SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 22, 1994
INTERNATIONAL MULTIFOODS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 1-6699 41-0871880
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
33 South Sixth Street, Minneapolis, Minnesota 55402
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (612) 340-3300
Not applicable
(Former name or former address,
if changed since last report)
Item 2. Acquisition or Disposition of Assets.
On August 22, 1994, Multifoods Distribution, Inc., a wholly-owned
subsidiary of International Multifoods Corporation (the "Company"),
purchased, pursuant to an Asset Purchase Agreement dated as of July 29,
1994, substantially all of the assets of Leprino Foods Company's
specialty foodservice distribution business. The Asset Purchase
Agreement also provided for the purchase of three distribution
warehouses from James G. Leprino, the principal shareholder of Leprino
Foods Company. Leprino Foods Company is a privately held manufacturer
and distributor of products to the foodservice industry, with its
principal offices located in Denver, Colorado. The assets purchased
include an aggregate of seven distribution warehouses and leasehold
interests in two distribution warehouses and substantially all of the
furniture, furnishings, leasehold improvements, fixtures, equipment,
machinery, motor vehicles, spare parts, inventory, supplies, accounts
and notes receivable, intellectual property rights, interests in
personal property leases, contracts and agreements and interests in
purchase orders of Leprino Foods Company used primarily in, or otherwise
primarily related to or necessary for, the specialty foodservice
distribution business. The Company also assumed certain liabilities of
Leprino Foods Company. Pursuant to the Asset Purchase Agreement,
Leprino Foods Company and Mr. Leprino and their affiliates have agreed
not to compete with any business in which the specialty foodservice
distribution business of Leprino Foods Company was engaged within one
year prior to the purchase of such business by the Company for a term of
five years.
The purchase price paid to Leprino Foods Company for the assets and
the covenant not to compete was $99,513,191 and the purchase price paid
to Mr. Leprino for the three distribution warehouses and his covenant
not to compete was $12,125,000, which amounts were paid in cash on the
closing date. The aggregate purchase price of $111,638,191 was arrived
at by negotiation among the Company, Leprino Foods Company and
Mr. Leprino. The Company received the majority of the funds for the
purchase price pursuant to a Credit Agreement, dated as of December 17,
1990, among the Company, Chemical Bank, Canadian Imperial Bank of
Commerce, Bank of America National Trust and Savings Association, Morgan
Guaranty Trust Company of New York, Continental Bank N.A., First Bank
National Association and Norwest Bank Minnesota, N.A. The Company also
borrowed additional funds from National Westminster Bank PLC and
Wachovia Bank of Georgia, N.A. The Company previously had reduced its
debt obligations by approximately $136,000,000 in June 1994 upon receipt
of the proceeds from the divestiture of the Company's Frozen Specialty
Foods business.
The assets purchased by the Company were used by Leprino Foods
Company to serve customers in the foodservice industry through a
full-line foodservice distribution network which supplies primarily
pizza and select limited menu establishments. The Company intends to
continue using such assets in the same manner as they were being used
prior to the transaction and to integrate the Company's Pueringer
distribution business with the business acquired. The Company intends
to lease space in Denver, Colorado for administrative offices for
the specialty foodservice distribution business acquired.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Financial statements of Leprino Foodservice Distribution
(a division of Leprino Foods Company) as of June 4, 1994
and October 30, 1993 and for the 31 weeks ended
June 4, 1994 and the fiscal year ended October 30, 1993,
including notes thereto.
(b) Pro forma financial information.
Pro forma financial information reflecting the acquisition
of the specialty foodservice distribution business of
Leprino Foods Company, as described above in Item 2.
(c) Exhibits.
2.1 Asset Purchase Agreement among Multifoods
Distribution, Inc. (Buyer), International Multifoods
Corporation (Buyer's Parent) and Leprino Foods
Company (Seller) and James G. Leprino (Seller's
Shareholder) dated as of July 29, 1994.
LEPRINO FOODSERVICE
DISTRIBUTION
FINANCIAL STATEMENTS
June 4, 1994 and October 30, 1993
[Letterhead of Price Waterhouse L.L.P.]
Report of Independent Accountants
July 29, 1994
To the Board of Directors
and Stockholders of
Leprino Foods Company
In our opinion, the accompanying balance sheet and the related
statements of income and of cash flows present fairly, in all material
respects, the financial position of Leprino Foodservice Distribution (a
division of Leprino Foods Company) at June 4, 1994 and October 30, 1993
and the results of its operations and its cash flows for the 31 weeks
ended June 4, 1994 and for the year ended October 30, 1993, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Division's
management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable
basis for the opinion expressed above.
