<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
May 30, 1995
Date of Report (Date of earliest event reported)
THORN APPLE VALLEY, INC.
(Exact name of registrant as specified in its charter)
Michigan 0-6566 38-1964066
- ---------------------------- -------------- -------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
18700 West Ten Mile Road, Southfield, Michigan 48075
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (810) 552-0700
-----------------------------
Not Applicable
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(Former name or former address, if changed since last report)
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FORM 8-K
Item 2. Acquisition or Disposition of Assets.
On May 30, 1995, Thorn Apple Valley, Inc. ("TAVI"), a Michigan
corporation, purchased certain assets of Foodbrands America, Inc., a Delaware
corporation and successor by merger to Doskocil Companies Incorporated, a
Delaware corporation, Wilson Foods Corporation, a Delaware corporation,
Concordia Foods Corporation, a Delaware corporation, Dixie Foods Company, a
Delaware corporation, and Shreveport Foods Company, a Delaware corporation
(collectively, "Sellers"). In accordance with the terms and conditions of an
Asset Purchase Agreement dated as of April 29, 1995, as amended by First
Amendment to Asset Purchase Agreement dated as of May 26, 1995 (the "Purchase
Agreement"), TAVI acquired substantially all of the assets of Sellers used in
their business of producing and marketing perishable food products, including
processed meat products consisting of hams, bacon, franks and sausage, through
the "Doskocil Retail Division". The assets acquired by TAVI include three
manufacturing facilities located in Missouri, Arkansas and Louisiana,
machinery, equipment, tools, supplies, inventory, receivables, certain
trademarks and trade names, customer purchase orders, a noncompete agreement
and goodwill. TAVI will use the assets acquired to conduct the business
previously conducted by Sellers.
The aggregate price for the assets acquired by TAVI was approximately
$65.8 million and the assumption of certain liabilities of Sellers. This
amount is subject to adjustment based on the actual value, as of May 29, 1995,
of certain of the assets and certain of the liabilities assumed. During the
next five years, Sellers have the right to receive from TAVI up to an
additional $10.0 million (the "Earnout Amount") in respect of the purchased
assets pursuant to a formula based on the future aggregate value of the issued
and outstanding common stock of TAVI as of certain specified dates. The
consideration for the assets was determined through arm's-length negotiations
among the parties.
On May 30, 1995, approximately $65.8 million of the total
consideration was paid by wire transfer. The acquisition was financed by
borrowings by TAVI under a $42,500,000 Note Agreement by and among TAVI,
Allstate Life Insurance Company, Principal Mutual Life Insurance Company and
Great-West Life & Annuity Insurance Company and by borrowings by TAVI under a
$80,000,000 Credit Agreement by and among TAVI, Cooperatieve Centrale
Raiffeisen-Boerleen bank, B.A., Old Kent Bank & Trust Co., National City Bank
and Harris Trust Savings Bank. The Earnout Amount will be paid semi-annually
during the next five years as it is earned.
<PAGE> 3
FORM 8-K
Item 7. Financial Statements and Exhibits.
(a) and (b) Financial Statements and Pro Forma Financial Information.
TAVI hereby requests a 60-day extension for filing the required
audited financial statements and pro forma financial information regarding the
acquired assets and business formerly operated by Sellers, because providing
such statements and information at this time is impracticable. It is expected
that such statements and information will be filed, by amendment, on or before
August 14, 1995. TAVI believes that, at this time, it is not appropriate to
file any financial statements.
(c) Exhibits.
2.1 Asset Purchase Agreement, dated as of April 29, 1995,
by and among Thorn Apple Valley, Inc., a Michigan corporation and Doskocil
Companies Incorporated, a Delaware corporation and Wilson Foods Corporation, a
Delaware corporation, Concordia Foods Corporation, a Delaware corporation,
Dixie Foods Company, a Delaware corporation and Shreveport Foods Company, a
Delaware corporation.
2.2 First Amendment to Asset Purchase Agreement dated as
of May 26, 1995, by and among Thorn Apple Valley, Inc., a Michigan corporation,
Foodbrands America, Inc., a Delaware corporation, successor by merger to
Doskocil Companies Incorporated, a Delaware corporation, Wilson Foods
Corporation, a Delaware corporation, Concordia Foods Corporation, a Delaware
corporation, Dixie Foods Company, a Delaware corporation and Shreveport Foods
Company, a Delaware corporation.
10.1 Noncompete Agreement, dated May 30, 1995, by
Foodbrands America, Inc., a Delaware corporation, Wilson Foods Corporation, a
Delaware corporation, Concordia Foods Corporation, a Delaware corporation,
Dixie Foods Company, a Delaware corporation and Shreveport Foods Company, a
Delaware corporation, in favor of Thorn Apple Valley, Inc., a Michigan
corporation.
10.2 Supply Agreement, dated May 30, 1995, by and among
Wilson Foods Corporation, a Delaware corporation, and Foodbrands America, Inc.,
a Delaware corporation, Dixie Foods Company, a Delaware corporation and Thorn
Apple Valley, Inc., a Michigan corporation.
10.3 Transition Service Agreement, dated May 30, 1995, by
and between Foodbrands America, Inc., a Delaware corporation, and Thorn Apple
Valley, Inc., a Michigan corporation.
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
THORN APPLE VALLEY, INC.
By:/s/ LOUIS GLAZIER
-----------------------
Louis Glazier
Executive Vice President
Finance and Administration
Dated: June 14, 1995
<PAGE> 5
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Page No.
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<S> <C> <C>
2.1 Asset Purchase Agreement, dated as of April 29, 1995, by
and among Thorn Apple Valley, Inc., a Michigan
corporation and Doskocil Companies Incorporated, a
Delaware corporation and Wilson Foods Corporation,
a Delaware corporation, Concordia Foods Corporation,
a Delaware corporation, Dixie Foods Company, a
Delaware corporation and Shreveport Foods Company,
a Delaware corporation.
2.2 First Amendment to Asset Purchase Agreement dated as
of May 26, 1995, by and among Thorn Apple Valley, Inc.,
a Michigan corporation, Foodbrands America, Inc.,
a Delaware corporation, successor by merger to Doskocil
Companies Incorporated, a Delaware corporation,
Wilson Foods Corporation, a Delaware corporation,
Concordia Foods Corporation, a Delaware corporation,
Dixie Foods Company, a Delaware corporation and
Shreveport Foods Company, a Delaware corporation.
10.1 Noncompete Agreement, dated May 30, 1995, by
Foodbrands America, Inc., a Delaware corporation,
Wilson Foods Corporation, a Delaware corporation,
Concordia Foods Corporation, a Delaware corporation,
Dixie Foods Company, a Delaware corporation and
Shreveport Foods Company, a Delaware corporation,
in favor of Thorn Apple Valley, Inc., a Michigan corporation.
10.2 Supply Agreement, dated May 30, 1995, by and among
Wilson Foods Corporation, a Delaware corporation, and
Foodbrands America, Inc., a Delaware corporation,
Dixie Foods Company, a Delaware corporation and
Thorn Apple Valley, Inc., a Michigan corporation.
10.3 Transition Service Agreement, dated May 30, 1995, by and
between Foodbrands America, Inc., a Delaware corporation,
and Thorn Apple Valley, Inc., a Michigan corporation.
</TABLE>
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
THORN APPLE VALLEY, INC.
AND
DOSKOCIL COMPANIES INCORPORATED
AND
WILSON FOODS CORPORATION,
CONCORDIA FOODS CORPORATION,
DIXIE FOODS COMPANY
AND
SHREVEPORT FOODS COMPANY
DATED AS OF
APRIL 29, 1995
SALE OF THE RETAIL DIVISION
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TABLE OF CONTENTS
<TABLE>
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ARTICLE I: PURCHASE AND SALE OF ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1. Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
(a) The Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(b) Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(c) Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(d) Other Current Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
(e) Machinery and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(f) Trademarks and Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(g) Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
(h) Division Sales Office Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(i) Covenant Not To Compete . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(j) Customer List . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(k) Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(l) Warranties; Licenses and Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
(m) Books and Records; Telephone Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II: ASSUMPTION OF LIABILITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.1. Liabilities Assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.2 Non-Assumption of Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III: PURCHASE PRICE AND PAYMENT; ALLOCATIONS;
PRORATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.1. The Purchase Price and Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(a) Purchase Price at Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
(b) Payment of the Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
(c) Adjusted Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2. Allocations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(a) Allocation of Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.3. Cash Equivalents, Costs and Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(a) Cash Equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Basic Prorations; Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
3.4. The Earnout . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.2. Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.4. Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
4.5. Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
4.6. SIC Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.7. Condition of Purchased Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
</TABLE>
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<TABLE>
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(a) Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
(b) Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(c) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
(d) Hazardous Materials Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.8. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.9. Legal Proceedings; Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.10. Employee Benefit Plans and Collective
Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(a) Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
(b) Collective Bargaining Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.11. Division Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.12. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.13. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.14. Multiemployer Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.15. No Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.16. No Notice of Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.17. No Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.18. Special Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.19. Information Correct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.20. Public Improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.21. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.22. Assessed Value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.23. Zoning Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.24. Pest Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.25. Seller Not a Foreign Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.26. Environmental Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
4.27. Sales Office Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
4.28. Condition of the Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.29. Sellers' Marks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
4.30. Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.31. Absence of Changes or Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
4.32. Net Fixed Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
ARTICLE V: REPRESENTATIONS AND WARRANTIES OF PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.1. Organization and Qualification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.2. Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.3. No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
5.4. Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI: CONDUCT OF BUSINESS PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1. Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.2. Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.3. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.4. Absence of Certain Developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE VII: OBLIGATIONS PRIOR, AS OF, AND SUBSEQUENT
TO THE CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.1. Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
7.2. Consents; Additional Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
</TABLE>
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7.3. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.4. Surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.5. Title Review/UCC Searches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.6. Title Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.7. Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.8. Third Party Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.9. Removal of Signs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.10. Casualty or Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
(a) Machinery and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(b) The Facilities - Fire or Casualty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(c) The Facilities - Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
(d) Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.11. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
7.12. Public Announcements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
7.13. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(a) The Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(b) Bill of Sale (Machinery and Equipment)
and Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
(c) Non-Compete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(d) Assignment and Assumption of
Division Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(e) Assignment of Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(f) Assignment and Assumption of Assumed
Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(g) Warranty Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(h) Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(i) Assignment and Assumption of Sales
Office Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(j) Assignment and Assumption of Receivables
and Customer Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(k) Other Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
7.14. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(a) Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
(b) Remediation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
(c) Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.15. Supplemental Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
7.16. Transition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.17. Supply Agreement; Removal of Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
7.18. The Copack Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
7.19. Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.20. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
7.21. Environmental Law Violations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII: PROVISIONS RESPECTING EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.1. Division Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.2. Purchaser's Obligations to
Division Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.3. COBRA Indemnification and Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.4. Seller's and Purchaser's Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
(a) Seller's 401(k) Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
</TABLE>
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(b) Transfer of Assets to
Purchaser's Pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.5. Plant Closing Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
8.6. Other Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(a) Purchaser's Medical Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
(b) Vacation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(c) Purchaser's Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
(d) The Extended Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
8.8. General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE IX: CONDITIONS TO OBLIGATIONS OF THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.1. No Governmental or Other Proceeding or
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.2. Physical Inventory of the Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
9.3. Documents and Certificates (the Closing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(a) The Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(b) Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
(c) Noncompete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(d) Division Contracts Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(e) Assignment and Assumption of
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(f) Assignment and Assumption of Sales
Office Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(g) Assignment and Assumption of Receivables
and Customer Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(h) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(i) Certificate of Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(j) Corporate Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
(k) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(l) Transition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(m) Supply Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
(n) Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.4. Representations and Warranties True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.5. Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
9.6. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE X: CONDITIONS TO OBLIGATIONS OF THE PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.1. No Governmental or Other Proceeding or
Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.2. Physical Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.3. Title Searches . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
10.4. Documents and Certificates (The Closing) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(a) Personal Property Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(b) Bill of Sale (Machinery and
Equipment) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(c) Noncompete Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(d) Division Contracts Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(e) Assignment of Trade Names . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
(f) Assignment and Assumption of
Assumed Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
</TABLE>
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(g) Assignment and Assumption of Sales
Office Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(h) Assignment and Assumption of Receivables
and Customer Purchase Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(i) Prorations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(j) Certificates of Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(k) Corporate Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(l) Transition Service Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(m) Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
(n) Warranty Deeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(o) Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(p) Possession . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
(q) Other Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.5. Affidavit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.6. Representations and Warranties True . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.7. Performance of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
10.8. No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
10.9. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE XI: CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.1. Time and Place of Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
11.2. The Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
11.3. Simultaneous Delivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XII: TERMINATION PRIOR TO CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
12.1. Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE XIII: INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
13.1. Seller's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
13.2. Purchaser's Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
13.3. Indemnification Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
13.4. Limitation of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
ARTICLE XIV: DEFINITIONS 89
ARTICLE XV: MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
15.1. Further Assurance and Assistance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
15.2. Transfer and Other Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
15.3. Amendment and Modification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
15.4. Waiver of Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
15.5. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
15.6. Definition of "Knowledge" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
15.7. Bulk Transfer Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
15.8. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
15.9. Assignability of Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
15.10. Disputes; Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
15.11. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
15.12. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108
15.13. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
</TABLE>
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15.14. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
15.15. Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
15.16. Third Party Beneficiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
</TABLE>
EXHIBITS AND SCHEDULES
Exhibits
Exhibit A Assignment and Assumption of Personal Property
Leases
Exhibit B Bill of Sale (Machinery and Equipment)
Exhibit C Noncompete Agreement
Exhibit D Assignment and Assumption of Division Contracts
Agreement
Exhibit E Assignment of Trade Names
Exhibit F Assignment and Assumption of Assumed Liabilities
Exhibit G Form of Warranty Deed
Exhibit H Assignment and Assumption of Sales Office Leases
Exhibit I Assignment and Assumption of Receivables and
Customer Purchase Orders
Exhibit J Environmental Disclosure Document
Exhibit K Transition Service Agreement
Exhibit L Supply Agreement
Exhibit M Form of Opinion of Purchaser's Counsel
Exhibit N Form of Opinion of Seller's Counsel
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Schedules
Schedule 1.1(a) The Facilities
Schedule 1.1(b) Inventory Terms
Schedule 1.1(d) Other Current Assets
Schedule 1.1(e) Machinery and Equipment
Schedule 1.1(f) Trade Names
Schedule 1.1(g) Personal Property Leases
Schedule 1.1(h) Sales Office Leases
Schedule 1.1(l) Permits
Schedule 2.1(a) Accounts Payable
Schedule 2.1(b) Accrued Liabilities
Schedule 4.1 Wilson - Foreign State Qualifications
Schedule 4.3 Seller's Consents and Approvals
Schedule 4.4 Permit Violations
Schedule 4.5 Purchased Assets - Liens
Schedule 4.7 Services
Schedule 4.9 Legal Proceedings
Schedule 4.10A Employee Welfare Benefit Plans and Employee
Pension Benefit Plans
Schedule 4.10B Collective Bargaining Agreements
Schedule 4.11 Division Contracts
Schedule 4.12 Self Insurance Risk
Schedule 4.13 Financial Statements
Schedule 4.16 No Notices
Schedule 4.21 Taxes
Schedule 4.22 Assessed Value
Schedule 4.23 Zoning Notices
Schedule 4.26 Environmental Matters
Schedule 4.28 Condition of the Facilities
Schedule 4.31 Absence of Changes or Events
Schedule 4.32 Net Fixed Assets
Schedule 5.03 No Violation
Schedule 6.2 Capital Expenditures
Schedule 6.4 Absence of Certain Developments
Schedule 7.18 The Copack Agreements
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (herein referred to as the
"Agreement"), made as of the 29th day of April, 1995, by and among THORN APPLE
VALLEY, INC., a Michigan corporation ("Purchaser"), and DOSKOCIL COMPANIES
INCORPORATED, a Delaware corporation ("Doskocil"), and WILSON FOODS
CORPORATION, a Delaware corporation ("Wilson"), CONCORDIA FOODS CORPORATION, a
Delaware corporation ("Concordia"), DIXIE FOODS COMPANY, a Delaware corporation
("Dixie"), and SHREVEPORT FOODS COMPANY, a Delaware corporation ("Shreveport"),
Wilson, Concordia, Dixie and Shreveport collectively with Doskocil, are herein
referred to as the "Seller" or "Sellers".
W I T N E S S E T H:
WHEREAS, Doskocil is a producer and marketer of perishable
food products which include processed meat products consisting of hams, bacon,
franks and sausage throughout much of the United States through the Doskocil
Retail Division (as defined herein, the "Division"); and
WHEREAS, the Division products are primarily produced in three
manufacturing facilities owned by Seller, located in Concordia, Missouri,
Forrest City, Arkansas and Shreveport, Louisiana (the "Facilities") with
additional ham products being manufactured at a facility dedicated to Doskocil,
located in Council Bluff, Iowa owned and operated by IBP, Inc.; and
WHEREAS, in connection with the operation of the Division
Sellers own certain other assets, including Inventory, Machinery and Equipment,
Receivables, Sellers' Marks, Customer Lists, each of
<PAGE> 10
which is hereinafter defined, and other tangible and intangible personal
property; and
WHEREAS, the Facilities are owned by Concordia, an indirect
subsidiary of Doskocil, and Wilson and Dixie, subsidiaries of Doskocil; and
WHEREAS, Seller desires to sell or assign and Purchaser
desires to purchase or receive, as assignee or otherwise, all of the assets of
the Division and certain of the liabilities of the Division (the "Assumed
Liabilities," as herein defined) which Purchaser shall assume upon the terms
and subject to the conditions of this Agreement; and
WHEREAS, Seller is willing to enter into a noncompetition
agreement with Purchaser in accordance with the terms and provisions of a
Noncompete Agreement (as herein defined) with respect to the territory
described in the Noncompete Agreement.
NOW, THEREFORE, for and in consideration of the recitals and
of the premises and mutual covenants, agreements, representations and
warranties contained herein and other good and valuable consideration, the
receipt and sufficiency of which hereby are acknowledged, the parties agree as
follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Purchased Assets. In consideration of the Purchase
Price and the Earnout Amount (each as defined and determined in accordance with
and paid as set forth in Article III below) and the
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assumption of the Assumed Liabilities (as defined in Section 2.1), and upon the
terms and subject to the conditions set forth in this Agreement, Seller agrees
to sell, assign, transfer, convey and deliver to Purchaser and Purchaser agrees
to purchase, accept, acquire and take assignment and delivery from Seller of,
the following assets (all of which assets are hereinafter referred to
collectively as the "Purchased Assets"):
(a) The Facilities. All of Seller's right, title
and interest in and to the Facilities described on Schedule 1.1(a) hereto
(including all owned furniture, fixtures and improvements located at the
Facilities whether or not listed as a Purchased Asset).
(b) Inventories. All good and saleable
Inventories as of the Closing Date, together with all good and saleable
Inventories and supplies owned by Seller in the ordinary course of business
prior to the Closing Date and received after the Closing Date (the "Inventory
in Transit"), determined in accordance with the inventory terms attached hereto
on Schedule 1.1(b).
(c) Receivables. All of Seller's right, title
and interest in and to the account receivables, net of the reserves, a list of
which has been delivered to Purchaser upon the execution of this Agreement,
subject to the confidentiality provisions of Section 7.11 which list shall be
updated to the Closing Date in accordance with Section 7.15 (the
"Receivables").
(d) Other Current Assets. All of Seller's right,
title and interest in and to the other current assets used by the
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Division in the conduct of its business listed on Schedule 1.1(d) hereto, which
schedule shall be updated to the Closing Date in accordance with Section 7.15
(the "Other Assets").
(e) Machinery and Equipment. All of Seller's
right, title and interest in and to the machinery and equipment, tooling and
tools either owned and used by the Division or subject to capital lease
agreements and used by the Division in the conduct of its business listed on
Schedule 1.1(e) hereto by major items (or categories of items, where
appropriate), together with a description of each item (or category of items)
and a statement of the date of acquisition and the location of each item (or
category of items), which schedule shall be updated to the Closing Date in
accordance with Section 7.15 (the "Machinery and Equipment").
(f) Trademarks, Trade Names. All of Sellers'
right, title and interest in and to the trademarks, service marks and trade
names listed on Schedule 1.1(f) and the related logos, symbols and copyrights
herein collectively referred to as "Sellers' Marks."
(g) Personal Property Leases. All of Seller's
right, title and interest under each of the transferable leases for tangible
assets and property leased by Seller located in or at the Facilities and/or
used in the operation of the Division, as of the Closing, a current list of
such transferable leases (together with all amendments, modifications or
assignments thereof) is set forth on Schedule 1.1(g) (the "Personal Property
Leases"). The Personal
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Property Leases include both operating leases and capitalized leases.
(h) Division Sales Office Leases. All of
Seller's right, title and interest under each of the transferable Division
sales office leases and all personal property located at the sales office
premises regardless of whether or not such items are described as Purchased
Assets herein, as of the Closing, a list of which leases (together with all
amendments, modifications, or assignments thereof) is set forth on Schedule
1.1(h) (the "Sales Office Leases").
(i) Covenant Not To Compete. The Noncompete
Agreement attached hereto as Exhibit C which Seller and Purchaser shall execute
and deliver each to the other at the Closing.
(j) Customer List. The list of the Division's
customers as of the Closing (including past known customers) which has been
delivered to Purchaser upon the execution of this Agreement, subject to the
confidentiality provisions of Section 7.11.
(k) Purchase Orders. All of Seller's rights
under, and interest in, all Division customer purchase orders ("Customer
Purchase Orders") as of the Closing Date.
(l) Warranties; Licenses and Permits. All of
Seller's right, title and interest in and to all transferable warranties
related to the Purchased Assets, licenses, registrations and permits, to the
extent legally transferable and necessary and requisite or convenient for the
use and operation of the Purchased
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<PAGE> 14
Assets and the Division which licenses and permits are listed on Schedule
1.1(l).
(m) Books and Records; Telephone Numbers. Copies
of all of the operating data and records of the Division, including, without
limitation, copies of books, records, order files and credit histories,
supplier information, purchasing records, technical and repair data and
manuals, and invoices, and the right to use the telephone number or numbers
primarily used by the Division immediately prior to Closing.
1.2. Excluded Assets. The Seller is not selling and
Purchaser shall not acquire from Seller any of the following assets or any
interest therein:
(a) except as provided in this Agreement, any
interest in or any rights to any patent, trade name, trademark, service mark or
logo owned or used by Seller, Doskocil, or any affiliate thereof;
(b) cash, prepaid expense items (except those
which are listed on Schedule 1.1(d)), certificates of deposit, stamps, checks,
trade coupons, and other paper representing a right to receive payment from a
third party other than the Receivables and Customer Purchase Orders
(collectively, "Cash Equivalents");
(c) The Canadian Bacon Operation (as herein
defined) and Wilson Express (as herein defined);
(d) all of Seller's right, title and interest in
and to 1650 Aldelman ham molds used in the production of deli honey-
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cooked hams at Council Bluff, Iowa and the assets associated with the Dixie
Spice Operation.
(e) refunds attributable to the Division or the
Seller;
(f) all claims, choses in action and rights or
actions by Seller against third parties except (i) contract rights under the
Division Contracts (as herein defined) Personal Property Leases, Sales Office
Leases, Customer Purchase Orders and Receivables and (ii) rights under
transferable warranties relating to the Purchased Assets;
(g) the licenses and permits, if any, used in
connection with the Purchased Assets, to the extent not lawfully transferable;
and
(h) any other asset of Seller not specifically
listed in this Agreement or the Schedules and agreements contemplated hereby as
being transferred to Purchaser in connection with the transactions contemplated
hereby.
ARTICLE II
ASSUMPTION OF LIABILITIES
2.1. Liabilities Assumed. Upon the terms and subject to
the conditions set forth in this Agreement, on and as of the Closing Date,
Purchaser shall timely assume and thereafter shall perform and discharge (i)
the accounts payable of the Division listed and described on Schedule 2.1(a)
hereto, which schedule shall be updated to the Closing Date in accordance with
Section
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7.15 (the "Accounts Payable"); (ii) the accrued liabilities of the Division
listed and described on Schedule 2.1(b) hereto, which schedule shall be updated
to the Closing Date in accordance with Section 7.15 (the "Accrued
Liabilities"); (iii) the Copack Agreements described in Section 7.18 and listed
on Schedule 7.18; (iv) the Division Contracts described in Section 4.11 and
listed on Schedule 4.11 hereto, which schedule shall be updated to the Closing
Date in accordance with Section 7.15; (v) except such obligations and
liabilities that are retained or assumed by Seller under this Agreement, any
and all obligations and liabilities arising from the Facilities accruing and
arising from and after the Closing, such as taxes, utilities and similar
periodic charges; (vi) any and all other obligations and liabilities
specifically assumed by Purchaser in accordance with this Agreement; (vii) the
Personal Property Leases that will be the subject of the Assignment and
Assumption of Personal Property Leases (Exhibit A), which Personal Property
Leases are to be transferred to the Purchaser as of the Closing, as a Purchased
Asset; (viii) the Sales Office Leases which are the subject of the Assignment
and Assumption of Sales Office Leases (Exhibit H), which leases are to be
transferred to the Purchaser as of the Closing, as a Purchased Asset; (ix) the
taxes, costs, fees, charges and the Earnout Amount that Purchaser has agreed to
pay pursuant to Sections 3.3, 3.4, 15.2 and 15.5 hereof; and (x) Seller's
obligations for capital commitments described on Schedule 6.2 hereto or
incurred with the consent of Purchaser pursuant to Section 6.2 (subsections (i)
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through (xi) herein collectively referred to as the "Assumed Liabilities").
2.2. Non-Assumption of Other Liabilities. Other than the
Assumed Liabilities, Purchaser shall not assume nor be deemed to assume, or in
any way be liable or responsible for any liability or obligation (debt or
otherwise) of Seller (the "Excluded Liabilities") which shall include, but not
be limited to, any and all debts, liabilities and obligations which accrued on
or before the Closing Date in respect to the Copack Agreements, the Division
Contracts, the Personal Property Leases and the Sales Office Leases (the
"Contract Obligations"); provided, however, Purchaser shall be obligated and
liable for any and all debts, liabilities and obligations which accrue after
the Closing Date arising under the Contract Obligations.
