. Notwithstanding the six-year period
specified in the foregoing sentences, in the event any claim or claims are
asserted or made within such six-year period, all rights to indemnification in
respect of any such claim or claims shall continue until disposition of any and
all such claims.
(i) The Company will at all times exercise the powers granted to it by
its articles of incorporation, its bylaws, and by applicable law to
indemnify and hold harmless to the fullest extent possible present or
former directors, officers, and employees of the Company against any
threatened or actual claim, action, suit, proceeding or investigation made
against them arising from their service in such capacities (or service in
such capacities for another enterprise at the request of the Company) prior
to, and including the Closing Date, including, without limitation, with
respect to matters relating to this Agreement.
(ii) The Buyer agrees that the Company shall cause to be maintained in
effect for not less than six years from the Closing Date the current
policies of the directors' and officers' liability insurance maintained by
the Company with respect to matters occurring at or prior to the Closing
Date (including, without limitation, the transactions contemplated by this
Agreement); provided that the Company may substitute therefor policies of
at least the same coverage containing terms and conditions which are no
less advantageous and provided that such substitution shall not result in
any gaps or lapses in coverage with respect to matters occurring prior to
the Closing Date; and provided, further, that the Company shall not be
required to pay an annual premium in excess of 200% of the last annual
premium paid by the Company prior to the date hereof and if the Company is
unable to obtain the insurance required by this Section 8(p)(ii) it shall
obtain as much comparable insurance as possible for an annual premium equal
to such maximum amount.
(iii) This Section 8(p) is intended to benefit the current and former
directors, officers, and employees of the Company and shall be binding on
all successors and assigns of the Buyer and the Company.
(q) ISRA Covenant. The Company shall submit to the New Jersey Department
of Environmental Protection ("NJDEP") within 30 days after Closing, true,
accurate and complete copies of all filings required pursuant to the New Jersey
Industrial Site Recovery Act ("ISRA") (N.J.S.A. 13:1k-6 et seq.) as necessary to
obtain formal ISRA nonapplicability determinations from NJDEP for the real
properties and operations of the Company in Bridgeton, New Jersey.
(r) Tax Covenant. The Company shall elect under Treasury Regulation
ss.1.382-6(b) to close its books as of the end of the Closing Date with respect
to the ownership change (within the meaning of Code ss.382) occurring pursuant
to this Agreement.
38
(s) Severance Pay Covenant. The Company agrees that if prior to the one
year anniversary of the date hereof, any Executive's employment with the Company
is terminated by the Company or its successors in interest without cause, such
Executive shall be entitled to continue to receive his then-current base salary,
which shall be no lower than his base salary as of the date hereof, payable in
regular installments as special severance payments for six-months from the date
of termination; provided, if such Executive breaches the provisions of any
non-solicitation or confidentiality covenants he has made (or shall make) to the
Company, the Company shall have no obligation to make (or continue to make)
severance payments to such Executive.
*****
39
IN WITNESS WHEREOF, the Parties hereto have executed this Stock Purchase
Agreement on as of the date first above written.
SUN NORTHLAND, LLC
By: /s/
---------------------------------
Title:
NORTHLAND CRANBERRIES, INC.
By: /s/
---------------------------------
Title:
40