/s/ Price Waterhouse LLP
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
BALANCE SHEET
June 4, October 30,
Assets 1994 1993
(in thousands)
Current assets
Cash $ 3 $ 3
Receivables, net 22,726 20,142
Inventories 22,370 21,544
Total current assets 45,099 41,689
Property, plant and equipment, net 19,083 17,748
Other assets 92 96
$64,274 $59,533
Liabilities and division equity
Current liabilities
Accounts payable $16,567 $13,411
Accrued expenses and liabilities 3,353 4,190
Total current liabilities 19,920 17,601
Deferred liabilities 364 288
Interdivisional payable - 994
Commitments
Division equity 43,990 40,650
$64,274 $59,533
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF INCOME
31 Weeks
Ended
June 4, October 30,
1994 1993
(in thousands)
Net sales $244,040 $364,585
Expenses
Cost of sales 214,909 319,098
Selling and distribution 17,889 26,826
General and administrative 7,801 11,644
240,599 357,568
Income before provision for income taxes 3,441 7,017
Provision for income taxes 101 206
Net income $ 3,340 $ 6,811
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF CASH FLOWS
31 Weeks
Ended
June 4, October 30,
1994 1993
Cash flows from operating activities
(in thousands)
Net income $3,340 $6,811
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation 1,454 2,396
Provision for doubtful accounts 98 (1,482)
Net (gain) loss on disposition of
property, plant and equipment (36) (118)
Changes in asset and liabilities
Receivables (2,682) (3,605)
Inventories (826) (4,244)
Accounts payable and accrued liabilities 2,395 2,014
Net cash provided by (used for)
Operating activities 3,743 1,772
Investing activities (2,749) (1,287)
Financing activities (994) (485)
Net increase in cash 0 0
Cash and cash equivalents beginning of period 3 3
end of period $ 3 $ 3
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
STATEMENT OF CASH FLOWS
(continued)
31 Weeks
Ended
June 4, October 30,
1994 1993
Cash flows from investing activities
(in thousands)
Capital expenditures $(2,938) $(1,842)
Proceeds from sales of property,
plant and equipment 185 551
Other 4 4
Net cash used for investing activities $(2,749) $(1,287)
Cash flows from financing activities
Net change in interdivisional payable $ (994) $ (485)
Net cash provided by (used for)
financing activities $ (994) $ (485)
The accompanying notes are an integral part of the financial statements.
LEPRINO FOODSERVICE DISTRIBUTION
(A DIVISION OF LEPRINO FOODS COMPANY)
NOTES TO FINANCIAL STATEMENTS
NOTE 1:
General Information
Leprino Foodservice Distribution (FSD, a division of Leprino Foods
Company) serves customers in the foodservice industry through a full-
line foodservice distribution network which supplies primarily pizza and
select limited menu multi-unit establishments.
On June 17, 1994, Leprino Foods Company (LFC) and its principal
shareholder (Shareholder) signed an agreement in principle (Agreement)
providing for the sale of substantially all of the net assets of LFC's
foodservice distribution business to a wholly-owned subsidiary of
International Multifoods Corporation. The Agreement also calls for the
sale by the Shareholder of three distribution warehouses owned by the
Shareholder and currently leased by FSD. Additionally, the Agreement
provides for certain other definitive agreements which include a cheese
supply agreement that sets forth the buyer's minimum purchase
obligations for LFC's cheese products over a five-year period and a non-
compete agreement precluding LFC from re-entering the foodservice
distribution business in the United States for a minimum of five years.
Sales to a significant franchise concept represented 23.5% of FSD's
sales in 1994 and 25.0% in 1993. No individual franchisee accounted for
sales in excess of 10% in any period presented.
Basis of Presentation and Significant Accounting Policies
Basis of Presentation: The accompanying financial statements present
FSD as if it had existed as a company separate from LFC and includes the
historical assets, liabilities, revenues and expenses that are directly
related to LFC's foodservice distribution business.
FSD's financial statements include all the direct costs of operating the
business. General and administrative expenses specifically incurred by
LFC on behalf of FSD were included while costs which were not incurred
specifically for any of LFC's divisions were allocated to FSD based on
relative assets employed during each period. Management believes the
foregoing allocations were made on a reasonable basis. Nonetheless, the
financial information included herein may not necessarily reflect the
financial position and results of operations of FSD in the future or
what the financial position or results of operations of FSD would have
been as a separate, stand-alone company during the periods presented.