ARTICLE III
PURCHASE PRICE AND PAYMENT; ALLOCATIONS; PRORATIONS
3.1. The Purchase Price and Payment.
(a) Purchase Price at Closing. Purchaser shall
pay to Seller for the Purchased Assets the sum of (i) the Net Working Capital
as of the end of the Doskocil accounting period for fiscal year 1995 next
before the Closing Date (the "Period End") plus (ii) $22,745,000 (the "Net
Fixed Asset Amount") and plus (iii) $33,572,000 (herein referred to as the
"Premium") minus the Long Term Debt Obligations as of the Period End,
collectively herein referred to as the "Purchase Price". The Purchase Price
shall be
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as reflected in a balance sheet of the Division (excluding the Excluded Assets
and Excluded Liabilities) prepared by Doskocil in accordance with its
consistently applied internal accounting procedures (except as related to the
Net Fixed Assets which shall be reflected as the Net Fixed Asset Amount), a
copy of which shall be delivered by Doskocil to Purchaser two days prior to
Closing.
(b) Payment of the Purchase Price. At the
Closing, Purchaser shall pay Doskocil the Purchase Price by wire transfer of
readily available funds to an account of Wilson Brands Corporation at the First
Bank N.A., Minneapolis, Minnesota, Account No. 1-602-3419-0512R (the "Doskocil
Account").
(c) Adjusted Purchase Price. The Adjusted
Purchase Price shall mean the sum of the (i) Net Working Capital as of the day
immediately preceding the Closing Date (the "Measuring Date"), (ii) the Net
Fixed Asset Amount and (iii) the Premium minus the Long Term Debt Obligations
as of the Measuring Date. In order to determine the Adjusted Purchase Price,
Purchaser and Seller shall take a physical inventory of the Inventory on the
weekend prior to the Closing Date. The portion of the Adjusted Purchase Price
attributable to Net Working Capital (excluding Inventory) and Long Term Debt
Obligations shall be as reflected on the books of account of Seller as of the
Period End adjusted to the Measuring Date. The Inventory shall be valued in
accordance with Schedule 1.1(b). The Accounts Payable, the Receivables and the
Accrued Liabilities shall be reconciled and adjusted to the Closing Date and
new lists of the Accounts Payable (Schedule 2.1(a)), the Accrued Liabilities
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(Schedule 2.1(b)), the Receivables and Other Current Assets (Schedule 1.1(d))
as of the Measuring Date shall be prepared by Doskocil. The Long Term Debt
Obligations shall be adjusted from the Period End to the Measuring Date and a
reconciled schedule of the IDB Obligations and the Capital Lease Obligations
shall be prepared by Doskocil.
Within fourteen days following Closing, Doskocil shall prepare
and furnish to Purchaser a detailed accounting of (i) the book value of the
Inventory computed from Seller's books of account as of the Measuring Date in
accordance with Schedule 1.1(b) and (ii) the computation of the Net Working
Capital (excluding the Inventory) and the Long Term Debt Obligations, as
determined from Seller's books of account as of the Measuring Date, as
hereinabove provided. Purchaser shall then have a period of time not exceeding
sixty days after its receipt of such detailed accounting in which to examine
such accounting, during which time Purchaser and Seller shall fully cooperate
each with the other to resolve disputes, if any. On the first business day
following such sixty day period, the difference (if any) between the Purchase
Price paid by Purchaser at the Closing, and the Adjusted Purchase Price
determined pursuant to this Section 3.1(c) shall be settled between the
parties, either by way of (i) the delivery of a check from Purchaser to Seller
for such difference in the event that the Adjusted Purchase Price is greater
than the Purchase Price or (ii) the delivery of a check from Seller to
Purchaser for such difference in the event that the Adjusted Purchase Price is
less
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than the Purchase Price. In the event that prior to the termination of the
provisions of Article I of the Supply Agreement (Exhibit L), Seller has not
conveyed unencumbered title to the Farmland Equipment to Purchaser, Seller
shall pay Purchaser in lieu of conveying such equipment, the sum of $174,000.
In the further event that Purchaser and Doskocil are unable to resolve any
dispute involved in the determination of the Adjusted Purchase Price in
accordance with this Section 3.1(c), the payment required to be made with
respect to the Adjusted Purchase Price as herein described shall be delayed
until such dispute shall have been settled by arbitration in accordance with
Section 15.10 of this Agreement.
3.2. Allocations.
(a) Allocation of Purchase Price. The Purchase
Price shall be allocated among the Purchased Assets as mutually agreed by
Purchaser and Doskocil after calculation of the Adjusted Purchase Price, and as
set forth on a certificate signed by Purchaser and Doskocil (the "Allocation
Certificate").
(b) Reporting Requirements. Purchaser and Seller
hereby agree that they shall not take any position or action inconsistent with
the allocations agreed to in accordance with this Section 3.2, including
without limitation positions or actions taken in connection with complying with
the Code and the regulations promulgated thereunder. Doskocil and Purchaser
shall consult with each other in the preparation of Internal Revenue Service
Form 8594 to be filed in connection with the transaction
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set forth in this Agreement which form shall be prepared consistent with the
provisions of Section 3.2(a) hereof.
3.3. Cash Equivalents, Costs and Prorations.
(a) Cash Equivalents. As of the Closing Date,
Doskocil shall collect and retain such Cash Equivalents held in or attributable
to the Division that it can reasonably collect. Purchaser shall pay over to
Doskocil all Cash Equivalents it receives from third parties following the
Closing.
(b) Basic Prorations; Taxes.
(i) As of the day after the Closing
Date, the real and personal property taxes, water, gas, electricity and other
utilities, taxes and similar periodic charges for 1995 related to the Book
Assets, local business or other transferable license fees, rents and other
similar periodic charges, shall be prorated between Purchaser and Seller on the
basis of actual amounts billed for such year or, if not so billed, on the basis
of 100% of such actual taxes or charges assessed or levied in 1994 or by using
such other method of determination as the parties may agree, adjusted to
reflect changes in assessments or rates of taxes known as of the Closing Date.
(ii) To the extent practicable, utility
meter readings shall be determined as of the Closing Date.
(iii) To the extent possible, all prorated
amounts shall be reflected as appropriate adjustments to the amount to be paid
to or charged to the Purchaser and Doskocil at the time of the delivery of the
Purchased Assets at the Closing. Prorated
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amounts that are not paid at the Closing or before shall be settled between
Doskocil and Purchaser as soon as possible following the Closing.
(iv) In calculating the prorations
hereunder, Doskocil shall pay all amounts accruing through the Closing Date,
and Purchaser shall pay all amounts accruing after such date.
(v) All prorated amounts shall be
reflected as appropriate adjustments to the Purchase Price paid at Closing.
3.4. The Earnout. In addition to the Purchase Price,
Doskocil shall be entitled to receive and Purchaser shall pay to Doskocil up to
an additional $10 million (the "Earnout Amount") for the Purchased Assets
computed as follows:
For a period commencing on the Closing Date and
ending June 1, 2000 (the "Earnout Period"), Doskocil shall be entitled to
receive 12.5% of the amount by which the Market Value (as herein defined) of
all of Purchaser's equity securities exceeds the greater of (i) $156.6 million,
or (ii) the highest Market Value on any prior Determination Date (as herein
defined), on each Determination Date; provided, however, the aggregate of all
such payments shall not exceed the Earnout Amount. Payments on the Earnout
Amount shall be determined semi-annually commencing on December 1, 1995 and on
each December 1 and June 1 through June 1, 2000, the expiration of the Earnout
Period (such days, including the day on which the Earnout Period expires, being
herein referred to as the "Determination Dates"); with any payment due within
five (5) business days following each such Determination Date. The
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Market Value of Purchaser's equity securities shall be determined by
multiplying the average of the closing prices, as reported by NASDAQ (or by
the New York Stock Exchange Composite Transactions or the American Stock
Exchange or on such other national or regional exchange, if such securities are
moved to any of such exchanges), of Purchaser's equity securities on the last
trading day of each month during the six month period prior to each
Determination Date by the total number of issued and outstanding shares of
equity securities of Purchaser as of the Determination Date. For example, if
the Market Value of Purchaser's common stock is calculated to be $158 million
at December 1, 1995, Doskocil shall be entitled to a payment on the Earnout
Amount of $175,000 ($158 million - $156.6 million = $1.4 million x .125 =
$175,000). If on June 1, 1996, the Market Value of Purchaser's common stock is
calculated to be $157.8 million, Doskocil will not be entitled to a payment on
such Determination Date, but, however, if on December 1, 1996, the Market Value
of Purchaser's common stock is calculated to be $160 million, Doskocil shall be
entitled to receive an additional payment on the Earnout Amount of $250,000
($160 million - $158 million = $2 million x .125 = $250,000). Such payments to
be made until the earlier of (i) the day which is five years from the Closing
Date and (ii) the receipt by Doskocil of the Earnout Amount. In the event that
the equity securities of Purchaser ceases to be publicly traded during the
Earnout Period, the balance, if any, of the Earnout Amount shall be due and
payable to
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Doskocil by Purchaser on a pro rata basis on subsequent Determination Dates
through the end of the Earnout Period.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers, jointly and severally, hereby represent and warrant to
the Purchaser as follows:
4.1. Organization and Qualification. Doskocil is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power and authority to carry
on its business as it is now being conducted. Doskocil is duly qualified to do
business and in good standing as a foreign corporation in each state where the
character of the property owned by it or the nature of its activities makes
such qualifications necessary, including in the states of California, Georgia,
Kansas and Oklahoma. Wilson is a corporation duly organized, validly existing
and in good standing under the laws of Delaware and has the requisite corporate
power and authority to carry on its business as it is now being conducted.
Wilson is duly qualified to do business and in good standing as a foreign
corporation in each state where the character of the property owned by it or
the nature of its activities makes such qualification necessary, including in
the states set forth on Schedule 4.1 hereto. Concordia is a corporation duly
organized, validly existing and in good standing under the laws of Delaware and
has the requisite corporate power and authority to carry on its
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business as it is now being conducted. Concordia is duly qualified to do
business and in good standing as a foreign corporation in each state where the
character of the property owned by it or the nature of its activities makes
such qualifications necessary, including in the state of Missouri. Dixie is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the requisite corporate power and authority to carry
on its business as it is now being conducted. Dixie is duly qualified to do
business and in good standing as a foreign corporation in each state where the
character of the property owned by it or the nature of its activities makes
such qualifications necessary, including in the state of Arkansas. Shreveport
is a corporation duly organized, validly existing and in good standing under
the laws of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted. Shreveport is duly
qualified to do business and in good standing as a foreign corporation in each
state where the character of the property owned by it or the nature of its
activities makes such qualifications necessary, including in the state of
Louisiana.
4.2. Due Authorization. Seller has full corporate power
and authority to enter into and perform this Agreement and all other agreements
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by Seller of this Agreement have been, and
the execution, delivery and performance by Seller of all other agreements and
transactions contemplated hereby and thereby have been or prior to Closing will
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be, duly authorized and approved by all requisite corporate action on the part
of Seller. This Agreement has been, and the other agreements contemplated
hereby, when executed, will be, duly executed and delivered by Seller and,
assuming the due authorization, execution and delivery hereof and thereof by
the other parties hereto or thereto, this Agreement constitutes and, when
executed, each of the other agreements contemplated hereby will constitute, a
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
4.3. No Violation. The execution, delivery and
performance by Seller of this Agreement and the other agreements and
transactions contemplated hereby and thereby will not cause any of the Sellers
to violate any provision of their respective Certificates of Incorporation or
By-laws. Except as described in Schedule 4.3, Seller is not subject to or
obligated under any provision of (i) any contract, indenture, deed of trust,
mortgage, loan agreement or other instrument or other agreement, (ii) any
license, franchise or permit, or (iii) any law (other than laws applicable to
bulk sales transactions, compliance with such bulk sales laws is waived by
Purchaser pursuant to Section 15.7 hereof), rule, regulation, order, judgment
or decree, which would be breached or violated or in respect of which a right
of termination or acceleration or any encumbrance, charge or lien on any
portion
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of the Purchased Assets would be created by Seller's execution, delivery and
performance of this Agreement or the other agreements and transactions
contemplated hereby and thereby except for those breaches, defaults and
violations that either (i) Doskocil shall have cured at or before the Closing
or (ii) which would not have a material effect on the Purchased Assets or the
business of the Division.
Except for the H-S-R Act filings which will be made as soon as
shall be practicable after the execution of this Agreement and the expiration
of the waiting period thereunder, no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority or other person or entity (whether or not governmental) is required
in connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby, except as listed on
Schedule 4.3.
4.4. Permits. Seller has made available to Purchaser
true, correct and complete copies of all permits, licenses or other
governmental approvals of any kind listed on Schedule 4.4 (collectively the
"Permits"). The Permits listed on Schedule 1.1(l) are transferrable to
Purchaser. To Seller's knowledge, there are no permits, licenses or other
approvals of any kind required by any governmental authority in connection with
the use and occupancy of the Facilities, except as listed on Schedule 4.4
hereto. Except as also set forth on Schedule 4.4, Seller has not received
notification of the violation, revocation or nonrenewal nor has it
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received notice of threatened revocations or nonrenewals of any material Permit
and to the knowledge of Sellers, (i) no violation of any of the Permits has
occurred at any time during the twelve months prior to the date hereof that
would result in a material adverse effect on the operation of the Purchased
Assets or the business of the Division, (ii) all the material Permits are in
full force and effect, (iii) no action has been taken by Seller which would
constitute a violation of any of the Permits and (iv) the material Permits have
been duly and validly issued and constitute all permits, licenses or other
governmental approvals necessary to operate or use the Purchased Assets in the
manner in which the Purchased Assets are currently being operated. Seller's
operations with respect to the Division are in compliance with applicable
federal, state and local laws, ordinances, rules and regulations, except for
such instances of noncompliance which, individually or in the aggregate, are
not material, do not result in any lien, claim or encumbrance on any of the
Purchased Assets and do not have a material effect on Purchaser's use of any of
the Purchased Assets.
4.5. Purchased Assets. Except as set forth in Schedule
4.5 and the Permitted Exceptions described in Section 7.5, Seller owns, or on
the Closing Date will own, and Purchaser will receive indefeasible, good and
marketable title to all of the Purchased Assets, in each case subject to no
liens, mortgages, pledges, privileges, adverse claims, security interest,
encumbrances or charges of any kind.
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4.6. SIC Code. The Division's SIC Code is 2010, which is
the SIC Code under which the Division reports to the Department of Commerce.
4.7. Condition of Purchased Assets.
(a) Conditions. Except as expressly otherwise
set forth in this Agreement, the Purchased Assets shall be conveyed to the
Purchaser, the personal property under the Personal Property Leases and the
leasehold estates subject to the Sales Office Leases shall be assigned to the
Purchaser, on an "AS IS, WHERE IS," BASIS, WITHOUT ANY REPRESENTATION OR
WARRANTY WHATSOEVER, EITHER ORAL OR WRITTEN, EXPRESS OR IMPLIED, AS TO THE
CONDITION OF SUCH ASSETS OR FITNESS OF SUCH ASSETS FOR ANY PARTICULAR OR
GENERAL USE OR PURPOSE OR FOR THE PURCHASER'S OR SELLER'S BUSINESS OR AS TO
MATERIALITY, MERCHANTABILITY OR VALUE OF THE PURCHASED ASSETS. SELLER HEREBY
EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES AND REPRESENTATIONS MADE TO
PURCHASER BY ANY PERSON, WHETHER RELATING TO THE CONDITION, THE OPERATION OR
OTHERWISE OF THE PURCHASED ASSETS, EXCEPT AS HEREIN EXPRESSLY SET FORTH. Such
transfer shall vest in Purchaser the full recourse and right of subrogation
which Seller has or may have against all prior owners of such assets (but
without any representation or warranty that Seller has or may have any such
recourse or right).
Sellers represent, jointly and severally, however, that the
Purchased Assets are suitable and adequate and constitute all assets necessary
for the operation of the Division as presently conducted by Seller, with the
exception of the assets associated
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with the services to be provided pursuant to the Transition Service Agreement
and other services currently being performed by Doskocil for the Division set
forth on Schedule 4.7.
(b) Utilities. Adequate public sanitary and
storm sewers, public water facilities, and other public utilities necessary to
Sellers' operation of the Facilities are installed and operational. All
utilities can be used without any charge except normal and usual utility
charges relating to consumption. All utilities enter such property either
through adjoining public streets or within recorded easements. To Seller's
knowledge there has not been any notification of any increase or proposed
increase in the rates charged for the utilities from the rates currently in
effect.
(c) Compliance. Seller has not received any
notification or other document from any governmental authority or any other
person regarding any alleged violation of, or that Seller may have liability
under any Environmental Laws or applicable zoning, building or other law,
ordinance, code, or regulation involving any of the Purchased Assets, except
where the failure to comply with such notification or document would not have a
material adverse effect on the use by Purchaser of each of such Purchased
Assets. Seller's operation of the Purchased Assets is in compliance with the
Environmental Laws and all applicable zoning, building and other laws,
ordinances, codes, and regulations as presently interpreted and enforced,
except where the failure to
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comply would not have a material adverse effect on the use by Purchaser of such
Purchased Assets.
(d) Hazardous Materials Reports. To Seller's
knowledge, Seller has delivered to Purchaser full, accurate, and complete
copies of any and all reports, studies, tests, and other information in
Seller's possession relating to the issue of the presence or suspected presence
of any Hazardous Materials at any of the Facilities or the Purchased Assets.
Seller shall promptly following its receipt thereof, furnish to Purchaser full,
accurate, and complete copies of any such reports, studies, tests, and other
information hereafter obtained by Seller.
4.8. Commissions. No broker or finder has acted directly
or indirectly for Seller in connection with this Agreement, or any other
agreement or the transactions contemplated hereby, and no broker or finder is
entitled to any brokerage or finder's fee or other commission in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of Seller.
4.9. Legal Proceedings, Defaults. Except as set forth on
Schedule 4.9, there is no legal, administrative, arbitration or other
proceeding pending or outstanding order, writ, injunction or decree of any
court, government or governmental authority or arbitration, of which the Seller
has notice (or to the knowledge of the Seller, which has been threatened),
against Seller or relating to the Purchased Assets which, if resolved against
Seller, would have a material adverse effect on the Purchased Assets or the
Division. Seller has not received notice of any default under any
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contract or agreement binding upon it, the effect of which would have a
material adverse effect on the Purchased Assets.
4.10. Employee Benefit Plans and Collective Bargaining
Agreements.
(a) Employee Benefit Plans. Schedule 4.10(a)
contains a complete list of "employee welfare benefit plans" (as that term is
defined in Section 3(1) of ERISA) in which active or former Facility Union
Employees and Non-Union Employees (collectively, the "Affected Employees")
participate (which plans, as applied to such Affected Employees are hereinafter
referred to as "Seller's Welfare Plans"). Schedule 4.10(a) also contains a
complete list of "employee pension benefit plans" (as that term is defined in
Section 3(2) of ERISA), excluding any "multiemployer pension plans" (as that
term is defined in Section 3(37)(A) of ERISA) in which Affected Employees
participate and all other plans affecting any of the other employees (which
plans, other than multiemployer plans, as applied to such Affected Employees
are hereinafter referred to as "Seller's Pension Plans"). Seller's Welfare
Plans and Seller's Pension Plans are hereinafter collectively referred to as
"Seller's Plans". Each of Seller's Plans is in material compliance with the
provisions of all applicable laws, rules and regulations, which shall include
by example and not by limitation ERISA and the Code except where failure to
comply would not have a material adverse effect on the Purchased Assets.
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(b) Collective Bargaining Agreements. Schedule
4.10(b) contains a complete and accurate list of all collective bargaining
agreements affecting the Facility Union Employees of Seller who are assigned to
the Division.
4.11. Division Contracts. Schedule 4.11 contains a
complete and accurate list, as of the date of this Agreement, of (i) all
agreements or arrangements, oral or written, between Seller and Division
customers, (ii) all agreements and arrangements, oral or written, between
Seller and the Division employees, (iii) all agreements and arrangements, oral
or written, between Seller and its shareholders, officers or directors that
relate to ownership or operations of the Purchased Assets or the business of
the Division, and (iv) all material agreements, oral or written, including the
Copack Agreements, relating to any of the Purchased Assets or by which any of
the Purchased Assets are bound (collectively as updated to the Closing Date,
the "Division Contracts"). Complete copies of all written Division Contracts
have been provided to Purchaser and complete summaries of all oral Division
Contracts are attached to Schedule 4.11. Except as set forth in Schedule 4.11,
(x) Seller is in substantial compliance with its obligations under the Division
Contracts, has received no notice from the other parties thereto of any actual
or alleged material default or breach by Seller nor, to Seller's knowledge,
does there exist any default or breach by any of the other parties thereto, nor
to Seller's knowledge has any event occurred which, with the passage of time or
the giving of notice (or both), would constitute such a breach or
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default by Seller or any other party and (y) none of the Division Contracts
require the consent of the other contracting party for assignment to Purchaser.
Seller shall assign all of its right, title and interest in and to the Division
Contracts as of the Closing; provided, no Division Contract which is by terms
or by law not assignable without the consent of the other party or parties,
where such consent or approval has not been given, or as to which all the
remedies for the enforcement thereof available to Seller would not by law pass
to Purchaser as an incident of the assignments provided for by this Agreement,
shall be assigned; provided, however, Seller shall provide Purchaser the
benefits of such unassigned Division Contract to the extent permitted by law.
To the extent that such Division Contracts have been assigned to Purchaser,
Purchaser shall assume Seller's obligations under the Division Contracts as of
the Closing Date and as and to the extent permitted by applicable law.
4.12. Insurance. Doskocil maintains a named perils policy
(fire and extended coverage), a copy of which has been made available for
inspection by Purchaser, currently with Royal Insurance Company covering the
Facilities which coverage provides for full replacement of the insured
property, and for coverage of business interruption losses, subject to a
deductible of $100,000 (the "Insurance Deductible"). Such policy is in full
force and effect, all premiums with respect thereto covering all periods up to
and including the Closing Date have or will have been paid prior to Closing,
and no notice of cancellation or termination has been
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received by Seller with respect to such policy. Such policy (i) is sufficient
for compliance with all requirements of law and all agreements to which Seller
is a party; (ii) is valid, outstanding and enforceable subject to applicable
bankruptcy, reorganization, insolvency, moratorium, fraudulent conveyance and
similar laws affecting creditors' rights generally from time to time and to
general principles of equity; (iii) will remain in full force and effect
through the Closing Date; and (iv) will not in any way be affected by, or
terminate or lapse until the Closing Date by reason of, the transactions
contemplated by this Agreement. Schedule 4.12 identifies all risks which
Seller has designated as being self-insured with respect to the Purchased
Assets. Seller is not in default with respect to any provisions contained in
the above described insurance policy, and there are no outstanding notices of
cancellation or of any defects or inadequacies in connection with the
Facilities or operation thereof.
4.13. Financial Statements. The unaudited balance sheet
and unaudited income statement of the Division as of and for the fiscal year
ended December 31, 1994 (without footnotes), the unaudited income statements of
the Division for the fiscal years 1992 and 1993 (without footnotes) and the
unaudited balance sheet and unaudited income statement of the Division as of
and for the thirteen weeks ended April 1, 1995 (without footnotes),
collectively the "Financial Statements," are attached hereto as Schedule 4.13.
The information contained in the Financial Statements for fiscal years ended
December 31, 1994, January 1,
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1994 and January 2, 1993 were included in the audited Financial Statements of
Doskocil for such fiscal years . The Financial Statements present fairly, in
all material respects, the financial position of the Division as of December
31, 1994 and April 1, 1995, and the results of operations for the years ended
December 31, 1994, January 1, 1994 and January 2, 1993 and for the thirteen
weeks ended April 1, 1995 and have been prepared in accordance with Doskocil's
consistently applied internal accounting practices which are in conformance
with GAAP, except as set forth in Schedule 4.13. Except as set forth in
Schedule 4.13, the expenses included in the Financial Statements include all
expenses associated with, or related to, the operation of the Division.
The balance sheet, accounting schedule and other calculations
which Doskocil is required to prepare and furnish to Purchaser in accordance
with Section 3 of this Agreement will accurately and completely reflect the
information required to be furnished as of the applicable date and will be
prepared in accordance with Doskocil's consistently applied internal accounting
practices which will be in conformance with GAAP except as described in Section
3 and as set forth in Schedule 4.13.
4.14 Multiemployer Pension Plans. None of the Sellers
maintains a "multiemployer pension plan" as defined in Section 3(37)(A) of
ERISA and Section 414(f) of the Code which would apply to any of the Facility
Union Employees.
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4.15 No Condemnation. Seller is not aware of any pending
or threatened condemnation of any portion of any of the Facilities.
4.16 No Notice of Violations. Except as set forth on
Schedule 4.16, Seller has not received notice of any alleged failure or
failures of Seller to comply with any applicable governmental requirements in
respect of the use, occupation and construction of the Facilities, including
but not limited to environmental, zoning, platting and other land use
requirements which have not been heretofore corrected to the satisfaction of
the appropriate governmental authority, and Seller has not received notice of
or does not have knowledge of any violations or investigations relating to any
such governmental requirement. Seller has not received advice from any of its
mortgagees or from any insurer of the Facilities or any part thereof requesting
any improvements, alterations, additions, corrections, or other work in, on or
about the Facilities. Seller will promptly notify the Buyer if Seller receives
any such notice.
4.17 No Defaults. Seller has not received notice that it
has committed any default or breach of any covenants, conditions, restrictions,
rights-of-way, or easements which pertain to any of the Facilities or any
portion thereof, and to Seller's knowledge no such default or breach now
exists.
4.18 Special Assessment. No special or general
assessments have been levied against all or any part of any of the Facilities,
nor to Seller's knowledge have any such assessments been threatened.
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4.19 Information Correct. To best of Seller's knowledge,
the lists, documents, data and information required to be delivered by Seller
to Purchaser pursuant to this Agreement are materially complete and correct.
Seller shall promptly inform Purchaser of any material changes in the condition
of the Facilities not reflected in said documentation.
