<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 15, 1995
AGWAY INC.
----------
(Exact name of registrant as specified in its charter)
Delaware 2-22791 15-0277720
- ------------------------------------------------------------------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
333 Butternut Drive, DeWitt, New York 13214
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (315) 449-6431
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
1
<PAGE>
ITEM 5. OTHER EVENTS
On December 15, 1995, Agway Holdings, Inc., a Delaware corporation and a
wholly-owned subsidiary of Agway Inc. ("Holdings"), sold all of Holdings'
common stock of its majority-owned subsidiary, H. P. Hood Inc. ("Hood"), to
Catamount Dairy Holdings Limited Partnership, a Massachusetts limited
partnership ("Buyer"), as assignee of The Catamount Corporation, a
Massachusetts corporation ("Catamount"), on the terms and subject to the
conditions of the Stock Purchase Agreement between Holdings and Catamount
dated as of December 14, 1995 (the "Stock Purchase Agreement"), a copy of
which is filed as an exhibit hereto. Hood, which was Agway Inc.'s dairy
segment, manufactures and distributes various forms of dairy products
including ice cream, fluid milk and manufactured products. The sale of Hood
reduced Agway Inc.'s consolidated assets by approximately $134 million and
consolidated liabilities by approximately $136 million. The net proceeds of
the sale, after the assumption of certain liabilities, were approximately
$19,000,000, which resulted in an estimated after-tax gain of approximately
$2,000,000.
In accordance with the Stock Purchase Agreement, the Buyer paid to Holdings
$25,500,000 in the form of $15,900,000 in cash and $9,600,000 in a promissory
note in consideration of the sale of its Hood common stock. Holdings assumed
certain specified obligations of Hood, including the liability for certain
supplemental executive retirement plans and certain management bonuses.
Furthermore, under the Stock Purchase Agreement, Holdings has indemnified the
Buyer with regard to specified representations, warranties and litigation;
federal and state taxes through fiscal 1995; and 50% of all other
indemnification obligations in excess of $1 million identified within two
years of the closing date. The obligations and/or liabilities assumed and
expenses incurred by Holdings in the transaction are currently estimated at
approximately $6,500,000. Immediately after closing, Holdings exchanged the
note of $9,600,000 received as proceeds for certain specified assets of Hood,
including stock of a Farm Credit System cooperative bank, certain accounts
receivable and certain real estate and fixed assets.
Pro forma financial information will be filed shortly, pursuant to Item 2 of
Form 8-K.
ITEM 7. EXHIBITS
1. Stock Purchase Agreement, dated as of December 14, 1995, between Holdings
and Catamount.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
AGWAY INC.
(Registrant)
Date December 18, 1995 By /s/ PETER J. O'NEILL
-------------------------- -------------------------------------
Peter J. O'Neill
Senior Vice President,
Finance and Control, Treasurer and Controller
(Principal Financial Officer and
Chief Accounting Officer)
3
<PAGE>
STOCK PURCHASE AGREEMENT
by and between
THE CATAMOUNT CORPORATION
and
AGWAY HOLDINGS, INC.
DECEMBER 14, 1995
<PAGE>
<TABLE>
<CAPTION>
Page
----
STOCK PURCHASE AGREEMENT
TABLE OF CONTENTS
<S> <C> <C>
SECTION 1. SALE OF SHARES AND PURCHASE PRICE.............................................................. 1
1.1 Transfer of Hood Shares............................................................... 1
1.2 Purchase Price and Payment............................................................ 1
1.3 Time and Place of Closing............................................................. 2
1.4 Further Assurances.................................................................... 2
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.............................................. 2
2.1 Making of Representations and Warranties.............................................. 2
2.2 Existence and Good Standing of AHI.................................................... 3
2.3 Existence and Good Standing of Hood and its Subsidiaries.............................. 3
2.4 Capitalization of the Companies; Ownership of Shares; Debt
Instruments........................................................................... 4
2.5 Due Authorization..................................................................... 5
2.6 No Violation; No Consent.............................................................. 6
2.7 Financial Statements; Stockholder Equity of Hood...................................... 6
2.8 Absence of Change..................................................................... 7
2.9 Certain Liabilities................................................................... 8
2.10 Assets; Property Necessary for Business............................................... 9
2.11 Inventories........................................................................... 9
2.12 Real Properties....................................................................... 9
2.13 Intellectual Property................................................................. 10
2.14 Material Contracts.................................................................... 11
2.15 Litigation............................................................................ 12
2.16 Taxes................................................................................. 13
2.17 Compliance with Laws.................................................................. 13
2.18 Employee Benefit Plans................................................................ 13
2.19 Labor and other Employment Matters.................................................... 16
2.20 Broker's or Finder's Fees............................................................. 16
2.21 Inter-company Transactions............................................................ 17
2.22 Insurance............................................................................. 17
2.23 No Environmental Representations...................................................... 17
2.24 Absence of Sensitive Payments......................................................... 18
2.25 Disclosure............................................................................ 19
2.26 Ordinary Course of Business........................................................... 19
</TABLE>
(i)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
SECTION 3. COVENANTS OF THE STOCKHOLDER.................................................................. 19
3.1 Making of Covenants and Agreements................................................... 19
3.2 Conduct of Business.................................................................. 19
3.3 Insurance............................................................................ 22
3.4 Assumption of SERPs.................................................................. 22
3.5 Authorization from Others............................................................ 23
3.6 Purchase of Assets by AHI............................................................ 23
3.7 Data Processing Services............................................................. 23
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER....................................................... 24
4.1 Making of Representations and Warranties............................................. 24
4.2 Organization of Buyer................................................................ 24
4.3 Authority of Buyer................................................................... 24
4.4 Litigation........................................................................... 25
4.5 Finder's Fee......................................................................... 25
4.6 Financing Contingency................................................................ 25
4.7 Hart-Scott-Rodino Considerations..................................................... 25
4.8 Knowledge of Misrepresentation. ..................................................... 26
SECTION 5. COVENANTS OF BUYER............................................................................ 26
5.1 Sale of Assets by Hood. ............................................................ 26
5.2 Offer to Purchase Other Common Shares................................................ 26
5.3 Assumption of Obligations to Robert L. Keller........................................ 27
SECTION 6. CONDITIONS.................................................................................... 27
6.1 Conditions to the Obligations of Buyer............................................... 27
6.2 Conditions to Obligations of the Stockholder......................................... 29
SECTION 7. TERMINATION OF AGREEMENT...................................................................... 29
7.1 Termination.......................................................................... 29
7.2 Liquidated Damages of the Stockholder................................................ 30
7.3 Return of Deposit to Buyer........................................................... 30
7.4 Specific Performance................................................................. 30
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.................................................. 31
8.1 Survival of Warranties............................................................... 31
SECTION 9. INDEMNIFICATION............................................................................... 31
9.1 General.............................................................................. 31
</TABLE>
(ii)
<PAGE>
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
9.2 Indemnification by the Stockholder.................................................... 31
9.3 Limitations on Indemnification by the Stockholder..................................... 33
9.4 Indemnification by Buyer.............................................................. 35
9.5 Limitation on Indemnification by Buyer................................................ 35
9.6 Time Limits for Claims................................................................ 35
9.7 Notice; Defense of Claims............................................................. 36
9.8 Insurance Offset to Indemnity......................................................... 37
SECTION 10. TAX MATTERS.................................................................................... 37
10.1 Definitions........................................................................... 37
10.2 Filing of Tax Returns; Payment of Taxes............................................... 38
10.3 Adjustments to Tax Liabilities........................................................ 39
10.4 Tax Indemnities....................................................................... 40
10.5 Mutual Cooperation.................................................................... 41
10.6 Post-June 24, 1995 Tax Returns........................................................ 41
10.7 Miscellaneous......................................................................... 42
SECTION 11. MISCELLANEOUS.................................................................................. 43
11.1 Fees and Expenses..................................................................... 43
11.2 Further Assurance..................................................................... 43
11.3 Notices............................................................................... 43
11.4 Successors and Assignment............................................................. 45
11.5 Certain Definitions................................................................... 45
11.6 Captions.............................................................................. 46
11.7 Severability.......................................................................... 46
11.8 Preservation of Records............................................................... 46
11.9 Publicity and Disclosures. .......................................................... 46
11.10 Confidentiality.............................................................. 46
11.11 Effective Date of Closing.................................................... 47
11.12 Arbitration.................................................................. 48
11.13 Governing Law Jurisdiction and Venue......................................... 48
11.14 Counterparts................................................................. 48
11.15 Entire Agreement............................................................. 48
11.16 Amendments................................................................... 49
</TABLE>
(iii)
<PAGE>
Page
----
Exhibits
Exhibit 1.2(a) - Form of Promissory Note
Exhibit 1.2(b) - Form of Guaranty of John A. Kaneb
Exhibit 3.4 - Assumption Agreement (SERPs and pay-to-stay)
Exhibit 3.6(a) - Form of Quitclaim Deeds
Exhibit 3.6(b) - Form of Bill of Sale
Exhibit 3.6(c) - Related Agreements
Exhibit 3.6(d) - Allocation of Purchase Price for Idle Assets
Exhibit 6.1(h) - Form of Guaranty of Agway, Inc.
(iv)
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
AGREEMENT entered into as of December 14, 1995 by and between THE
CATAMOUNT CORPORATION, a Massachusetts corporation ("Buyer"), and AGWAY
HOLDINGS, INC., a Delaware corporation (sometimes herein referred to as "AHI"
or the "Stockholder").
W I T N E S S E T H
-------------------
WHEREAS, the Stockholder owns of record and beneficially 1,695,114 of
the issued and outstanding common stock of H.P. HOOD INC., a Massachusetts
corporation ("Hood"), which comprises 99.999% of the 1,695,127 issued and
outstanding shares of Hood's Common Stock, without par value per share (said
1,695,114 shares owned and being sold by the Stockholder hereby being referred
to herein as the "Hood Shares"); and
WHEREAS, the Stockholder desires to sell all of the Hood Shares to
Buyer, and Buyer desires to acquire all of the Hood Shares.
NOW, THEREFORE, in order to consummate said purchase and sale and in
consideration of the mutual agreements set forth herein, the parties hereto
agree as follows:
SECTION 1. SALE OF SHARES AND PURCHASE PRICE.
- ----------------------------------------------
1.1 Transfer of Hood Shares. At the Closing (as hereinafter defined),
the Stockholder shall deliver or cause to be delivered to Buyer
certificates representing all of the Hood Shares. Such stock
certificates shall be duly endorsed in blank for transfer or shall
be presented with stock powers duly executed in blank, with such
signature guarantees and such other documents as may be reasonably
required by Buyer to effect a valid transfer of such Hood Shares
by such Stockholder, free and clear of any and all liens,
encumbrances, charges or claims.
1.2 Purchase Price and Payment.
(a) In consideration of the sale by the Stockholder to Buyer of
the Hood Shares and in reliance upon the representations and
warranties of the Stockholder herein contained and made at
the Closing and subject to the satisfaction or waiver of all
of the conditions contained herein, Buyer agrees that at the
Closing it will deliver to the Stockholder Twenty-Five
1
<PAGE>
Million Five Hundred Thousand Dollars ($25,500,000) in part
by wire transfer of immediately available funds in the
amount of Fifteen Million Nine Hundred Thousand Dollars
($15,900,000), and in part by the delivery of the Nine
Million Six Hundred Thousand Dollar ($9,600,000) promissory
note of the Buyer payable to the Stockholder in the form
attached hereto as Exhibit 1.2(a), accompanied by an
executed Guaranty of John A. Kaneb in the form attached
hereto as Exhibit 1.2(b) (the "Kaneb Guaranty").
(b) On the date of execution hereof, the Stockholder
acknowledges receipt from Buyer of a deposit in immediately
available United States funds in the amount of $1,500,000
(the "Deposit"). The Deposit shall be applied against the
cash portion of the purchase price payable by Buyer pursuant
to Section 1.2(a) on the Closing Date. In the event that no
Closing shall occur, the Deposit shall be applied as set
forth in Section 7.2 or 7.3, as applicable.
1.3 Time and Place of Closing. The closing of the purchase and sale
provided for in this Agreement (herein called the "Closing") shall
be held at the offices of Goodwin, Procter & Hoar at Exchange
Place (53 State Street), Boston, Massachusetts at 10:00 A.M.,
local Boston time, on December 15, 1995 or at such other place or
on such earlier or later date or time as may be mutually agreed
upon in writing by the Stockholder and the Buyer (the "Closing
Date").
1.4 Further Assurances. The Stockholder from time to time after the
Closing at the request of Buyer and without further consideration
shall execute and deliver such further instruments of transfer and
assignment and take such other action as Buyer may reasonably
require to more effectively transfer and assign to, and vest in,
Buyer the Hood Shares and all rights thereto.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.
- --------------------------------------------------------------
2.1 Making of Representations and Warranties. As a material inducement
to Buyer to enter into this Agreement and consummate the
transactions contemplated hereby, the Stockholder hereby makes to
Buyer the representations and warranties contained in this Section
2. When a representation or warranty herein is qualified by the
term "to the best of AHI's knowledge", "to the best knowledge of
AHI", "to AHI's best knowledge", "knowingly", or "known to AHI",
Buyer acknowledges and agrees that (i) such representation or
warranty is based solely upon (A) inquiry by AHI of Peter J.