Fiscal year: LFC and FSD utilize a 52 or 53 week convention, with each
year ending on the Saturday nearest October 31. Fiscal year 1993 was 52
weeks. Financial information presented for 1994 is for the 31 week
period ended June 4, 1994. Due to the seasonal nature of FSD's
business, the results of operations for the 31 weeks ended June 4, 1994
are not necessarily representative of such results for a full fiscal
period.
Accounts receivable and accounts payable: The carrying amount of the
accounts receivable and accounts payable balances approximate their fair
value.
Inventories: Inventories are stated at the lower of cost or market,
with cost determined using the first-in, first-out (FIFO) method.
Interdivisional payable: The interdivisional payable balance reflects
the interdivisional financing requirements necessary to reflect FSD as a
separate entity assuming no interdivisional balances were outstanding at
June 4, 1994. No provision for interest has been made on such
interdivisional balances.
Property, plant and equipment: Land, building, and equipment are
capitalized at cost. Depreciation is provided on the straight-line
method over the estimated useful lives of the assets. Ordinary repair
and maintenance are expensed as incurred.
Debt: None of the indebtedness of LFC has been secured or
collateralized by the assets employed in FSD, and accordingly, there
were no debt instruments or interest costs reflected.
Cash: The only cash allocated to FSD were the nominal petty cash
balances maintained at the distribution centers.
NOTE 2 - Receivables
Receivables consist of the following (in thousands):
June 4, October 30,
1994 1993
Trade $23,076 $20,112
Other 761 1,114
Allowance for doubtful accounts (1,111) (1,084)
$22,726 $20,142
In 1991, FSD established a $2.4 million reserve for the possible bad
debt from a major customer. Due to improved circumstances, a portion of
this reserve was reversed in 1993, resulting in an increase to net
income of $1.9 million.
NOTE 3 - Inventories
Inventories consist of the following (in thousands):
June 4, October 30,
1994 1993
Resale products $22,057 $21,249
Supplies 313 295
$22,370 $21,544
NOTE 4 - Property, plant and equipment
Property, plant and equipment consist of the following (in thousands):
June 4, October 30,
1994 1993
Land $1,519 $1,519
Building and improvements 8,787 8,656
Machinery and equipment 9,714 9,445
Furniture and fixtures 2,308 2,321
Transportation equipment 7,050 7,516
Construction in progress 2,212 47
31,590 29,504
Less - accumulated depreciation (12,507) (11,756)
$19,083 $17,748
NOTE 5 - Income taxes
LFC is taxed as an S Corporation under the Internal Revenue Code. As
such, it is not directly liable for federal and, with certain
exceptions, state income taxes. Rather, LFC's income, deductions,
losses and credits pass directly through to its stockholders and such
amounts are included in their individual income tax returns. The
provision for income taxes for FSD is based upon managements' estimate
of those state income taxes applicable to FSD.
NOTE 6 - Commitments
LFC leases certain transportation equipment, distribution warehouses,
and computer equipment applicable to FSD. These leases are accounted
for as operating leases. The transportation equipment leases expire at
various times over the next one to seven years and provide for month-to-
month renewals at the end of the primary terms. The facility leases
generally contain renewal options and escalation clauses and expire over
the next three years. Minimum gross rental commitments under these
leases at October 30, 1993 are as follows (in thousands):
1994 $2,905
1995 1,620
1996 1,142
1997 901
1998 503
Thereafter 109
$7,180
Three of the FSD warehouses are leased from the Shareholder. These
leases expire in 1994. Rental expense under these leases was $516,000
in 1994 and $906,000 in 1993.
Aggregate rental expense under all operating leases was $1,541,000 in
1994 and $2,484,000 in 1993.
NOTE 7 - Employee benefit plans
All full-time employees who have at least one year of continuous
employment are eligible to participate in the LFC's profit sharing plan.
LFC's contribution is determined annually by its Board of Directors.
The portion of the contribution allocated to the employees supporting
FSD was $1,214,000 in 1993. FSD has accrued $510,000 in the 1994
results of operations. LFC's policy is to fund amounts accrued. The
Company may terminate this plan at any time.