4.20 Public Improvements. There are no notices
outstanding calling attention to the need for any unperformed curbing,
recurbing, paving, repaving, or other construction, improvements, or work on or
about the Facilities or any streets or roads abutting the Facilities, or the
removal of any nuisance from the Facilities or any of the foregoing. All
street paving, curbing, sewer installation, or other public improvements which
have been constructed or installed at the Facilities which have been ordered to
be constructed or installed and for the cost of which the Facilities is
assessable have been paid for and will not be assessed and all assessments have
been paid in full.
4.21 Taxes. To Seller's best knowledge, the total real,
personal and ad valorem taxes payable in 1995 with respect to all of the
Facilities are set forth on Schedule 4.21.
For the year 1995 and subsequent years, Seller has not
received notice of any proposed increase in the assessed valuation of the
Facilities or any portion thereof. No other taxes, levies or assessments are
due or will become due with respect to the Facilities.
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4.22. Assessed Value. The assessed values and taxes on the
Facilities for year 1994 which assessments have been made on a fully completed
building basis are set forth on Schedule 4.22.
4.23. Zoning Notices. The zoning classifications of the
Facilities are as described on Schedule 4.23.
Except as set forth on Schedule 4.23, Seller has not received
from any governmental authority, holder of any mortgage, or board of fire
underwriters (or other body performing similar functions) any notices asserting
any violation of any applicable law, regulation, or other governmental
requirement. If such notices are served or received prior to Closing, Seller
will effect full compliance therewith prior to Closing or as soon thereafter as
may be practicable.
4.24 Pest Control. Seller maintains a program of control
regarding vermin and other pests at each of the Facilities in order to keep the
Facilities free from infestation in conformity with the rules and regulations
promulgated by the USDA.
4.25 Seller Not a Foreign Person. None of the Sellers is
a foreign person as defined in Section 1445(f)(3) of the Code.
4.26 Environmental Warranties. Except as set forth on
Schedule 4.26, to the knowledge of Seller's, the Facilities and the Machinery
and Equipment :
(a) are free of friable asbestos;
(b) are free of PCB's;
(c) do not have levels of radon gas requiring
abatement or remediation;
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(d) are free from all other Hazardous Materials
requiring abatement or remediation under the Environmental Laws.
To the best of Seller's knowledge, no fact, condition or
occurrence exists or has occurred that is related in any way to the Facilities
or the Machinery and Equipment that would afford any governmental agency or any
other person the right to obtain relief of any material kind under the
Environmental Laws from Seller or Purchaser, assuming Purchaser should acquire
the Facilities and the Machinery and Equipment and should then use and operate
them in the same and identical manner in which they are currently being used
and operated.
4.27 Sales Office Leases. The following is true with
respect to each Sales Office Lease:
(a) The Sales Office Lease is valid and in full
force and effect in accordance with its terms, has not been modified except as
set forth on the copies delivered by Seller or Doskocil to Purchaser, and
Schedule 1.1(h) contains an accurate and complete list of all the material
documents which comprise the Sales Office Leases or affect the rights of the
parties thereto.
(b) Subject to Section 3.3, all obligations of
Seller under the Sales Office Leases which accrue prior to or on the Closing
Date shall have been performed and paid for in full by Seller on or prior to
Closing.
(c) To the best of Doskocil's knowledge, there
has been no material default or event which, with the giving of notice
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or lapse of time (or both), would constitute a default on Doskocil's part under
the Sales Office Leases.
4.28 Condition of the Facilities. To the best of
Doskocil's knowledge, there are no structural defects in any of the Facilities,
or major capital improvements required (which cost would exceed $100,000),
except as set forth on Schedule 4.28.
4.29 Sellers' Marks. All of the Sellers' Marks are listed
or described on Schedule 1.1(f) to this Agreement and, except as disclosed in
Schedule 1.1(f), are the sole and exclusive property of Seller. Except as
disclosed on Schedule 1.1(f), the Sellers' Marks constitute all of the
trademarks, trade names, logos, symbols, copyrights and service marks that
Seller is currently using in connection with the business of the Division, or
which were used by Seller in connection with the sale of any products the sales
of which were reflected in the Financial Statements. The Sellers' Marks are
sufficient to conduct the business of the Division as presently being
conducted. Except as disclosed on Schedule 1.1(f), the Sellers' Marks have not
been hypothecated, assigned or licensed, in whole or in part, to any other
person or entity, and to the best of Sellers' knowledge, do not infringe upon
or violate the rights of any person or entity in the jurisdictions in which
they are used or registered, and are not subject to challenge, claims of
infringement, unfair competition or other claims.
4.30 Employees.
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(a) Doskocil has provided Purchaser a list, as of
the date of this Agreement, of all employees of the Division, and their dates
of hire, positions, base salary and commission schedule (if applicable).
Except as set forth on Schedule 4.11, none of such employees has any
understanding or agreement (written or otherwise) with Seller.
(b) Doskocil will, at Purchaser's request,
cooperate in assisting Purchaser in obtaining Seller's experience rating for
workers' compensation and state unemployment insurance; provided, however,
nothing herein contained shall require Seller to provide any undertakings or
guaranties or make any out-of-pocket expenditures in connection with such
cooperation.
4.31 Absence of Changes or Events. Except as disclosed on
Schedule 4.31 to this Agreement or as disclosed in the Financial Statements,
Seller has operated the Division only in the ordinary course and there has not
been, since April 1, 1995, any material adverse change in the financial
position or results of operation of the Division except changes resulting from
economic conditions or consumer trends affecting the branded meat industry in
general.
4.32. Net Fixed Assets. Except as disclosed on Schedule
4.32 and for minor or inconsequential items of little or no value and for
Excluded Assets, no item which was reflected as "Land," "Buildings" or
"Machinery & Equipment" on the Consolidated Balance Sheet of the Retail
Division, dated January 28, 1995 of the Division, which balance sheet is
attached to Schedule 4.32, has
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been transferred, sold, encumbered or otherwise disposed of since January 28,
1995.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
5.1. Organization and Qualification. Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of Michigan and has the requisite corporate power and authority to carry
on its business as it is now being conducted. Purchaser is duly qualified to
do business and in good standing as a foreign corporation in the states of
California, Illinois, Kansas, Massachusetts, Missouri, New Jersey, New York,
North Carolina, Ohio, Oklahoma, Pennsylvania, Tennessee and Utah.
5.2. Due Authorization. Purchaser has full corporate
power and authority to enter into and perform this Agreement and all other
agreements and to consummate the transactions contemplated hereby and thereby.
The execution, delivery and performance by Purchaser of this Agreement has
been, and the execution, delivery and performance by Purchaser of all other
agreements and transactions contemplated hereby have been or prior to Closing
will be, duly authorized and approved by all requisite corporate action on the
part of Purchaser. This Agreement has been, and the other agreements
contemplated hereby, when executed, will be, duly executed and delivered by
Purchaser and, assuming the due authorization, execution and delivery hereof
and thereof by the
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other parties hereto and thereto, this Agreement constitutes and, when
executed, each of the other agreements contemplated hereby will constitute, a
valid and binding obligation of Purchaser, enforceable against Purchaser in
accordance with its terms subject to applicable bankruptcy, reorganization,
insolvency, moratorium, fraudulent conveyance and similar laws affecting
creditors' rights generally from time to time and to general principles of
equity.
5.3. No Violation. The execution, delivery and
performance by Purchaser of this Agreement and the other agreements and
transactions contemplated hereby will not cause Purchaser to violate any
provision of its Articles of Incorporation or By-laws. Except as described on
Schedule 5.3, Purchaser is not subject to or obligated under any provisions of
(i) any contract, indenture, deed of trust, mortgage, loan agreement or other
agreement, (ii) any license, franchise or permit, or (iii) any law, rule,
regulation, order, judgment or decree, which would be breached or violated or
in respect of which a right of termination or acceleration or any encumbrance,
charge or lien on any portion of the Purchased Assets would be created by
Purchaser's execution, delivery and performance of this Agreement or the other
agreements and transactions contemplated hereby except for those breaches,
defaults and violations that Purchaser shall have cured at or before the
Closing
Except for the H-S-R Act filings which will be made as soon as
shall be practicable after the execution of this Agreement and the expiration
of the waiting period thereunder, no consent, approval or authorization of, or
declaration, filing or
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registration with, any governmental or regulatory authority or other person or
entity (whether or not government) is required in connection with the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby.
5.4. Commissions. No broker or finder has acted directly
or indirectly for Purchaser in connection with this Agreement or any other
agreement or the transactions contemplated hereby or thereby, and no broker is
entitled to any brokerage or finder's fee or other commission in respect
thereof based in any way on agreements, arrangements or understandings made by
or on behalf of Purchaser.
ARTICLE VI
CONDUCT OF BUSINESS PRIOR TO CLOSING
6.1. Conduct of Business. The business of Seller with
respect to the Division between the date hereof and the Closing Date, to the
reasonable best efforts of Seller, shall be conducted only in the ordinary
course. Without limitation of the foregoing, without the prior written consent
of Purchaser, which consent shall not be unreasonably withheld, Seller shall
use its reasonable best efforts to maintain the operation of the Division
pending Closing and in so doing shall (i) continue its business in the ordinary
and usual course through the Closing; (ii) maintain and repair all of the
Purchased Assets in accordance with past practice through the Closing as long
as such assets are in the possession of and owned by Seller; (iii) use its
reasonable best efforts to preserve the
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business organization and good will of the Division intact, including Seller's
relationships with suppliers, employees, customers, brokers, agents and others
as they relate to the Purchased Assets or the Division through the Closing;
(iv) not enter into any material agreements, contracts, purchases or sales in
respect of the Purchased Assets and the Division except in the ordinary course
of business including any agreement, contracts, purchases or sales that would
dispose of the Purchased Assets; (v) not transfer, sell, encumber or otherwise
dispose of any of the Net Fixed Assets, without the written approval of
Purchaser; (vi) comply with all applicable laws, rules and regulations of each
federal, state, municipal and administrative authority having jurisdiction over
the Purchased Assets and the operations of the Division, and with the
provisions of Seller's Plans, to the Closing; (vii) operate the Purchased
Assets as long as the Purchased Assets are owned by and in possession of Seller
in accordance with past practices; (viii) maintain insurance in the ordinary
course of business with respect to the Purchased Assets, including coverage for
business interruption losses, as long as the Purchased Assets are owned by and
in the possession of Seller until the Closing Date; (ix) not increase the base
salary of any Facility Union Employee or Non-Union Employee except in
accordance with Seller's past practices, existing agreements and Division
policies; (x) comply with its obligations, if any, under, and not amend or
modify, the Sales Office Leases and (xi) pay all costs, expenses, liabilities
and obligations in the ordinary course when
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due, regardless of whether any such items are to be reimbursed by Purchaser
under this Agreement.
6.2. Capital Expenditures. Other than as set forth on
Schedule 6.2, without the prior written consent of Purchaser, which consent
shall not be unreasonably withheld or delayed, Seller shall not commit to
expend any monies for capital items which Purchaser would be required to pay
for or assume under this Agreement. Commitments for capital expenditures which
shall be assumed by Purchaser in accordance with this Agreement are set forth
on Schedule 6.2 attached hereto and are deemed part of the Assumed Liabilities.
6.3. Books and Records. Seller shall maintain the books,
accounts and other records (including employee records) with respect to the
Division in its customary manner consistent with past practices so as to fully
and accurately reflect all information concerning the Purchased Assets and the
operation of the Division relevant to this Agreement.
6.4. Absence of Certain Developments. Sellers, jointly
and severally, represent and warrant that, except as set forth in Schedule 6.4,
since April 1, 1995, the Division has not received (i) any notice from any
customer of the Division that accounted for one (1) percent or more of the
Division's gross sales during the twelve month period prior to the date hereof
(a "Significant Customer") stating such customer's intention to sever or
curtail its business relationship with the Division; or (ii) any notice, either
oral or written, from the lessor under any Personal Property
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Lease or any Sales Office Lease; or (iii) any notice or other document of any
kind from any governmental authority or anyone else regarding any Environmental
Condition or any claim of violation or alleged violation of Environmental Laws.
From the date of this Agreement through the Closing Date, Seller shall use
their reasonable best efforts to provide Purchaser with any additional notices,
either written or oral, regarding the matters described in this Section 6.4,
provided, however, the failure of Seller to provide such notices shall not
constitute a default or breach by Seller of this Agreement unless such failure
would constitute a separate breach of another representation, warranty or
covenant contained in this Agreement.
ARTICLE VII
OBLIGATIONS PRIOR, AS OF, AND SUBSEQUENT
TO THE CLOSING
The parties agree that, prior to the Closing and, where
specifically indicated below, subsequent to the Closing:
7.1. Access. Seller shall afford the officers, employees,
agents, counsel and consultants of Purchaser access at all reasonable times and
upon reasonable notice given to a person appointed by Horst O. Sieben,
Doskocil's Senior Vice President and Chief Financial Officer, who shall
establish reasonable conditions for such access, from the date hereof to the
Closing, to the Facilities, the Facility Union Employees and the Non-Union
Employees, assets, books, contracts, tax returns, documents and
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other records (including employee records) containing information relevant to
the Purchased Assets, and shall furnish the Purchaser all financial, operating
and other data and information with respect to the Division as the Purchaser,
through its officers, employees, counsel, consultants or agents may reasonably
request. Purchaser's right of access shall include the right to make a
physical inspection of the Facilities and to take samples, soil borings and
conduct tests with respect to the condition, including without limitation the
environmental condition, of the Facilities at Purchaser's sole cost and expense
(which shall include the repair of any damages to the Facilities to the
reasonable satisfaction of Doskocil), provided, however, Purchaser shall be
liable to Sellers for any and all Losses incurred by Seller and shall indemnify
and hold harmless Seller from Losses to Seller or third parties resulting from
such acts, provided, further, however, no such acts shall be undertaken without
the prior written consent of Doskocil which consent shall not be unreasonably
withheld or delayed. Upon the request of Doskocil, its representative shall
have the right to accompany any representative of Purchaser on any inspection
of any of the Purchased Assets. Seller shall not be liable for any claims for
personal injury and property damage during Purchaser's inspection of the
Purchased Assets except to the extent that they were caused by Seller's
negligence or willful misconduct.
7.2. Consents; Additional Agreements. Purchaser and Seller
agree to cooperate and promptly take, or use their
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reasonable best efforts to cause to be taken, all action and to cooperate and
promptly do, or use their reasonable best efforts to cause to be done, all
things necessary, proper or advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement,
including (i) the removal of any legal impediment to the consummation or
effectiveness of such transactions and (ii) the obtaining of all necessary and
material waivers, consents and approvals of all third parties and governmental
bodies, and the making of all necessary filings, including, but not limited to,
filings under the H-S-R Act with the FTC and the U.S. Department of Justice.
Purchaser and Seller shall bear equally any and all filing fees which either of
them is required to pay to the FTC, under the rules of the FTC, in respect of
any filings under the H-S-R Act. Except as provided in the preceding sentence,
the foregoing shall not require any party to file any suit or make any
divestiture of other assets or operations or expend funds that such party
reasonably considers to be excessive.
7.3. Disclosures. Within ten (10) days after the date of
this Agreement, Doskocil shall deliver to Purchaser complete and accurate
copies of all recorded and unrecorded real property agreements, easements,
rights-of-way agreements, restrictive covenants, and encumbrances relating to
the Facilities that are in the possession of Seller or of which Doskocil is
aware and to which it has access.
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7.4. Surveys. Within thirty (30) days after the date of
this Agreement, Doskocil shall deliver to Purchaser six copies of plats of
surveys of each of the Facilities. The surveys shall be performed by licensed
surveyors reasonably acceptable to Doskocil and Purchaser. Each plat shall be
dated no earlier than thirty (30) days prior to the date of this Agreement and
shall be certified to Doskocil, Purchaser, any lender designated by Purchaser,
and the Title Company (as defined below) as having been made in compliance with
applicable law and in accordance with the Minimum Standard Detail Requirements
for ALTA/ACSM Land Title Surveys or substantially equivalent state standards
and shall also show set back and building height restrictions of record or
disclosed by applicable zoning or building codes, flood zone designation, all
improvements in addition to buildings, visible and recorded easements,
indication of access to a public way such as curb cuts and driveways, recorded
rights-of-way, encroachments, and total area. The legal description of the
real property on each plat shall coincide exactly with the legal description in
the title insurance commitment for such property.
7.5. Title Review/UCC Searches. Within fifteen (15) days
after the date of this Agreement, Doskocil shall, at its expense, deliver to
Purchaser a commitment for an owner's policy of title insurance for each
Facility along with copies of all documents described in the commitments that
are the basis for exceptions to coverage (the "Underlying Documents"). The
commitments shall be issued by Lawyer's Title Insurance Corporation as to the
Shreveport
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Facility and Chicago Title Insurance Company as to the other Facilities
(collectively the "Title Company") and shall be dated no earlier than thirty
(30) days prior to the date of this Agreement. The commitments shall name
Purchaser as the proposed insured and provide for coverage in the amount of the
Purchase Price allocated to each Facility with standard exceptions deleted and
zoning endorsements. Purchaser shall have a period (the "Review Period")
ending fifteen (15) days after the date on which Purchaser receives the
commitments, the Underlying Documents, the plats, the documents described in
Section 7.3 and the tax lien and UCC searches described below in which to
notify Doskocil of any objections Purchaser has to any Major Title Defects (as
defined below) disclosed in the commitments and the plats, as well as Minor
Title Defects (as defined below). Any Major Title Defects or Minor Title
Defects that are disclosed in the commitments or the plats to which Purchaser
does not object in writing within the Review Period or which Purchaser
subsequently waives shall be deemed to be permitted exceptions to the status of
Seller's title (the "Permitted Exceptions"). With regard to Major Title
Defects to which Purchaser does object within the Review Period, Seller shall
have fifteen (15) days after receipt of Purchaser's written objections in which
to cure such objections or secure the undertaking of the Title Company to
insure Purchaser against such matters. If Seller is unable or elects not to
cure such objections or obtain a commitment for insurance against such matters,
Purchaser, at its option, may waive its objections and purchase the Property
without
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reduction of the Purchase Price or terminate this Agreement with respect to the
affected Facility. If Purchaser so terminates this Agreement, Purchaser and
Seller shall have no further obligations to each other under this Agreement.
With respect to Minor Title Defects to which Purchaser does object within the
Review Period, Seller shall use reasonable efforts to cure or remove such
matters prior to Closing. However, Purchaser shall have no right to terminate
this Agreement on the basis of Minor Title Defects.
The term "Major Title Defect" means with respect to any
Facility any condition of title that will materially interfere with Purchaser's
operation of any of the Facilities in the manner in which Seller has operated
such Facility over the past twelve months, including, without limitation: (i)
any building encroachment on real estate that is not part of a Facility for
which Purchaser cannot obtain insurance against forced removal of the
encroaching portion of the building; (ii) any defect in Seller's chain of title
which prevents Seller from being able to convey marketable title in fee simple
at the Closing; (iii) any lack of access or easements necessary to allow
continued operation of the Facility in the manner in which Seller has been
operating; (iv) material violations of zoning laws or regulations; and (v) any
lien, claim, or encumbrance securing an obligation. Any Major Title Defect
shall be determined and cured in accordance with the title examination
standards of the state in which the affected Facility is located. "Minor Title
Defects" means any deficiency of title that is not a Major Title Defect.
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Permitted Exceptions shall also include real estate taxes for
the year of the closing and subsequent years (which shall be prorated in
accordance with this Agreement) and those matters that are disclosed in the
commitments and plats to which Purchaser consents or which Purchaser waives
pursuant to this Agreement.
Within fifteen (15) days after the date of this Agreement,
Doskocil shall, without expense to Purchaser, furnish Purchaser tax lien and
UCC searches with respect to the Purchased Assets, showing all liens and
encumbrances thereon.
7.6. Title Policy. At the Closing, Doskocil, at its
expense, shall cause the Title Company to issue to Purchaser either Title
Policies, as defined in Section 7.13(h) or marked-up title insurance
commitments that will assure Purchaser that it will be able to obtain owner's
policies of title insurance at the expense of Doskocil pursuant to the
commitments and insuring that as of the Closing Purchaser has indefeasible fee
simple title to the Facilities subject only to the Permitted Exceptions.
Doskocil and Purchaser shall furnish the Title Company with such affidavits and
certificates as are reasonably requested by the Title Company for issuance of
the title insurance policies.
7.7. Books and Records. Concurrently with Purchaser
taking control of the Facilities at the Closing, Seller shall deliver to
Purchaser the maintenance logs and records relating to the Facilities and the
Machinery and Equipment located therein. Subsequent to the Closing, the Seller
will, to the extent reasonably necessary or helpful or relevant to the transfer
of the
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Purchased Assets and Assumed Liabilities or as required by law, or
administrative rules or regulations (including but not limited to, requirements
under the Code), (i) retain and, as the Purchaser may reasonably request,
permit the Purchaser and its agents to inspect and copy, all books and records
of the Seller which relate to the operation of the Division during the period
prior to the Closing Date and which are retained by Seller and (ii) assist in
arranging discussions with (and the calling as witnesses of) officers,
directors, employees and agents of the Seller on matters which relate to the
Purchased Assets, the Division or the Assumed Liabilities.
7.8. Third Party Claims. From and after the Closing, and
subject to Article XIII hereof, the parties shall reasonably cooperate with
each other with respect to any claims made or litigation which relate to the
operation of the Purchased Assets and/or the Division prior to the Closing,
provided that the party requesting cooperation shall reimburse the other party
for the other party's reasonable out-of-pocket costs (not to include cost of
employee time) and expenses of furnishing such cooperation.
7.9. Removal of Signs. Except for the Sellers' Marks
comprising a portion of the Purchased Assets, the signs bearing the Sellers' or
any of their affiliates names and/or logos shall be removed from the Purchased
Assets by Purchaser, without expense to Seller, within forty-five (45) days
after the Closing Date.
7.10. Casualty or Condemnation.
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(a) Machinery and Equipment. If, prior to the
Closing, any of the Machinery and Equipment should be damaged by fire or other
casualty, such damaged or destroyed asset shall be either repaired or replaced
by Seller to the reasonable satisfaction of Purchaser or shall be retained by
Seller and its book value as of January 28, 1995 shall be subtracted from the
Purchase Price to be paid by Purchaser.
(b) The Facilities - Fire or Casualty. If, prior
to the Closing, any portion of any of the Facilities is damaged by fire or
other casualty, if Seller is able, it shall prior to the Closing repair or
rebuild such damaged Facility. If, however, Seller is unable to repair or
rebuild such damaged Facility prior to the Closing, this Agreement shall not
be affected and the parties shall proceed to Closing as herein otherwise
provided, subject to Seller providing Purchaser with an assignment of the
proceeds of any insurance policy, including the business interruption proceeds
from and after the Closing. Further, if the proceeds of the fire and casualty
portion of such insurance policy are in excess of funds as shall be reasonably
necessary and requisite to repair or rebuild the damaged Facility to its former
operational state prior to the fire or other casualty, such excess funds shall
belong to and shall be the property of Purchaser.
(c) The Facilities - Condemnation. If, prior to
the Closing, condemnation or eminent domain proceedings shall be threatened or
commenced against any of the Facilities, this Agreement shall not be affected
and the parties shall proceed to
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Closing, provided, however, Seller shall assign to Purchaser all of its right,
title and interest in and to any award to be received from any governmental or
other authority.
Notwithstanding the foregoing, if at any time prior
to the Closing Date, any public authority shall, under the power of eminent
domain, take any part of the buildings upon any of the Facilities or so much of
any Facility that there is no longer sufficient land to provide, in a manner in
compliance with applicable governmental ordinances, parking to serve such
Facility or access to such Facility, then Purchaser shall have the right to
terminate this Agreement by written notice to Doskocil within thirty (30) days
after receipt of such notice of such taking.
(d) Settlements. Seller will not, prior to the
Closing Date, pursue or settle any casualty or condemnation claim, if available
to it, with respect to the Facilities (unless repair will be fully completed to
the reasonable satisfaction of Purchaser prior to the Closing Date) without the
prior written consent of Purchaser, which consent shall not be unreasonably
withheld or delayed.
7.11. Confidentiality.
(a) Doskocil and Purchaser have entered into a
Confidentiality Agreement dated February 11, 1995, which agreement is
incorporated herein by reference. Notwithstanding such agreement, neither
Purchaser nor Seller shall have the right to disclose this Agreement, except to
their respective counsel,
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accountants and consultants, without the prior written consent of the other.
(b) In the event the transactions contemplated
hereby are not consummated, Purchaser shall not use in any manner or disclose
the Information (as such term is used in the Confidentiality Agreement), unless
such Information is currently public or is hereafter disclosed, through no act
or omission of Purchaser in violation of the Confidentiality Agreement or this
Section 7.11, and Purchaser shall return to Doskocil all copies of the
Information; provided, however, that any portion of the Information which
consists of analyses, compilations, forecasts, studies or other documents
prepared by Purchaser or any of their affiliates shall be destroyed by
Purchaser upon Doskocil's request and Purchaser shall confirm such destruction
to Doskocil in writing.
Likewise, in the event the transactions contemplated hereby
are not consummated, Seller shall not use in any manner or disclose any
information relating to Purchaser it has acquired by reason of the negotiations
leading to the execution of this Agreement, unless such information is
currently public or is hereafter disclosed, through no act or omission of
Seller in violation of the Confidentiality Agreement or this Section 7.11;
provided, however, that any such information which consists of analyses,
compilations, forecasts, studies or other documents prepared by Doskocil or
any of its affiliates shall be destroyed
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by Doskocil upon Purchaser's request and Doskocil shall confirm such
destruction to Purchaser in writing.
7.12. Public Announcements. Whether prior to Closing or
within thirty (30) days after the Closing or termination of this Agreement, and
subject to Section 8.8 hereof, each party agrees to use its best efforts to
consult with the other before issuing any press releases or otherwise making
any public statements with respect to the transactions contemplated by this
Agreement and, except as may be necessary to comply with legal or stock
exchange requirements, shall not issue any such press release or make any such
public statement prior to the other party approving of such press release or
public statement. No approval by either party of any such press release or
public statement shall be unreasonably withheld or delayed.