O'Neill, Senior Vice President of Agway
2
<PAGE>
Inc., Michael R. Hopsicker, Director of Business Development,
Agriculture and Related Services of Agway Inc., Martin
Frankenfield, Director of Taxes of Agway Inc., Robert L. Keller,
President of Hood, Robert E. Schaejbe, Senior Vice President of
Hood, Richard G. Marquis, Senior Vice President of Hood and
General Manager-Dairy Group, Gary Musial, Senior Vice President of
Hood and General Manager-Manufactured Products Group of Hood,
and/or Pamela Downing Brake, Corporate Counsel of Hood, and/or (B)
the actual knowledge of the other officers of Agway Inc., AHI and
Hood who have reason to know about the specific matter in
question, without any further independent verification by AHI of
the subject matter of such inquiry and (ii) for the express
benefit of the foregoing officers, no such officer shall incur any
personal liability to Buyer for any such representations or
warranties.
2.2 Existence and Good Standing of AHI. AHI is a corporation duly
organized, validly existing and in good standing under the laws of
the State of Delaware, with full corporate power and authority to
own the Hood Shares and to carry on its business as now operated
and carried on by it. AHI is duly qualified or licensed as a
foreign corporation to do business, and is in good standing, in
each jurisdiction in which the failure to be so qualified or
licensed or in good standing would have a material adverse effect
upon AHI's ability to consummate the transactions contemplated
hereby. AHI is an indirect, wholly-owned, subsidiary of Agway,
Inc., a Delaware corporation ("Parent").
2.3 Existence and Good Standing of Hood and its Subsidiaries. Hood and
each of its subsidiaries (individually, a "Subsidiary", and
collectively, the "Subsidiaries"; Hood and the Subsidiaries
sometimes being referred to herein collectively as the "Companies"
or any one individually as a "Company") is a corporation duly
organized, validly existing and in good standing under the laws of
its jurisdiction of incorporation (as identified on Schedule 2.3
of the Disclosure Schedule heretofore delivered by AHI to Buyer
(the "Disclosure Schedule")), and, except as otherwise set forth
in the Disclosure Schedule, each has all necessary power and
authority to own, lease and operate its properties and to carry on
its business as now being conducted. Except as otherwise set forth
on Schedule 2.3 of the Disclosure Schedule, each Company is duly
qualified or licensed as a foreign corporation to do business, and
is in good standing, in each jurisdiction in which the failure to
be so qualified or licensed or in good standing would have a
Material Adverse Effect (as such term is hereinafter defined).
Schedule 2.3 to the Disclosure Schedule sets forth the formal
corporate name, jurisdiction of incorporation and jurisdictions in
which each of the Companies is qualified and/or licensed as a
foreign corporation.
3
<PAGE>
2.4 Capitalization of the Companies; Ownership of Shares; Debt
Instruments.
(a) Schedule 2.4(a)to the Disclosure Schedule sets forth:
(i) All classes of capital stock that each of the
Companies is authorized by its charter to issue;
(ii) The number of shares so authorized for each class;
(iii) The number of shares of each class of capital stock
issued and outstanding with respect to each of the
Companies; and
(iv) The number of shares of each class of capital stock
held by each Company in treasury.
Except for ownership by Hood or a Subsidiary of all of the
issued and outstanding shares of the capital stock of each of the
Subsidiaries and except as set forth on Schedule 2.4(a) to the
Disclosure Schedule, none of the Companies owns, directly or
indirectly, of record or beneficially, any capital stock,
partnership unit, equity interest or other security evidencing a
material equity investment of any kind in any other corporation,
joint venture or partnership. All outstanding capital stock of
each of the Companies is duly and validly issued, fully paid and
nonassessable. Except as set forth on Schedule 2.4(a) to the
Disclosure Schedule:
(x) None of the Companies has outstanding, nor does any
Person have, any right or claim, vested, unvested, actual,
contingent or inchoate, to any subscription, warrant,
option, purchase contract, put, call, preemptive right or
other right of any kind with regard to the acquisition from
any of the Companies of any authorized shares of capital
stock of any kind of any of the Companies;
(y) Hood has performed each of its written obligations to
the holders of all classes of its capital stock; and
(z) All dividends required by Hood's Articles of
Organization to be declared and paid have been declared and
paid or set apart for payment.
(b) Schedule 2.4(b) to the Disclosure Schedule sets forth, as of
the respective dates set forth therein, the names and
addresses of all record holders of shares of all classes of
the capital stock of Hood as reflected in the stock transfer
records maintained by Hood or by Hood's designated transfer
agent(s), as the case may be. AHI (i) has good and
marketable title to the Hood Shares, free and clear of any
Encumbrance (as hereinafter defined)
4
<PAGE>
of any other Person, and (ii) has full and unrestricted
legal right, power and authority to enter into and to
perform its obligations under this Agreement and to sell,
assign, transfer and convey the Hood Shares in accordance
with this Agreement.
(c) The Stockholder has delivered to Buyer lists of record
holders who, as of the respective dates set forth in
Schedule 2.4(c) to the Disclosure Schedule, held all
outstanding debentures of the Companies (the "Debentures"),
and the outstanding balance thereof held by each as of such
date. Except as set forth on Schedule 2.4(c) to the
Disclosure Schedule, all payments of interest required to be
paid by the terms of the indenture under which the Debenture
in question was issued (or by the terms of the Debenture
itself) have, to the best of AHI's knowledge, in all
material respects been made on or about the dates and in the
amounts so required.
(d) Schedule 2.4(d) to the Disclosure Schedule sets forth a list
of all debt instruments of all of the Companies (other than
the Debentures) under which any of the Companies is the
obligor (other than in the ordinary course of business) for
borrowed money in excess of $50,000, and the holder, the
principal balance, the maturity date and the effective
interest rate of each as of October 21, 1995.
2.5 Due Authorization.
(a) By action duly taken on or prior to the date of execution
and delivery hereof, the execution, delivery and performance
by AHI of this Agreement was duly and validly authorized by
all necessary stockholder, director, and other required
corporate action on its part. Upon the execution and
delivery hereof, this Agreement will be the valid and
binding obligation of AHI, enforceable against it in
accordance with its terms, except that enforcement hereof
may be limited by (x) bankruptcy, insolvency, moratorium,
receivership, fraudulent conveyance or other laws of general
application affecting the enforcement of creditor's rights
generally and (y) general principles of equity (regardless
of whether enforceability is considered in a proceeding in
equity or at law).
(b) Except as set forth on Schedule 2.5(b) to the Disclosure
Schedule, the corporate record books of the Companies and
the records of meetings and actions of directors and
stockholders contained therein are, in all material
respects, in good order, accurate and complete.
5
<PAGE>
2.6 No Violation; No Consent.
(a) The execution and delivery of this Agreement by AHI, and the
consummation of the transactions contemplated hereby, will
not (including, without limitation, with the giving of
notice or the passage of time or both) (i) violate any
provision of the charter or by-laws of AHI or Parent
(collectively, with AHI, the "AHI Group"), Hood or any
Subsidiary; or (ii) violate any statute, rule, regulation,
judgment, order or decree of any public body or authority by
which any member of the AHI Group or any Company is bound or
which is binding upon any of their respective properties or
assets. Assuming receipt of the consents and satisfaction of
the requirements set forth on Schedule 2.6(b) to the
Disclosure Schedule, the execution and delivery of this
Agreement by AHI, and the consummation of the transactions
contemplated hereby, will not (iii) result in a violation or
breach of, or constitute a default under, any license,
franchise, permit, indenture, agreement or other instrument
to which any member of the AHI Group or any Company is a
party, or by which any member of the AHI Group or any
Company or any of their respective assets or properties is
bound, or (iv) result in the creation or imposition of any
material Encumbrance upon any capital stock or asset of any
Company; or (v) result in the acceleration of any obligation
of any Company. The foregoing representation is qualified to
the extent that a violation described in clause (ii) above,
and a violation, breach or default described in clause (iii)
above, and an acceleration of an obligation described in
clause (v) above shall not be considered to be a
misrepresentation under this Section 2.6(a) unless any or
all such violations, breaches, defaults and accelerations
would have a Material Adverse Effect (as such term is
hereinafter defined).
(b) Subject to receipt of the consents and the satisfaction of
the requirements set forth on Schedule 2.6(b) to the
Disclosure Schedule, (i) no approval, waiver or consent of
any Person is necessary in connection with the execution and
delivery of this Agreement, or the consummation of the
transactions contemplated hereby, and (ii) no approval,
waiver or consent of any Person is necessary to permit any
of the Companies which is a party thereto to continue to
enjoy its rights under any Material Contract (as such term
is hereinafter defined) after the Closing Date.
2.7 Financial Statements; Stockholder Equity of Hood. AHI has
heretofore furnished to Buyer, with respect to the fiscal year
ended June 24, 1995 (the "Audit Date"), consolidated balance
sheets and the related consolidated statements of operations
6
<PAGE>
and retained deficit and cash flows for the year then ended of
Hood and its Subsidiaries, accompanied by the unqualified opinion
of Price Waterhouse LLP dated August 11, 1995, true and correct
copies of which are attached as Schedule 2.7 to the Disclosure
Schedule (collectively, including the footnotes thereto, the
"Financial Statements"). The Financial Statements, except as
indicated therein, have been prepared in conformity with generally
accepted accounting principles, and present fairly, in all
material respects, the financial position of Hood and its
Subsidiaries at the Audit Date and the results of their operations
and their cash flows for the year then ended in conformity with
generally accepted accounting principles. Also attached as part of
Schedule 2.7 to the Disclosure Schedule is the consolidated
balance sheet of Hood and its Subsidiaries as at October 21, 1995,
together with related consolidated statements of income and cash
flow for the 17 week period ended October 21, 1995 (the "Interim
Financial Statements"). The Interim Financial Statements have been
prepared in accordance with generally accepted accounting
principles consistently applied and present fairly in all material
respects the financial condition of Hood and its Subsidiaries at
October 21, 1995 and the results of its operations and cash flows
for the 17 week period ended October 21, 1995, subject to normal
year-end adjustments.
2.8 Absence of Change. Except as set forth on Schedule 2.8 to the
Disclosure Schedule, including, without limitation, anything
contemplated by the 1996 Plan attached thereto (as such term is
hereinafter defined), since the Audit Date, there has not been:
(a) any change in accounting methods or practices (including,
without limitation, any change in depreciation or
amortization policies or rates) by any Company;
(b) any sale, transfer, exchange or disposal (by merger,
consolidation, reorganization or otherwise), or Encumbrance
of any of the Assets owned by any of the Companies or any of
the capital stock of, or any interest in, any Company
(excluding any sale, transfer, exchange, disposal or
Encumbrance of capital stock or other securities or
interests in Hood not owned by AHI, as to which AHI has no
control, and as to which AHI makes no representations,
warranties or covenants in this Agreement), except in the
ordinary course of business;
(c) any loan or other extension of credit (or any guaranty
thereof or obligation with respect thereto, whether direct
or contingent) to any Company from any Person that is in
excess of $25,000 individually or $100,000 collectively,
except in the ordinary course of business;
7
<PAGE>
(d) any loan or other extension of credit by any Company to AHI
or Parent, or to any officer, director or employee of any of
them (herein, each an "AHI Group member" or a "member of the
AHI Group"), except in the ordinary course of business;
(e) any settlement, waiver or release of any material right,
action, cause of action, lawsuit or claim of any Company,
except in the ordinary course of business;
(f) any declaration, setting aside or payment of any dividend
on, or any distribution in respect of, the capital stock of
any Company;
(g) any discharge or satisfaction of any material Encumbrance or
payment of any material obligation or liability (absolute or
contingent) other than current liabilities included in the
Financial Statements or current liabilities incurred since
the Audit Date in the ordinary course of business;
(h) any authorization or consent to change any capital stock of
any Company; or
(i) any written agreement by or written commitment of any
Company or any member of the AHI Group, the performance of
which will result in any of the things described in the
preceding clauses (a) through (h).
2.9 Certain Liabilities. Except as set forth on Schedule 2.9 to the
Disclosure Schedule, none of the Companies has any material
liability or obligation of any nature, whether accrued, absolute,
contingent, due, or to become due (including, without limitation,
any liability or obligation as a guarantor or otherwise with
respect to the obligations of others, or any contingent or
potential liability relating to or arising out of the activities
of any Company or the conduct of its business prior to the date
hereof, regardless of whether claims in respect thereof have been
asserted), except for:
(a) Environmental Matters (as such term is hereinafter defined),
(b) liabilities or obligations reflected in the Financial
Statements, the Interim Financial Statements or the 1996
Plan,
(c) liabilities or obligations which arise from matters
disclosed in this Agreement or in the Schedules to the
Disclosure Schedule, and
8
<PAGE>
(d) liabilities or obligations for taxes or Taxes.
2.10 Assets; Property Necessary for Business. Except as otherwise
reflected in the Disclosure Schedule, all of the Assets (which
term means all of the real property and all of the personal
property, tangible and intangible (including Intellectual Property
(as defined in Section 2.13), customer lists, formulae, and
technical information), used in the conduct of the business of the
Companies as it is presently conducted by each of them) are owned,
licensed, leased or, to the best of AHI's knowledge, used with the
permission or consent of the owner, licensee, licensor, lessor or
lessee thereof, by one or more of the Companies.
2.11 Inventories. Finished product inventory, raw material inventory
and supplies inventory reflected in the Financial Statements were,
as of the Audit Date, of commercial standards generally acceptable
in the industry, and, except for returns or anticipated returns of
outdated finished product inventory and for spoilage of raw
material inventory and supplies inventory consistent with the
experience of the Companies, no material amount of inventory which
is obsolete or unmarketable is currently owned by a Company.
2.12 Real Properties.
(a) Real Property Owned. Schedule 2.12(a) to the Disclosure
Schedule contains a complete list of all real property owned
by the Companies or any Company (the "Real Properties") and
with respect to each parcel of Real Property for which a
title policy dated May, 1991, is available, a reference to
that title policy. With respect to the Real Properties
located in Mexico, Maine, Augusta, Maine and Newport, Maine,
no title policy is available and no representation with
respect to the quality of title to such properties is made.