LFC has a deferred compensation plan for certain key employees which
provides long-term incentives and an opportunity to participate in the
equity appreciation of LFC. Awards under the plan are based upon a
combination of measured individual performance and financial performance
of LFC. Vested benefits at the time of retirement, death, disability or
severance of employment are payable in ten annual installments at the
time of retirement. The expense for this plan associated with the
eligible employees engaged directly in FSD totaled $76,000 in 1994 and
$129,000 in 1993. Such amounts have not been funded. The deferred
compensation plan has specific provisions for the sale of a division.
Upon completion of the sale of FSD, the affected key employees will no
longer be participants of the plan and their balances will be fully
vested and the associated liability may be funded. LFC has not
determined the additional cost of this occurrence but the amount is not
expected to be significant.
LFC established a retirement savings plan (401(k) Plan) on January 1,
1993, under Section 401(k) of the Internal Revenue Code. Employees who
are at least 21 years old and who have completed one year of eligible
service may become "participants" in the 401(k) Plan. LFC matches 50%
of the participant's contribution to the 401(k) plan not to exceed 3% of
the participant's annual compensation or $1,500, if less. The amounts
expensed for LFC's matching contributions to the 401(k) Plan for
employees supporting FSD were $129,000 in 1994 and $173,000 for 1993.
The financial statements for the 31 weeks ended June 4, 1994 include
charges for the portion of LFC's annual budgeted expenses related to the
profit sharing plan, deferred compensation plan, 401(k) Plan and
employee bonuses applicable to this period.
In December 1990, the FASB issued Statement of Financial Accounting
Standards (FAS) No. 106, "Employers' Accounting for Postretirement
Benefits Other Than Pensions". There is no postretirement benefit
obligation associated with the foodservice distribution business.
In November 1992, the FASB issued FAS No. 112 "Employers' Accounting for
Postemployment Benefits". LFC does not believe that the amount of the
liability, if any, will be material.
NOTE 8 - Related party transaction
FSD purchases mozzarella cheese products from LFC. During 1994 and 1993
FSD purchased $17.9 million and $27.1 million, respectively, for resale
to customers.
INTERNATIONAL MULTIFOODS CORPORATION
Introduction to Pro Forma Consolidated
Condensed Financial Information (Unaudited)
As described in Item 2, on August 22, 1994, the Company completed
the acquisition of substantially all of the assets of Leprino Foods
Company's specialty foodservice distribution business ("Leprino
Distribution Business").
As discussed in the Company's Form 8-K dated June 1, 1994, the
Company completed the divestiture of its Frozen Specialty Foods business
on June 1, 1994 and its Meats business on May 2, 1994. The divestiture
of the Frozen Specialty Foods business resulted in a net gain which
will be reported in the Company's results of operations in the quarter
ended August 31, 1994.
The following unaudited pro forma financial statements reflect the
impact of the transactions described above, in the manner described in
the accompanying notes, to the historical statement of earnings for the
three months ended May 31, 1994, the statement of operations for the
year ended February 28, 1994 and the balance sheet as of May 31, 1994.
The pro forma financial information is not intended to reflect the
results of operations or financial position of the Company which
actually would have resulted had these transactions occurred on the
assumed dates.
The pro forma financial information should be read in conjunction
with the accompanying notes which follow and the historical financial
statements of the Company included in its Annual Report on Form 10-K for
the year ended February 28, 1994 and its quarterly report on Form 10-Q
for the three months ended May 31, 1994.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Balance Sheet
May 31, 1994
(Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)(b)
-------------------------
Historical Divestiture Acquisition Results
<S> <C> <C> <C> <C>
Assets
Current assets:
Cash and equivalents $ 16,052 $ 0 $ 0 $ 16,052
Trade accounts receivable,
net of allowance 133,593 (9,525) 21,851 145,919
Inventories 203,266 (22,376) 22,370 203,260
Other current assets 66,443 1,190 323 67,956
Total current assets 419,354 (30,711) 44,544 433,187
Property, plant and
equipment, net 238,548 (43,598) 31,083 226,033
Goodwill 71,216 (10,977) 34,500 94,739
Other assets 55,744 (19,120) 21,092 57,716
Total assets $784,862 $(104,406) $131,219 $811,675
Liabilities and Shareholders' Equity
Current liabilities:
Notes payable $ 62,753 $(135,772) $110,000 $ 36,981
Current portion of
long-term debt 3,522 (172) 0 3,350
Accounts payable 138,446 (6,700) 16,567 148,313
Other current liabilities 80,869 22,088 4,652 107,609
Total current liabilities 285,590 (120,556) 131,219 296,253
Long-term debt, net of
current portion 188,939 0 0 188,939
Other liabilities 63,776 (13,488) 0 50,288
Total liabilities 538,305 (134,044) 131,219 535,480
Redeemable preferred stock 3,626 0 0 3,626
Shareholders' equity 242,931 29,638 0 272,569
Total liabilities and
shareholders' equity $784,862 $(104,406) $131,219 $811,675
</TABLE>
(a) The pro forma adjustments assume that the Frozen Specialty Foods
divestiture and the Leprino Distribution Business acquisition took place
on May 31, 1994. The Meats business divestiture was completed on May 2,
1994 and, accordingly, the historical balance sheet reflects the effects
of this transaction. The Frozen Specialty Foods divestiture adjustments
reflect the application of proceeds, the elimination of assets
transferred to and liabilities assumed by the buyer, and accruals for
estimated additional costs directly attributable to the divestiture.