7.13. The Closing. On the Closing Date, at the Closing,
Seller and Purchaser shall execute and deliver the following:
(a) The Purchase Price. The Purchaser shall
deliver the Purchase Price to the Doskocil Account by wire transfer of readily
available funds.
(b) Bill of Sale (Machinery and Equipment) and
Personal Property Leases. The Seller shall execute and deliver to the
Purchaser the Bill of Sale (Machinery and Equipment) in substantially the form
of Exhibit B and Purchaser and Seller shall execute and deliver to the other
the Assignment and Assumption of Personal Property Leases, in substantially the
form of Exhibit A, respectively.
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(c) Noncompete Agreement. Seller and Purchaser
shall enter into and deliver to the other the Noncompete Agreement in
substantially the form of Exhibit C hereto.
(d) Assignment and Assumption of the Division
Contracts. The Purchaser and Seller shall enter into and deliver to the other
the Assignment and Assumption of Division Contracts Agreement in substantially
the form of Exhibit D hereto.
(e) Assignment of Trade Names. Seller shall
execute and deliver to Purchaser the Assignment of Trade Names covering the
Seller's Marks substantially in the form of Exhibit E hereto.
(f) Assignment and Assumption of Assumed
Liabilities. Seller and Purchaser shall execute and deliver each to the other
the Assignment and Assumption of Assumed Liabilities concerning the Accounts
Payable and the Accrued Liabilities substantially in the form of Exhibit F
hereto.
(g) Warranty Deeds. Sellers shall execute and
deliver to Purchaser Warranty Deeds substantially in the form of Exhibit G
hereto.
(h) Title Policies. A policy or policies of
title insurance shall be delivered by Seller to Purchaser in accordance with
Section 7.6.
(i) Assignment and Assumption of Sales Office
Leases. The Purchaser and Seller shall enter into and deliver to the other the
Assignment and Assumption of Sales Office Leases in substantially the form of
Exhibit H hereto.
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(j) Assignment and Assumption of Receivables and
Customer Purchase Orders. The Purchaser and Seller shall enter into and
deliver to the other the Assignment and Assumption of Receivables and Customer
Purchase Orders in substantially the form of Exhibit I hereto.
(k) Other Documents. Purchaser and Seller shall
execute and deliver to the other the other documents and certificates described
in Sections 9.3, 9.4, 9.5, 10.4, 10.5, 10.6 and 10.7 and such other instruments
and documents reasonably necessary or desirable to consummate the transactions
contemplated by this Agreement.
7.14. Environmental Matters.
(a) Review. Doskocil, at its expense, has
engaged, to which engagement Purchaser has agreed, GaiaTech, Inc. (the
"Environmental Consultant") to conduct a "Phase I Environmental Site Assessment
and Compliance Review" of the Facilities. Such assessment and review shall be
conducted in conformance with the scope and limitations of ASTM Practice E
1527-94 (or any more recent ASTM Practice that superseded it) and this
Agreement. In performing the Phase I Environmental Assessment and Compliance
Review, the Environmental Consultant shall use its reasonable best efforts to
also perform all activities and obtain all information reasonably necessary to
determine whether: (a) the condition of the Facilities and the Machinery and
Equipment, and all facts related thereto, conform to and are consistent with
the statements regarding the Facilities and the Machinery and Equipment made to
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the knowledge of Seller in Section 4.26 and Section 7.14(c); (b) any violation
of the Environmental Laws has occurred or been alleged to occur at, or in
connection with, the use or operation of, the Facilities or the Machinery and
Equipment, and whether any governmental agency or any other person has alleged
in any manner that any person has any liability under the Environmental Laws
related in any way to the ownership, use or operation of the Facilities or the
Machinery and Equipment; (c) any other Environmental Condition exists that is
related to the Facilities or the Machinery and Equipment; (d) assuming
Purchaser has obtained all requisite environmental and other permits designated
by the Environmental Consultant, Purchaser may commence using and operating the
Facilities and the Machinery and Equipment immediately upon acquiring them and
by so doing will not be in violation of any of the Environmental Laws;
provided, however, that notwithstanding use of its reasonable best efforts, if
the Environmental Consultant is unable to obtain any or all of the information
required by subparagraphs (a) through (d) hereof, or cannot obtain any or all
of such information within a reasonable period of time so as to not unduly
delay the Closing, such failure shall not excuse the Purchaser from fulfilling
its obligation to close the transactions contemplated by the Agreement nor
shall it excuse Seller from its obligation to remediate, cure or otherwise
correct Environmental Conditions as described herein; provided, further,
however, Purchaser shall be responsible for all costs and expenses of the
Environmental Consultant resulting or arising from
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determining the foregoing matters to the extent any such determinations exceed
the activities and information of a customary Phase I environmental assessment.
If the Environmental Consultant concludes, after performing
the Phase I Environmental Assessment and Compliance Review, that a Phase II
Environmental Assessment is reasonably necessary to reach a reasonably reliable
conclusion regarding any issue or matter addressed initially in the Phase I
Environmental Assessment and Compliance Review, then Doskocil shall retain the
Environmental Consultant, at its expense, to perform a Phase II Environmental
Assessment. The Environmental Consultant shall deliver to Doskocil and
Purchaser a detailed written report of the Phase I Environmental Assessment and
Compliance Review and, if performed, the Phase II Environmental Assessment
(collectively, the "Environmental Reports"). Each report prepared by the
Environmental Consultant shall contain a statement that the report was prepared
for the benefit of, and may be relied upon by, Seller and Purchaser.
Furthermore, subject to the provisions of Section 7.14(b), the Environmental
Consultant shall perform and certify it has performed any and all work
necessary to (i) constitute "appropriate inquiry" for purposes of Section
101(35)(B) of CERCLA and (ii) be consistent with good commercial and customary
practice, such that Purchaser would have the benefit of an innocent purchaser
or innocent landowner defense under CERCLA and all other federal, state and
local environmental laws that permit such a defense. If the Environmental
Reports indicate the existence of any
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Environmental Condition, the Environmental Consultant shall provide a proposed
plan to remediate or correct or cure the Environmental Conditions and the
estimated cost thereof (the "Remedial Plan"). An "Environmental Condition" is:
(A) any generation, treatment, disposal,
arrangement for disposal, discharge, emission, release, or presence of, any
Hazardous Material at, in, on, or under the Facilities or Machinery and
Equipment (i) that violates the Environmental Laws, (ii) in any amount or
concentration that exceeds any applicable standard or requirement issued under
the Environmental Laws, (iii) that would afford any governmental agency or any
other person the right to obtain relief under the Environmental Laws from
Seller or Purchaser, assuming Purchaser acquires the Facility and the Machinery
and Equipment and then uses and operates them in the same and identical manner
in which they are currently being used or operated by Seller; (B) Seller's not
holding in good standing any permit, license or other approval of any kind,
required under the Environmental Laws for Seller's current use and operation of
the Facilities and the Machinery and Equipment; (C) the absence at the
Facilities or the Machinery and Equipment of any pollution control or treatment
equipment or facility, or any other equipment or facility, required under the
Environmental Laws for Seller's current use and operation of the Facilities and
the Machinery and Equipment; and (D) any other violation of the Environmental
Laws related to the Facilities or the Machinery and Equipment; provided,
however, the phrase "Environmental Condition" shall not be deemed
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to include any fact, occurrence or condition that arises from and after the
Closing resulting in the violation of an Environmental Law unless such
violation is committed by Seller.
The Remedial Plan shall prescribe all measures necessary to
ensure that, following its implementation, each Environmental Condition shall
have been remediated, cured, and/or eliminated in accordance with the
Environmental Laws, which, after implementation and completion thereof, will
result in the Purchased Assets being in compliance with the Environmental Laws.
Within twenty (20) days from the date of this Agreement,
Doskocil shall deliver to Purchaser an "Environmental Disclosure Document for
Transfer of Real Property," a copy of which is attached hereto as Exhibit J,
for each Facility.
(b) Remediation. Seller, at its expense, shall
remediate the Environmental Conditions, if any, in accordance with the Remedial
Plan, and shall be deemed to have completed its implementation of the Remedial
Plan in accordance with the requirements of this Agreement when the
Environmental Consultant certifies in writing to Seller and Purchaser that
Seller has remediated, cured, and/or eliminated every Environmental Condition,
if any, in accordance with the Environmental Laws in effect at the time of
completion and to the reasonable satisfaction of the Environmental Consultant
and Purchaser; provided, however, if at any time prior to Closing in the
reasonable opinion of the Environmental Consultant the cost to implement and
complete the Remedial Plan exceeds $500,000, Seller may terminate this
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Agreement. Upon completion of the Remedial Plan, the Environmental Consultant
shall furnish Seller and Purchaser with its written certification of
remediation of the Environmental Conditions in accordance with the Remedial
Plan (the "Certification"). Once Seller has remediated the Environmental
Condition Seller shall have no further liability or responsibility for any
further remediation which may be required under Environmental Laws with respect
to such Environmental Condition. It is understood and agreed that Seller shall
not be responsible for violations of Environmental Laws enacted after the
Closing Date with respect to facts, occurrences or conditions occurring prior
to the Closing Date. If Seller elects prior to the Closing to agree to
implement the Remedial Plan, remediate, cure and/or eliminate the Environmental
Conditions, and such measures cannot reasonably be completed prior to Closing,
Purchaser shall afford Seller and Seller's agents with access to the Facilities
following such closing in order to complete such measures. If Seller comes on
the Facilities after Closing to complete implementation of the Remedial Plan,
Seller shall (i) to the maximum extent possible perform its activities in a
manner that will not interfere with Purchaser's use and operation of the
Facilities and the Machinery and Equipment, and (ii) be liable to Purchaser for
any Losses incurred by Purchaser due to any unavoidable interference by Seller
with Purchaser's use and operation of the Facilities and the Machinery and
Equipment. Any sums expended in implementing the Remedial Plan by Seller for
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capital assets shall be for the account of the Seller and shall not be included
in the Purchase Price.
(c) Compliance. To Seller's knowledge, except as
disclosed in this Agreement, there is no past or existing event, condition,
circumstance or practice or procedure involving or relating to environmental
matters which, if not corrected, changed or remediated, is likely to materially
interfere with or adversely affect in any material manner any of the material
Purchased Assets, or which would require disclosure, reporting, monitoring,
cleanup, remediation or other action affecting any of the material Purchased
Assets or which would result in any of the material Purchased Assets being in
violation of or in noncompliance with Environmental Laws which would have a
material adverse affect on the Purchased Assets or the business of the
Division.
7.15. Supplemental Disclosure. Seller and Purchaser
agree that, with respect to Seller's covenants, representations and warranties
made in this Agreement, Seller shall have the continuing right and obligation
to supplement or amend promptly any information set forth in any schedule with
respect to any matter hereafter arising or discovered which, if existing or
known at the date of this Agreement, would have been required to be set forth
or described in a schedule. For purposes of this Agreement, the accuracy of
the covenants, representations and warranties made by Seller contained herein
shall be determined by reference to the schedules and the information contained
in any supplement or amendment thereto provided such information is furnished
Purchaser
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in a supplemental schedule prior to or at the Closing. If Seller shall have
supplemented or updated a schedule with information and if accepted by
Purchaser would create a liability or obligation of a material nature or amount
not occurring in the ordinary course of business, Purchaser's only remedy shall
be to terminate this Agreement in accordance with Section 12.1(d) hereof or to
accept such schedule and close the transactions contemplated hereby on the
Closing Date without liability of any nature to Seller. Any schedule
supplemented or updated by Seller under this Section 7.15 shall be prepared in
accordance with Doskocil's consistently applied practices used in the
preparation of the original schedules.
7.16. Transition Service Agreement. As of the Closing
certain of the Inventory to be acquired by Purchaser under this Agreement will
be located at Doskocil's Edwardsville, Kansas distribution center (the
"Doskocil Warehouse") and other outside storage facilities. Doskocil has
agreed to make distribution of such products for and on behalf of Purchaser.
In addition, Doskocil has agreed to provide Purchaser with management
information, distribution, warehousing and other services for a period of six
months following the Closing. All of such services shall be embodied in a
Transition Service Agreement to be executed and delivered by Doskocil and
Purchaser on the Closing Date in substantially the form of Exhibit K hereto.
7.17. Supply Agreement; Removal of Equipment. Doskocil has
advised Purchaser that Doskocil and/or Wilson may need to
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purchase certain products from Purchaser for a period of time following the
Closing and also since Purchaser is not assuming the Farmland Copack Agreement
that Purchaser has advised Doskocil that it will need to purchase certain
products from Doskocil under the Farmland Copack Agreement, in each instance
for short periods of time. Accordingly, as of the Closing, commencing with the
Closing Date, Purchaser, Doskocil and Wilson shall execute and deliver each to
the other a Supply Agreement substantially in the form of Exhibit L hereto with
respect to the supply arrangement described in Article I and at the election of
Doskocil, the arrangements described in Articles II and III described therein.
In addition, if the IBP Agreement described on Schedule 7.18 is assigned to
Purchaser, Purchaser shall use its reasonable best efforts, upon the written
request of Doskocil, to provide reasonable access to Doskocil to the Council
Bluff, Iowa facility of IBP, Inc. to remove the 1650 Aldelman ham molds which
are excluded from the Purchased Assets.
7.18. The Copack Agreements. Listed on Schedule 7.18 hereto
are all of the contracts and agreements, oral or written, relating to the
contractual production of Division products by third parties (the "Copack
Agreements"). Seller shall assign all of its right, title and interest in and
to all of the IBP Agreement and the other Copack Agreements as of the Closing.
Purchaser shall assume Seller's obligations accruing from and after the Closing
under the Copack Agreements which shall constitute part of the
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Assumed Liabilities as of the Closing Date and as and to the extent permitted
by applicable law.
7.19. Receivables. Purchaser shall use its reasonable best
efforts to collect all of the Receivables within ninety (90) days following
Closing; provided, however, that although Purchaser's reasonable best efforts
shall include making demand for payment both orally and in writing and to
suggest that it will consider legal proceedings, Purchaser will not be required
to (i) otherwise threaten or institute legal proceedings to collect
Receivables; (ii) defend any claim from account debtors as to offset against
receivables; or (iii) give any credits or cease shipping product to or doing
business with any account debtor who does not timely pay its Receivable amount.
All Receivables that are not collected by Purchaser within such ninety (90) day
period shall be reassigned to Doskocil without recourse, and Doskocil shall
reimburse Purchaser the face amount of any such Receivable less any reserve for
doubtful account, bad debt, credit or allowance attributable to such Receivable
which was applicable to such Receivable as of the Closing.
7.20 Insurance. Doskocil shall keep the Facilities fully
insured for fire and casualty and business interruption insurance in an amount
not less than the full replacement cost through the Closing Date. Doskocil
shall also maintain public liability insurance in an amount not less than
$25,000,000 through the Closing Date.
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7.21. Environmental Law Violations. Subject to the
provisions of Section 7.14 hereof, if prior to or after Closing Purchaser
determines that as of the Closing, (a) any of the Facilities or Machinery and
Equipment had friable asbestos, PCB's, radon or other Hazardous Materials
requiring abatement or remediation under Environmental Laws, or (b) any fact,
condition, or occurrence is discovered which occurred or existed prior to the
Closing with respect to the Facilities or the Machinery and Equipment, and that
would afford any governmental agency or any other person the right to obtain
relief under the Environmental Laws from Seller or Purchaser, assuming
Purchaser should acquire the Facilities and the Machinery and Equipment and
then uses and operates them in the same and identical manner in which they are
currently being used and operated by Sellers, Seller shall have total and
complete responsibility and liability for all assessment, remediation and any
other related costs (including fines and penalties) that are required to comply
with the Environmental Laws.
ARTICLE VIII
PROVISIONS RESPECTING EMPLOYEES
8.1. Division Employees. Subject to the provisions of
Section 8.8 of this Agreement, Seller will notify (i) all non-union personnel
which include employees located at the Oklahoma City headquarters of Doskocil,
Division sales personnel and non- union employees located at the Facilities
(the "Non-Union Employees") and (ii) those employees who are subject to
collective bargaining
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agreements and are engaged at or in connection with the manufacturing operation
of the Facilities (the "Facility Union Employees") and the Union bargaining
representative of such employees that the Purchased Assets are being sold to
Purchaser and all such employees of the Division will be terminated effective
as of the Closing Date; provided, however, such Non-Union Employees hired by
Purchaser shall be hired on an "at-will-basis" and may be terminated by
Purchaser at any time. From and after the Closing, Purchaser shall assume and
agree to perform all contracts of employment or collective bargaining
agreements entered into by Seller and the Union, and Seller and any of the
Non-Union Employees. Purchaser shall offer employment to substantially all of
the Non- Union Employees and substantially all Facility Union Employees under
substantially the same terms and conditions that such employees are employed by
Sellers as of the Closing Date. "Substantially all" means all except for up to
forty-nine 49 of the Facility Union Employees and the Non-Union Employees,
collectively. All obligations and liabilities to the Non-Union Employees and
the Facility Union Employees arising or accruing prior to the Closing Date,
including wages, vested vacations, withholding and reporting obligations, and
the employer's share of payroll or other employment taxes and other obligations
which are not included in Accrued Liabilities and described in Schedule 2.1(b)
(collectively the "Employee Obligations"), shall be the obligation of Seller
and all such Employee Obligations arising or accruing to those Division
employees hired by Purchaser from the date of such hiring and
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thereafter shall be the obligation of Purchaser. All severance liability due
and payable to Non-Union Employees and the Facility Union Employees not
retained by Seller nor hired by Purchaser (including, if any, accrued vested
vacation entitlement) which arise prior to and as of the Closing is herein
referred to as the "Severance Obligation" and shall be the responsibility of
Seller.
8.2. Purchaser's Obligation to Division Employees.
Purchaser shall be liable to the Non-Union Employees and the Facility Union
Employees of Seller for all Employee Obligations with respect to those
employees it hires, such liability to accrue only from the date of such
employment and thereafter (premised upon Purchaser's and not Seller's Plans in
respect of such Employee Obligations). Purchaser shall hold Seller harmless
from and indemnify Seller against, any and all such liabilities to such
Division employees who are hired by Purchaser. Seller shall be liable for sums
owed to the Non-Union Employees that are not retained by Seller or hired by
Purchaser with respect to Severance Obligation.
8.3. COBRA Indemnification and Information. Seller shall
pay and shall assume, indemnify, defend, and hold harmless Purchaser from and
against and in respect of any and all losses, damages, liabilities, taxes, and
sanctions that arise under the Consolidated Omnibus Budget Reconciliation Act
of 1984 ("COBRA") and the Code, interest and penalties, costs, and expenses
(including, without limitation, disbursements and reasonable legal fees
incurred in connection therewith, and in seeking
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indemnification therefor, in any amounts or expenses required to be paid or
incurred in connection with any action, suit, proceeding, claim, appeal,
demand, assessment, or judgment) imposed upon, incurred by, or assessed against
Purchaser and any of its employees arising by reason of or relating to any
failure of Seller to comply with the continuation health care coverage of COBRA
and Sections 601 through 608 of ERISA which failure occurred with respect to
any current or prior employee of Seller or any qualified beneficiary of such
employee (as defined in COBRA) prior to the Closing Date or as otherwise
required as a result of any transactions or matters contemplated by this
Agreement.
8.4. Seller and Purchaser's Plans.
(a) Seller's 401(k) Plan. Seller is the sponsor
of a defined contribution plan which provides, in part, deferrals of
compensation under Section 401(k) of the Code entitled "Doskocil Companies
Incorporated Retirement and Profit Sharing Plan" (the "Seller's 401(k) Plan").
All Non-Union Employees and Facility Union Employees who become employees of
Purchaser on the Closing will be deemed 100% vested and nonforfeitable in their
respective benefits in Seller's 401(k) Plan. Purchaser is the sponsor of a
defined contribution plan which provides, in part, for deferrals of
compensation under Section 401(k) of the Code entitled "Savings Incentive Plan
for Employees of Thorn Apple Valley, Inc." (the "Purchaser's 401(k) Plan").
Credit for past employment service with the Seller prior to the Closing will be
given by the Purchaser for purposes of determining eligibility and vesting of
benefits
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under Purchaser's 401(k) Plan with respect to the Non-Union Employees and the
Facility Union Employees (if required under the applicable collective
bargaining agreement) who become employees of Purchaser at Closing. As soon as
practical following the Closing and after notification has been provided to and
approval has been granted by all applicable governmental agencies with respect
to the transaction described in this Section 8.4(a), including a favorable
ruling from the Internal Revenue Service that this transaction constitutes an
"event" described in the Code, including Section 401(k) of the Code, which
would permit distributions of the account balances to be offered to the
Non-Union Employees and the Facility Union Employees who become employees of
the Purchaser at the Closing without adversely affecting Seller's 401(k) Plan,
distributions will be offered to the Non-Union Employees and the Facility Union
Employees from Seller's 401(k) Plan. Purchaser will ensure that Purchaser's
401(k) Plan will be authorized to accept the direct transfer of any amounts
distributed to the Non-Union Employees and Facility Union Employees (if
required under the applicable collective bargaining agreement) from Seller's
401(k) Plan.
(b) Transfer of Assets to Purchaser's Pension
Plan. Doskocil is the sponsor of a defined benefit pension plan entitled
"Pension Plan for Hourly Employees of Wilson Foods Corporation" (the "Seller's
Defined Benefit Plan"). As soon as practicable following the Closing and after
notification has been provided to and approval has been granted by all
applicable governmental
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agencies with respect to the transactions described in this Section 8.4(b), but
to be effective as of the Closing, Seller shall cause (i) the Facility Union
Employees to be 100% vested and nonforfeitable in their benefits in Seller's
Pension Plan and (ii) assets equal to the actuarial value of the then accrued
benefit obligations determined on an "on-going" basis calculated using the
assumptions used in the most recent actuarial valuation for purposes of
determining the range of deductible contributions under the Code, and under the
formula contained in the Seller's Defined Benefit Plan as of the Closing and
attributable to the Facility Union Employees, to be segregated and transferred
directly to the trustee of a new defined benefit plan to be established by
Purchaser for the benefit of the Facility Union Employees (the "Purchaser's
Pension Plan"). Any amounts transferred shall bear interest at an amount equal
to the greater of (i) the stated interest rate for determining actuarial
equivalence used in Seller's Defined Benefit Plan or (ii) the actual earnings
in the plan and such amount shall be calculated for the period between the
Closing and the date of transfer. The actuarial value of the assets to be
transferred from the Seller's Defined Benefit Plan to the Purchaser's Pension
Plan shall be valued and calculated by Seller based upon sound actuarial
principles and practices (as determined by Seller's and Purchaser's actuaries)
in accordance with applicable rules and regulations of the Internal Revenue
Service and the Pension Benefit Guaranty Corporation. Provided, such transfer
of assets from the Seller's Defined Benefit Plan to
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Purchaser's Pension Plan shall be made after Purchaser's Pension Plan and
Seller's Defined Benefit Plan have been amended to reflect the transactions
contemplated by this Section 8.4(b) and a favorable determination letter has
been issued to each of the plans by the Internal Revenue Service with respect
to such amendments and the transactions described in this Section 8.4(b).
After such transfer, the Purchaser shall be solely responsible for all
contributions to and cost and expenses of any kind whatsoever associated with
the Purchaser's Pension Plan and for the payment of all benefits to Facility
Union Employees earned both before and after the Closing. Pending transfer of
the assets from the Seller's Defined Benefit Plan to the Purchaser's Pension
Plan, Seller will continue to administer the Seller's Defined Benefit Plan in
accordance with the terms thereof, on behalf of the Non-Union Employees and the
Facility Union Employees. Credit for past employment service with the Seller
prior to the Closing will be given by the Purchaser under the Purchaser's
Pension Plan for purposes of determining eligibility and vesting of benefits
with respect to Facility Union Employees. Benefits under the Purchaser's
Pension Plan for the Facility Union Employees shall be the sum of (i) the
benefit calculated under the Seller's Defined Benefit Plan as of the Closing
considering employment service and compensation earned prior to the Closing
plus (ii) the benefit calculated under the Purchaser's Pension Plan considering
employment service and compensation earned after the Closing.
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8.5. Plant Closing Notice. Pursuant to the Worker
Adjustment and Retraining Notification Act of 1988 ("WARN"), Seller shall, if
required, provide timely and effective notice to its employees who are employed
by the Division with respect to any employment loss suffered by such employees
as the result of the termination of their employment by Seller. Purchaser,
however, has agreed to offer employment to all of the Facility Union Employees
and the Non-Union Employees who are engaged by the Division on substantially
the same terms and conditions such employees are receiving from Seller as of
the Closing. In the event that WARN requires notice to such employees and
Seller fails to provide timely and effective notice under WARN, Seller and
Doskocil shall indemnify and hold Purchaser harmless from and against any
liability to such employees or any unit of local government that may result to
Purchaser from such failure including but not limited to fines, back pay and
reasonable attorney's fees. Any notification or obligation required under WARN
to the Facility Union Employees or the Non-Union Employees hired by Purchaser
occurring from and after the Closing shall be the responsibility of Purchaser
and Purchaser hereby agrees to indemnify and hold harmless Seller for any such
liability under WARN occurring after the Closing Date.
8.6. Other Benefit Plans.
(a) Purchaser's Medical Plans. The Purchaser
shall provide group medical insurance benefits under Purchaser's medical plans
(the "Purchaser's Medical Plans") with respect to those Non-
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Union Employees and Facility Union Employees of Seller who become employees of
Purchaser (the "Transferred Employees") with respect to each of such
Transferred Employees upon their becoming employees of Purchaser. Employment
service with Seller will be recognized for eligibility to participate in the
Purchaser's Medical Plans. Participation in Purchaser's Medical Plans by the
Transferred Employees shall not be subject to any preexisting condition clause
or other provision contained in the policy for or required by Purchaser's
Medical Plans which limits participation in the Purchaser's Medical Plans;
provided however, with respect to any of the Transferred Employees who have
incurred a Major Medical Condition during the 12-month period prior to Closing
and who during the 12- month period following the Closing suffer a reoccurrence
or further treatment of such Major Medical Condition, Purchasers shall be
responsible for and hold Seller harmless as a result of the first $5,000 of
medical treatment costs related to such treatment of the Major Medical
Condition and Seller shall be responsible for and reimburse Purchaser for the
excess over $5,000 but not exceeding the applicable individual stop/loss limit
of $175,000 defined in or applicable to Purchaser's Medical Plans. Following
the end of the 12-month period after the Closing, all restrictions applicable
to the Transferred Employees in regard to the major Medical Conditions shall
cease and all expenses under Purchaser's Medical Plans shall be borne by
Purchaser.