Hood or, if applicable, one or more of its Subsidiaries, has
good, clear, record fee simple title to each of the other
Real Properties, free and clear of all record Encumbrances
except for (i) those matters set forth on Schedule 2.12(a)
to the Disclosure Schedule, (ii) such title matters or
exceptions as are disclosed in the title insurance policy
applicable to such Real Property and (iii) any Encumbrances
which would be shown in endorsements to such title policies
that would be necessary to make the effective date of the
policies the date of this Agreement. Copies of title
insurance policies and of the documents referred to therein
as encumbering the Real Property named in each such policy
have been furnished to the Buyer.
9
<PAGE>
(b) Leases. Each lease or other occupancy agreement or other
agreement under which a Company holds or occupies real
property and for which such Company pays more than Five
Hundred Dollars ($500) per month (collectively, the "Leases"
and each individually, a "Lease") is set forth on Schedule
2.12(b) to the Disclosure Schedule. Each Lease has been duly
authorized, executed and delivered by the Company that is
the tenant under such Lease or by its predecessor in
interest, and is a legal, valid and binding obligation of
that Company. Each Company has a valid leasehold interest in
and enjoys peaceful and undisturbed possession under each
Lease to which it is a party. Except as set forth in the
Disclosure Schedule, no Company and, to the best of AHI's
knowledge, no other party thereto, is in default in the
performance, observance or fulfillment in any material
respect of any obligation, covenant or condition contained
in any Lease which, in any case, would have a Material
Adverse Effect. Schedule 2.12(b) to the Disclosure Schedule
contains a listing of all Leases, a reference to or notation
of the location of the real estate leased thereunder, the
name and address of the lessor, and the date of the Lease.
Schedule 2.12(b) to the Disclosure Schedule also
contains a listing of all leases under which a Company
grants the use or occupancy of real property to another
Person and for which such Company receives more than Five
Hundred Dollars ($500) per month (collectively, the "Tenancy
Agreements" and each individually, a "Tenancy Agreement"), a
reference to or notation of the location of the real estate
leased thereunder, the name and address of the lessee, and
the date of such Tenancy Agreement. No Company has granted
to another Person the right to occupy the Real Property in
Charlestown, Massachusetts, except for leases set forth on
Schedule 2.12(b) to the Disclosure Schedule.
2.13 Intellectual Property. Subject to its disclosures set forth on
Schedule 2.13 to the Disclosure Schedule, each Company owns or, to
the best of AHI's knowledge, otherwise has the right to use all of
the registered trademarks, tradenames, and servicemarks and, to
the best of AHI's knowledge, subject to common law restrictions,
all of the unregistered trademarks, tradenames, and servicemarks
(all of such registered or unregistered trademarks, tradenames and
servicemarks herein after referred to as "Intellectual Property")
currently used in the conduct of its business. No Company has
knowingly abandoned the use of any Intellectual Property used in
the conduct of its business, and, to the best of AHI's knowledge,
each Company has properly maintained in all material respects its
Intellectual Property, including but not limited to filing
"Section 8" and "Section 15" affidavits when due in the United
States Patent and Trademark Office, except
10
<PAGE>
to the extent that it has deemed it proper in the ordinary course
of business. Except as set forth on Schedule 2.13 to the
Disclosure Schedule, to the best of AHI's knowledge, none of the
Companies is infringing with respect to any Intellectual Property,
copyright, patent or trade secret belonging to a party other than
the Companies, and, to the best of AHI's knowledge, no third party
is infringing on the Intellectual Property owned by or licensed to
any of the Companies. No member of the AHI Group uses any
Intellectual Property owned or used by any of the Companies, or
has any license, right or claim to any Intellectual Property of
any Company.
Subject to the preceding paragraph of this Section 2.13,
Schedule 2.13 to the Disclosure Schedule shows:
(i) a list of each trademark, tradename and servicename
currently used by a Company in the conduct of its
business;
(ii) identifies those trademarks, tradenames and
servicenames owned by a Company;
(iii) indicates with respect to those owned trademarks,
tradenames and servicenames which are registered, the
federal and state registration numbers thereof;
(iv) a list of each trademark, tradename and servicename
licensed or sublicensed by written agreement to a
Company for use in the manufacture, distribution or
sale of product, showing the name of the licensor and
the date of such license or sublicense agreement; and
(v) a list of the license agreements or sublicense
agreements pursuant to which a Company grants to
another Person the right to use a trademark, tradename
or servicename, showing the trademark, tradename or
servicename in question, the name of the licensee or
sublicensee and the date of license or sublicense
agreement.
2.14 Material Contracts. Listed on Schedule 2.14 to the Disclosure
Schedule are all "Material Contracts", which term means all
written and fully executed agreements which exist relating to
possession of and use of personal property owned by other Persons
(including all license agreements listed in Schedule 2.13 to the
Disclosure Schedule pursuant to clauses (iv) and (v) of Section
2.13, and which are included by reference to Schedule 2.13 within
Schedule 2.14), the purchase or sale of supplies, equipment, raw
material inventory, finished inventory and other goods and farm
products, the purchase of data processing, advertising, food
brokerage, consulting and other services, and agreements relating
to non-competition, construction and other miscellaneous
activities, projects and
11
<PAGE>
arrangements which affect the ownership or operation of the
business and Assets of the Companies and to which a Company is a
party and which, in each case, involves payment or receipt by any
Company of $300,000 or more in any calendar year, which is not
cancelable without penalty within ninety days and the duration of
which is greater than one year. A true, complete and correct copy
of each Material Contract has been furnished or made available to
Buyer. Except as set forth in a Material Contract, no Company is a
party to or is bound by (a) any agreement, license, contract,
lease or commitment materially limiting the freedom of any Company
to engage in any line of business or to compete with any other
Person or (b) any agreement, license, contract, lease or
commitment not entered into in the ordinary course of business and
which involves payment or repayment by any Company of $300,000 or
more in any calendar year, which is not cancelable without penalty
within ninety days and the duration of which is greater than one
year.
Except as set forth in the Disclosure Schedule: (i) each Company
which is party to a Material Contract has complied with the terms
and conditions of such Material Contract in all material respects
and has not done or performed any act which would invalidate or
materially impair its rights thereunder; (ii) there exists no
event, occurrence, condition or act which, with the giving of
notice, the lapse of time, or both, would become a material
default by a Company under any Material Contract; (iii) there is
no outstanding written claim by any party that operations pursuant
to any Material Contract have been improperly conducted or
maintained; and (iv) to the best of AHI's knowledge; there exists
no event, occurrence or condition which would invalidate or
materially impair the rights of the Company which is party to such
Material Contract under such Material Contract, or which would
materially increase the costs of such Company under any such
Material Contract (except for increases in costs based upon market
conditions existing from time to time as they relate to the cost
of raw materials, products, supplies or services).
2.15 Litigation. Except (i) as set forth in Schedule 2.15 to the
Disclosure Schedule, (ii) claims asserted as of August 31, 1995
and listed in Schedule 2.22 to the Disclosure Schedule, (iii)
claims made since that date for which the Companies have
historically provided self insurance and which are of the same
general type as those described in Schedule 2.22 to the Disclosure
Schedule and (iv) any claims arising out of any alleged or actual
violation of any Antitrust Law (as defined in Section 9.2(g)),
there is no action, suit or proceeding at law or in equity by any
Person or any arbitration or any administrative or other
proceeding by or before any governmental or other instrumentality
or agency (individually a "Claim" and collectively "Claims")
pending or, to the best knowledge of AHI,
12
<PAGE>
threatened against any Company which, if successful, would result
in uninsured damages, fines or penalties awarded against any one
or more of the Companies or which would involve a felony. There is
no Claim now pending or, to the best of AHI's knowledge,
threatened which would prevent or materially delay the
consummation of the transactions contemplated hereby. Although
indemnity is given in accordance with the provisions of Section 9
for any violation of any Antitrust Law by the Companies prior to
the Closing Date, no representation whatsoever is made herein with
respect to the existence or non-existence of any violation of any
Antitrust Law by any of the Companies.
2.16 Taxes. Hood and each of the Companies has filed (or has had filed
on its behalf) all tax returns, filings and similar documents
which are required to be filed by or with respect to it on or
prior to the date hereof (after giving effect to valid extensions)
and has paid all taxes shown as due on such tax returns. To the
best of AHI's knowledge, all taxes of every kind, including,
without limitation, federal, state and local income, franchise,
net worth, property, sales, use, withholding, payroll and motor
vehicle taxes, and all estimated taxes required to be paid by any
of the Companies, through the date hereof (after giving effect to
valid extensions), have been paid whether disputed or not. AHI
makes no representation or warranty regarding the sufficiency or
adequacy of any accrual for liability for taxes which were not yet
due as of June 25, 1995 and/or any subsequent interim periods.
Except as disclosed on Schedule 2.16 to the Disclosure Schedule,
(i) there are no waivers in effect of the applicable statutory
period of limitation for any taxes of Hood or its Subsidiaries for
any tax period, and (ii) no deficiency assessment or proposed
adjustment with respect to any liability for taxes of Hood or any
Company for any tax period ending on or prior to the date hereof
is pending, or, to the best of AHI's knowledge, threatened. Except
as disclosed in Schedule 2.16 to the Disclosure Schedule, no
governmental audit of any tax returns filed by Hood or any Company
is in progress or pending or, to the best of AHI's knowledge,
threatened. Except as set forth on Schedule 2.16 to the Disclosure
Schedule, none of the Companies is or ever has been party to a
Tax-sharing agreement or /has been a member of an "affiliated
group" (as defined in Section 1504(a) of the Internal Revenue Code
of 1986, as amended and in effect for the taxable year in question
(the "Code")) or been required to file a consolidated, combined or
unitary income tax return with any other Person.
2.17 Compliance with Laws. Except as set forth on Schedule 2.17 of the
Disclosure Schedule or on any other Schedule to the Disclosure
Schedule, and except for Environmental Matters, as to which
reference is made to Section 2.23 of this
13
<PAGE>
Agreement, each Company is in compliance in all material respects
with all applicable laws, regulations, orders, judgments and
decrees.
2.18 Employee Benefit Plans.
(a) Each employee benefit plan within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), maintained or which has been
maintained (within the preceding 7 years) by any Company for
the benefit of its employees, other than any "Multiemployer
Plan" (as defined in Section 3(37) of ERISA (collectively,
the "ERISA Plans"), is listed on Schedule 2.18 of the
Disclosure Schedule, is in substantial compliance with
applicable law and has been administered and operated in all
material respects in accordance with its terms.
(b) Each ERISA Plan which is intended to be "qualified" within
the meaning of Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue
Service, and no event has occurred and no condition exists
which could reasonably be expected to result in the
revocation of any such determination.
(c) No event which constitutes a "reportable event" (as
described in Section 4043 of ERISA) for which the 30-day
notice requirement has not been waived by the Pension
Benefit Guaranty Corporation (the "PBGC") has occurred with
respect to any ERISA Plan.
(d) At no time has any ERISA Plan subject to Title IV of ERISA
been terminated or been the subject of termination
proceedings pursuant to Title IV of ERISA.
(e) Full payment has been made of all amounts which, under the
terms of any ERISA Plan, Hood was required to have paid as
contributions to such ERISA Plan on or prior to the date
hereof, and no ERISA Plan which is subject to Part 3 of
Subtitle B of Title 1 of ERISA has incurred any "accumulated
funding deficiency" (within the meaning of Section 302 of
ERISA or Section 412 of the Code), whether or not waived.
(f) Except as disclosed on Schedule 2.18 to the Disclosure
Schedule, there have been no "prohibited transactions" (as
described in Section 406 of ERISA or Section 4975 of the
Code) with respect to any ERISA Plan, and no Company has
otherwise engaged in any prohibited transaction.
14
<PAGE>
(g) Neither any Company nor any member of the AHI Group has
engaged in any transactions in connection with any ERISA
Plan that could reasonably be expected to result in the
imposition of a penalty pursuant to Sections 502 and 4071 of
ERISA, damages pursuant to Section 409 of ERISA or an excise
tax pursuant to Section 4975(a) of the Code.
(h) No liability, claim, action or litigation, has been made,
commenced or threatened with respect to any ERISA Plan
(other than for benefits payable in the ordinary course and
PBGC insurance premiums).
(i) No ERISA Plan or related trust owns any securities in
violation of Section 407 of ERISA.
(j) Except as set forth on Schedule 2.18 to the Disclosure
Schedule, all contributions required to have been made by
any Company to a "Multiemployer Plan" to which any Company
or any member of the AHI Group is obligated to contribute in
respect of any of the Companies ("Multiemployer Plan") have
been made on a timely basis.
(k) Except as set forth on Schedule 2.18 of the Disclosure
Schedule, neither Hood nor any of its Subsidiaries maintains
or has established any welfare plan (as defined in Section
3(1) of ERISA) which provides for continuing benefits or
coverage for any participant or any beneficiary of a
participant after such participant's termination of
employment except as may be required (A) by Section 4980B of
the Code or Section 601 (et. seq.) of ERISA or (B) under any
state law and at the expense of the participant or the
beneficiary of the participant.
(l) Neither Hood nor any of its Subsidiaries has been advised by
any Multiemployer Plan that any Company has incurred any
withdrawal liability under Sections 4201 or 4204 of ERISA
with respect to any Multiemployer Plan.
(m) Each Company has complied in all material respects at all
times with all applicable provisions of the Consolidated
Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA").
(n) The Company has made available to Buyer (1) a copy of the
two most recently filed Federal Form 5500 series and
accountant's opinion, if applicable, for each Plan (and the
two most recent actuarial valuation
15
<PAGE>
reports for each Plan, if any, that is subject to Title IV
of ERISA), and all information provided by the Company to
any actuary in connection with the preparation of any such
actuarial valuation report was true, accurate and complete
in all material respects and (2) information concerning the
present value of accumulated plan liabilities calculated in
a manner consistent with FAS 106 and actual annual expense
for such benefits for each of the last two (2) years for any
Plan described in Section 2.18(k), if applicable.