The application of proceeds from the divestiture are assumed to reduce
debt obligations. The Leprino Distribution Business acquisition adjustments
reflect the purchase of assets and assumption of liabilities, the use of the
Frozen Specialty Foods divestiture proceeds to fund the purchase and the
recognition of goodwill and other intangible assets.
(b) Goodwill and other assets represent an estimate of the intangible
assets associated with the acquisition.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Earnings
Three Months Ended May 31, 1994
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)
-------------------------
Historical Divestitures Acquisition Results
<S> <C> <C> <C> <C>
Net sales $579,730 $(58,345) $108,056 $629,441
Cost of sales (480,811) 41,942 (95,993) (534,862)
Delivery and distribution (34,553) 3,893 (6,039) (36,699)
Selling, general
and administrative (55,616) 10,989 (4,812) (49,439)
Interest, net (3,355) 1,401(b) (1,100)(c) (3,054)
Corporate (333) 0 0 (333)
Earnings (loss) before
income taxes 5,062 (120) 112 5,054
Income taxes (2,025) 130 (45) (1,940)
Net earnings $ 3,037 $ 10 $ 67 $ 3,114
Net earnings per share
of common stock $ .17 $ 0 $ 0 $ .17
Average shares of common
stock outstanding 18,107 18,107
</TABLE>
(a) The pro forma statement of earnings for the three months ended May
31, 1994 assumes that the Frozen Specialty Foods and Meats businesses
divestitures and the Leprino Distribution Business acquisition took
place on March 1, 1994. The pro forma divestitures adjustments include
the elimination of net sales and expenses of the businesses. The net
gain on the divestiture of the Frozen Specialty Foods business has not
been included. The pro forma acquisition adjustments include the net
sales and expenses of the acquired business for the three months ended
May 31, 1994, amortization of goodwill, depreciation and other
adjustments based on the allocated purchase price of net assets
acquired, and calculation of income taxes based on the Company's tax
rate. The pro forma adjustments do not include the benefits from
synergies the Company anticipates realizing in the future from the
integration of the acquired business and the Company's pizza restaurant
distribution business. The pro forma adjustments also do not include
charges the Company will report in the second quarter ended
August 31, 1994 for integrating these businesses. The Company is
currently in the process of estimating the costs associated with the
integration, which will include the closing of duplicate facilities of
the Company.
(b) The pro forma adjustment to reduce interest expense from the
divestitures is the result of net proceeds which were used to reduce debt
obligations. Net proceeds represent the aggregate sales price reduced by
additional costs directly attributable to the divestiture transactions,
including taxes.
(c) The acquisition pro forma adjustment results in an increase to
interest expense as a result of debt obligations incurred to fund the
purchase price.