The Purchaser shall be liable for and agrees to indemnify and
hold Seller harmless from any and all costs, expenses,
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payments, claims and liabilities of whatever nature associated with or related
to any medical expenses and liabilities (the "Medical Liabilities")
attributable to the Transferred Employees. Purchaser's agreement hereunder is
for the sole benefit of Seller, and no inference shall be drawn that any
Transferred Employee is a beneficiary of this indemnity. Purchaser's
responsibility to any Transferred Employee for Medical Liabilities shall be
limited to the coverage provided under Purchaser's then existing medical and
health care plans which are applicable to all of Purchaser's similarly situated
employees.
(b) Vacation. The Purchaser agrees with Seller
to provide vacation seniority to all of the full time Transferred Employees,
i.e., each full time Transferred Employee shall be able to tack service with
Seller with his (her) employment with Purchaser for the sole purpose of
determining his (her) number of days of vacation accruing after the Closing,
but such tacking shall not apply for any other purpose, e.g., job security or
seniority. Seller, however, shall be and has agreed to be responsible to the
Division employees for, and to hold Purchaser harmless against, all vacation
liability under FASB No. 43 or as provided by Seller's Plans.
(c) Purchaser's Employee Benefit Plans. With
respect to all Transferred Employees, Purchaser agrees to recognize all
employment service with Seller for purposes of determining eligibility and
vesting under any of Purchaser's "employee welfare benefit plans" (as that term
is defined in Section 3(1) of ERISA)
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and Purchaser's "employee pension benefit plans" (as that term is defined in
Section 3(2) of ERISA) and any other plans, programs or arrangements which
provide benefits to any of Purchaser's employees.
(d) The Extended Period. Non-Union Employees who
are discharged prior to sixty days following the Closing Date (the "Extended
Period") by Purchaser for any reason other than for "cause," as herein defined,
or the closure of a Facility or reduction in force (50 or more employees) at a
Facility shall be and remain entitled to Seller's severance program to be
received by the other Non-Union Employees whose employment will be terminated
in connection with the transactions contemplated by this Agreement as of or
prior to the Closing Date. Seller shall be responsible for and shall pay all
of the Severance Obligations to those Non-Union Employees who are terminated by
Purchaser during the Extended Period other than for "cause", death, disability
or the closure of a Facility or reduction in force (50 or more employees) at a
Facility that such Non-Union Employees would have been entitled to receive as
of the Closing Date as if they had been terminated by Seller except for accrued
vested vacation entitlement and any other liability for employee benefits
included with the Accrued Liabilities assumed by Purchaser. Purchaser shall be
responsible for and shall pay to such Non-Union Employees any accrued vested
vacation entitlement and any other liability for the employees benefits
included within the Accrued Liabilities assumed by Purchaser. For purposes of
this Agreement, "cause" shall mean (i)
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the commission by the Non-Union Employee of one or more acts (regardless of
when such acts shall have occurred or shall occur) for which the Non-Union
Employee is convicted of a felony under United States federal, state or local
criminal law, or (ii) willful and gross misconduct (regardless of when such
misconduct shall have occurred or shall occur) on the part of the Non-Union
Employee that is materially and demonstrably detrimental to the Purchaser, each
as determined in good faith by the chief executive officer of Purchaser after
due investigation.
8.8. General. Seller and Purchaser shall consult with
each other before issuing any written communications or otherwise making any
public statements to employees relating to the transactions contemplated by
this Agreement through the Closing Date and prior to communicating with labor
unions including communications concerning any notice requirements contained in
the collective bargaining agreements which are affected by this Agreement. It
is agreed that Seller will have full and complete discretion with respect to
the content of such communications, but will at all times act in good faith.
Seller shall have the responsibility for informing and discussing the effects
of the transactions contemplated hereby upon the Facility Union Employees
represented by labor organizations. Seller agrees to inform Purchaser of all
written and material oral communications between Seller and such labor
organizations.
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ARTICLE IX
CONDITIONS TO OBLIGATIONS OF THE SELLER
Each and every obligation of the Seller under this Agreement
to be performed at or before the Closing shall be subject to the satisfaction,
at or prior to the Closing, of the following conditions:
9.1. No Governmental or Other Proceeding or Litigation.
No order of any court or administrative agency shall be in effect or threatened
which restrains or prohibits the transactions contemplated hereby.
9.2. Physical Inventory of the Inventory. The physical
inventory of the Inventory shall be completed in accordance with and pursuant
to Section 3.1(c).
9.3. Documents and Certificates (The Closing). At the
Closing, concurrently with the making of the deliveries by Seller as set forth
in Section 10.4, the Purchaser shall have delivered to Seller the following, in
form and substance reasonably satisfactory to Seller:
(a) The Purchase Price. The Purchase Price by
wire transfer of readily available funds to the Doskocil Account;
(b) Personal Property Leases. The Assignment and
Assumption of Personal Property Leases (Exhibit A) dated as of the Closing Date
executed by Purchaser;
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(c) Noncompete Agreement. The Noncompete
Agreement (Exhibit C) dated as of the Closing Date duly executed by Purchaser;
(d) Division Contracts Agreement. The Assignment
and Assumption of Division Contracts Agreement (Exhibit D) dated as of the
Closing Date duly executed by Purchaser;
(e) Assignment and Assumption of Assumed
Liabilities. The Assignment and Assumption of Assumed Liabilities (Exhibit F)
dated as of the Closing Date duly executed by Purchaser;
(f) Assignment and Assumption of Sales Office
Leases. The Assignment and Assumption of Sales Office Leases (Exhibit H) dated
as of the Closing Date duly executed by Purchaser;
(g) Assignment and Assumption of Receivables and
Customer Purchase Orders. The Assignment and Assumption of Receivables and
Customers' Purchase Orders (Exhibit I) dated as of the Closing Date duly
executed by Purchaser.
(h) Prorations. A closing statement with respect
to the prorations setting forth the calculation of the prorated amounts as
described in Section 3.3;
(i) Certificate of Good Standing. Certificate of
Good Standing from Purchaser from the Secretary of State of Michigan dated as
of a recent date;
(j) Corporate Resolutions. A copy of all
necessary corporate resolutions authorizing the execution, delivery and
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performance of this Agreement and all other agreements and transactions
contemplated hereby between Purchaser and Seller, certified by Purchaser's
Secretary or Assistant Secretary, as of the Closing Date;
(k) Opinion of Counsel. Opinion of Honigman
Miller Schwartz and Cohn, counsel to Purchaser, dated the Closing Date,
substantially in the form of Exhibit M hereto;
(l) Transition Service Agreement. The Transition
Service Agreement (Exhibit J) dated as of the Closing Date duly executed by
Purchaser;
(m) Supply Agreement. The Supply Agreement
(Exhibit L) duly executed by Purchaser;
(n) Other Instruments. Such other instruments
and documents reasonably requested by Doskocil and as are required or
contemplated by this Agreement.
9.4. Representations and Warranties True. The
representations and warranties made by Purchaser in this Agreement shall be
true and accurate in all material respects as of the date when made and, at and
as of the Closing, Purchaser shall have delivered to Seller a certificate,
dated as of the Closing Date, to that effect duly executed by the Chairman,
President or Executive Vice President of Purchaser.
9.5. Performance of Covenants. Purchaser shall have
performed and complied in all material respects with each and every covenant,
agreement and condition required by this Agreement to be performed or complied
with by it prior to or on the Closing
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Date, and Purchaser shall have delivered to Seller a certificate, dated the
Closing Date, to that effect duly executed by the Chairman, President or the
Executive Vice President of Purchaser.
9.6. Waiver. Seller may, in its sole and absolute
discretion, waive or elect not to waive, any conditions precedent to the
Closing set forth in this Article IX. To be effective, any such waiver must be
in writing.
ARTICLE X
CONDITIONS TO OBLIGATIONS OF THE PURCHASER
Each and every obligation of the Purchaser under this
Agreement to be performed at or before the Closing shall be subject to the
satisfaction, at or before the Closing, of the following conditions:
10.1. No Governmental or Other Proceeding or Litigation. No
order of any court or administrative agency shall be in effect or threatened
which restrains or prohibits the transactions contemplated hereby.
10.2. Physical Inventory. The physical inventory of the
Inventory shall be completed in accordance with and pursuant to Section 3.1(c).
10.3. Title Searches. Pursuant to the provisions of Section
7.5, Purchaser shall have obtained reports of Uniform Commercial Code, tax lien
and other searches reasonably requested by it as to liens and encumbrances
affecting the Purchased Assets
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showing no lien or encumbrance not satisfactory to Purchaser that is not
released or paid in full at Closing.
10.4. Documents and Certificates (The Closing). At the
Closing, concurrently with the making of the deliveries by Purchaser as set
forth in Section 9.3, Seller shall have delivered to Purchaser the following,
in form and substance reasonably satisfactory to Purchaser:
(a) Personal Property Leases. The Assignment and
Assumption of Personal Property Leases (Exhibit A) dated as of the Closing Date
duly executed by Seller;
(b) Bill of Sale (Machinery and Equipment). The
Bill of Sale (Machinery and Equipment) (Exhibit B) in multiple counterparts
duly executed by Seller;
(c) Noncompete Agreement. The Noncompete
Agreement (Exhibit C) dated as of the Closing Date duly executed by Seller;
(d) Division Contracts Agreement. The Assignment
and Assumption of Division Contracts Agreement (Exhibit D) dated as of the
Closing Date duly executed by Seller;
(e) Assignment of Trade Names. The Assignment of
Trade Names (Exhibit E) dated as of the Closing Date duly executed by Seller;
(f) Assignment and Assumption of Assumed
Liabilities. The Assignment and Assumption of Assumed Liabilities (Exhibit F)
dated as of the Closing Date duly executed by Seller;
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(g) Assignment and Assumption of Sales Office
Leases. The Assignment and Assumption of Sales Office Leases (Exhibit H) dated
as of the Closing Date duly executed by Seller;
(h) Assignment and Assumption of Receivables and
Customer Purchase Orders. The Assignment and Assumption of Receivables and
Customer Purchase Orders (Exhibit I) dated as of the Closing Date duly executed
by Seller.
(i) Prorations. A closing statement with respect
to the prorations setting forth the calculation of the prorated amounts as
described in Section 3.3;
(j) Certificates of Good Standing. Certificates
of good standing for Doskocil, Wilson, Concordia, Dixie and Shreveport from the
Secretary of State of Delaware, each dated as of a recent date;
(k) Corporate Resolutions. A copy of all
necessary corporate resolutions authorizing the execution, delivery and
performance of this Agreement and all other agreements contemplated hereby by
each of the Sellers, certified by each of Seller's Secretary or Assistant
Secretary, as of the Closing Date;
(l) Transition Service Agreement. The Transition
Service Agreement (Exhibit K) dated as of the Closing Date duly executed by
Seller and Doskocil;
(m) Opinion of Counsel. Opinion of McAfee & Taft
A Professional Corporation, counsel to Seller, dated the Closing Date,
substantially in the form of Exhibit N;
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(n) Warranty Deeds. Duly executed and
acknowledged warranty deeds in recordable form conveying to Purchaser good,
clear and marketable title to each of the Facilities free and clear of any
matter other than the Permitted Exceptions and substantially in the form of
Exhibit G to this Agreement;
(o) Title Policies. Amended title insurance
commitments in accordance with Section 7.6, insuring Purchaser's fee simple
interest in each of the Facilities, subject to no exceptions other than the
Permitted Exceptions ;
(p) Possession. Possession of the Facilities; and
(q) Other Instruments. Such other instruments
and documents reasonably requested by Purchaser as are required or contemplated
by this Agreement.
10.5. Affidavit. An affidavit regarding the
non-foreign status of Seller and sufficient to relieve Purchaser from
obligation of withholding taxes under Section 1145 of the Code and the
regulations relating thereto.
10.6. Representations and Warranties True. The
representations and warranties made by each Seller in this Agreement shall be
true and accurate in all material respects as of the date when made and, at and
as of the Closing, Seller shall have delivered to Purchaser a certificate,
dated the Closing Date, to that effect duly executed by the Chairman, President
or a Vice President of each Sellers, respectively.
10.7. Performance of Covenants. Each of Sellers shall have
performed and complied in all material respects with each and
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every covenant, agreement and condition required to be performed or complied
with by it prior to or on the Closing Date, and each of the Sellers shall have
delivered to Purchaser a certificate dated the Closing Date to that effect duly
executed by the Chairman, President or a Vice President of each of the Sellers,
respectively.
10.8. No Material Adverse Change. There shall not have
occurred any material adverse change in the financial position or results of
operation of the Division since April 1, 1995 to the Closing Date, provided,
however, it shall not be considered a material adverse change if such change in
the financial position or results of operation of the Division is the result of
economic conditions or consumer trends affecting the branded meat industry in
general.
10.9. Waiver. Purchaser may, in its sole and absolute
discretion, waive or elect not to waive, any conditions precedent to the
Closing set forth in this Article X. To be effective, any such waiver must be
in writing.
ARTICLE XI
CLOSING
11.1. Time and Place of Closing. Consummation of the
transactions contemplated by this Agreement as of the Closing shall be held at
the offices of McAfee & Taft A Professional Corporation, Two Leadership Square,
10th Floor, Oklahoma City, Oklahoma 73102 (Doskocil's Counsel's office), or
such other place as the parties
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may agree, at 9:00 A.M. on May 30, 1995, or such other date as the parties
shall agree (the "Closing Date").
11.2. The Closing. The actual delivery of the documents
provided for in Article IX and Article X is herein referred to as the
"Closing".
11.3. Simultaneous Delivery. All payments, documents and
instruments to be delivered on the Closing Date pursuant to Articles IX and X
shall be regarded as having been delivered simultaneously as of the Closing,
and no document or instrument shall be regarded as having been delivered until
all documents and instruments being delivered on the Closing Date have been
delivered.
ARTICLE XII
TERMINATION PRIOR TO CLOSING
12.1. Termination. Anything contained in this Agreement to
the contrary notwithstanding, this Agreement, other than Sections 7.11, 7.12
and 15.5, may be terminated at any time prior to the Closing as follows:
(a) By mutual written consent of Doskocil and
Purchaser;
(b) By either Purchaser or Doskocil if the
Closing Date shall not have occurred on or before June 30, 1995;
(c) By Doskocil pursuant to Section 7.14; or
(d) By Purchaser pursuant to Section 7.5.
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In the event of the termination of this Agreement pursuant to
the provisions of this Article XII, no party shall have any liability of any
nature whatsoever to the other under this Agreement, including liability for
damages, unless either party is in default under its obligations hereunder, in
which event the party in default shall be liable to the other party for such
default but only for actual damages and not for punitive, exemplary or
consequential damages. Notwithstanding the foregoing or anything to the
contrary contained herein, the provisions of Sections 7.11, 7.12 and 15.5 shall
survive any termination of this Agreement and in the event of a breach thereof
shall be actionable by the aggrieved party to the fullest extent permitted by
applicable law.
ARTICLE XIII
INDEMNIFICATION
13.1. Seller's Indemnity. Seller, jointly and severally,
agree to indemnify and hold the Purchaser and its respective affiliates,
shareholders, officers, directors, attorneys, agents, consultants, successors
and assigns harmless from and with respect to (i) any and all Losses related to
or arising directly or indirectly out of any breach by any of the Sellers of
any covenant, warranty or representation contained in this Agreement or in any
agreement, schedule, exhibit or certificate delivered by Seller to Purchaser
pursuant to the terms of this Agreement, (ii) any and all Losses (the
"Pre-Closing Losses") arising directly or
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indirectly out of any attempt or threat (regardless of whether successful and
regardless of whether litigation is commenced) by any person or entity to cause
or require Purchaser to pay or discharge any actual or claimed debt,
obligation, liability or commitment of or associated with Seller which is not
expressly assumed by Purchaser under this Agreement, including all Excluded
Liabilities, (iii) any and all Losses (the "Excluded Liability Losses") related
to or arising directly or indirectly out of Seller's failure to promptly and
fully satisfy and discharge any Excluded Liability and (iv) any and all Losses
directly or indirectly resulting from any failure of Seller to comply with the
Bulk Transfer Laws ("Bulk Sales Losses"); provided, however, that except with
respect to Bulk Sale Losses, Pre-Closing Losses, Excluded Liability Losses and
Losses resulting from any breach by Sellers of any of their indemnities,
covenants, warranties or representations contained in Section 4.26, Section
7.14, Section 7.21 or Article VIII hereof, Seller shall not have any liability
under this Section 13.1 unless and until, and only to the extent that,
Purchaser shall have incurred Losses, in the aggregate, in excess of $500,000
("Seller's Cushion"). Notwithstanding the foregoing, Seller shall not have
any liability under this Section 13.1 exceeding in the aggregate, the Purchase
Price (the "Ceiling").
13.2. Purchaser's Indemnity. Purchaser agrees to indemnify
and hold Sellers and their respective affiliates, shareholders, officers,
attorneys, agents, consultants, successors
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and assigns harmless from and with respect to any and all Losses related to or
arising directly or indirectly from and with respect to (i) any breach by
Purchaser of any covenant, warranty or representation contained in this
Agreement or in any agreement or certificate delivered by Purchaser to Sellers
pursuant to the terms of this Agreement; (ii) any and all Losses arising
directly or indirectly out of third party claims premised solely on events
occurring or conditions arising after the Closing and related to Purchaser's
operation of the Purchased Assets (the "Post-Closing Losses"); and (iii) any
attempt or threat (regardless of whether successful and regardless of whether
litigation is commenced) by any person or entity to cause or require Seller to
pay or discharge any actual or claimed debt, obligation, liability or
commitment of or associated with Purchaser which is expressly assumed by
Purchaser under this Agreement, including all Assumed Liabilities (collectively
the "Assumed Liabilities Losses"); provided, however, that except with respect
to Post-Closing Losses, the Assumed Liabilities Losses and Losses resulting
from any breach by Purchaser of any of its indemnities, covenants, warranties
or representations contained in Article VIII hereof, Purchaser shall have no
liability under this Section 13.2 unless and until, and only to the extent
that, Seller shall have incurred Losses, in the aggregate, in excess of
$500,000 ("Purchaser's Cushion").
13.3. Indemnification Procedure.
(a) In the event that any party (the "Aggrieved")
desires to make a claim against any other party (the "Indemnitor")
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in connection with any Losses for which the Aggrieved may seek indemnification
hereunder (a "Claim"), the Aggrieved shall notify the Indemnitor of such Claim
and the amount and circumstances surrounding it; provided that failure of the
Aggrieved to give such notice shall only relieve the Indemnitor of its
obligations under this Article XIII to the extent, if any, that the Indemnitor
shall have been prejudiced thereby. Upon receipt of such notice from the
Aggrieved, the Indemnitor shall be entitled, at the Indemnitor's election, to
assume or participate in the defense of Claims made by a third party. In any
case in which the Indemnitor assumes the defense of the Claim, the Indemnitor
shall give the Aggrieved ten calendar days notice prior to executing any
settlement agreement and the Aggrieved shall have the right to approve or
reject any settlement and related expenses; provided, however, that upon
rejection of any settlement and related expenses, the Aggrieved shall assume
control of the defense of such Claim and the liability of the Indemnitor with
respect to such Claim shall be limited to the amount or the monetary equivalent
of the rejected settlement and related expenses.
(b) The Aggrieved shall retain the right to
employ its own counsel and to discuss matters with the Indemnitor related to
the defense of any Claim, the defense of which has been assumed by the
Indemnitor pursuant to Section 13.3(a) of this Agreement, but the Aggrieved
shall bear and shall be solely responsible for its own costs and expenses in
connection with such participation; provided, however, that all decisions of
the Indemnitor shall be
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final and that the Aggrieved shall cooperate with the Indemnitor in all
respects in the defense of the Claim .
(c) In the event that the Indemnitor fails to
give notice of the assumption of the defense of any Claim within a reasonable
time period not to exceed forty-five days after receipt of notice thereof from
the Aggrieved, the Indemnitor shall no longer be entitled to assume (but shall
continue to be entitled to participate in) such defense. The Aggrieved may, at
its option, continue to defend such Claim and, in such event, the Indemnitor
shall indemnify the Aggrieved for all reasonable fees and expenses incurred in
connection therewith. The Indemnitor shall be entitled to participate at its
own expense and with its counsel in the defense of any Claim the defense of
which it does not assume. Prior to effectuating any settlement of such Claim,
the Aggrieved shall furnish the Indemnitor with written notice of any proposed
settlement in sufficient time to allow the Indemnitor to act thereon. Within
fifteen days after the giving of such notice, the Aggrieved shall be permitted
to effect such settlement unless the Indemnitor (i) reimburses the Aggrieved in
accordance with the terms of this Article XIII for all reasonable fees and
expenses incurred by the Aggrieved in connection with such Claim, (ii) assumes
the defense of such Claim, and (iii) takes such other actions as the Aggrieved
may reasonably request as assurance of the Indemnitor's ability to fulfill its
obligations under this Article XIII in connection with such Claim.
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13.4. Limitation of Claims. Notwithstanding anything to the
contrary contained in any other provision of this Agreement, all covenants,
representations and warranties of the parties hereto under this Agreement and
all rights of indemnification (whether or not relating to representations or
warranties) shall terminate and expire and shall be without any further force
or effect whatever as to any Claim not asserted in writing prior to the
expiration of thirty (30) months following the Closing Date; provided,
however, that with respect to the Seller's obligations to indemnify, defend and
hold Purchaser harmless for breaches of the covenants, representations and
warranties as contained in Section 4.26 and Section 7.14 and Section 7.21 and
in the Warranty Deed and for Pre-Closing Losses and the Excluded Liability
Losses and Purchaser's obligations under the instruments of assumption referred
to in Article IX and for Post-Closing Losses, a right of indemnification for
breach of such obligations shall survive until the expiration of the applicable
limitations periods.
ARTICLE XIV
DEFINITIONS
When used in this Agreement the following terms shall have the
following respective meanings:
Accounts Payable shall have the meaning set forth in Section
2.1.
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Accrued Liabilities shall have the meaning set forth in
Section 2.1.
Adjusted Purchase Price shall have the meaning set forth in
Section 3.1(c).
Affected Employees shall have the meaning set forth in Section
4.10.
Aggrieved shall have the meaning set forth in Section 13.3.
Allocation Certificate shall have the meaning set forth in
Section 3.2(a).
Assignment and Assumption of Assumed Liabilities (Exhibit F)
shall have the meaning set forth in Section 7.13(f).
Assignment and Assumption of the Division Contracts Agreement
(Exhibit D) shall have the meaning set forth in Section 7.13(d).
Assignment and Assumption of Personal Property Leases
(Exhibit A) shall have the meaning set forth in Section 7.13(b).
Assignment and Assumption of Receivables and Customer Purchase
Orders (Exhibit I) shall have the meaning set forth in Section 7.13(j).
Assignment and Assumption of Sales Office Leases (Exhibit H)
shall have the meaning set forth in Section 7.13(i).
Assignment of Trade Names (Exhibit E) shall have the meaning
set forth in Section 1.1(4).
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Assumed Liabilities shall have the meaning set forth in
Section 2.1.
Assumed Liabilities Losses shall have the meaning set forth in
Section 13.2.
Balance Sheet shall have the meaning set forth in Section 4.13.
Bill of Sale (Machinery and Equipment) (Exhibit B) shall have
the meaning set forth in Section 7.13(b).
Bulk Sales Losses shall have the meaning set forth in Section
13.1.
Bulk Transfer Laws shall have the meaning set forth in Section
15.7.
Capital Lease Obligations means the sum of the remaining rent
and other obligations under the capital leases described on Schedule 1.1(g)
discounted to present value in accordance with the rental obligations of each
capital lease and in accordance with Doskocil's consistently applied internal
accounting procedures.
Cash Equivalents shall have the meaning set forth in Section
1.2(b).
Canadian Bacon Operation means all of the inventory, machinery
and equipment (which had a net book value of approximately $346,000 as of
January 28, 1995) and other assets necessary and requisite for the manufacture
of canadian bacon for Normac Foods Co., a supplier of canadian bacon to
McDonalds Corp., at the Facility located in Concordia, Missouri.
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Certification shall have the meaning set forth in Section
7.14(b).
Claim shall have the meaning set forth in Section 13.3.
Closing shall have the meaning set forth in Section 11.2.
Closing Date shall have the meaning set forth in Section 11.1.
COBRA shall have the meaning set forth in Section 8.3.
Code means the Internal Revenue Code of 1986, as amended.
Concordia shall have the meaning set forth in the recitals.
Contract Obligations shall have the meaning set forth in
Section 2.2.
Copack Agreements shall have the meaning set forth in Section
3.5.
Customer List shall have the meaning set forth in Section
1.1(j).
Customer Purchase Orders shall have the meaning set forth in
Section 1.1(k).
Determination Date(s) shall have the meaning set forth in
Section 3.4.
Division shall mean the Retail Division of Doskocil which
produces ham, bacon, franks, sausage and other meat products from the
Facilities and boneless hams from plants operated by others under the Copack
Agreements and sells such products to grocery wholesalers, grocery store chains
and individual grocery stores for resale to consumers from grocery store
refrigerated meat cases,
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excluding the Canadian Bacon Operation and Wilson Express; provided, however,
that with respect to Section 4.13 of this Agreement, "Division" includes the
Canadian Bacon Operation and Wilson Express.
Division Contracts shall have the meaning set forth in Section
4.11.