2.19 Labor and other Employment Matters. Except as set forth on
Schedule 2.19 to the Disclosure Schedule,
(a) none of the Companies has (i) any collective bargaining or
employment agreements or commitments, or any agreements or
commitments that contain any severance or termination pay
liabilities or obligations, or (ii) other than any ERISA
Plan, any written bonus, deferred compensation, profit
sharing, severance or retirement arrangement, whether
legally binding or not, and none is presently paying any
pension, deferred compensation, or retirement allowance to
anyone;
(b) no Company is now involved in or, to the best of AHI's
knowledge, threatened with any union election, petitions
therefor or other union organizational activities;
(c) there is no unfair labor practice complaint against any of
the Companies pending or, to the best of AHI's knowledge,
threatened;
(d) there are no proceedings pending or, to the best of AHI's
knowledge, threatened before the National Labor Relations
Board with respect to any of the Companies;
(e) there is no labor strike or similar dispute pending or, to
the best of AHI's knowledge, threatened against any of the
Companies; and
(f) there have not been in the past five (5) years and there are
no discrimination charges (relating to sex, age, race,
national origin, handicap or veteran status) pending or, to
the best of AHI's knowledge, threatened against any of the
Companies or involving any of the Companies, before any
federal, state, county, or local agency, board, commission,
authority or other subdivision thereof.
16
<PAGE>
2.20 Broker's or Finder's Fees. Except as set forth on Schedule 2.20 to
the Disclosure Schedule, no agent, broker, firm or any other
Person acting on behalf of any member of the AHI Group or any
Company, is, or will be, entitled to any commission or broker's or
finder's fees from any of the parties hereto, or from any Person
controlling, controlled by, or under common control with, any of
the parties hereto, in connection with any of the transactions
contemplated hereby.
2.21 Inter-company Transactions. Except as set forth on Schedule 2.21
to the Disclosure Schedule, (a) no member of the AHI Group (or any
officer or director thereof) has any contractual relationship or
other arrangement with or any indebtedness to any Company or has a
controlling interest in any entity that does business with any of
the Companies and (b) no Company has any indebtedness to any
member of the AHI Group (or any officer or director thereof), or
to any entity in which any member of the AHI Group (or any officer
or director thereof) has a controlling interest. Schedule 2.21 to
the Disclosure Schedule also sets forth an accounting of all
inter-company debits and credits (including, but not limited to,
all tax and Tax (as defined in Section 10) debits and credits)
since June 24,1995, and a reconcilement of those amounts with the
Financial Statements.
2.22 Insurance. The insured risks, amounts of coverage and carriers of
all insurance policies currently in force (and previously in force
since 1991) in respect to the Companies are set forth on Schedule
2.22 of the Disclosure Schedule. No Company is in material breach
or violation of or in default under any insurance policy currently
in force, all premiums due thereon have been paid, and each such
policy will (subject to renewal and reasonable commercial
availability) continue to be in force and effect up to and
including the Closing Date. As of the Audit Date, the Companies
established reserves for future payments which they reasonably
anticipate may become payable by them in respect of claims which
have been or will be asserted with respect to events which
occurred through the Audit Date in the amount of Five Million One
Hundred Twenty-five Thousand Two Hundred Seventy-seven Dollars
($5,125,277) (the "Insurance Reserve"). To the best of AHI's
knowledge, no Company has, within the past eight (8) years, been
refused insurance by any insurance carrier to which it has applied
for insurance. No representation or warranty is made in this
Agreement as to the sufficiency or adequacy of the Insurance
Reserve for such claims in the future and/or of similar reserves
established by the Companies for any interim periods subsequent to
the Audit Date.
2.23 No Environmental Representations. It is acknowledged and agreed by
the parties that AHI makes no representations or warranties
(either express or implied) with respect to Environmental Matters.
Buyer expressly acknowledges that it has had
17
<PAGE>
access to, and the opportunity to review and make oral inquiries
of the Stockholder, Hood's officers and employees, and their
respective consultants with respect to, all documents referred to
on Schedule 2.23 to the Disclosure Schedule.
For the purposes of this Agreement, the following words and
phrases shall have the following meanings:
"Environmental Matters" shall mean any claims, notices, or
demands brought at any time by any Person, including, without
limitation, any governmental agency that arise from, relate to or
are based upon: (1) compliance by any of the Companies and any of
its affiliates with any Environmental Law, including, without
limitation, requirements for permits; (2) the presence, release,
or threat of release of any Hazardous Materials on, in, under, in
the vicinity of or off-site from any real or personal property
owned or operated by any of the Companies or any of their
affiliates; (3) the presence on, in, or under any real or personal
property operated by any of the Companies or any of their
affiliates of underground storage tanks, underground injection
wells, asbestos, equipment containing polychlorinated biphenyls or
septic tanks; or (4) disposal off site of Hazardous Materials.
"Environmental Law" shall mean any environmental law, regulation,
rule, ordinance, or by-law at the federal, state, or local level,
whether existing as of the date hereof, previously enforced, or
subsequently enacted.
"Hazardous Material" shall mean any pollutant, regulated material,
toxic substance, hazardous waste, hazardous material, hazardous
substance, oil, or petroleum product as defined in or pursuant to
the Resource Conservation and Recovery Act, as amended, the
Comprehensive Environmental Response, Compensation, and Liability
Act, as amended, the Federal Clean Water Act, or any other
Environmental Law.
"Permit shall mean any environmental permit, license, approval,
consent, or authorization issued by a federal, state, or local
governmental entity.
"Release" shall mean any releasing, spilling, leaking, pumping,
pouring, emitting, emptying, discharging, injecting, escaping,
leaching, disposing, or dumping into the Environment.
18
<PAGE>
"Threat of Release" shall mean a substantial likelihood of a
Release which requires action to prevent or mitigate damage to the
environment which may result from such Release.
2.24 Absence of Sensitive Payments. No Company has (1) made any
contributions, payments or gifts to or for the private use of any
governmental official, employee or agent where either the payment
or the purpose of such contribution, payment or gift is illegal
under the laws of the United States or the jurisdiction in which
made, (2) established or maintained any unrecorded fund or asset
for any purpose or made any false or artificial entries on its
books, or (3) made any payments to any Person with the intention
or understanding that any part of such payment was to be used for
any purpose other than that described in the documents supporting
the payment.
2.25 Disclosure None of the representations or warranties contained in
this Agreement (including the Disclosure Schedule) contains any
untrue statement of a material fact or, when taken together, omits
to state a material fact required to be stated herein or therein
necessary in order to make the statements made herein or therein,
in the light of the circumstances under which they are made, not
misleading. No representation or warranty is given by the
Stockholder as to any requirement to file under the
Hart-Scott-Rodino Act.
2.26 Ordinary Course of Business. Except as contemplated by the 1996
Plan or any Schedule to the Disclosure Schedule, between the Audit
Date and the date of this Agreement, none of the Companies has
taken any of the actions which it is prohibited from taking
pursuant to Section 3.2(b).
SECTION 3. COVENANTS OF THE STOCKHOLDER.
- -----------------------------------------
3.1 Making of Covenants and Agreements. The Stockholder hereby makes
the covenants and agreements set forth in this Section 3, and the
Stockholder agrees to cause the Company and its Subsidiaries to
comply with such agreements and covenants until the Closing Date.
3.2 Conduct of Business. Between the date of this Agreement and the
earlier of the Termination Date or the Closing Date, the
Stockholder agrees that:
(a) Access. AHI and Hood will allow Buyer and its
representatives, at Buyer's expense, access to the
properties and assets, and to the inventory books and
records, and management personnel of the Companies in order
19
<PAGE>
that Buyer may have full opportunity to make such
investigation as it shall desire. Hood and AHI will furnish
or cause to be furnished to Buyer and Buyer's
representatives all data and information concerning the
business, finances, and properties of the Companies that may
be reasonably requested.
(b) Ordinary Course of Business; Negative Covenants. AHI will
cause Hood and its Subsidiaries to operate their businesses
in the ordinary course except as otherwise contemplated by
the 1996 Plan, Schedule 2.8 to the Disclosure Schedule or
the provisions of this Agreement. AHI will promptly inform
Buyer of any material changes known to AHI in the asset
levels and the operation of business as a whole and of any
material liability incurred by any of the Companies except
as incurred in the ordinary course of business. Except as
may be first approved by Buyer (which approval shall not be
unreasonably withheld and shall be deemed to be given if
Buyer is provided with written notice of such action at
least ten (10) days prior thereto and Buyer does not object
in writing to AHI to such action prior to the expiration of
such ten (10) day period) or as is otherwise permitted or
required by this Agreement or except as otherwise (i)
contemplated by the 1996 Plan, (ii) required for compliance
with statutory or regulatory requirements or any court
ordered or approved action, (iii) necessary to comply with
Hood's Articles of Organization or any Company's charter,
(iv) occurring in the conduct of the ordinary course of
business, or (v) required under existing loan agreements or
other Material Contracts, AHI shall not cause or permit:
(i) any Company to amend its charter or by-laws;
(ii) the compensation payable or to become payable by any
Company to any of its directors, officers or employees
to be increased or decreased from the amounts payable
as of the date hereof (other than customary and usual
salary increases);
(iii) any Company to make any bonus, pension, severance,
retirement or insurance payment or arrangement to or
with any such director, officer or employee (other
than customary and usual payments);
(iv) the Companies to increase their indebtedness for
borrowed money or to incur any contingent liability as
a guarantor or otherwise with respect to the
obligations of others except with respect to normal
20
<PAGE>
and customary borrowing or indebtedness incurred under
existing letters of credit or revolving facilities
with CoBank;
(v) any Company to sell or otherwise dispose of, or to
contract to sell or otherwise dispose of, any of its
properties or assets;
(vi) any Company to:
(a) amend or terminate any outstanding lease,
contract or agreement,
(b) incur any obligations or liability (fixed,
contingent or other), and
(c) enter into any material agreement, license,
contract, lease or commitment which, if it had
been entered into prior to the date hereof,
would be listed as a Material Contract on
Schedule 2.14 to the Disclosure Schedule;
(vii) any Company to engage in any unusual transaction
regarding its inventory or to make any addition to its
property or any purchase of machinery or equipment,
except for normal maintenance and replacements;
(viii)any Company to discharge or satisfy any obligation or
liability (absolute or contingent) other than current
liabilities or obligations under contracts now
existing or hereafter entered into in the ordinary
course of business, to discharge or satisfy any such
current trade liabilities or obligations in a more
accelerated fashion than has heretofore been the
practice of such Company, and to discharge or satisfy
commitments other than those under Leases or other
leases now existing or incurred hereafter in the
ordinary course of business;
(ix) any Company to suffer any material damage, destruction
or loss not fully insured against (using book value as
the minimum level for losses to property), in each
case, subject to established deductions and
self-insurance coverage, or any acquisition or taking
of property by any governmental authority;
21
<PAGE>
(x) any Company to cancel or waive any claim or right of
substantial value which individually or in the
aggregate is material to the Companies on a
consolidated basis;
(xi) any Company to declare, set aside or pay any dividends
or distributions in respect of or make any direct or
indirect redemption, purchase or acquisition of its
capital stock;
(xii) any Company to purchase, lease, sell, dispose of,
mortgage, pledge, subject to a lien or otherwise
encumber any of its material assets; or
(xiii)any Company to prepay loans from its stockholders,
officers or directors or from any other Person or make
any change in its borrowing arrangements.
3.3 Insurance. AHI will cause the Companies to keep all of the Real
Properties, the properties held under Leases and the other Assets
of the Companies adequately insured consistent with the insurance
presently in effect and subject to reasonable availability of such
insurance in the market. In case of any loss occurring after the
date of this Agreement but prior to Closing due to a risk covered
under a fire and extended coverage policy of insurance, AHI shall
cause the applicable Company to repair the damaged property to
substantially the same condition as before the damage. In the
event any such property damage has a Material Adverse Effect, or
exceeds $250,000 and is not repaired in substantially all material
respects before the Closing Date, or if such damage exceeds
$1,000,000 in the aggregate with all other unrepaired damage to
the Companies' assets, Buyer, at its option, may either: (a)
terminate this Agreement, in which event AHI shall return to the
Buyer the $1,500,000 Deposit and the parties will be relieved of
all further liability hereunder or (b) proceed to Closing, in
which event all insurance proceeds payable or paid in connection
with such property damage shall be the property of the Company
owning the property. AHI will use its reasonable business efforts
to continue to maintain other insurance policies listed on
Schedule 2.22 to the Disclosure Schedule covering the Companies in
substantial conformity to the amounts and on the terms as
presently maintained through and until the Closing Date.
3.4 Assumption of SERPs. Notwithstanding Section 3.2(b), but subject
to Hood's continued administrative assistance as may be reasonably
requested by AHI, contemporaneously with the Closing AHI shall
cause Hood to assign to a member of the AHI Group, and that member
of the AHI Group shall (i) accept and
22
<PAGE>
assume all past, present and future liabilities, obligations and
responsibilities of the Companies under the Hood Supplemental
Employee Retirement Arrangements (listed in Item 3 of Schedule
2.18 to the Disclosure Schedule) previously incurred by the
Companies or any one of them, both as they currently exist and as
they may develop or evolve in the future under the terms thereof
as they exist on the date of this Agreement, all pursuant to the
Assumption Agreement in the form of Exhibit 3.4 and (ii) receive,
hold and administer, directly or through a Trustee, the assets,
liabilities and obligations associated with each such arrangement
or obligation. Following the Closing, the Buyer shall cause Hood
to pay when due the so-called "Pay-to-Stay" obligations of Hood
listed in Item 6 of Schedule 2.19 to the Disclosure Schedule, and
AHI shall promptly reimburse Hood in full for the payment of all
such amounts.