International Multifoods Corporation and Subsidiaries
Pro Forma Consolidated Condensed Statement of Operations
Year Ended February 28, 1994
(Unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Pro Forma
--------------------------------------
Adjustments (a)
-------------------------
Historical Divestitures Acquisition Results
<S> <C> <C> <C> <C>
Net sales $2,224,710 $(259,628) $368,947 $2,334,029
Cost of sales (1,810,248) 187,036 (325,399) (1,948,611)
Delivery and distribution (141,838) 16,491 (21,293) (146,640)
Selling, general
and administrative (203,797) 46,285 (18,075) (175,587)
Unusual items (70,007) (70,007)
Interest, net (10,685) 4,290(b) (3,630)(c) (10,025)
Corporate (852) (852)
Losses from unconsolidated
affiliates (12,187) (12,187)
Earnings (loss) before
income taxes (24,904) (5,526) 550 (29,880)
Income taxes 11,466 2,376 (256) 13,586
Net earnings (loss) $ (13,438) $ (3,150) $ 294 $ (16,294)
Net earnings (loss) per
share of common stock $ (.72) $ (.17) $ .02 $ (.87)
Average shares of common
stock outstanding 18,911 18,911
</TABLE>
(a) The pro forma statement of operations for the year ended February
28, 1994 assumes that the Frozen Specialty Foods and Meats businesses
divestitures and the Leprino Distribution Business acquisition took
place on March 1, 1993. The pro forma divestitures adjustments include
the elimination of net sales and expenses of the businesses. The impact
on the net loss per share from the write-down of the Meats business net
assets was $.67 which is included in the historical statement of
operations and has not been eliminated in the pro forma results. The pro
forma acquisition adjustments include the net sales and expenses of the
acquired business for the fiscal year ended November 30, 1993,
amortization of goodwill, depreciation and other adjustments based on
the allocated purchase price of net assets acquired, and calculation of
income taxes based on the Company's tax rate. The pro forma adjustments
do not include the benefits from synergies the Company anticipates
realizing in the future from the integration of the acquired business
and the Company's pizza restaurant distribution business. The pro forma
adjustments also do not include charges the Company will report
in the second quarter ended August 31, 1994 for integrating
these businesses. The Company is currently in the process of estimating
the costs associated with the integration, which will include the
closing of duplicate facilities of the Company.
(b) The pro forma adjustment to reduce interest expense from the
divestitures is the result of net proceeds which were used to reduce debt
obligations. Net proceeds represent the aggregate sales price reduced by
additional costs directly attributable to the divestiture transactions,
including taxes.
(c) The acquisition pro forma adjustment results in an increase to
interest expense as a result of debt obligations incurred to fund the
purchase price.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
INTERNATIONAL MULTIFOODS CORPORATION
Date: September 2, 1994 By /s/ Duncan H. Cocroft
Duncan H. Cocroft
Vice President - Finance and
Chief Financial Officer
EXHIBIT INDEX
2.1 Asset Purchase Agreement among Multifoods Distribution,
Inc. (Buyer), International Multifoods Corporation
(Buyer's Parent) and Leprino Foods Company (Seller) and
James G. Leprino (Seller's Shareholder) dated as of
July 29, 1994.
EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
among
MULTIFOODS DISTRIBUTION, INC.
(Buyer)
INTERNATIONAL MULTIFOODS CORPORATION
(Buyer's Parent)
and
LEPRINO FOODS COMPANY
(Seller)
and
JAMES G. LEPRINO
(Seller's Shareholder)
Dated as of July 29, 1994
TABLE OF CONTENTS
1. Purchased Assets. . . . . . . . . . . . . . . . . . . . . 1
2. Excluded Assets . . . . . . . . . . . . . . . . . . . . . 4
3. Consideration; Payment; and Allocation. . . . . . . . . . 6
4. Assumption of Certain Liabilities . . . . . . . . . . . . 10
5. Closing Date. . . . . . . . . . . . . . . . . . . . . . . 14
6. Title . . . . . . . . . . . . . . . . . . . . . . . . . . 14
7. Title Documents . . . . . . . . . . . . . . . . . . . . . 15
8. Title Commitments and Surveys . . . . . . . . . . . . . . 17
9. Property Taxes and Utilities. . . . . . . . . . . . . . . 17
10. Seller's Employees. . . . . . . . . . . . . . . . . . . . 19
11. Noncompetition Agreement. . . . . . . . . . . . . . . . . 22