Dixie shall have the meaning set forth in the recitals.
Dixie Spice Operation shall mean the production of spices for
use in making Sellers' meat products at Dixie.
Doskocil shall have the meaning set forth in the recitals.
Doskocil Account shall have the meaning set forth in Section
3.1(b).
Doskocil Warehouse shall have the meaning set forth in Section
7.16.
Earnout Amount shall have the meaning set forth in Section 3.4.
Earnout Period shall have the meaning set forth in Section 3.4.
Employee Obligations shall have the meaning set forth in
Section 8.1.
Environmental Conditions shall have the meaning set forth in
Section 7.14(a).
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Environmental Consultant shall have the meaning set forth in
Section 7.14(a).
Environmental Laws means (i) any federal, state or local law,
statute, ordinance, rule, regulation, code, order, permit, directive or
requirement, relating to pollution, the environment, Hazardous Materials,
underground storage tanks, or the protection of air, surface water,
groundwater, drinking water, land (including its surface and subsurface), human
health, the environment or any other natural resource, or concerning the use,
storage, recycling, treatment, generation, transportation, processing,
handling, production or disposal of any Hazardous Materials, and (ii) any
common law or equitable doctrine (including, without limitation, injunctive
relief and tort doctrines such as negligence, nuisance, trespass and strict
liability) that may impose liability or obligation for or related to death,
personal injury or property damage, or for the performance of, or payment of
the cost of performing any investigation, remediation or clean-up of the
threatened, alleged or actual presence of Hazardous Materials.Such term
includes, without limitation, the Solid Waste Disposal Act (42 U.S.C. Section
6991, et seq.) ("SWDA"), as amended by the Resource Conservation and Recovery
Act (42 U.S.C. Section 6901, et seq.) ("RCRA") and the Comprehensive
Environmental Response, Compensation and Liability Act (42 U.S.C. Section
9601, et seq.) ("CERCLA"), as in existence on the date hereof and the Closing
Date except as provided in Section 7.14(b).
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Environmental Report shall have the meaning set forth in
Section 7.14(a).
ERISA means the Employee Retirement Income Security Act of
1974, as amended.
Excluded Assets shall mean the assets excluded from the
Purchased Assets in accordance with the provisions of Section 1.2.
Excluded Liabilities shall have the meaning set forth in
Section 2.2.
Excluded Liabilities Losses shall have the meaning set forth
in Section 13.1.
Extended Period shall have the meaning set forth in Section
8.6(c).
Facilities shall mean (i) approximately 11.32 acres of land
together with the 65,000 square foot production facility and other improvements
located in Forrest City, Arkansas, (ii) approximately 3.6 acres of land
together with the 30,100 square foot production facility and other improvements
located in Shreveport, Louisiana and (iii) approximately 17.2 acres of land
together with the 61,100 square foot production facility and other improvements
located in Concordia, Missouri more particularly described on Schedule 1.1(a)
hereto.
Facility Union Employees shall have the meaning set forth in
Section 8.1.
FASB shall mean the Financial Accounting Standard Board.
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Farmland Copack Agreement means that certain Private Label
Manufacturing Agreement dated May 13, 1992 by and between Wilson and Farmland
Foods, Inc., a Kansas corporation.
Farmland Equipment means all of the machinery and equipment
owned by Wilson and leased to Farmland Foods, Inc. under that certain
Equipment Rental Agreement dated as of October 6, 1992.
Financial Statements shall have the meaning set forth in
Section 4.13.
FTC means the Federal Trade Commission.
GAAP means generally accepted accounting principles in the
United States of America as in effect as of any specified date.
H-S-R Act means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976.
Hazardous Material means asbestos; petroleum; and any
material, substance or waste that may adversely affect human health or the
environment or that is referenced in or regulated under the Environmental Laws,
including, without limitation, any "hazardous waste," "hazardous substance,"
"toxic substance," "regulated substance," "pollutant," or "contaminant" as
those terms are defined or used in the Environmental Laws. Such term includes,
without limitation, (i) any material, substance or waste defined as a
"hazardous waste" pursuant to Section 1004 of RCRA, (ii) any material,
substance or waste defined as a "hazardous substance" pursuant to Section 101
of CERCLA or (iii) any material, substance
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or waste defined as a "regulated substance" pursuant to Subchapter IX of RCRA.
IBP Agreement means that certain Production Agreement by and
between Doskocil and IBP, Inc. dated October 14, 1993.
IDB Obligations means the unpaid principal and accrued
interest in respect to (i) the Arkansas Development Finance Authority Economic
Development Revenue Bonds (Dixie Food Company Project) $2,000,000 Taxable
Series 1993A and $2,000,000 Taxable 1993B; and (ii) a promissory note dated
July 13, 1993 in the principal sum of $1,775,845 made payable to the City of
Forest City, Arkansas, secured by a mortgage dated July 13, 1993 in favor of
the City of Forest City, Arkansas.
Indemnitor shall have the meaning set forth in Section 13.3.
Information shall have the meaning set forth in Section 7.11.
Insurance Deductible shall have the meaning set forth in
Section 4.12.
Inventory or Inventories shall mean the raw materials, spare
parts, and supplies (including wrapping film, bags, spices, additives, and
other materials) and work in progress located at the Facilities and finished
goods located at a Doskocil Warehouse or in outside storage facilities
associated with the operation of the Division.
Inventory in Transit shall have the meaning set forth in
Section 1.1(b).
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Long Term Debt Obligations means the sum of (i) the IDB
Obligations and (ii) the Capital Lease Obligations.
Losses means all actual liabilities, losses, costs, damages,
penalties, fines, assessments, demands, claims, causes of action, including,
without limitation, reasonable attorneys', accountants' and consultants' fees
and expenses and court costs, but net of the effect of the Aggrieved's actual
benefit from tax deductions and credits and insurance proceeds.
Machinery and Equipment shall have the meaning set forth in
Section 1.1(e).
Major Medical Condition means (i) a medical condition
resulting in hospitalization, (ii) any psychiatric or psychological treatment
which is frequent and reoccurring, and (iii) any diagnosis of a condition that
will reasonably be expected to require hospitalization or frequent or
reoccurring psychiatric and/or psychological treatment.
Major Title Defect shall have the meaning set forth in Section
7.5.
Measuring Date shall have the meaning set forth in Section
3.1(c).
Medical Liabilities shall have the meaning set forth in
Section 8.6(a).
Minor Title Defects shall have the meaning set forth in
Section 7.5.
Multiemployer Plan shall have the meaning set forth in Section
8.4.
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Net Fixed Assets shall mean the Facilities and the Machinery
and Equipment a/k/a the plant, property and equipment of the Division as
reflected on the books of account of the Division.
Net Working Capital shall mean the Receivables, Inventories
and Other Current Assets minus the Accounts Payable and the Accrued Liabilities
as reflected on the books of account of the Division.
Noncompete Agreement (Exhibit C) shall have the meaning set
forth in Section 7.13(c).
Non-Union Employees shall have the meaning set forth in
Section 8.1.
Other Assets shall have the meaning set forth in Section
1.1(d).
Period End shall have the meaning set forth in Section 3.1(a)
hereof.
Permits shall have the meaning set forth in Section 4.4.
Permitted Exceptions shall have the meaning set forth in
Section 7.5 and on Schedule 4.5.
Personal Property Leases shall have the meaning set forth in
Section 1.1(g).
Post-Closing Losses shall have the meaning set forth in
Section 13.2.
Pre-Closing Losses shall have the meaning set forth in Section
13.1.
Premium shall have the meaning set forth in Section 3.1(a).
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Prorated Items means the items to be prorated between Seller
and Purchaser pursuant to the provisions of Section 3.3 hereof.
Purchase Price shall have the meaning set forth in Section
3.1(a).
Purchased Assets shall have the meaning set forth in Section
1.1.
Purchaser shall have the meaning set forth in the recitals.
Purchaser's Cushion shall have the meaning set forth in
Section 13.2.
Purchaser's 401(k) Plan shall have the meaning set forth in
Section 8.4(a).
Purchaser's Medical Plans shall have the meaning set forth in
Section 8.6(a).
Purchaser's Pension Plan shall have the meaning set forth in
Section 8.4(b).
Receivables shall have the meaning set forth in Section 1.1(c).
Remedial Plan shall have the meaning set forth in Section
7.14(a).
Review Period shall have the meaning set forth in Section 7.5.
Sales Office Leases shall have the meaning set forth in
Section 1.1(h).
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Seller or Sellers shall have the meaning set forth in the
recitals.
Seller's Cushion shall have the meaning set forth in Section
13.1.
Seller's Defined Benefit Plan shall have the meaning set forth
in Section 8.4(b).
Seller's 401(k) Plan shall have the meaning set forth in
Section 8.4(a).
Seller's Marks shall have the meaning set forth in Section
1.1(f).
Seller's Medical Plans shall have the meaning set forth in
Section 8.7(b).
Seller's Pension Plans shall have the meaning set forth in
Section 4.10.
Seller's Plans shall have the meaning set forth in Section
4.10.
Seller's Welfare Plans shall have the meaning set forth in
Section 4.10.
Severance Obligations shall have the meaning set forth in
Section 8.1.
SIC Code means the Standard Industrial Classification as
published by the Executive Office of the President-Office of Management and
Budget.
Significant Customers shall have the meaning set forth in
Section 6.4.
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Supply Agreement (Exhibit L) shall have the meaning set forth
in Section 7.17.
Title Company shall have the meaning set forth in Section 7.5.
Title Policies shall have the meaning set forth in Section
7.13(h).
Transferred Employees shall have the meaning set forth in
Section 8.7(a).
Transition Service Agreement (Exhibit K) shall have the
meaning set forth in Section 7.16.
Underlying Documents shall have the meaning set forth in
Section 7.5.
Union shall mean collectively local union No. 576 and local
union No. 210, each affiliated with the United Food and Commercial Workers
International Union, AFL-CIO.
USDA means the United States Department of Agriculture.
WARN shall have the meaning set forth in Section 8.5.
Warranty Deeds shall have the meaning set forth in Section
7.13(g).
Wilson Express means Wilson Certified Express, Inc., a
wholly-owned trucking subsidiary of Wilson located in Des Moines, Iowa, that
performs trucking services for Seller and others.
Withdrawal Liability shall have the meaning set forth in
Section 8.4.
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ARTICLE XV
MISCELLANEOUS PROVISIONS
15.1. Further Assurance and Assistance. Sellers agree that
after the Closing Date they will, from time to time, upon the request of
Purchaser, execute, acknowledge and deliver in proper form any instrument of
conveyance or further assurance reasonably necessary or desirable to transfer
to Purchaser the interest in the Purchased Assets being transferred to
Purchaser in accordance with the terms of this Agreement. Purchaser agrees
that after the Closing Date it will, from time to time, upon the reasonable
request of Seller, execute, acknowledge and deliver in proper form any
instruments of assumption or further assurance so as to perfect in Purchaser
the Assumed Liabilities.
15.2. Transfer and Other Taxes. Except as specifically
provided for in this Agreement, any and all sales, use, stamp, transfer,
documentary, personal property, and like taxes; closing fees and charges; and
any other fees and charges required to be paid in connection with the transfer
of the Purchased Assets and Assumed Liabilities and the transactions
contemplated hereby shall be the liability of and paid by Purchaser or Seller
whose liability for such obligation is determined to be customary in the
jurisdiction.
15.3. Amendment and Modification. This Agreement may be
amended, modified or supplemented only by mutual written consent of the parties
hereto.
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15.4. Waiver of Compliance. The failure by any party at any
time to require performance of any provision hereof shall not affect its right
later to require such performance. No waiver in any one or more instances
shall (except as stated therein) be deemed to be a further or continuing waiver
of any such condition or breach in other instances or a waiver of any condition
or breach of any other term, covenant, representation or warranty.
15.5. Expenses. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses except as provided in Section 15.2 and
Article XIII hereof.
15.6. Definition of "Knowledge". Whenever in this Agreement
any representation or warranty is expressed in terms of the "knowledge" of
Purchaser, Seller or Doskocil, such knowledge shall be deemed to refer to
matters known (i) in the case of Purchaser, to any of Messrs. Henry S Dorfman,
Joel Dorfman, Louis Glazier, Michael Rozzano, Keith Jahnke and Ronald Risher,
and (ii) in the case of Seller and Doskocil, to any of Messrs. R. Randolph
Devening, Horst O. Sieben, William L. Brady, Bryant Bynum, Larry Swafford, and
David Clapp.
15.7. Bulk Transfer Laws. Purchaser hereby waives Seller's
compliance with all applicable bulk sales, bulk sales tax laws or similar laws
relating to the transfer to it of the Purchased Assets ("Bulk Transfer Laws").
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15.8. Notices. All notices, requests, demands or other
communications required or permitted by this Agreement shall be in writing and
effective when received or upon the addressee's refusal to accept service, and
delivery shall be made personally or by registered or certified mail, return
receipt requested, postage prepaid, or overnight courier or confirmed facsimile
transmission, addressed as follows:
(a) If to Seller or Doskocil:
Doskocil Companies Incorporated
2601 N.W. Expressway
Oklahoma City, Oklahoma 73112
Attn: Mr. R. Randolph Devening
Chairman, President and
Chief Executive Officer
Facsimile No. (405) 879-5568
Copy to:
McAfee & Taft
A Professional Corporation
Tenth Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attn: John M. Mee, Esq.
Facsimile No. (405) 235-0439
(b) If to Purchaser:
Thorn Apple Valley, Inc.
18700 West Ten Mile Road
Southfield, Michigan 48075
Attn: Mr. Joel Dorfman
President and Chief Executive Officer
Facsimile No.: (810) 552-0986
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Copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attn: Donald J. Kunz, Esq.
Facsimile No: (313) 962-0176
or to such other addresses as may be specified pursuant to notice given by
either party in accordance with the provision of this Section 15.8.
15.9. Assignability of Agreement. This Agreement may not be
assigned in whole or in part by Seller and may not be assigned in whole or in
part by Purchaser without the prior written consent of Doskocil, which consent
shall not be unreasonably withheld or delayed; provided, however, that
Purchaser shall have the right to assign this Agreement to a wholly-owned
subsidiary of the Purchaser without the consent of Doskocil so long as such
assignment shall not discharge, relieve or in any manner obviate the
obligations and liabilities of Purchaser under this Agreement and any
instrument of assignment shall so provide. Any purported assignment without
such consent shall be void.
15.10. Disputes; Arbitration. The parties hereto agree that
all disputes between them relating to this Agreement are to be resolved by
binding arbitration as provided herein. This agreement to arbitrate shall
survive the rescission or termination of this Agreement. All arbitration shall
be conducted pursuant to the Commercial Arbitration Rules of the American
Arbitration Association except as herein may be provided. The panel used will
be selected from, if available, the "Food Industry Panel" employed
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by the American Arbitration Association and the decision of the arbitrators
will be final and binding on all parties. All arbitration will be undertaken
pursuant to the Federal Arbitration Act, where applicable, and the decision of
the arbitrators will be enforceable in any court of competent jurisdiction.
In any dispute where a party seeks $50,000 or more in damages,
three arbitrators will be employed. All costs attendant to the arbitration,
excluding attorney's and expert's fees, will be borne equally by the parties.
Each party will bear its own attorney's and expert's fees. The arbitrators
will not award punitive, consequential or indirect damages. Each party hereby
waives the right to such damages and agrees to receive only those actual
damages directly resulting from the claim asserted. In resolving all disputes
between the parties, the arbitrators will apply the law of the State of
Oklahoma, except as may be modified by this Agreement. The arbitrators are by
this Agreement directed to conduct the arbitration hearing no later than three
(3) months from the service of the statement of claim and demand for
arbitration unless good cause is shown establishing that the hearing cannot
fairly and practically be so convened.
Except as needed for presentation in lieu of a live
appearance, depositions will not be taken. Parties will be entitled to conduct
document discovery by requesting production of documents. Responses or
objections will be served twenty days after receipt of a request. The
arbitrators will resolve any discovery disputes by such prehearing conferences
as may be needed.
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All parties agree that the arbitrators and any counsel of record to the
proceeding will have the power of subpoena process as provided by law.
From related transactions in connection with this Agreement,
the parties may be in a debtor/creditor relationship, which may include the
granting of security interests in goods and/or fixtures. The parties recognize
that these kinds of relationships could give rise to the need by one or more of
the parties for emergency judicial relief to regain possession of goods, to
prevent the sale or transfer of goods. The parties agree that either shall be
entitled to pursue such remedies for emergency or preliminary injunctive relief
in any court of competent jurisdiction, provided that each party agrees that it
will consent to the stay of such judicial proceedings on the merits of both
this Agreement and the related transactions pending arbitration of all
underlying claims between the parties immediately following the issuance of any
such emergency or injunctive relief.
15.11. Governing Law. This Agreement and the legal relations
between the parties hereto shall be governed by and construed in accordance
with the laws of the State of Oklahoma.
15.12. Counterparts. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
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15.13. Headings. The headings of the Sections and Articles of
this Agreement are inserted for convenience only and shall not constitute a
part hereof.
15.14. Entire Agreement. This Agreement, including the
agreements referred to herein, the Schedules and Exhibits attached hereto and
other documents referred to herein which form a part hereof, contains the
entire understanding of the parties hereto in respect of the subject matter
contained herein. There are no restrictions, promises, representations,
warranties, covenants or undertakings, other than those expressly set forth or
referred to herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
15.15. Schedules. Notwithstanding anything to the contrary
contained in this Agreement, Seller and Purchaser hereby agree that the
schedules are attached hereto and are made a part of this Agreement for all
purposes. The parties further understand and agree that disclosure made in any
schedule shall be deemed disclosure in all other schedules as if set forth
therein, that is, information set forth in one schedule shall be construed as
disclosure in all schedules.
15.16. Third Party Beneficiaries. Regardless of any other
provision of this Agreement, there are no third party beneficiaries of this
Agreement or of any term or provision thereof.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in multiple original counterparts as of the date first
above written.
"Seller" or "Sellers"
DOSKOCIL COMPANIES INCORPORATED
By /s/ R. Randolph Devening
-------------------------------
R. Randolph Devening
Chairman, President and Chief
Executive Officer
WILSON FOODS CORPORATION
By /s/ R. Randolph Devening
-------------------------------
R. Randolph Devening, President
CONCORDIA FOODS CORPORATION
By /s/ R. Randolph Devening
-------------------------------
R. Randolph Devening, President
DIXIE FOODS COMPANY
By /s/ R. Randolph Devening
-------------------------------
R. Randolph Devening, President
SHREVEPORT FOODS COMPANY
By /s/ R. Randolph Devening
----------------------------
R. Randolph Devening, President
"Purchaser"
THORN APPLE VALLEY, INC.
By /s/ Joel Dorfman
-------------------------------
Joel Dorfman
President and Chief Executive
Officer
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EXHIBIT 2.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT dated as of the 26th
day of May, 1995 (the "First Amendment"), by and among THORN APPLE VALLEY,
INC., a Michigan corporation ("Purchaser"), FOODBRANDS AMERICA, INC., a
Delaware corporation ("Foodbrands"), successor by merger to DOSKOCIL COMPANIES
INCORPORATED, a Delaware corporation ("Doskocil"), WILSON FOODS CORPORATION, a
Delaware corporation ("Wilson"), CONCORDIA FOODS CORPORATION, a Delaware
corporation ("Concordia"), DIXIE FOODS COMPANY, a Delaware corporation
("Dixie") and SHREVEPORT FOODS COMPANY, a Delaware corporation ("Shreveport"),
Wilson, Concordia, Dixie and Shreveport collectively with Foodbrands are herein
referred to as the "Seller" or "Sellers".
WHEREAS, on the 16th day of May, 1995 Doskocil merged with and into
Foodbrands who thereby succeeded to all of the rights and benefits as well as
all of the duties and obligations of Doskocil, and
WHEREAS, Purchaser and Doskocil, Wilson, Concordia, Dixie and
Shreveport entered into that certain Asset Purchase Agreement dated as of April
29, 1995 (the "Agreement"), and
WHEREAS, Purchaser and Sellers mutually desire and it is in the mutual
benefit of Purchaser and Sellers to amend the Agreement.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, Purchaser and Sellers hereby amend
the Agreement as follows:
<PAGE> 2
1. The Merger. The name "Foodbrands" shall be and hereby is substituted for
the name "Doskocil" throughout and wherever appearing in the Agreement.
2. The Amendments.
(a) Section 3.1(a) Purchase Price at Closing. Section
3.1(a) of the Agreement is hereby amended by the deletion of the "." at the end
of the first sentence of Section 3.1(a) and by adding the following provision:
"; provided, however, in the computation of Net Working
Capital, Foodbrands may use earlier period numbers in the event that the Period
End numbers are not available."
(b) Section 3.1(b) Payment of the Purchase Price.
Section 3.1(b) of the Agreement is hereby amended by the deletion of Section
3.1(b) in its entirety and the substitution therefor of a new Section 3.1(b) as
follows:
"(b) Payment of Purchase Price. At the Closing, Purchaser
shall pay Foodbrands the Purchase Price by wire transfer of readily available
funds to the Doskocil Master Clearing Account No. 144813983 at Chemical Bank, a
New York Banking Corporation, New York, New York (the 'Foodbrands Account')."
(c) Section 7.7. Books and Records. Section 7.7 of the
Agreement is hereby amended by the insertion of the phrase "or deliver
originals of any or all of such books and records to Purchaser" following the
word "Seller" in line 13, and by adding
<PAGE> 3
the following sentence after the word "Liabilities." in the last line of
Section 7.7:
"In the event Seller delivers originals of the books and
records to Purchaser pursuant to clause (i) above, upon Foodbrands' reasonable
request, Purchaser shall permit Seller access to such books and records for
the purpose of examining and making copies of such books and records it shall
reasonably request all at the expense of Sellers."
(d) Section 7.9. Removal of Signs. Section 7.9 of the
Agreement is hereby amended by the addition of the following provision:
"It is further understood and agreed that certain of Sellers'
Marks appear on assets of Sellers that are not being sold to Purchaser under
this Agreement and Sellers have in stock in divisions other than the Division
stationery, labels and other paper products bearing Sellers' Marks. Purchaser
hereby consents to Sellers' use of Sellers' Marks for a period of six months
from Closing at which time Foodbrands shall cause Sellers' Marks to be removed
from all of Sellers' assets and any remaining stationery, labels or other
remaining paper products bearing such marks or logos destroyed, without expense
to Purchaser."
(e) Section 7.13(j). Assignment and Assumption of
Receivables and Customer Purchase Orders. Section 7.13(j) of the Agreement is
hereby amended by the deletion of Section 7.13(j) in
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its entirety and the substitution therefor of a new Section 7.13(j) as follows:
"(j) Assignment and Assumption of Receivables, Customer
Purchaser Orders and Other Assets. The Purchaser and Seller shall enter into
and deliver to the other the Assignment and Assumption of Receivables, Customer
Purchase Orders and Other Assets (Exhibit I) hereto."
(f) Section 7.15. Supplemental Disclosure. Section 7.15
of the Agreement is hereby amended by the deletion of the "." at the end of
Section 7.15 and by adding the following provision after the word "schedules:"
"; provided, however, in the preparation of Schedule 2.1(a)
(Accounts Payable) and Schedule 2.1(b) (Accrued Liabilities), at Purchaser's
request, Seller shall retain as many of the Accounts Payable and Accrued
Liabilities it can reasonably and prudently retain and Schedule 2.1(a)
(Accounts Payable) and Schedule 2.1(b) (Accrued Liabilities) shall reflect only
those Accounts Payable and Accrued Liabilities Purchaser shall assume and pay.
In respect to the list of Receivables and the list of Other Assets to be
updated to the Closing Date pursuant to Section 1.1(c) and Section 1.1(d),
respectively, Seller shall not be required to update such schedules prior to or
at the Closing but shall, as soon as practicable after Closing, but in any
event within fourteen (14) days following Closing, prepare and furnish to
Purchaser a complete and accurate list of the Receivables and a complete and
accurate list of the Other Assets as of the Closing Date."
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(g) Section 9.3(a). The Purchase Price. Section 9.3(a)
of the Agreement is hereby amended by the deletion of the phrase "the Doskocil
Account" in line two of Section 9.3(a) and the substitution therefor of the
phrase "the Foodbrands Account".
3. Assignment and Assumption of Receivables, Customer Purchase Orders and
Other Assets (Exhibit I). The term "Assignment and Assumption of Receivables,
Customer Purchase Orders and Other Assets (Exhibit I)" shall be and hereby is
substituted for the term "Assignment and Assumption of Receivables and Customer
Purchase Orders (Exhibit I)" appearing in Section 9.3(g), Section 10.4(h) and
Article XIV.
4. Article XIV DEFINITIONS. The definition of "IDB Obligations" is hereby
amended by the deletion of the "." and by adding the following provision after
the word "Arkansas" in line eight of such definition:
"and minus (iii) the pre-paid debt expense associated with (i)
and (ii) above except to the extent such pre-paid expense is included in Other
Assets."
5. The Agreement. The term "Agreement" as used in the Agreement shall
hereafter mean the Agreement as amended by this First Amendment and shall
continue in full force and effect in accordance with the terms thereof and
hereof.
-5-
<PAGE> 6
6. Governing Law. This First Amendment shall be governed by and construed in
accordance with the laws of the State of Oklahoma.
7. Counterparts. This First Amendment may be executed in one or more
counterparts, all of which shall be considered one and the same instrument, and
shall become effective when one or more counterparts have been signed by each
of the parties and delivered to the other parties.
IN WITNESS WHEREOF, the parties have caused this First
Amendment to be duly executed on the date first above written.