3.5 Authorization from Others. Prior to the Closing Date, the
Stockholder will use (and the Stockholder shall cause Hood and
each Subsidiary to use) its reasonable business efforts to obtain
all authorizations, waivers, consents and permits of others
required to permit the consummation by the Stockholder, Hood and
its Subsidiaries of the transactions contemplated by this
Agreement, including those consents listed on Schedule 2.6(b) to
the Disclosure Schedule (but subject in any and all cases to the
provisions of Section 6.1(g)).
3.6 Purchase of Assets by AHI. Subject only to the tender by Hood to
it of quitclaim deeds and a bill of sale and certain related
agreements in the form of Exhibit 3.6(a), 3.6(b) and 3.6(c)
respectively, AHI agrees to purchase from Hood on the Closing Date
and effective immediately after the Closing the assets listed in
those Exhibits (the "Idle Assets"), the only consideration for
which shall be the delivery to Hood of the promissory note of
Buyer described in Section 1.2(a), endorsed by AHI to pay to the
order of Hood and an assignment of the Kaneb Guaranty to Hood. AHI
and Buyer shall allocate the purchase price (and all other
capitalized costs) among the Idle Assets as set forth on Exhibit
3.6(d). Buyer and AHI agree that the aggregate value set forth on
Exhibit 3.6(d) for the Idle Assets exceeds or is equal to the fair
market value of such assets.. All transfer taxes payable with
respect to conveyance of the Idle Assets by Hood to AHI shall be
paid by AHI. Buyer and AHI shall allocate the purchase price (and
all other capitalized costs) among the Idle Assets as set forth on
Exhibit 3.6(d). Such allocation shall be binding upon Buyer and
AHI for all purposes (including financial accounting purposes,
financial and regulatory reporting purposes and tax purposes).
Buyer and AHI also each agree to file any and all necessary forms
with the IRS consistent with the foregoing
23
<PAGE>
3.7 Data Processing Services. The Contract between Hood and Agway Data
Services, Inc. dated December 1, 1989, as amended to date, will
continue after the Closing, and it will be renewed from time to
time for such periods after the Closing, but not to exceed a
period of 18 months, (at market rates prevailing at the time of
such renewals) as is reasonably needed by the Companies until
their own general ledger and accounting system is ready for use,
and until such time as conversion of all data, reports and
programs to the data processing, general ledger and accounting
system of the Companies has been successfully accomplished.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF BUYER.
- ----------------------------------------------------
4.1 Making of Representations and Warranties. As a material inducement
to the Stockholder to enter into this Agreement and to consummate
the transactions contemplated hereby, Buyer hereby makes the
representations and warranties to the Stockholder contained in
this Section 4.
4.2 Organization of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the
Commonwealth of Massachusetts. Buyer will assign its rights
hereunder to a Massachusetts limited partnership, Catamount Dairy
Holdings Limited Partnership ("CDHLP"), pursuant to its right to
do so under Section 11.4. At the time of such assignment, CDHLP
will be duly organized, validly existing as a Massachusetts
limited partnership and in good standing under the laws of the
Commonwealth of Massachusetts.
4.3 Authority of Buyer. Buyer has full right, authority and power to
enter into this Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by
Buyer of this Agreement have been duly authorized by all necessary
corporate action of Buyer and no other action on the part of Buyer
is required to authorize such execution, delivery and performance.
This Agreement constitutes the valid and binding obligation of
Buyer enforceable in accordance with its terms, except that
enforcement hereof and thereof may be limited by (I) bankruptcy,
insolvency, moratorium, receivership, fraudulent conveyance or
other laws of general application affecting the enforcement of
creditor's rights generally, and (ii) general principles of equity
(regardless of whether enforceability is considered in a
proceeding in equity or at law). The execution, delivery and
performance by Buyer of this Agreement:
(i) does not and will not violate any provision of the
Articles of Organization or By-laws of Buyer;
24
<PAGE>
(ii) does not and will not violate any laws of the United
States or of any state or any other jurisdiction
applicable to Buyer; and
(iii) does not and will not result in a breach of,
constitute a default under, accelerate any obligation
under, or give rise to a right of termination of any
indenture, loan or credit agreement, or other
agreement, mortgage, lease, permit, order, judgment or
decree to which Buyer is a party and which is material
to the business and financial condition of Buyer.
Upon the assignment by Buyer of its rights hereunder as described
in Section 4.2: CDHLP will have full right, authority and power to
carry out the transactions contemplated hereby; the performance by
CDHLP of this Agreement will have been duly authorized by all
necessary action of such assignee's general partner and no other
action on the part of CDHLP or its general partner will be
required to authorize such performance; this Agreement will
constitute the valid and binding joint obligation of Buyer and
CDHLP, enforceable against each as set forth above; and the
performance by CDHLP of this Agreement --
(iv) will not violate any provision of its partnership
agreement,
(v) will not violate any laws of the United States or of
any state or any other jurisdiction applicable to it,
and
(vi) will not result in a breach of, constitute a default
under, accelerate any obligation under, or give rise
to a right of termination of any indenture, loan or
credit agreement, or other agreement, mortgage, lease,
permit, order, judgment or decree to which such
assignee is a party and which is material to the
business and financial condition of such assignee.
4.4 Litigation. There is no litigation pending or, to Buyer's
knowledge, threatened against Buyer which would prevent or hinder
the consummation of the transactions contemplated by this
Agreement.
4.5 Finder's Fee. Buyer has not incurred or become liable for any
broker's commission or finder's fee relating to or in connection
with the transactions contemplated by this Agreement.
25
<PAGE>
4.6 Financing Contingency. Buyer represents that it has adequate funds
immediately available to it to consummate fully the transaction
contemplated hereby and to fulfill all of its obligations
hereunder and expressly acknowledges that there is no financing
contingency or condition which will permit it to terminate this
Agreement or otherwise not honor its obligations hereunder.
4.7 Hart-Scott-Rodino Considerations. Buyer represents that its
assignee, CDHLP, will, at Closing, be a recently created
Massachusetts limited partnership that will not have a regularly
prepared balance sheet. On the Closing Date, CDHLP shall have less
than $10 million in assets in excess of all cash that will be used
as consideration for acquiring the Hood Shares and for expenses
incidental to that acquisition. CDHLP will have a single general
partner, The Catamount Corporation, which will have invested 1% of
CDHLP's capital, will be entitled to 1% of CDHLP's profits, and
will have the right in the event of dissolution to 1% of CDHLP's
assets. Twelve limited partners will have each contributed
approximately 8.25% of CDHLP's capital, each will have the right
to receive approximately 8.25% of CDHLP's profits, and each will
have the right in the event of dissolution to receive
approximately 8.25% of CDHLP's assets. Six of the limited partners
will be adult individuals or trusts established for the benefit of
such individuals, and the other six will be trusts that each of
such individuals, as settlor, has established for his children.
4.8 Knowledge of Misrepresentation. None of John A. Kaneb, Stephen J.
Kaneb or Gary R. Kaneb has actual knowledge of any matter giving
the Buyer a right to indemnification pursuant to Section 9.2(a) or
(b), or Section 10, or of any matter which constitutes a breach by
the Stockholder of any representation or warranty of the
Stockholder made in this Agreement or in any Sale Document.
SECTION 5. COVENANTS OF BUYER.
- -------------------------------
5.1 Sale of Assets by Hood Subject only to the tender by AHI to Hood
of the promissory note of Buyer described in Section 1.2(a),
endorsed by AHI and payable to the order of Hood, Buyer agrees to
cause Hood to execute and deliver to AHI, effective immediately
after the Closing, quitclaim deeds, a bill of sale and certain
related agreements in the form of Exhibits 3.6(a), 3.6(b), and
3.6(c) respectively. Buyer and AHI shall allocate the purchase
price (and all other capitalized costs) among the Idle Assets as
set forth on Exhibit 3.6(d). Such allocation shall be binding upon
Buyer and AHI for all purposes (including financial accounting
purposes, financial and regulatory reporting purposes and tax
26
<PAGE>
purposes). Buyer and AHI also each agree to file any and all
necessary forms with the IRS consistent with the foregoing.
5.2 Offer to Purchase Other Common Shares. Buyer hereby authorizes AHI
to extend to each of the holders of Common Stock of Hood listed on
Schedule 2.4(b), other than AHI, the offer by the Buyer to
purchase, on the Closing Date or within ninety days thereafter,
all shares of Common Stock of Hood owned by such holder at a price
per share of $15.04 (the price per share to be paid by Buyer to
AHI under the Agreement for each of the Hood Shares). This
covenant is made expressly for the benefit of the Stockholder and
each other holder of Common Stock of Hood.
5.3 Assumption of Obligations to Robert L. Keller. The Buyer will
cause Hood to assume as of the Closing Date the obligations of
Agway Inc. to Robert L. Keller pursuant to Section 3 of the
"Salary Continuation and Non-Compete Agreement" between them dated
as of May 28, 1992.
SECTION 6. CONDITIONS.
- -----------------------
6.1 Conditions to the Obligations of Buyer. The obligation of Buyer to
consummate this Agreement and the transactions contemplated hereby
are subject to the fulfillment, prior to or at the Closing, of the
following conditions precedent:
(a) Representations; Warranties; Covenants. (i) Each of the
representations and warranties of the Stockholder contained
in Section 2 shall be true and correct in all material
respects (except for such representations and warranties
that are qualified by their terms as to materiality, which
representations and warranties as so qualified shall be true
in all respects) as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing
Date (except as to any representation or warranty which
specifically relates to an earlier date or except to the
extent that the contents of any Schedule to the Disclosure
Schedule would require amendment if it were being completed
as of the Closing Date as a result of any of the Companies
or any member of the AHI Group having taken any action or
there having occurred any event or circumstance which is not
prohibited by the terms of this Agreement), and (ii) the
Stockholder shall, on or before the Closing Date, have
performed all of its obligations hereunder which by the
terms hereof are to be performed on or before the Closing
Date.
27
<PAGE>
(b) Material Adverse Change. As measured on the Closing Date,
there shall have been no Material Adverse Change (as defined
in Section 11.5) regarding Hood.
(c) Certificate from Officers. The Stockholder shall have
delivered to Buyer a certificate of Stockholder's President
or any vice president and of its chief financial officer
dated as of the Closing to the effect that the statements
set forth in paragraphs (a) and (b) above in this Section
6.1 are true and correct.
(d) Opinion of Counsel. On the Closing Date, Buyer shall have
received from Goodwin, Procter & Hoar, counsel for Hood and
the Stockholder, a legal opinion dated as of said date, in
form reasonably acceptable to Buyer.
(e) No Litigation. There shall have been no determination by
Buyer, acting in good faith, that the consummation of the
transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or
threat (in each case after the date of execution of this
Agreement) by any Person of litigation, investigatory
proceedings or other action against Buyer, Hood, any
Subsidiary or the Stockholder, seeking to enjoin or
investigate the transactions contemplated hereby.
(f) Agri-Mark, Inc. Right of First Refusal. Agri-Mark shall have
acknowledged that the Agri-Mark Right of First Refusal
(which term is used in this Agreement to mean the right to
purchase the Hood Shares under certain circumstances, which
right was granted by Agway, Inc. to Agri-Mark, Inc. by
letter dated June 16, 1980, as amended by letter agreement
dated May 9, 1991) is of no further force and effect in a
manner satisfactory to Buyer.
(g) Guaranty. Agway, Inc. shall have executed and delivered its
guaranty of the post-closing obligations of AHI hereunder in
the form of Exhibit 6.1(g).
(h) Consents. AHI shall have also received and delivered to
Buyer all consents, in form and substance reasonably
satisfactory to Buyer, from all third parties listed in
Schedule 6.1(h) to the Disclosure Schedule whose consent has
been requested to be obtained by Buyer at or prior to the
execution of this Agreement, after good faith consultation
with the Stockholder.
28
<PAGE>
(i) Massachusetts Tax Certificate. At or prior to the Closing,
Buyer shall have received from AHI a certificate of
payment/good standing relating to Hood from the Commissioner
of Revenue as provided in Massachusetts General Laws Chapter
62C, Section 44(a).
(j) Resignations. Hood shall have delivered to Buyer the
resignations of all of the directors of the Company (other
than Robert L. Keller and any director who may have been
designated and elected by the holders of the Preferred Stock
of Hood), such resignations to be effective at the Closing.
6.2 Conditions to Obligations of the Stockholder. The obligation of
the Stockholder to consummate this Agreement and the transactions
contemplated hereby is subject to the fulfillment, prior to or at
the Closing, of the following conditions precedent:
(a) Representations; Warranties; Covenants. (i) Each of the
representations and warranties of Buyer contained in Section
4 shall be true and correct in all material respects as
though made on and as of the Closing Date; (ii) Buyer shall,
on or before the Closing Date, have performed all of its
obligations hereunder which by the terms hereof are to be
performed on or before the Closing Date; and (iii) Buyer
shall have delivered to the Stockholder a certificate of the
President or any Vice President of the Buyer dated of the
Closing Date to the effect that the statements set forth in
clauses (i) and (ii) above in this Section 6.2(a) are true
and correct.
(b) Opinion of Counsel. On the Closing Date, the Stockholder
shall have received from Sullivan & Worcester, counsel for
Buyer, an opinion as of said date, in form reasonably
acceptable to the Stockholder.