12. Supply Agreement, Transition Services Agreement and
Cheese Storage Agreement . . . . . . . . . . . . . . . . 22
13. Representations and Warranties of Seller and the
Shareholder . . . . . . . . . . . . . . . . . . . . . . . 22
14. Representations and Warranties of Buyer and Parent. . . . 36
15. Conditions Precedent to Buyer's and Parent's Obligations
Hereunder . . . . . . .. . . . . . . . . . . . . . . . . 38
16. Conditions Precedent to Seller's and the Shareholder's
Obligations Hereunder . . . . . . . . . . . . . . . . . . 42
17. Indemnification of Buyer and Parent by Seller and the
Shareholder . . . . . . . . . . . . . . . . . . . . . . . 43
18. Indemnification of Seller and the Shareholder by Buyer
and Parent. . . . . . . . . . . . . . . . . . . . . . . . 47
19. Effect of Taxes on Indemnification. . . . . . . . . . . . 49
20. Covenants of Seller and the Shareholder . . . . . . . . . 49
21. Mutual Pre-Closing Covenants. . . . . . . . . . . . . . . 50
22. Assignment. . . . . . . . . . . . . . . . . . . . . . . . 51
23. Notices . . . . . . . . . . . . . . . . . . . . . . . . . 52
24. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 53
25. Further Assurances. . . . . . . . . . . . . . . . . . . . 53
26. Public Announcements. . . . . . . . . . . . . . . . . . . 54
27. Specific Performance. . . . . . . . . . . . . . . . . . . 54
28. Entire Agreement. . . . . . . . . . . . . . . . . . . . . 54
29. Severability. . . . . . . . . . . . . . . . . . . . . . . 54
30. Governing Law . . . . . . . . . . . . . . . . . . . . . . 55
31. Schedules . . . . . . . . . . . . . . . . . . . . . . . . 55
32. Waiver of Compliance; Consents. . . . . . . . . . . . . . 55
33. Remedies Cumulative . . . . . . . . . . . . . . . . . . . 55
34. Amendments. . . . . . . . . . . . . . . . . . . . . . . . 55
35. Successors and Assigns; No Third Party Beneficiaries. . . 55
36. Interpretation. . . . . . . . . . . . . . . . . . . . . . 56
37. Retention of Records. . . . . . . . . . . . . . . . . . . 56
38. Divisibility. . . . . . . . . . . . . . . . . . . . . . . 57
SCHEDULES AND EXHIBITS
Schedule 1.01(a) Seller's Land
Schedule 1.01(c) Equipment
Schedule 1.01(g) Intellectual Property
Schedule 1.01(i) Contracts
Schedule 1.01(j) Purchase Orders
Schedule 1.01(l) Other Assets
Schedule 1.02(a) Shareholder's Land
Schedule 2(j) Excluded Software
Schedule 3.03 Allocation
Schedule 6.01(c) Permitted Title Exceptions
Schedule 8.01 Objections to Title Commitments
Schedule 8.02 Objections to Surveys
Schedule 10.03 Buyer's Employee Plans
Schedule 13.01(a) Foreign Qualifications
Schedule 13.01(f) Seller Conflicts
Schedule 13.01(h) Real Property Assessments
Schedule 13.01(j) Litigation
Schedule 13.01(l) Environmental
Schedule 13.01(n) Licenses and Permits
Schedule 13.01(u) Seller's Employee Plans
Schedule 13.01(y) Changes to Consistent Presentation of
Financial Statements
Schedule 13.01(z) Insurance Schedule
Schedule 13.01(aa) Trade Allowance Programs
Schedule 13.01(bb) Changes
Schedule 13.01(dd) Recalls
Schedule 20(h) Remediation of Owned Real Property
Exhibit A License Agreement
Exhibit B Statement of Principles and Methodology
Exhibit C Seller's Warranty Deeds
Exhibit D Deliberately Omitted
Exhibit E Seller's Bill of Sale and Assumption Agreement
Exhibit F Shareholder's Warranty Deeds
Exhibit G Shareholder's Bill of Sale
Exhibit H Noncompetition Agreement
Exhibit I Supply Agreement
Exhibit J Transition Services Agreement
Exhibit J-1 Cheese Storage Agreement
Exhibit K Opinion of Senn Lewis Visciano & Strahle P.C.
Exhibit L Livermore Lease
Exhibit M Opinion of Faegre & Benson
Exhibit N Opinion of Frank W. Bonvino
ASSET PURCHASE AGREEMENT
THIS AGREEMENT (the "Agreement") made and entered into as of
the 29th day of July, 1994 (the "Effective Date") by and among LEPRINO
FOODS COMPANY, a Colorado corporation having its principal office at
1830 West 38th Avenue, Denver, Colorado ("Seller"), JAMES G. LEPRINO,
the principal shareholder of Seller (the "Shareholder"), MULTIFOODS
DISTRIBUTION, INC., a Delaware corporation, having its principal office
at 33 South Sixth Street, Minneapolis, Minnesota ("Buyer") and
INTERNATIONAL MULTIFOODS CORPORATION, a Delaware corporation having its
principal office at 33 South Sixth Street, Minneapolis, Minnesota and
the holder of all of the outstanding capital stock of Buyer ("Parent").