THORN APPLE VALLEY, INC., a
Michigan corporation
By /s/ Joel Dorfman
-----------------------------
Joel Dorfman, President and
Chief Operating Officer
FOODBRANDS AMERICA, INC., a
Delaware corporation (successor
by merger to DOSKOCIL COMPANIES
INCORPORATED, a Delaware
corporation)
By /s/ R. Randolph Devening
-----------------------------
R. Randolph Devening,
Chairman, President and Chief
Executive Officer
-6-
<PAGE> 7
WILSON FOODS CORPORATION, a
Delaware corporation
By /s/ R. Randolph Devening
-----------------------------
R. Randolph Devening,
President
CONCORDIA FOODS CORPORATION, a
Delaware corporation
By /s/ R. Randolph Devening
-----------------------------
R. Randolph Devening,
President
DIXIE FOODS COMPANY, a Delaware
corporation
By /s/ R. Randolph Devening
-----------------------------
R. Randolph Devening,
President
SHREVEPORT FOODS COMPANY, a
Delaware corporation
By /s/ R. Randolph Devening
-----------------------------
R. Randolph Devening,
President
-7-
<PAGE> 1
EXHIBIT 10.1
NONCOMPETE AGREEMENT
THIS NONCOMPETE AGREEMENT (the "Agreement") is made this 30th
day of May, 1995, by FOODBRANDS AMERICA, INC., a Delaware corporation, WILSON
FOODS CORPORATION, a Delaware corporation, CONCORDIA FOODS CORPORATION, a
Delaware corporation, DIXIE FOODS COMPANY, a Delaware corporation, and
SHREVEPORT FOODS COMPANY, a Delaware corporation (collectively, the
"Undersigned"), in favor of THORN APPLE VALLEY, INC., a Michigan corporation
("TAV"), with reference to the following:
(i) The Undersigned, as Seller, and TAV, as Purchaser, are
parties to an Asset Purchase Agreement dated as of the 29th day of April, 1995,
as amended by First Amendment to Asset Purchase Agreement dated May 26, 1995 by
and among the Undersigned and TAV (the "Purchase Agreement"); and
(ii) A condition to TAV's performance of its obligations
under the Purchase Agreement is the execution and delivery by the Undersigned
of this Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Undersigned hereby
jointly and severally covenant and agree as follows:
1. Noncompetition Covenant. During the period commencing on
the date hereof and ending on the expiration of five (5) years following the
date hereof, neither the Undersigned nor any subsidiary of the Undersigned
shall, directly or indirectly, own, manage, operate, join, advise, control, or
otherwise engage or participate in or be connected as a partner, investor,
stockholder, creditor, guarantor, advisor, or consultant in, the business of
producing and distributing ham, bacon, franks and other sausage products
similar to the products produced and distributed from the Facilities (as
defined in the Purchase Agreement)(the "Facility Products")for sale to grocery
wholesalers, grocery store chains and individual grocery stores intended for
resale to consumers from retail grocery store refrigerated meat cases (the
"Retail Meat Case Business") within the continental United States.
Notwithstanding the foregoing, this Agreement does not prohibit the Undersigned
from, and the term "Retail Meat Case Business" does not include, (i) the
manufacture, production and sale of deli meat products, luncheon meats and
other similar meat products under the trade name Wilson's Continental Deli
which do not compete directly with the Facility Products, (ii) acquiring any
business which produces and sells branded meats, franks, sausages and bacon
which do not compete directly with the Facility Products, (iii) acquiring or
holding the outstanding shares of any entity engaged in the Retail Meat Case
Business if such shares are publicly traded and the Undersigned's ownership is
less than five percent (5%) of the outstanding equity of such entity, (iv)
buying, selling and trading
<PAGE> 2
commodities contracts, or (v) acquiring a business or company which has a
division or facility which competes in the Retail Meat Case Business, so long
as such division or facility accounts for less than 30% of the revenue of the
acquired business or company and the Undersigned, after such acquisition, does
not materially expand the production capacity of such facility or division.
2. Purchase Price. As provided in Section 3.2 of the
Purchase Agreement, the consideration for the Undersigned's satisfactory
performance of this Agreement is $20,000,000 payable in cash contemporaneously
with the execution and delivery of this Agreement.
3. Injunctive Relief. The remedy at law for any breach of
this Agreement is and will be inadequate, and if there is a breach by the
Undersigned of the provisions of this Agreement, TAV shall be entitled to an
injunction restraining the Undersigned from violating the provisions of Section
1 hereof. Nothing herein contained shall be construed as prohibiting TAV from
pursuing any other remedies available to it for such breach, including, without
limitation, the recovery of damages from the Undersigned. None of these
remedies shall be mutually exclusive, and all of them may be pursued
concurrently and cumulatively.
4. Separate Covenants. This Agreement shall be deemed to
consist of a series of separate covenants independent from any provision of the
Purchase Agreement. The Undersigned expressly agree that the character,
duration, and geographical scope of this Agreement are reasonable in light of
the circumstances as they exist on the date upon which this Agreement has been
executed. However, should a determination nonetheless be made by a court of
competent jurisdiction at a later date that the character, duration, or
geographical scope of this Agreement is unreasonable in light of the
circumstances as they then exist or as they existed at the execution of this
Agreement, then it is the intention and the agreement of the Undersigned and
TAV that this Agreement shall be construed by the court and given effect in
such a manner as to impose only those restrictions on the conduct of the
Undersigned which are reasonable in light of the circumstances as they then
exist and as are necessary to assure TAV of the intended benefit of this
Agreement. If, in any judicial proceeding, a court shall refuse to enforce all
of the separate covenants deemed included herein because, taken together they
are more extensive than necessary to assure TAV of the intended benefit of this
Agreement, it is expressly understood and agreed between the parties hereto
that those of such covenants which, if eliminated, would permit the remaining
separate covenants to be enforced in such proceeding shall, for the purpose of
such proceeding, be deemed eliminated from the provisions hereof.
5. Waivers. No breach of any term of this Agreement shall be
deemed waived unless it is expressly waived in writing by
<PAGE> 3
the party who might assert such breach. No waiver of any right hereunder shall
operate as a waiver of any other right or of the same or a similar right on
another occasion.
6. Attorneys' Fees. If any action or proceeding is commenced
by any party hereto for the purpose of enforcing any provision of this
Agreement, the prevailing parties in such action or proceeding may receive as
part of any award, judgment, decision, or other resolution of such action or
proceeding their costs and reasonable attorneys' fees.
7. Assignment. This Agreement is not assignable, by
operation of law or otherwise, provided, TAV may assign its rights hereunder to
(a) any entity which at any time may be a direct or indirect subsidiary of TAV,
or (b) any successor in interest of TAV whether by merger or consolidation or
sale of all or substantially all of its assets.
8. Entire Agreement. This Agreement, together with the
Purchase Agreement, contains the entire understanding of the parties with
regard to the subject matter hereof, supersedes all prior agreements and
understandings relating to the subject matter hereof, and shall not be amended
except by a written instrument hereafter signed by all of the parties hereto.
9. Section Headings. The headings in this Agreement are for
reference only and shall not limit or control the meaning thereof.
10. Notices. All notices, claims, certificates, requests,
demands and other communications hereunder will be in writing (whether by
letter, telecopy, telex or other commercially reasonable means of written
communication) and will be deemed to have been duly given upon receipt as
follows:
(a) If to TAV:
Thorn Apple Valley, Inc.
18700 West Ten Mile Road
Southfield, Michigan 48075
Attn: Mr. Joel Dorfman
President and Chief Executive Officer
Facsimile No.: (810) 552-0986
-3-
<PAGE> 4
With a copy to:
Honigman Miller Schwartz and Cohn
2290 First National Building
Detroit, Michigan 48226
Attn: Donald J. Kunz, Esq.
Facsimile No: (313) 962-0176
(b) If to the Foodbrands America, Inc.:
Foodbrands America, Inc.
2601 N.W. Expressway
Oklahoma City, Oklahoma 73112
Attn: Mr. R. Randolph Devening
Chairman, President and
Chief Executive Officer
Facsimile No. (405) 879-5568
With a copy to:
McAfee & Taft
A Professional Corporation
Tenth Floor, Two Leadership Square
Oklahoma City, Oklahoma 73102
Attn: John M. Mee, Esq.
or to such other address as the person to whom notice is to be given may have
previously furnished to the other in writing in the manner set forth above.
11. Governing Law; Submission to Jurisdiction. THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF MICHIGAN.
12. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
-4-
<PAGE> 5
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
"UNDERSIGNED"
FOODBRANDS AMERICA, INC. a Delaware
corporation
By /s/ R. Randolph Devening
---------------------------------
R. Randolph Devening, President
WILSON FOODS CORPORATION, a Delaware
corporation
By /s/ R. Randolph Devening
---------------------------------
R. Randolph Devening, President
CONCORDIA FOODS CORPORATION, a
Delaware corporation
By /s/ R. Randolph Devening
---------------------------------
R. Randolph Devening, President
DIXIE FOODS COMPANY, a Delaware
corporation
By /s/ R. Randolph Devening
---------------------------------
R. Randolph Devening, President
SHREVEPORT FOODS COMPANY, a Delaware
corporation
By /s/ R. Randolph Devening
---------------------------------
R. Randolph Devening, President
-5-
<PAGE> 6
"TAV"
THORN APPLE VALLEY, INC. a Michigan
corporation
By /s/ Louis Glazier
---------------------------------
Louis Glazier, Executive Vice
President Finance and Adminis-
tration
-6-
<PAGE> 1
EXHIBIT 10.2
SUPPLY AGREEMENT
THIS SUPPLY AGREEMENT (the "Agreement") is made and entered
into this 30th day of May 1995, by and among WILSON FOODS CORPORATION, a
Delaware corporation, and FOODBRANDS AMERICA, INC., a Delaware corporation
(collectively "Wilson"), DIXIE FOODS COMPANY, a Delaware corporation ("Dixie")
and THORN APPLE VALLEY, INC., a Michigan corporation ("TAV") with reference to
the following circumstances:
(i) Wilson and certain of its affiliates have entered
into that certain Asset Purchase Agreement with TAV dated as of April 29, 1995
as amended by First Amendment to Asset Purchase Agreement dated May 26, 1995
(the "Asset Purchase Agreement"); and
(ii) This Supply Agreement is delivered in connection with
the closing of the Asset Purchase Agreement; and
(iii) Wilson has entered into that certain Private Label
Manufacturing Agreement dated May 13, 1992 with Farmland Foods, Inc., a Kansas
corporation ("Farmland"), as amended (the "Co-Pack Agreement") pursuant to
which Farmland has agreed to process and package certain meat products for
Wilson under Wilson's private label and other labels sold by Wilson; and
(iv) TAV has been assigned and agreed to assume the
liabilities of that certain Production Agreement (the "IBP Agreement") dated
October 14, 1993, between Doskocil Companies Incorporated and IBP, Inc.
("IBP"); and
(v) The parties desire that Wilson will supply to TAV certain
of the products produced by Wilson at its facility located in Cherokee, Iowa
(the "Cherokee Facility") for the term provided below on the terms and
conditions herein set forth; and
(vi) The parties desire that Wilson will supply to TAV
certain of the products produced by Farmland pursuant to the Co-Pack Agreement
for the term provided below, and TAV will supply certain products to Wilson
produced for TAV pursuant to the IBP Agreement for the term provided below on
the terms and conditions herein set forth; and
(vii) TAV desires to use the facility located at 2530 W.
Broadway, Forrest City, Arkansas held by Dixie pursuant to the Lease Agreement
with Delta Warehousing & Freight, Inc. dated December 20, 1994 (the "Dixie
Lease") and the equipment located therein (collectively the "Spice Facility")
to produce spices for a limited period of time.
NOW, THEREFORE, in consideration of the foregoing and of the
mutual covenants stated below, the parties agree as follows:
<PAGE> 2
ARTICLE I. FARMLAND PRODUCTS
1.1. Supply. Throughout the term set forth in this
Article I of this Agreement, TAV shall purchase from Wilson and Wilson shall
sell to TAV the sliced cold cut, smoked sausage and other products listed in
Section 1.4, below, (the "Farmland Products") under labeling and packaging
consistent with Wilson's current Specification and Packaging Supplies (as those
terms are defined in the Co-Pack Agreement). Spices will be supplied by TAV
and billed to Farmland or Wilson as directed by Wilson, which cost will be
included in the product cost, in accordance with the Farmland Agreement.
1.2. Price and Other Terms of Sale. The purchase price
for the Farmland Products will be the actual cost, including all freight,
storage, overhead and other cost of the Product, to Wilson as delivered to
such destinations as TAV shall designate. Wilson shall invoice TAV weekly for
Farmland Products delivered during the preceding week. TAV shall pay within
two business days after receipt of such invoice by wire transfer of readily
available funds to an account at Wilson Brands Corporation at First Bank N.A.,
Minneapolis, Minnesota, account #1-602-3419-0512.
1.3. Specifications; Title. Specifications for Farmland
produced products will be as in existence on the initial date of this Supply
Agreement. TAV shall have the same right to inspect and reject for cause
Product and Packaging Supplies (as defined in the Co-Pack Agreement) as Wilson
has under the Co-Pack Agreement. Title to the Product and risk of loss to the
Product will pass to TAV at such time as it passes to Wilson pursuant to the
terms of the Co-Pack Agreement.
1.4. Quantities. During the term of this Agreement, TAV
will purchase from Wilson the following volumes on a monthly basis
<TABLE>
<CAPTION>
Monthly
Product Category Purchased Volume
---------------- ----------------
<S> <C>
Sliced Coldcuts 1.5 million pounds -10%/+20%
Smoked Sausage 400,000 pounds -10%/+20%
Stick Sausage Farmland Products 80,000 pounds -10%/+20%
Pork Sausage 60,000 pounds -10%/+20%
</TABLE>
TAV will place its orders weekly for the list of Farmland Products to be
produced the subsequent week. Such orders will include a description of the
Product and tonnage; special labeling instructions may be given separately.
TAV will provide Wilson with
-2-
<PAGE> 3
monthly forecast of TAV's needs for Product on or before the 15th day of the
preceding month.
1.5. Term. The term of this Article II shall commence on
the date hereof and shall extend for a period of ninety (90) days following the
date hereof; provided, Wilson may extend the term of this Article I for an
additional 60 days by giving written notice to TAV 20 days prior to the end of
its term, provided, further, however, this Article I shall be automatically
terminated upon termination of the Co-Pack Agreement, if earlier. Wilson will
use its reasonable best efforts to maintain the Co- Pack Agreement in full
force and effect for ninety (90) days.
1.6. Warranty/Indemnification. Wilson warrants to TAV the
quality of the Product to the same extent that Wilson is entitled to warranties
from Farmland. Wilson also agrees to indemnify and hold TAV harmless from and
against any and all claims, liabilities, demands, expense, damages and cost,
including attorney's fees, to the full extent that Wilson is entitled to such
indemnification from Farmland.
ARTICLE II. IBP PRODUCTS
2.1. Supply. Throughout the term set forth in this
Article II of this Agreement, Wilson shall purchase from TAV and TAV shall sell
to Wilson, standard cooked hams to be distributed by Wilson through its
Wilson's Continental Deli division or Wilson Foodservice or Doskocil
Foodservice divisions (the "IBP Products") under labeling and packaging
Specifications and Packaging Supplies (as those terms are defined in the IBP
Agreement) provided to TAV consistent with the terms of the IBP Agreement.
2.2. Price and Other Terms of Sale. The purchase price
for the IBP Products will be the actual standard direct cost (based on the
consistently applied procedure of using the Cherokee Facility's labor standard
minus $3.33 per cwt. to determine the actual standard direct cost for labor),
fixed overhead charge of $10.30 per Cwt., and all applicable freight and
storage costs. TAV shall invoice Wilson weekly for IBP Products delivered
during the previous week. Wilson shall pay within two business days after
receipt of such invoice by wire transfer of readily available funds to an
account at First of America, Account No. 301135497, Royal Oaks, Michigan.
2.3. Specifications; Title. Specifications for IBP
Products will be as provided by Wilson from time to time to TAV so long as such
Specifications are consistent with the terms of the IBP Agreement. All
Specifications provided by Wilson will be maintained by TAV as confidential and
will only be used to provide the IBP Products. Wilson shall have the same
right to inspect and reject for cause IBP Products and Packaging Supplies (as
defined in
-3-
<PAGE> 4
the IBP Agreement) and to request product information as TAV has under the IBP
Agreement. Title to the IBP Products and risk of loss to the IBP Products will
pass to Wilson at such time as it is unloaded at the destination designated by
Wilson.
2.4. Quantities. During the term of this Article II,
Wilson will purchase from TAV the following volumes on a weekly basis:
<TABLE>
<CAPTION>
Weekly
Product Category Purchased Volume
----------------- ----------------
<S> <C>
Standard Cooked Hams 200,000 pounds - 10%/+20%
</TABLE>
Wilson will place its orders weekly for the list of IBP Products to be produced
the subsequent week. Such orders will include a description of the IBP
Products and tonnage; special labeling instructions may be given separately.
2.5. Term. The term of this Article II of this Agreement
shall commence on the date hereof and shall extend for a period of one hundred
eighty (180) days following the date hereof, provided, however, this Article II
may be terminated upon 10 days notice by Wilson after the first ninety (90)
days of this term. Upon termination of this Article II, Wilson shall be
permitted reasonable access to the Council Bluff, Iowa facility to remove the
Ildelman ham molds which were excluded from the Purchased Assets (as defined in
the Asset Purchase Agreement).
2.6. Warranty/Indemnification. TAV warrants to Wilson the
quality of the IBP Products to the same extent that TAV is entitled to
warranties from IBP. TAV also agrees to indemnify and hold Wilson harmless
from and against any and all claims, liabilities, demands, expense, damages and
cost, including attorney's fees, to the full extent that TAV is entitled to
such indemnification from IBP.
ARTICLE III. CHEROKEE PRODUCTS
3.1. Supply. Throughout the term set forth in this
Article III of this Agreement, TAV shall purchase from Wilson and Wilson shall
sell to TAV the retail franks, stick retail sausage and other products listed
in Section 3.4, below, (the "Cherokee Products") under labeling and packaging
consistent with Wilson's current specification and packaging supplies. Spices
will be supplied by TAV and billed to Wilson's Cherokee Facility which cost
will be included in the product cost, in accordance with the Retail Product
Costing System. All labeling and packaging supplies will be those supplies
currently used to produce the Cherokee Products and are part of the existing
inventory at the Cherokee Facility or
-4-
<PAGE> 5
as reasonably designated by TAV. TAV will supply or cause to be supplied to
Wilson at the Cherokee Facility all labeling and packaging supplies.
3.2. Price and Other Terms of Sale. The purchase price
for the Cherokee Products will be the actual standard direct cost, all
applicable freight and storage costs and a fixed overhead charge of (i) $7.00
per cwt. for franks and (ii) $8.00 per cwt. for all other products. Wilson
shall invoice TAV weekly for Cherokee Products produced during the preceding
week. TAV shall pay within two business days after receipt of such invoice by
wire transfer of readily available funds to an account at Wilson Brands
Corporation at First Bank N.A., Minneapolis, Minnesota, account
#1-602-3419-0512.
3.3. Specifications; Title. Specifications for Cherokee
Products will be as in existence on the initial date of this Supply Agreement.
TAV shall have the right to inspect and reject for cause Cherokee Products and
packaging supplies to the extent the product does not comply with the product
and packaging specifications in effect at the time of this Agreement. Title to
the Cherokee Products and risk of loss to the Cherokee Products will pass to
TAV at such time as the Product is loaded on a TAV truck at the Cherokee
Facility or when delivered to a destination arranged by Wilson at the direction
of TAV.
3.4. Quantities. During the term of this Agreement, TAV
will (except as otherwise provided below) purchase from Wilson the following
volumes on a weekly basis:
<TABLE>
<CAPTION>
Cherokee Product Weekly Production
----------------- -----------------
<S> <C>
Retail Franks 420,000 pounds -10%/+20%
Stick Liverwurst/Braunsweiger 18,000 pounds -10%/+20%
Stick Bologna 48,000 pounds -10%/+20%
Stick Salami 9,000 pounds -10%/+20%
Sliced Canadian Bacon 1,000 pounds -10%/+20%
Cured Emulsion for Slice Roast Minimum 25,000 pounds per order
Beef as required
</TABLE>
; provided, the above volumes may be decreased by TAV after the first 30 days,
and for each 30 day period thereafter, by giving written notice to Wilson at
least 14 days prior to the end of the then existing 30 day period of the
volumes TAV will purchase during such succeeding 30 day period; provided,
further, once TAV has decreased the volumes, TAV may not be increased without
Wilson's
-5-
<PAGE> 6
written consent. TAV will place its orders weekly for the list of Cherokee
Products to be produced the subsequent week. Such orders will include a
description of the Cherokee Products and tonnage; special labeling instructions
may be given separately.
3.5. Term. The term of this Article III shall commence on
the date hereof and shall extend for a period of ninety (90) days following the
date hereof; provided, TAV may extend the term of this Article III for an
additional 60 days by giving written notice to Wilson 20 days prior to the end
of its term. Upon termination of this Article III, TAV will purchase from
Wilson all remaining raw materials, ingredients and packaging used for the
production of the Cherokee Products at the same price as originally paid by
Wilson.
3.6. Warranty/Indemnification. Wilson warrants that no
Cherokee Products sold to TAV under this Supply Agreement will be adulterated
or misbranded within the meaning of the Federal Meat Inspection Act or Federal
Food, Drug or Cosmetic Act or any amendments thereto. However, Wilson does not
warrant against Cherokee Products becoming adulterated or misbranded within the
meaning of such Acts after shipment by reason of causes beyond Wilson's
control. Further, Wilson's liability for misbranding under TAV's labels shall
be limited to that resulting from the failure of Cherokee Products to conform
to the labels designed for use by TAV. TAV warrants that it has the right to
use any and all tradenames, service marks, trademarks or design placed on
Cherokee Product labeling from time to time. TAV agrees to indemnify and hold
Wilson harmless for and against any and all claims, liabilities, demands,
expenses, damages or costs, including attorneys' fees incurred by Wilson,
arising out of Wilson's use of labeling, tradenames, service marks or
trademarks directed by TAV to be used in conjunction with the Cherokee
Products.
ARTICLE IV. SPICE OPERATIONS
4.1. Use. Dixie hereby subleases and grants to TAV the
right to use the Spice Facility. All operations at the Spice Facility will be
conducted by employees of TAV. Any use of the Spice Facility by Dixie during
the term of this Article IV will be coordinated with TAV, TAV having the first
right to use the Spice Facility. TAV agrees and covenants that its use of the
Spice Facility will be only in accordance with the Lease Agreement and subject
to all terms of the Lease Agreement. TAV will make no alteration, addition or
improvement in and to the Spice Facility without Dixie's prior written consent.
4.2. Responsibility. TAV is responsible for all
maintenance and repairs to the Spice Facility and all other out-of-pocket
expenses incurred by Dixie in connection with TAV's use of the Spice Facility,
including without limitation, utilities,
-6-
<PAGE> 7
janitorial services and repairs occasioned by the negligence or intentional act
of TAV and its employees, resulting from the use of the Spice Facility by TAV
during the term of this Article IV; provided, however, TAV shall not be
responsible for any of the lease payments, personal property taxes (except on
inventory and other personal property belonging to TAV) and general maintenance
and repair to the Spice Facility not resulting from the use of such facility by
TAV. Dixie will forward to TAV promptly upon receipt, all invoices or other
documentation reflecting any out-of-pocket expenses payable by TAV pursuant to
this Article IV and TAV will promptly pay such amounts to Dixie.
4.3. Term. The use and occupancy of the Spice Facility by
TAV will be for a term of 45 days ending on the close of business on July 14,
1995. TAV may terminate this Article IV sooner by providing to Dixie 5 days
written notice. Upon termination of this Article IV, TAV will vacate the Spice
Facility, leaving the Spice Facility in the condition it was in on the date
hereof, except for ordinary wear and tear, and shall remove any inventory or
property belonging to TAV within 5 days.
4.4. Indemnification. TAV shall defend, indemnify and
hold Dixie, its subsidiaries, shareholders, affiliates, officers, directors,
employees, agents, successors and assigns from and against each and every loss,
damage, injury, harm, detriment, decline in value, lost opportunity, liability,
exposure, claim, demand, proceeding, settlement, judgment, award, fine,
penalty, tax, fee, charge, cost or expense (including without limitation,
interest, penalty, costs of preparation and investigation, and the fees,
disbursements and expenses of any attorney or other professional advisor)
arising out of, or relating, directly or indirectly to or resulting from: (i)
the conduct of TAV's business at the Spice Facility and (ii) any acts or
omissions of any employees, agents, servants, invitees, or licensees of TAV or
any of its subsidiaries', employees or agents at or relating to the Spice
Facility. TAV will maintain appropriate general liability, workers'
compensation and other insurance of a nature and amount reasonably acceptable
to Dixie for its operations at the Spice Facility.
ARTICLE V. GENERAL TERMS
5.1. Dispute Resolution. If the parties to this Agreement
are unable to resolve any dispute between themselves arising out of this
Agreement within thirty (30) days after either party gives the other notice of
such dispute, then the parties shall submit the dispute to mediation pursuant
to the provisions of Section 5.1.1 hereof.
5.1.1. Mediation. Each and every controversy or
claim between the parties and arising out of or relating to this Agreement that
the parties have not resolved pursuant to Section 7
-7-
<PAGE> 8
shall be submitted by the parties to mediation before any other action shall be
taken with respect thereto. Any party desiring to institute such mediation
process shall provide written notice to the other parties of the nature of such
controversy or claim and within ten (10) days of such notice shall submit the
matter for mediation to any reputable, recognized alternative-to-litigation
program doing business in Kansas City, Missouri. The parties shall comply with
the rules and regulations of such organization and shall meet and confer at
reasonable times upon reasonable notice in order to resolve any such
controversy or claim. The parties shall pursue mediation in good faith and in
a cooperative effort and shall not withdraw from the mediation process
arbitrarily. If such mediation fails to resolve the dispute within forty-five
(45) days of the date of the notice submitting the matter to mediation, such
controversy or claim shall be settled in accordance with the provisions of
Section 5.1.2. hereof.
5.1.2. Arbitration. Each and every controversy or
claim arising out of or relating to this Agreement, not otherwise disposed of
pursuant to the provisions of Section 4.1 and/or 5.1.1. above, shall be settled
by arbitration conducted pursuant to the Commercial Arbitration Rules of the
American Arbitration Association, except as may be otherwise provided herein.