(c) No Litigation. There shall have been no determination by the
Stockholder, acting in good faith, that the consummation of
the transactions contemplated by this Agreement has become
inadvisable or impracticable by reason of the institution or
threat by any Person of material litigation, investigatory
proceedings or other action against Buyer, Hood, any
Subsidiary or the Stockholder, seeking to enjoin or
investigate the transactions contemplated hereby.
(d) Environmental Release. The release described in Section
9.3(f) shall have been executed and delivered to the
Stockholder.
29
<PAGE>
SECTION 7. TERMINATION OF AGREEMENT.
- -------------------------------------
7.1 Termination. At any time prior to the Closing, this Agreement may
be terminated on the "Termination Date", determined as follows:
(a) by mutual written consent of all of the parties to this
Agreement;
(b) by Buyer, pursuant to written notice by Buyer to the
Stockholder given at least ten days prior to the Termination
Date set forth in such notice, if any of the conditions set
forth in Section 6.1 of this Agreement have not been
satisfied at or prior to the Closing Date, or if it has
become reasonably and objectively certain that any of such
conditions, other than a condition within the control of
Hood, any Subsidiary or the Stockholder, will not be
satisfied at or prior to the Closing Date, such written
notice to set forth such conditions which have not been or
will not be so satisfied;
(c) by the Stockholder, pursuant to written notice by the
Stockholder to Buyer given at least ten days prior to the
Termination Date set forth in such notice, if any of the
conditions set forth in Section 6.2 of this Agreement have
not been satisfied at or prior to the Closing Date, or if it
has become reasonably and objectively certain that any of
such conditions, other than a condition within the control
of Buyer, will not be satisfied at or prior to the Closing
Date, such written notice to set forth such conditions which
have not been or will not be so satisfied; and
(d) by the Stockholder or by Buyer, if the transaction does not
close by December 31, 1995.
7.2 Liquidated Damages of the Stockholder. If (a) Buyer shall fail to
purchase the Hood Shares in accordance with the terms and
conditions of this Agreement and (b) the Stockholder shall have
satisfied in all material respects each of the conditions of
Section 6.1 on or before December 15, 1995 or on such later date
as the parties may have agreed pursuant to Section 1.3 above, then
Stockholder shall have the irrevocable right to retain the
Deposit, which sum shall constitute liquidated damages for the
entire amount of the Stockholder's damages hereunder, and the
Stockholder shall be entitled to no other legal or equitable
relief except with respect to the obligations of Buyer contained
in Sections 11.1, 11.9 and 11.10.
7.3 Return of Deposit to Buyer. If the transactions contemplated
hereby fail to close on or before the date specified pursuant to
Section 7.1 (or such later date to
30
<PAGE>
which the parties may have agreed upon in writing), for any reason
other than that which would entitle the Stockholder to retain the
Deposit pursuant to Section 7.2, the Deposit shall be returned
forthwith to Buyer. Such return of the Deposit shall be in
addition to, and not in limitation of, any other rights of Buyer
hereunder or at law or in equity.
7.4 Specific Performance. The parties recognize that the Buyer's right
to require the Stockholder to convey the Hood Shares is unique
and, accordingly, unless the conditions to Closing set forth in
Section 6.2 of this Agreement shall not have been satisfied at or
prior to the Closing Date, the Buyer shall, in addition to such
other remedies as may be available to it at law or in equity, have
the right to enforce its rights hereunder by actions for
injunctive relief and specific performance to the extent permitted
by law, provided, however, that if one or more of the conditions
to Closing set forth in Section 6.1(a), (b), (f), (h) or (i) of
this Agreement (and Section 6.1(c) by reason of the failure to
satisfy a condiditon set forth in Section 6.1(a) or (b)) shall not
have been satisfied at or prior to the Closing Date and if the
Buyer shall have waived satisfaction of such condition or
conditions or specified portions thereof and the Closing shall
have occurred, then the Buyer shall not be entitled to include
within any action for indemnification pursuant to Section 9.2 (a)
or (b) any Loss (as hereinafter defined) resulting from the
specified condition or portion thereof so waived.
SECTION 8. RIGHTS AND OBLIGATIONS SUBSEQUENT TO CLOSING.
- ---------------------------------------------------------
8.1 Survival of Warranties. Each of the representations, warranties,
agreements, covenants and obligations expressly set forth in this
Agreement (including the Disclosure Schedule) and in any
certificate executed and delivered in accordance with the specific
terms of this Agreement are material, shall be deemed to have been
relied upon by such other party and shall survive the Closing
regardless of any investigation and shall not merge in the
performance of any obligation by any party hereto; provided,
however, that such representations and warranties shall expire on
the same dates as and to the extent that the rights to
indemnification with respect thereto under Section 9 shall expire.
SECTION 9. INDEMNIFICATION.
- ----------------------------
9.1 General. No party to this Agreement shall be liable or bound in
any manner by expressed or implied representations, warranties or
covenants pertaining to the subject matter of this Agreement, and
any other matter whatsoever, made,
31
<PAGE>
furnished or implied by an agent, employee, servant or other
Person representing or purporting to represent such party unless
such representations, warranties or covenants are expressly and
specifically set forth in this Agreement (including the Disclosure
Schedule) or in any certificate or other document executed and
delivered in accordance with the specific terms of this Agreement
(herein, a "Sale Document").
9.2 Indemnification by the Stockholder. Subject to the limitations set
forth in this Section 9 below, the Stockholder agrees subsequent
to the Closing Date to indemnify and hold harmless Buyer, the
Companies and the officers, directors, employees and agents of
each of them (individually, an "Indemnified Buyer Party" and
collectively, the "Indemnified Buyer Parties") from and against
and in respect of all losses, liabilities, obligations, damages,
deficiencies, actions, suits, proceedings, demands, assessments,
orders, judgments, fines, penalties, costs and expenses
(including, without limitation, the reasonable fees, disbursements
and expenses of attorneys, accountants and consultants) of any
kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) sustained,
suffered or incurred by or made against any Indemnified Buyer
Party (a "Loss" or "Losses") to the extent, but only to the
extent, arising out of, based upon or in connection with:
(a) any breach of any representation or warranty made by the
Stockholder in Sections 2.1 through 2.8 or in Sections 2.20
or 2.21;
(b) any breach of any representation or warranty made by the
Stockholder in Section 2 but which is not specified in
Section 9.2(a);
(c) any breach of any covenant or agreement made by the
Stockholder in a Sale Document;
(d) any actual or alleged violation, on, prior to or after the
Closing Date, of an Environmental Law with respect to or
arising out of the operations of any of the Companies at (i)
the premises located in the State of New York, and Town of
Elbridge (Skaneateles) commonly known as Jordan Road (and
Hamilton Road), (ii) the premises located in the State of
New York and City of Syracuse commonly known as 810 Burnet
Street, (iii) the premises located in the State of Maine and
Town of Newport commonly known a 10 Spring Street, and (iv)
the premises located in the Commonwealth of Massachusetts
and Town of Milton commonly known as 131-139 Eliot Street
(collectively, the "Sites"), or the presence, prior to
32
<PAGE>
or after the Closing Date, of any Hazardous Material on, in,
under, in the vicinity of or off-site from the Sites, but
specifically excluding any such violation or presence at any
time with respect to any of the Companies' operations or
assets at any real property other than the Sites and
specifically excluding liability for Environmental Matters
arising at any time that does not relate to the Sites;
(e) any costs incurred in connection with the defense of,
settlement of, or payment of any judgment or award made in
connection with the claim for indemnity by Coca-Cola
Corporation described on Schedule 2.15 to the Disclosure
Schedule, and in connection with the defense of, settlement
of, or payment of any judgment or award made in connection
with the action referred to in Schedule 2.15 to the
Disclosure Schedule under the heading "Lago & Sons Dairy,
Inc. and Michael Lago v. H.P. Hood, Inc." (it being
understood that the Stockholder shall be entitled to retain
any amount payable to Hood and/or the Companies which is in
payment of judgment or award of any counterclaim raised by
Hood and/or the Companies in either such action);
(f) any Tax for which indemnity is given by the Stockholder
pursuant to Section 10 hereof;
(g) any actual or alleged violation of, or grand jury or other
investigation which could result in an alleged violation of,
an Antitrust Law (which term means the federal laws, as
amended to date, which are commonly referred to as the
Sherman Act, the Clayton Act and the Robinson-Patman Act,
and the substantial equivalents of those laws which are
incorporated into state and local laws) by any of the
Companies which arise from activities of a Company prior to
the Closing Date (and to the extent, but only to the extent,
of activities of a Company prior to the Closing Date), or a
claim by any Person for damages if such claim is based upon,
and to the extent the Loss results from, an actual or
alleged violation of any Antitrust Law by any of the
Companies which arises from, but only to the extent it
arises from, activities of a Company prior to the Closing
Date, including those which arise from the matters described
in Schedule 2.15 to the Disclosure Schedule under the
following headings: Connecticut State Investigation; Federal
Investigation - Connecticut; Federal Investigation -
Massachusetts; Maine Attorney General's inquiry; and New
Jersey State Investigation.
33
<PAGE>
Claims under clauses (a) through (g) of this Section
9.2 are hereinafter collectively referred to as
"Indemnifiable Buyer Claims". The rights of Indemnified
Buyer Parties to recover indemnification in respect of any
occurrence referred to in clauses (c) through (g) of this
Section 9.2 shall not be limited by the fact that such
occurrence may not constitute an inaccuracy in or breach of
any representation or warranty referred to in clause (a) or
clause (b) of this Section 9.2.
9.3 Limitations on Indemnification by the Stockholder.
(a) The Buyer shall not make a claim upon the Stockholder for
Losses for Indemnifiable Buyer Claims unless the total of
all Indemnifiable Buyer Claims shall result in Losses in
excess of $100,000 in the aggregate, or, if the total of all
Indemnifiable Buyer Claims shall result in Losses of
$100,000 or less in the aggregate and the time limit for
some or all of such Indemnifiable Buyer Claims will expire
within 90 days, then the Buyer may make a claim upon the
Stockholder for payment of the Indemnifiable Buyer Claims
which are about so to expire, whereupon the amount of such
Losses, or the portion thereof for which claim may then be
made, shall be recoverable in full except as otherwise
provided in Section 9 and Section 10.
(b) Subject to the provisions of Section 9.3(a), the Stockholder
shall be obligated to indemnify Indemnified Buyer Parties
for Losses for Indemnifiable Buyer Claims under Section
9.2(b) to the extent, and only the extent, that such Losses
exceed $1,000,000 in the aggregate, and then as to such
excess only for fifty percent (50%) of each Loss.
(c) The maximum cumulative aggregate amount of indemnification
for which the Stockholder shall be liable pursuant to
Sections 9.2(a) through (f) shall be $15,900,000;
indemnification for which the Stockholder shall be liable
pursuant to Section 9.2(g) shall be unlimited, provided,
however, that solely with respect to Loss arising from a
breach of the representation that all outstanding capital
stock of each of the Companies is duly and validly issued,
fully paid and nonassessable, the Stockholder shall be
liable for up to an additional $9,600,000.
(d) The provisions of this Section 9 shall be the sole and
exclusive recourse of Buyer, Hood, any Company, and any
affiliate of any of them against AHI for any breach,
misrepresentation or other matter relating to or arising in
connection with this Agreement or any other Sale Document.
34
<PAGE>
(e) Section 10 shall be the sole and exclusive recourse of Buyer
for Taxes.
(f) Buyer shall cause Hood and the Companies as of the Closing
Date to release the Stockholder and all of its affiliates,
officers, directors, stockholders and agents from any Loss
arising out of any actual or alleged violation, before, on
or after the Closing Date, of an Environmental Law with
respect to any facilities owned or operated by Buyer or any
affiliate thereof or any of the Companies or any affiliate
thereof or the presence before, on or after the Closing Date
of any Hazardous Material on, in, under, in the vicinity of
or off-site from the Real Property (other than the Sites,
for which no such release is or shall be given) or in
personal property owned or operated by any of the Companies.
9.4 Indemnification by Buyer. Subject to the limitations set forth in
this Section 9, Buyer agrees subsequent to the Closing Date to
indemnify and hold harmless the Stockholder and its officers,
directors, stockholders, employees and agents and each of them
(individually an "Indemnified Stockholder Party" and collectively
the "Indemnified Stockholder Parties") from and against and in
respect of all losses, liabilities, obligations, damages,
deficiencies, actions, suits, proceedings, demands, assessments,
orders, judgments, fines, penalties, costs and expenses
(including, without limitation, the reasonable fees, disbursements
and expenses of attorneys, accountants and consultants) of any
kind or nature whatsoever (whether or not arising out of
third-party claims and including all amounts paid in
investigation, defense or settlement of the foregoing) sustained,
suffered or incurred by or made against any Indemnified
Stockholder Party (a "Loss" or "Losses") to the extent, but only
to the extent, arising out of, or based upon or in connection with
any breach of any representation, warranty, covenant or agreement
made by Buyer in this Agreement (including the Disclosure
Schedule) or any Sale Document, or by reason of any claim, action
or proceeding asserted, instituted or arising out of any matter or
thing covered by any such representation, warranty, covenant or
agreement.
9.5 Limitation on Indemnification by Buyer. The Buyer shall not be
obligated to indemnify the Indemnified Stockholder Parties unless
the total of all claims for indemnification pursuant to Section
9.4 exceed $100,000 in the aggregate whereupon the full amount of
such claims shall be recoverable.
9.6 Time Limits for Claims. Indemnification with respect to Buyer
Indemnifiable Losses
35
<PAGE>
(a) Described in Section 9.2(a), (b) and (c) shall expire on the
second anniversary of the Closing Date;
(b) Described in Section 9.2(e) shall expire on the ninetieth
day following the date on which the judgements in or
settlements of such actions have become final and subject to
no further judicial appeal or administrative action;
(c) Described in Section 9.2(f) shall expire on the ninetieth
day following the date on which the statute of limitations
with respect to the Tax liability expires; and
(d) Described in Sections 9.2(d) and (g) shall not expire.