This agreement to arbitrate shall survive the rescission or termination of this
Agreement. If available, the panel used shall be selected from the "Food
Industry Panel" employed by the American Arbitration Association and the
decision of the arbitrators shall be final and binding on all parties. All
arbitration shall be undertaken pursuant to the Federal Arbitration Act, where
applicable, and the decision of the arbitrators shall be enforceable in any
court of competent jurisdiction. Notice of the demand for arbitration shall be
filed in writing with the other party to this agreement and with the Kansas
City, Missouri office of the American Arbitration Association, which such
demand shall set forth in the same degree of particularity as required for
complaints under the Federal Rules of Civil procedure the claims to be
submitted to arbitration. Within thirty (30) days after the demand for
arbitration the parties shall exchange appropriate copies of all documents on
which their respective claims and defenses are based and a list of all persons
whom the parties will call as witnesses with respect to such claims and
defenses. In no event shall the demand for arbitration be made after the date
when institution of legal or equitable proceedings based on such claim, dispute
or other matter in question would be barred by the applicable statutes of
limitations. This Agreement to arbitrate may be specifically enforced by a
court of competent jurisdiction.
In any dispute in which any party seeks in excess of $50,000
in damages, three arbitrators shall be employed. In all disputes, the
arbitrator(s) shall not award consequential or punitive damages. Each party
hereby waives the right to consequential and punitive damages and agrees to
receive only those
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<PAGE> 9
actual damages resulting from the claim asserted. The arbitrators are by this
agreement directed to conduct the arbitration hearing no later than six months
from the service of the statement of claim and demand for arbitration unless
good cause is shown establishing that the hearing cannot fairly and practically
be so convened. The arbitrators shall have the authority and jurisdiction to
enter any pre-arbitration awards that would aid and assist the conduct of the
arbitration or preserve the parties' rights with respect to the arbitration as
the arbitrators shall deem appropriate in their discretion. The award of the
arbitrators shall be in writing and it shall specify in detail the issues
submitted to arbitration and the award of the arbitrators with respect to each
of the issues so submitted.
The provisions of the Federal Rules of the Civil Procedure
relating to the right of discovery in civil actions shall be applicable to such
arbitration proceedings except as modified by the terms of this Agreement.
Except as needed for presentation in lieu of a live appearance, depositions
shall not be taken. The parties shall be entitled to engage in document
discovery by requesting production of documents. Responses or objections to
such requests shall be served twenty (20) days after receipt of a request. The
arbitrators shall resolve any discovery disputes by such prehearing conferences
as may be needed. All parties agree that the arbitrator(s) and any counsel of
record to the proceeding shall have the power of subpoena process as provided
by law.
The prevailing party as determined by the arbitrators shall be
entitled to recover form the losing party reasonable expenses, attorneys' fees
and costs incurred in connection with the arbitration and the mediation and in
the enforcement or collection of any judgment or award rendered therein. The
prevailing party means the party determined by the arbitrators to have most
nearly prevailed, even if such party does not prevail in all matters, or is not
the party in whose favor an award is rendered. Included within the cost
recoverable pursuant to the terms of this Section shall be included services of
process costs, filing fees, mediation fees, arbitration fees, arbitrators'
fees, court and reporter costs, investigative costs, and expert witness fees.
The award pursuant to such arbitration will be final, binding
and conclusive upon final determination of the award, the parties determined
obligated to pay will pay to the party determined entitled thereto, within
thirty (30) days of such final determination, the full amount, in cash, of such
award (which shall include such fees and costs as awarded by the arbitrators).
In addition, if the party determined to be obligated to pay does not pay in
full the award, the same will be increased by 10% per annum for the period that
it is not paid in full.
The parties recognize that this Agreement shall create between
them a kind of relationship that could give rise to the
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<PAGE> 10
need by one or more of the parties for emergency judicial relief. Either party
shall be entitled to pursue such relief for emergency or preliminary injunctive
relief in any court of competent jurisdiction, but immediately following the
issuance of any such emergency or injunctive relief each party shall consent to
the stay of such judicial proceedings on the merits pending arbitration of all
underlying claims between the parties.
5.2. Attorneys' Fees and Costs. In the event suit is
brought to enforce any of the terms of this Agreement, the losing party shall
pay to the prevailing party its reasonable attorneys' fees and costs incurred
in any proceeding to enforce the terms of this Agreement.
5.3. Amendment or Waiver. This Agreement shall not be
amended, nor shall any of its terms be deemed to have been waived by either
party, unless such amendment or waiver be in writing and signed by the parties
hereto.
5.4. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Oklahoma.
5.5. Counterparts. This Agreement may be executed in
multiple counterparts, which taken together shall constitute one instrument and
each of which shall be considered an original for all purposes.
5.6. Time is of the Essence. The parties agree that time
is of the essence under this Agreement.
5.7. Notices. All communications required or permitted
under this Agreement shall be in writing, and sent to the following addresses
or to such other address requested by the parties by notice as herein provided:
(1) Notices to Wilson or Dixie:
Wilson Foods Corporation
P.O. Box 26724
Oklahoma City, Oklahoma 72126
Attention: Mr. David J. Clapp
(2) Notices to TAV:
Thorn Apple Valley, Inc.
18700 West Ten Mile Road
Southfield, Michigan 48075
Attention: Mr. Joel Dorfman
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<PAGE> 11
5.8. Miscellaneous.
5.8.1. Binding Effect. This Agreement shall inure
to the benefit of, and be binding upon, the parties hereto, their respective
successors and assigns. Provided, however, that neither this Agreement nor the
rights and obligations hereunder shall be assignable by either party without
the written consent of the other, and any purported assignment in contravention
hereof shall be void.
5.8.2. Schedules. Any Schedule attached hereto is
made a part hereof and is fully incorporated herein by reference.
5.8.3. Entire Agreement. This Agreement embodies
the entire understanding of the parties hereto in relation to the purchase of
products by Wilson or TAV and supersedes any other agreement between the
parties to the extent the latter covers the same subject matters; provided, in
the event of any conflict between this Agreement and the Asset Purchase
Agreement, the terms of the Asset Purchase Agreement shall control. There are
no representations, promises, warranties, understandings or agreements, express
or implied, oral or otherwise, in relation thereto, except expressly referred
to or set forth herein.
5.8.4. Headings. Headings or captions of the
paragraphs in this Agreement are for convenience of reference only, and in no
way define or limit or describe the intent of this Agreement or any provision
of any paragraph hereof.
5.8.5. Partial Invalidity. In the event that any of
the provisions or portions thereof of this Agreement are held to be
unenforceable or invalid by any court of competent jurisdiction, the validity
and enforceability of the remaining provisions or portions hereof shall not be
affected thereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
FOODBRANDS AMERICA, INC.
By /s/ William L. Brady
--------------------------------
William L. Brady, Vice President
WILSON FOODS CORPORATION
By /s/ William L. Brady
--------------------------------
William L. Brady, Vice President
"WILSON"
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<PAGE> 12
DIXIE FOODS COMPANY
By /s/ William L. Brady
--------------------------------
William L. Brady, Vice President
"DIXIE"
THORN APPLE VALLEY, INC.
By /s/ Joel Dorfman
--------------------------------
Joel Dorfman
President and Chief Operating
Officer
"TAV"
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<PAGE> 1
EXHIBIT 10.3
TRANSITION SERVICE AGREEMENT
This Transition Service Agreement is made and entered into as of this
30th day of May, 1995 (the "Agreement") by and between Foodbrands America,
Inc., a Delaware corporation ("Foodbrands") and Thorn Apple Valley, Inc., a
Michigan corporation ("TAV") with reference to the following:
(i) Foodbrands and certain of its affiliates, as Sellers,
and TAV, as Purchaser, are parties to an Asset Purchase Agreement dated as of
the 29th day of April, 1995 as amended by First Amendment to Asset Purchase
Agreement dated as of May 26, 1995 (the "Purchase Agreement");
(ii) Terms used herein, which are not otherwise defined,
shall have the meanings set forth in the Purchase Agreement;
(iii) Pursuant to the Purchase Agreement, TAV has this date
purchased the Facilities and other assets previously operated as the Division
by Foodbrands;
(iv) Foodbrands provides certain services and functions to
the Division which are not included in the Purchased Assets and it is not
practical for TAV to provide all of these services immediately upon
consummation of the Purchase Agreement; and
(v) TAV desires to have Foodbrands to continue to perform
certain of the services previously provided by Foodbrands, as hereinafter
specifically set forth.
NOW, THEREFORE, for good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Foodbrands and TAV agree
as follows:
1. Term; Extended Term. This Agreement shall commence
on the Closing Date and shall continue, unless terminated sooner by agreement
of the parties or upon not less than sixty days notice by TAV, for six months
after the Closing Date. TAV, upon written notice given to Foodbrands not less
than 30 days prior to the end of the then existing term, has two options to
extend this Agreement for an additional three months on each option(the
"Extended Term"). During the Extended Term all provisions of this Agreement
shall continue unaffected; provided, TAV shall reimburse Foodbrands for all
increased expenses and out-of-pocket cost, subject to reasonable documentation
provided by Foodbrands, resulting to Foodbrands as a result of TAV extending
the term, including without limitation, any cost resulting from the expansion
(purchase of additional hardware or otherwise) of the MIS System as reasonably
determined by Foodbrands to accommodate TAV's use during the Extended Term.
2. Office Space. In accordance with the terms of this
Agreement, Foodbrands will, or will cause its subsidiaries to,
<PAGE> 2
provide to TAV office space at the corporate headquarters of Foodbrands in
Oklahoma City, Oklahoma (consisting of Suite 900W, 2601 Northwest Expressway,
and referenced to herein as the "Corporate Premises") and at the Edwardsville,
Kansas facility of Foodbrands (the "Edwardsville Premises"), of the nature and
quality as previously utilized by the employees of the Division which are hired
by TAV (the "Transferred Employees") at such locations. Foodbrands is not
guaranteeing or agreeing to provide space of any specific location or square
footage, but is agreeing to provide space consistent with the needed at such
locations by the Transferred Employees. Foodbrands may, from time to time,
require TAV to relocate the Transferred Employees within any given building
but will give TAV reasonable notice under the circumstances. The use and
occupancy by TAV of the space is subject to the following:
2.1 Certain personal property within the space
previously occupied by the Transferred Employees is being transferred to TAV at
Closing; other personal property at such locations is used by the Transferred
Employees but is owned by Foodbrands. To the extent the Transferred Employees
used such personal property of Foodbrands in connection with their employment
by the Division, the use of the office space in question includes the use of
such personal property. The office space and the personal property, if
applicable, to be provided pursuant to this Agreement shall be referred to as
the "Premises" or as the Corporate Premises or Edwardsville Premises, where
applicable.
2.2 The Premises will be used by TAV solely for
the purpose of conducting its continuation of the business previously conducted
by the Division.
2.3 The rent payable for the Corporate Premises
shall be equal to the actual cost of such space to Foodbrands; no additional
rent is payable for the Edwardsville Premises. The rent owed pursuant to this
Section 2.3 shall be payable on or before the 8th day of each calendar month
throughout the term of this Agreement, and shall be paid in advance. The
current amount of rent for the Corporate Premises is $7,600 per month;
Foodbrands will notify TAV of any increase or additional charges attributable
to the Corporate Premises.
2.4 TAV's use of the Premises shall be in
compliance with all applicable laws and the terms of all leases pursuant to
which Foodbrands holds the Premises. TAV shall not be responsible for any
maintenance and repair of the Premises nor responsible for any routine
janitorial services. Upon expiration of this Agreement, Tenant will vacate and
surrender the Premises in the condition they were in on the date hereof, except
for ordinary wear and tear. TAV shall make no alteration, addition, or
improvement in or to the Premises without Foodbrands' prior written consent.
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<PAGE> 3
2.5 The use of the Edwardsville Premises includes
all utility services used on or from the Edwardsville Premises during the term
hereof consistent with the utility services previously provided to such
Premises. TAV's use of the utility services shall be limited to those
reasonably necessary for the operations of its business consistent with past
practice of the Division. By way of illustration and not limitation,
Foodbrands is not required to provide separate telephone lines or special
utilities required by any computer equipment used by TAV, except to the extent
such services are already available to such Premises. All utility services
provided at the Corporate Premises will be the responsibility of TAV.
Foodbrands shall not be liable for any damage caused by any interruption or
failure of utility services to the Premises.
2.6 At the Edwardsville Premises TAV shall have
access to and be permitted to use the administrative office services provided
by Foodbrands at such location, consistent with past practices.
"Administrative office services" shall mean use of copying machines, postage
and mailing services and reception services. There shall be no additional
charge for administrative office services other than for actual postage
charges, so long as TAV's use thereof is reasonable and consistent with past
practice. All existing telephone equipment is and shall continue to be owned
by Foodbrands. Foodbrands will bill TAV separately for all long distance
charges attributable to TAV and shall bill TAV its pro rata (based on number of
employees using telephones) portion of any local and services charges. All
administrative office services and telephone charges at the Corporate Premises
shall be the responsibility of Foodbrands provided, however, TAV shall be
responsible and reimburse Foodbrands for all long distance charges.
2.7 All amounts payable under this Section 2 of
this Agreement shall be prorated for any partial period.
3. Distribution Center Services. In connection with the
operation of Division, Foodbrands previously utilized its distribution center
in Edwardsville, Kansas (the "Distribution Center") as the storage and
distribution facility for the Division. Foodbrands will continue to provide
distribution services for TAV during the term of this Agreement, on the
following terms:
3.1 Unless otherwise agreed by the parties, all
employees, hourly and salaried of Foodbrands located at the Distribution Center
will continue to be employees of Foodbrands and not TAV. All responsibility
for and duties relating to billing, accounts receivable, deduction research and
resolution, credit management, accounts payable, product management, export
sales, inventory management, supply and capital purchasing, meat procurement,
legal, tax and cash management, payroll and other services previously provided
by Foodbrands for the Division, except to the extent specifically set forth in
this Agreement, will be
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<PAGE> 4
performed by employees of TAV who may or may not be located at the Distribution
Center.
3.2 Foodbrands will provide reasonable storage
space in the Distribution Center or an adjacent cold storage facility for all
finished product of TAV produced from the Facilities or pursuant to the Copack
Agreements ("Inventory"). The services to be rendered by Foodbrands pursuant
to this Agreement are limited to the Inventory and in volumes consistent with
past practices (the "Planned Volume").
3.3 The risk of loss for delays, interruptions,
spoilage, breakage and shrinkage shall be with TAV; provided, Foodbrands will
be liable to the extent that its acts constitute gross negligence or willful
misconduct. Any damage or destruction to Inventory caused by personnel of
Foodbrands during the term of this Agreement shall be the responsibility of
Foodbrands and Foodbrands shall reimburse TAV the book value of such Inventory
based on the same accounting convention and methodology currently used and
consistently applied by Foodbrands. TAV will obtain business interruption and
other insurance insuring the Inventory; such insurance will contain provisions
waiving any subrogation rights against Foodbrands.
3.4 TAV is responsible for procuring and
coordinating the shipping of Inventory to the Distribution Center. All
deliveries will be made to the Distribution Center in accordance with the
established policies and procedures of Foodbrands.
3.5 Foodbrands will provide transportation and
traffic services from the Distribution Center for TAV during the term of this
Agreement. "Transportation and traffic services" shall mean the shipping and
distribution of the Inventory from the Distribution Center in accordance with
orders and shipping instructions supplied by TAV. All orders and shipping
instructions of TAV will be supplied by TAV and processed by Foodbrands in
accordance with its established policies and procedures and in accordance with
past practices for the Division. Shipments of the Inventory in accordance with
such orders and shipping instructions will be made by carriers operating under
contract with Foodbrands and will be consolidated with other shipments being
made by Foodbrands for its own account. All actual costs and expenses
associated with shipping the Inventory shall be the responsibility of
Foodbrands. TAV shall pay Foodbrands for all transportation and traffic
services in accordance with the freight arbitrary rates set forth on Schedule
3(B) hereto. Foodbrands will provide to TAV on a daily basis copies of all
bills of lading and other shipping reports reflecting the amounts shipped
during such period. TAV shall pay Foodbrands the amount due and owing for such
transportation and traffic services within seven (7) days after receipt of the
invoice. In the absence of manifest error, the
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<PAGE> 5
records maintained in the ordinary course of business by Foodbrands shall be
controlling.
3.6 TAV acknowledges that Foodbrands is not responsible or
liable for any acts of the carriers utilized by Foodbrands for the shipping of
the Inventory. Without limiting the generality of the foregoing, Foodbrands
will not be liable to TAV for any delays caused by the carrier nor for any
damage or spoilage occurring to the Inventory while in the hands of the
carrier. Foodbrands will assign to TAV or otherwise assist TAV in collecting
any damages or reimbursement Foodbrands may be entitled to recover from a
carrier with respect to the Inventory.
4. MIS and Computerized Business Systems. Prior to the
Closing, Foodbrands provided to the Division access to its computers and
management information system (the "MIS Services"). Foodbrands agrees to
continue to provide the MIS Services as previously provided to the Division on
the following terms:
4.1 The existing MIS Services will be provided on
an "AS IS" basis. Foodbrands will be responsible for any routine upkeep
required to keep the system running in accordance with past practices of
Foodbrands. Any incremental expense incurred on the existing system to allow
TAV to continue to use the MIS Services, will be charged to TAV at the actual
out-of-pocket costs to Foodbrands. To the extent reasonably practicable,
Foodbrands will accommodate any request for modifications made by TAV,
provided, TAV will bear all actual expenses incurred. TAV acknowledges that
Foodbrands is not and cannot be responsible for processing and resultant output
thereof. Foodbrands makes no warranty, expressed or implied, with respect to
the MIS Services, nor does Foodbrands guarantee the correctness of any
information furnished under such services except that Foodbrands will use its
reasonable best efforts to correct any errors in accordance with past
practices.
4.2 All data, documents, material and information
("Data") arising after the Closing Date relating to the Purchased Assets and
TAV's operation thereof will remain the property of TAV. It will be the
responsibility of TAV to transmit all Data necessary for Foodbrands to perform
the MIS Services to Foodbrands' equipment. Foodbrands shall have no
responsibility or liability for any delay, damage or loss resulting from
transportation, transmission or processing of the Data. Upon termination of
this Agreement, Foodbrands will cooperate and assist TAV (excluding any
obligation to make out-of-pocket expenditures) in transferring the Data to TAV
and will delete the Data from the MIS System; provided, Foodbrands will keep a
tape medium copy of the Data for its records.
4.3 All software, systems, programs and modules
("Software") and all equipment ("Hardware") associated with the MIS Services,
other than the equipment which was assigned to TAV
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<PAGE> 6
pursuant to the Purchase Agreement, shall remain the property of Foodbrands.
TAV is not granted any rights in or to such Software or Hardware other than the
limited access granted during the term of this Agreement.
4.4 TAV may cause to be installed, at TAV's expense,
necessary telephone lines, communications equipment and software (all subject
to the reasonable approval of Foodbrands), to allow TAV to establish a
communications link between TAV's IBM AS/400 computer and Foodbrands, IBM
AS/400 computer located at its Oklahoma City office for purposes of
transmitting Data relating to the Division.
4.5 TAV agrees that (i) TAV will not provide access
to the MIS Services to any other person, (ii) TAV will not provide access to
the MIS Services to any employees or agents of TAV except those conducting the
business previously conducted by the Division, and (iii) no employee or agent
of TAV will access, copy or utilize any Data of Foodbrands. Foodbrands may
terminate this Agreement without notice for a material violation of this
Section 4.5.
4.6 Foodbrands will perform routine backup
procedures of the MIS System in accordance with past practices.
5. Fees. In addition to the rent and fees payable
pursuant to Sections 2.3 and 3.5 above, TAV shall pay to Foodbrands, on a
monthly basis no later than the 8th day of each month, in advance, an amount
equal to $59,400 per week less the cost of any salaried employees of Foodbrands
at the Distribution Center hired by TAV as described in Section 3.1 above. To
the extent the actual volume of Inventory delivered to or shipped from the
Distribution Center is in excess of 110% of the Planned Volume, TAV shall
reimburse Foodbrands for any incremental cost incurred by Foodbrands as a
result of such increase.
6. Indemnification by TAV. TAV shall defend, indemnify
and hold Foodbrands, its subsidiaries and each of their respective
shareholders, affiliates, officers, directors, employees, agents, successors
and assigns from and against each and every loss, damage, injury, harm,
detriment, decline in value, lost opportunity, liability, exposure, claim,
demand, proceeding, settlement, judgment, award, fine, penalty, tax, fee,
charge, cost or expense (including, without limitation, interest, penalties,
costs of preparation and investigation, and the fees, disbursements and
expenses of any attorney or other professional advisor) arising out of, or
relating, directly or indirectly to or resulting from: (i) the conduct of
TAV's business on the Premises; and (ii) any acts or omissions of any
employees, agents, servants, invitees, or licensees of TAV or any of its
subsidiaries, employees or agents. Foodbrands may, from time to time, request
that TAV provide Foodbrands with evidence that TAV has general liability
insurance
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<PAGE> 7
of a nature and amount reasonably acceptable to Foodbrands, with Foodbrands
named as an additional insured thereunder.
7. Limitation of Liability. Foodbrands will not be
liable for any loss of business, special, incidental or consequential damages
of any kind, even if Foodbrands has been advised of the possibility of such
damage, including losses suffered by any buyer from TAV, notwithstanding the
cause for any such loss or damage.
8. Force Majeure. If because of any occurrence or
condition beyond the reasonable control of Foodbrands, Foodbrands is unable to
carry out any of its obligations under this Agreement, and if Foodbrands
promptly gives to TAV at the beginning of the period of force majeure or soon
thereafter as is practical under the circumstances written notice of such
cause, then in such event, Foodbrands shall be at liberty to suspend the
performance by both parties under this Agreement during the continuance of the
events or conditions causing delay, or prevention, and no liability for damage
shall attach to either party for such suspension. Foodbrands shall take all
reasonable measure to resume performance under this Agreement at the earliest
possible time except Foodbrands reserves the right to settle strikes on its own
decision. The term "force majeure" shall include without limitation, acts of
God; acts of the public enemy; insurrections; riots, labor disputes; labor or
material shortages; fires; explosions; floods; weather conditions; breakdown or
damage to plants, railroads, equipment or facilities not resulting from lack of
due diligence on the part of the parties to this Agreement or their agents;
subcontractors' embargoes; orders or acts of civil or military authority;
requirements of any government and other causes of similar nature which wholly
or partly prevent the delivery, loading, transportation, transfer of the
commodities hereunder or provision of the surfaces contemplated hereby.
9. Confidentiality by TAV. TAV acknowledges that TAV
will be exposed to confidential and proprietary subject matter which may
constitute trade secrets of Foodbrands and accordingly, TAV agrees that the
Information (as defined below) of Foodbrands shall be deemed confidential.
Neither TAV, nor its officers, directors, employees or agents shall (i) make
copies of, take, distribute or reveal the contents of all or any portion of any
computer programs (source code or modules), program documentation, user
manuals, Data, shipping information, rates, charges, customer lists, suppliers,
product information, distribution methods, proprietary information, methods or
processes (the "Information") of Foodbrands without the written consent of an
officer of Foodbrands; or (ii) use the Information of Foodbrands in a manner
which would be harmful to Foodbrands or its customers, or which would give TAV
a competitive advantage as a result of using this Information. Nothing
contained in this Section shall be construed as prohibiting TAV, its officers,
directors, employees or agents
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<PAGE> 8
from utilizing in any manner, knowledge and experience of a general nature or
such Information as is available to the public in general. The provisions of
this Section 9 shall survive the termination of this Agreement for a term of
two years.
10. Confidentiality by Foodbrands. Foodbrands
acknowledges that Foodbrands will be exposed to confidential and proprietary
subject matter which may constitute trade secrets of TAV and accordingly,
Foodbrands agrees that the Information (as defined below) of TAV shall be
deemed confidential. Neither Foodbrands, nor its officers, directors,
employees or agents shall (i) make copies of, take, distribute or reveal the
contents of all or any portion of any computer programs (source code or
modules), program documentation, user manuals, Data, shipping information,
rates, charges, customer lists, suppliers, product information, distribution
methods, proprietary information, methods or processes (the "Information") of
TAV without the written consent of an officer of TAV; or (ii) use the
Information of TAV in a manner which would be harmful to TAV or its customers,
or which would give Foodbrands a competitive advantage as a result of using
this Information. Nothing contained in this Section shall be construed as
prohibiting Foodbrands, its officers, directors, employees or agents from
utilizing in any manner, knowledge and experience of a general nature or such
Information as is available to the public in general. The provisions of this
Section 10 shall survive the termination of this Agreement for a term of two
years.
11. Assignments. This Agreement and all rights and
duties hereunder shall not, without the prior written consent of the parties
hereto, be assigned by either of the parties hereto or by operation of law.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns.
12. Governing Law. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of
Oklahoma.
13. Sales Tax. All applicable state and local sales
taxes shall be added to the charges to TAV contemplated by this Agreement.
14. Attorneys' Fees. If any action or proceeding is
commenced by any party hereto for the purpose of enforcing any provision of
this Agreement, the prevailing parties in such action or proceeding may receive
as part of any award, judgment, decision or resolution of such action or
proceeding, their cost and reasonable attorneys' fees.
15. Entire Agreement. This Agreement, together with the
Schedules hereto, contains the entire understanding of the parties with regard
to the subject matter hereof, supersedes all prior
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<PAGE> 9
agreements and understandings relating to the subject matter hereof, and shall
not be amended except by a written instrument hereafter signed by all the
parties hereto.
16. Counterparts. This Agreement may be executed by the
parties in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument.
17. Disputes. Any disputes arising under the provisions
of this Agreement shall be resolved by means of arbitration in accordance with
Section 15.10 of the Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
FOODBRANDS AMERICA, INC. a Delaware
corporation
By /s/ R. Randolph Devening
--------------------------------------
R. Randolph Devening, President
THORN APPLE VALLEY, INC. a Michigan
corporation
By /s/ Louis Glazier
--------------------------------------
Louis Glazier, Executive Vice President
Finance and Administration
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