If prior to any specified expiration date a state of facts
shall have become known which may in good faith be reasonably
deemed to constitute any Loss as to which indemnity may be payable
and an Indemnified Buyer Party shall have given notice of such
facts to the Stockholder, then the right to indemnification with
respect to such specified Loss (but only with respect thereto)
shall remain in effect until such matter shall have been finally
determined and disposed of, and any indemnification due in respect
thereof shall have been paid, according to the date on which
notice of the applicable claim is given.
9.7 Notice; Defense of Claims. Promptly after receipt by an
indemnified party of notice of any claim, liability or expense to
which the indemnification obligations hereunder would apply, the
indemnified party shall give notice thereof in writing to the
indemnifying party, but the omission so to notify the indemnifying
party promptly will not relieve the indemnifying party from any
liability except to the extent that the indemnifying party shall
have been prejudiced as a result of the failure or delay in giving
such notice. Such notice shall state the information then
available regarding the amount and nature of such claim, liability
or expense and shall specify the provision or provisions of this
Agreement under which the liability or obligation is asserted. If
within 20 days after receiving such notice the indemnifying party
gives written notice to the indemnified party stating that (i) it
would be liable under the provisions hereof for indemnity in the
amount of such claim if such claim were successful and (ii) that
it disputes and intends to defend against such claim, liability or
expense at its own cost and expense, then counsel for the defense
shall be selected by the indemnifying party (subject to the
consent of the indemnified party, which consent shall not be
unreasonably withheld) and the indemnified party shall not be
required to make any payment with respect to such claim, liability
or expense as long as the indemnifying party is conducting a
36
<PAGE>
good faith and diligent defense at its own expense; provided,
however, that the assumption of defense of any such matters by the
indemnifying party shall relate solely to the claim, liability or
expense that is subject or potentially subject to indemnification.
The indemnifying party shall have the right to settle all
indemnifiable matters related to claims by third parties which are
susceptible to being settled provided its obligation to indemnify
the indemnified party therefor will be fully satisfied. The
indemnifying party shall keep the indemnified party reasonably
apprised of the status of the claim, liability or expense and any
resulting suit, proceeding or enforcement action, shall have
control over the handling of any such claim, liability, expense,
suit, proceeding or enforcement action, shall furnish the
indemnified party with all documents and information that the
indemnified party shall reasonably request and shall consult with
the indemnified party prior to acting on major matters, including
settlement discussions. Notwithstanding anything herein stated,
the indemnified party shall at all times have the right to fully
participate (subject to the control of the indemnifying party as
stated above) in such defense at its own expense directly or
through counsel; provided, however, if the named parties to the
action or proceeding include both the indemnifying party and the
indemnified party and representation of both parties by the same
counsel would be inappropriate under applicable standards of
professional conduct the expense of separate counsel for the
indemnified party shall be paid by the indemnifying party. If no
such notice of intent to dispute and defend is given by the
indemnifying party, or if such diligent good faith defense is not
being or ceases to be conducted, the indemnified party shall, at
the expense of the indemnifying party, undertake the defense of
(with counsel selected by the indemnified party), and shall have
the right to compromise or settle (exercising reasonable business
judgment), such claim, liability or expense. If such claim,
liability or expense is one that by its nature cannot be defended
solely by the indemnifying party, then the indemnified party shall
make available all information and assistance that the
indemnifying party may reasonably request and shall cooperate with
the indemnifying party in such defense.
9.8 Insurance Offset to Indemnity. In settlement of indemnification to
which any Indemnified Buyer Party is entitled under Section
9.2(a), the amount of any loss, liability or damage as to which
the Indemnified Buyer Party is otherwise entitled to indemnity
shall be reduced by the amount of insurance proceeds previously
paid, if any, to the Indemnified Buyer Party in cash with respect
to such loss, liability or damage, and any claim held by the
Indemnified Buyer Party for the payment of insurance proceeds in
respect of the matter then being settled shall be assigned to the
Stockholder at the time of such settlement. At the request of the
Stockholder, the Indemnified Buyer Party shall use its reasonable
efforts (at the
37
<PAGE>
Stockholder's expense) to assist the Stockholder in obtaining any
such insurance payment.
SECTION 10. TAX MATTERS
- -----------------------
10.1 Definitions.
(a) For purposes of Section 10 of this Agreement:
(i) "Affiliate" of any Person shall mean any Person who
controls, is controlled by, or is under common control
with such Person.
(ii) "Tax" and "Taxes" shall mean only state and federal
income, franchise, and net worth taxes, together with
any related interest, penalties, and additions to tax.
(iii) "Tax Returns" shall include all returns, filings and
other forms or statements in respect of Taxes which
are required or permitted to be filed with any taxing
authority.
(iv) "Treasury Regulations" shall mean the income tax
regulations promulgated under the Code applicable to
the taxable year in question.
(b) Other capitalized terms used in this Section 10 and not
expressly defined in this Section 10 shall have the meanings
assigned to them elsewhere in this Agreement. Any term
relating to Taxes that is not defined in this Agreement
shall, unless the context otherwise expressly requires, have
the meaning assigned in the Code or the Treasury
Regulations. References to provisions of the Code or
Treasury Regulations shall include a reference to any
successor provisions.
10.2 Filing of Tax Returns; Payment of Taxes.
(a) AHI shall file or cause to be filed all Tax Returns required
to be filed by or with respect to Hood or any of the
Companies for all taxable periods ending on or before June
24, 1995. Such Tax Returns shall include all of the income,
gain, losses, deductions, credits and similar items of Hood
and the Companies reportable for such periods and shall
correctly and accurately set forth the amount of any Taxes
relating to such periods.
38
<PAGE>
Hood and the Companies shall execute and file consents,
elections and other documents as may be reasonably requested
by AHI in connection with the proper filing of such Tax
Returns. AHI shall pay on behalf of Hood all Taxes shown as
due on such Tax Returns.
(b) Buyer shall cause Hood, and/or the Companies to file or
cause to be filed all Tax Returns required to be filed by or
with respect to Hood or any of the Companies, for all
taxable periods beginning after June 24, 1995. Such Tax
Returns shall include all of the income, gains, losses,
deductions, credits and similar items of Hood and the
Companies reportable for such and shall correctly and
accurately set forth the amount of any Taxes relating to
such periods. Hood or the Companies shall pay all Taxes
shown as due on such Tax Returns and shall be entitled to
any Tax refunds or Tax credits reflected thereon.
10.3 Adjustments to Tax Liabilities.
(a) AHI represents that Hood's aggregate Tax basis in the Idle
Assets is in excess of the aggregate fair market value of
such assets as bargained between AHI and Buyer and as set
forth in Exhibit 3.6(c).
(b) Buyer shall cause Hood and the Companies to pay to AHI the
amount of any Tax refund or Tax credit received by, or for
the benefit of, Hood or the Companies with respect to any
Tax Return for which AHI is responsible hereunder. To the
extent that such Tax refund or Tax credit results from a
carryback for Tax years ending after June 24, 1995, Hood and
the Companies shall not be required to pay such Tax refund
or Tax credit. Buyer shall cause Hood and/or one or more of
the Companies to make payment to AHI under this Section
10.3(b) within 30 days of the receipt of any such Tax refund
or Tax credit. In the event that Hood and/or the Companies
fail to make such payment, Buyer shall pay such amount to
AHI.
(c) Buyer or Hood shall keep AHI currently informed in writing
as to the status of any Tax audit or proceeding or
adjustment as to which AHI may be required to make a payment
under this Section 10 and shall promptly provide AHI with
complete copies of any correspondence or other written
materials which the Buyer or Hood receives from or provides
to the Tax-imposing jurisdiction concerning such a Tax audit
or proceeding or adjustment. AHI shall keep Hood and the
Companies currently informed in writing as to the status of
any Tax audit or proceeding or adjustment,
39
<PAGE>
and AHI shall promptly provide Hood with complete copies of
any correspondence or other written materials which AHI
receives from or provides to the Tax-imposing jurisdiction
concerning such Tax audit or proceeding or adjustment. AHI
shall be responsible for and have the sole right to control
all decisions relating to the conduct and resolution of any
such Tax audit or proceeding and Hood and the Companies
shall execute any power of attorney, consent, extension, or
other document reasonably requested by AHI in connection
with such Tax audit or proceeding. Subject to the prior
sentence, Buyer and Hood shall have the right to
participate, at their own expense, in any such Tax audit or
proceeding, but only insofar as such Tax audit or proceeding
relates to a non-consolidated Tax Return of Hood or the
Companies. Without limiting the control rights of AHI under
this Section 10.3(c), AHI shall use reasonable judgment,
taking into consideration the overall Tax position of Hood
for all taxable periods, in conducting and resolving any
such Tax audit or proceeding.
10.4 Tax Indemnities.
(a) Indemnification by AHI. AHI shall indemnify, defend and hold
and save Buyer, Hood and the Companies harmless against any
and all Taxes (i) which it has undertaken to pay pursuant to
Section 10.2(a), and (ii) imposed or assessed against Buyer,
Hood and/or the Companies with respect to consolidated Tax
returns of Agway. With respect to Tax Returns (i) filed or
required to be filed by or with respect to Hood or the
Companies prior to the date hereof, or (ii) not filed or
required to be filed by or with respect to Hood or the
Companies prior to the date hereof, but for which AHI is
responsible under Section 10.2(a), AHI shall indemnify,
defend and hold and save Buyer, Hood, and the Companies
harmless against any and all Taxes imposed or assessed
against or collected from Buyer, Hood, or the Companies with
respect to such Tax Returns. AHI shall not, however, have
any obligation under this Agreement as a result of any
reduction in a net operating loss carryover of the Companies
for periods ending prior to June 25, 1995.
(b) Notice. Buyer or Hood shall promptly notify AHI in writing
of any claim it may have for indemnification under this
Section 10, specifying in reasonable detail the individual
items of liability, loss, cost, damage or expense. Failure
to give or delay in giving such notice shall not relieve AHI
of any of its obligations under this indemnity, except to
the extent that AHI is damaged or is otherwise prejudiced or
otherwise suffers a loss
40
<PAGE>
as a result of such failure or delay.
(c) Further information. Upon the request of AHI, Buyer or Hood
shall give to AHI in writing all necessary information which
is reasonably required to determine (or to allow an
independent third party reasonably acceptable to AHI to
determine) (i) the amount of indemnity against AHI with
respect to any claim made by Buyer or Hood under this
Section 10.4 or (ii) the amount owed to AHI under Section
10.3(b).
10.5 Mutual Cooperation.
(a) AHI (for itself and Parent) and Buyer (for itself and Hood)
shall promptly provide each other with such assistance as
may be reasonably requested by either of them in connection
with the preparation and execution of any Tax Return, any
audit or other examination by any taxing authority, or any
judicial or administrative proceedings relating to any Tax
liability, and each will, upon the request of the other,
promptly provide the other with any records or information
which may be relevant to such Tax Return, audit, examination
or proceedings.
(b) AHI (for itself and Parent) and Buyer (for itself and Hood)
will retain all Tax Returns, schedules and work papers, and
all other material records and other documents relating
thereto, until the later of (i) the time the applicable
statute of limitations for assessment of Tax for each
taxable year to which such records and documents relate has
expired, and (ii) the time a final settlement of all
payments which may be required under this Agreement is made
for such taxable year.
10.6 Post-June 24, 1995 Tax Returns. From the Closing Date until the
earlier of the expiration of the statute of limitations with
respect to federal income taxes of Hood for the tax year ended
June 24, 1995, or the date of resolution of an audit of the
federal income tax return of Hood for such tax year, in the
absence of a controlling change in law or circumstances, all Tax
Returns of Hood or the Companies filed for periods beginning after
June 24, 1995 shall be prepared on a basis consistent with the
elections, accounting methods, conventions, theories and
principles of taxation reflected in the Tax Returns of Hood and
the Companies for periods ending on or prior to June 24, 1995,
except as otherwise agreed in writing between AHI and Buyer. The
preceding sentence shall not apply if AHI's tax liability
hereunder shall not be affected and if written notice of any such
change is given by Hood to AHI at least 75 days prior to the
filing of any Tax Return reflecting such change. Tax Returns of
Hood or the Companies for
41
<PAGE>
periods ending prior to June 25, 1995, which have not been filed
or amendments to such Tax Returns shall be prepared on a basis
consistent with the elections, accounting methods, conventions,
theories and principles of taxation reflected in the Tax Returns
of Hood and the Companies already filed (except as otherwise
agreed in writing between AHI and Buyer).
10.7 Miscellaneous.
(a) Obligations of Parties and their Affiliates. To the extent
necessary, each of Buyer (for itself and Hood) and AHI (for
itself and Parent) respectively agrees to cause its
Affiliates to perform the duties and fulfill the obligations
contemplated for such Persons under this Section 10.
(b) Resolution of Disputes. Any disputes between the parties
regarding the proper interpretation of this Section 10 shall
be resolved by a so-called "Big Six" public accounting firm
or a law firm satisfactory to both parties, whose fees and
expenses shall be shared equally by the parties. The
resolution by the accounting firm or law firm shall be final
and binding on all parties and their affiliates.
(c) Settlement of Tax Receivables and Payables. Prior to the
Closing, AHI shall cause Hood to pay to AHI the net
difference between the Current Payable Federal and State Tax
Liabilities of Hood and the sum of the Refundable Federal
Taxes of Hood and the Refundable State Taxes of Hood as they
then exist. Schedule 2.21 reflects those amounts as
$2,939,357, $1,723,780 and $277,000, respectively, and if
settlement were to be made on the date of this Agreement,
Hood would pay to AHI $938,577.
(d) Sharing Agreements. Prior to the Closing, AHI shall adopt
and AHI shall cause Hood and the Companies to adopt, and
upon the occurrence of the Closing each shall be deemed to
have authorized, approved and adopted immediately prior to
the Closing, the provisions of this Section 10 as a tax
sharing agreement among them, whereupon the provisions of
this Section 10 shall constitute the exclusive and entire
agreement among AHI, Hood and the Companies with respect to
Taxes and shall supersede any other Tax agreement,
allocation or arrangement among them. Buyer agrees that,
except as specified in this Agreement, it shall not make
(and shall not cause the Companies to make, or encourage any
third party to seek to cause the Companies to make) any
claim against AHI or its Affiliates for Taxes or any amount
based upon a computation of Taxes, regardless of
42
<PAGE>
the period to which such Taxes relate.
SECTION 11. MISCELLANEOUS.
- --------------------------
11.1 Fees and Expenses. Each of the parties will bear its own expenses
in connection with the negotiation and the consummation of the
transactions contemplated by this Agreement.
11.2 Further Assurance. Each party shall cooperate with the others,
take such further action, and execute and deliver such further
documents, as may be reasonably requested by such other party to
carry out the transactions contemplated by this Agreement.
11.3 Notices. Any notice, request or other communication to be given by
any party hereunder will be in writing. Notices may be given by
attorneys for the respective parties. Notices shall be delivered
(i) in hand or (ii) by mail or (iii) by Federal Express or similar
expedited commercial carrier or (iv) by facsimile transmission, in
each case addressed to the recipient of the notice, postpaid and
registered or certified with return receipt requested (if by
mail), or with all freight charges prepaid (if by Federal Express
or similar carrier). They shall be deemed to have been given for
all purposes of this Agreement upon the date of delivery (in the
case of hand delivery), the date of delivery or refusal to accept
delivery shown on the return receipt (in the case of mail or
expedited commercial carrier), or on the date of acknowledgment by
the facsimile machine to which a transmission has been sent (in
the case of facsimile transmission).
All such notices, consents, elections, approvals and other
communications required or permitted under this Agreement shall be
addressed:
(1) If to the Stockholder, Parent or Hood, to:
Agway Holdings, Inc.
c/o Agway, Inc.
P. O. Box 4933
Syracuse, NY 13221-4933
Telecopy: (315) 449-7451
Attention: Mr. Peter O'Neill
43
<PAGE>
with a copy to:
David M. Hayes, Esq.
General Counsel
Agway, Inc.
P. O. Box 4933
Syracuse, NY 13221-4933
Telecopy: (315) 449-6253
and
F. Beirne Lovely, Jr., P.C.
Goodwin, Procter & Hoar
Exchange Place
Boston, MA 02109-2881
Telecopy: (617) 523-1231
or to such other Person or place as the Stockholder will furnish
to Buyer in writing in the manner provided herein, or
(2) If to Buyer, to:
The Catamount Corporation
c/o Catamount Management Corporation
90 Everett Avenue
Chelsea, MA 02150-2337
Attention: Mr. John A. Kaneb
Telecopy: (617) 884-0637
with a copy to:
Paul F. Beatty, Esq.
Sullivan & Worcester, LLP
One Post Office Square
Boston, MA 02109
Telecopy: (617) 338-2880
or to such other Person or place as the Buyer will furnish to the
Stockholder and Hood in writing in the manner provided herein.
44
<PAGE>
11.4 Successors and Assignment. All the terms of this Agreement will be
binding upon and inure to the benefit of and be enforceable by the
successors and assigns of the parties hereto; provided, however,
that, except for an assignment by the Buyer of the Buyer's rights
and obligations under this Agreement (provided that the Buyer
shall remain obliged to perform under Section 1.2 should such
assignee fail to perform) to a corporation, partnership or other
entity owned and controlled by John A. Kaneb and/or the issue of
John A. Kaneb, neither party may assign its rights and obligations
under this Agreement without the prior written consent of the
other. In the event of any such assignment by Buyer, Buyer shall
as a condition thereto provide the Stockholder with a guaranty or
other security (in each case reasonably satisfactory to the
Stockholder) for the performance of the assignee's obligations
hereunder.
11.5 Certain Definitions. For purposes of this Agreement (except as
otherwise specifically defined differently), the following
capitalized terms shall have the following meaning:
"Affiliate" and "affiliate" shall have the meaning of "affiliated
person" as set forth in Section 2(3) of the Investment Company Act
of 1940, as amended.
"Encumbrance" shall mean any lien, charge or security interest
upon or in personal property and any lien or other incumbrance
upon real property.
"material," when used with reference to information, a fact or
circumstance, a course of action, a decision-making process or
other matter, shall be limited to information, facts and
circumstances, courses of action, decision-making processes or
other matters as to which a reasonable prospective purchaser of
the Hood Shares would attach importance in determining whether and
the price at which to purchase the Hood Shares.
"Material Adverse Change" shall mean an unfavorable variance in
stockholders' equity greater than $1,000,000 from the
stockholders' equity projected for the applicable month in the
Hood Projected Balance Sheet in the 1996 Plan (dated August 9,
1995, 3:40 p.m.) compared to the latest available schedule A-6
from H.P. Hood Inc.'s Monthly Financial Data.
"Material Adverse Effect" shall mean a material adverse effect on
the business, operations, results of operations or financial
condition of Hood and its Subsidiaries on a consolidated basis in
an aggregate amount of more than $250,000.
45
<PAGE>
"1996 Plan" shall mean Hood's fiscal 1996 plan in the form
attached to Schedule 2.8 to the Disclosure Schedule and as
modified, supplemented, revised and/or amended by the other
information set forth in Schedule 2.9 to the Disclosure Schedule.
"Person" shall mean any individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or
government or any agency or political subdivision thereof.
11.6 Captions. The captions of this Agreement are for convenience of
reference only and will not define or limit any of the terms or
provisions hereof. All references in the singular will include the
plural and all references in the plural will include the singular,
and all references to one gender will include all genders.
11.7 Severability. Should any one or more of the provisions of this
Agreement be determined to be invalid, unlawful or unenforceable
in any respect, the validity, legality and enforceability of the
remaining provisions thereof will not in any way be affected or
impaired thereby.
11.8 Preservation of Records. Except as otherwise expressly provided in
Section 10, each party hereto agrees that, at its respective
expense, it shall preserve and keep all records relating to the
Companies for a period of at least six (6) years from the Closing
Date, or for any longer period that may be required by any party
pursuant to a governmental investigation or litigation, and shall
make such records available to the requesting party (along with a
right to make copies thereof) as may be required by the requesting
party from time to time.
11.9 Publicity and Disclosures. Except as may be required by applicable
law or regulation or by a court of competent jurisdiction, no
press releases or public disclosure, either written or oral, of
the transactions contemplated by this Agreement, shall be made by
any party to this Agreement or Hood or any of the Companies
without the prior knowledge and written consent of the Stockholder
and Buyer.
11.10 Confidentiality.
(a) For a period of three (3) years from and after the Closing
Date, AHI shall, and AHI shall cause its Parent and any
other member of the AHI Group to, keep all data, records,
files, reports, pricing information, sales manuals,
Intellectual Property, customer lists, business contacts,
employee lists, operating procedures, marketing techniques,
manufacturing
46
<PAGE>
techniques and processes, business plans and financial or
Tax-related information of each of the Companies
(collectively, "Hood Confidential Information") strictly and
absolutely confidential and shall not, except as may be
required by law or a court of competent jurisdiction or in
connection with any Tax-related filing or proceeding,
disclose or use the same for any purpose whatsoever, such
Hood Confidential Information being recognized and
acknowledged as the sole and exclusive confidential property
of Hood after the Closing Date. "Hood Confidential
Information" does not include (i) information which is or
becomes generally available to the public other than through
a disclosure by AHI or the Parent or any other member of the
AHI Group, or (ii) which is obtained lawfully from an
independent third party who is not under any agreement not
to disclose such information.
(b) For a period of three (3) years from and after the Closing
Date, Buyer (including, without limitation, the Buyer
initially named herein and any permitted assignee thereof)
and the Companies shall, and each of them shall cause any
other member of any affiliated group of which any of them is
the common parent to, keep all data, records, files,
reports, pricing information, sales manuals, Intellectual
Property, customer lists, business contacts, employee lists,
operating procedures, marketing techniques, manufacturing
techniques and processes, business plans and financial or
Tax-related information of AHI, Parent and any Affiliate
thereof (collectively, "AHI Confidential Information")
strictly and absolutely confidential and shall not, except
as may be required by law or a court of competent
jurisdiction or in connection with any Tax-related filing or
proceeding, disclose or use the same for any purpose
whatsoever, such AHI Confidential Information being
recognized and acknowledged as the sole and exclusive
confidential property of AHI or Parent, as the case may be.
"AHI Confidential Information" does not include (I)
information which is or becomes generally available to the
public other than through a disclosure by Buyer, any of the
Companies or any member of an affiliated group of which any
of them is a common parent, or (ii) which is obtained
lawfully from an independent third party who is not under
any agreement not to disclose such information.
11.11 Effective Date of Closing. For accounting and tax purposes, the
effective date of Closing shall be deemed to be the last day of
the accounting month-end which occurs immediately prior to the
Closing Date.
47
<PAGE>
11.12 Arbitration. Except to the extent otherwise provided in Section
10.7(b) hereof and except for any action by the Buyer or its
assignee for specific performance, any controversy or claim
arising out of or relating to this Agreement, or the breach
thereof, shall be settled by arbitration administered by the
American Arbitration Association in accordance with its Commercial
Arbitration Rules and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof. If any party's claim exceeds one million dollars
($1,000,000), exclusive of interest and attorneys' fees, the
dispute shall be heard and determined by three (3) arbitrators.
The determination of the arbitrator(s) shall be final and binding.
The arbitration shall be held in Boston, Massachusetts, or at any
other place selected by mutual agreement.
11.13 Governing Law Jurisdiction and Venue. This Agreement will be
governed by and construed in accordance with the internal laws of
the Commonwealth of Massachusetts (excluding the conflicts of laws
provisions). Subject to the provisions of Section 11.11, any
action to enforce, arising out of, or relating to any of the
provisions of this Agreement or the determination or award made by
the arbitrator(s) in accordance with Section 11.11, may be brought
and prosecuted in such court or courts located in the Commonwealth
of Massachusetts. The parties consent to and agree to be subject
to the jurisdiction of the federal and state courts located within
the Commonwealth of Massachusetts and to service of process by
certified mail, return receipt requested, or in any other manner
provided by law.
11.14 Counterparts. This Agreement may be executed in any number of
counterparts, each of which will be an original, but such
counterparts will together constitute but one and the same
instrument and only one (1) complete set of such counterparts
shall be necessary to prove the existence of this Agreement.
11.15 Entire Agreement. This Agreement, including the Schedules,
Exhibits and lists referred to herein and the other writings
specifically identified herein or contemplated hereby, is
complete, reflects the entire agreement of the parties with
respect to its subject matter, and supersedes all previous written
or oral negotiations, commitments and writings. No promises,
representations, understandings, warranties and agreements have
been made by any of the parties hereto except as referred to
herein or in such schedules and exhibits or in such other
writings; and all inducements to the making of this Agreement
relied upon by either party hereto have been expressed herein or
in such schedules or exhibits or in such other writings.
48
<PAGE>
11.16 Amendments. This Agreement may not be amended or modified, nor may
compliance with any condition or covenant set forth herein be
waived, except by a writing duly and validly executed by each
party hereto, or in the case of a waiver, by the party waiving
compliance.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as an instrument under seal as of the date first above written.
AGWAY HOLDINGS, INC.
By: s/Peter O'Neill
---------------------------
Peter O'Neill
Title: Senior Vice President
THE CATAMOUNT CORPORATION
By: s/John A. Kaneb
--------------------------
John A. Kaneb
Title: President
49
<PAGE>
Agway/Catamount
Stock Purchase Agmt
DISCLOSURE SCHEDULE
-------------------
The following is the list of Schedules which comprise the Disclosure
Schedule to the Stock Purchase Agreement between The Catamount Corporation and
Agway Holdings, Inc.
dated as of December 14, 1995 (the "Agreement").
Schedules
---------
Schedule 2.3 - Existence of Hood and Subsidiaries
Schedule 2.4(a) - Capitalization
Schedule 2.4(b) - Ownership of Capital Stock of Hood
Schedule 2.4(c) - Ownership of Debentures of Hood
Schedule 2.4(d) - Debt Instruments of the Companies
Schedule 2.5(b) - Corporate Record Books
Schedule 2.6(b) - Consents
Schedule 2.7 - Financial Statements
Schedule 2.8 - Absence of Change
Schedule 2.9 - Certain Liabilities
Schedule 2.12(a) - Real Properties
Schedule 2.12(b) - Leases
Schedule 2.13 - Intellectual Property
Schedule 2.14 - Material Contracts
Schedule 2.15 - Litigation
Schedule 2.16 - Taxes
Schedule 2.17 - Compliance with Laws
Schedule 2.18 - Employee Benefit Plans
Schedule 2.19 - Labor and Employment Matters
Schedule 2.20 - Brokers' or Finders' Fees
Schedule 2.21 - Intercompany Transactions/Contracts
Schedule 2.22 - Insurance
Schedule 2.23 - Environmental Matters
Schedule 6.1(g) - Consents to be Delivered
Any Disclosure in any Schedule contained in this Disclosure Schedule shall be
deemed, where applicable, to be a Disclosure of the same matter wherever
applicable in any other Schedule to this Disclosure Schedule.
The Registrant agrees to furnish supplementally a copy of any of the foregoing
Schedules to the Stock Purchase Agreement to the Commission upon request.
225407.c4