W I T N E S E T H S:
IN CONSIDERATION of the mutual covenants and agreements
hereinafter set forth, Seller, the Shareholder, Buyer and Parent agree
as follows:
1. Purchased Assets.
1.01 Seller's Purchased Assets. On the terms and subject to
the conditions of this Agreement, Seller agrees to sell, assign,
transfer and convey to Buyer, and Buyer agrees (and Parent agrees to
cause Buyer) to purchase from Seller, on and as of the Closing Date (as
hereinafter defined), all of Seller's Purchased Assets (as hereinafter
defined) wherever located and whether or not reflected in Seller's books
and records. "Seller's Purchased Assets" means all right, title and
interest of Seller in and to the assets (other than Excluded Assets, as
hereinafter defined) used primarily in, or otherwise primarily related
to or necessary for, the foodservice distribution business conducted by
Seller in the United States (the "Distribution Division" or the
"Distribution Business"). The Seller's Purchased Assets to be
transferred to Buyer by Seller shall include, without limitation, the
following:
(a) The real property described legally and by street address
on Schedule 1.01(a) attached hereto (the "Seller's Land"), together with
all buildings, other improvements, fixtures, easements, rights-of-way
and privileges appurtenant thereto or situate thereon, and all other
rights, title, interests and appurtenances of Seller in or pertaining to
Seller's Land and/or such buildings, improvements, fixtures, easements,
rights-of-way and privileges (collectively "Seller's Owned Real
Property");
(b)(i) The leasehold estates and interests (collectively, the
"Leasehold Estates") created by (A) that certain Lease Agreement between
First Industrial Financing Partnership, L.P., (REMIC) as successor to
Rouse & Associates-401 Russell Drive Limited Partnership, as lessor, and
Seller, as lessee, dated November 22, 1989 (the "Middletown Lease"),
including Seller's partnership interest and related rights in connection
therewith and (B) that certain Lease Agreement between Santa Fe Pacific
Realty Corporation, as successor by merger to Southern Pacific
Industrial Development Company as successor to Rosenberg Fund-I, Inc.,
as lessor, and Seller, as successor to Leprino Foods Company of Arizona,
as lessee, dated July 22, 1982, as amended by Supplemental Agreements
dated May 28, 1987, February 24, 1989 and July 12, 1989 (the "Phoenix
Lease"), in the real estate, buildings and other improvements subject
thereto (the real estate, buildings and other improvements subject to
the Middletown Lease and the Phoenix Lease being hereinafter
collectively called the "Leased Real Property"), and (ii) all right,
title and interest of Seller under or in respect of the Middletown Lease
and the Phoenix Lease and/or the Leased Real Property, whether in its
capacity as tenant or otherwise, including without limitation any
security and other deposits, common area cost and tax refunds and
adjustments and other amounts now or hereafter payable to Seller under
or in respect of the Middletown Lease or the Phoenix Lease, all of which
will be appropriately credited, debited or prorated between Buyer and
Seller at the Closing (as hereinafter defined);
(c) All of Seller's right, title and interest in all
furniture, furnishings, leasehold improvements, fixtures (including
without limitation trade fixtures), equipment (including without
limitation all distribution and office equipment and computer systems),
machinery, motor vehicles and spare parts used primarily in, or
otherwise primarily related to or necessary for, the Distribution
Business other than the personal property constituting Excluded Assets
(collectively, the "Equipment"), including within the Equipment, but not
limited to, the furniture, furnishings, leasehold improvements,
fixtures, equipment, machinery, motor vehicles and spare parts listed
and described in Schedule 1.01(c) attached hereto and made a part
hereof;
(d) All originals and copies of drawings, plans and
specifications of the buildings and improvements constituting a part of
Seller's Owned Real Property or the Leased Real Property (including
marked up "as built" plans and specifications) to the extent that they
are in Seller's custody or control; all original surveys of the real
estate constituting a part of the Seller's Land or the Leased Real
Property; all warranties, guaranties or bonds given to Seller by any
contractor, installer or supplier of labor and/or materials to the
buildings, improvements or fixtures constituting a part of Seller's
Owned Real Property or the Leased Real Property; and all right, title
and interest of Seller in and to any licenses and permits obtained by
Seller in connection with the construction and/or installation or
occupancy of any such buildings or improvements or any Equipment or the
operation of the Distribution Business which are assignable to Buyer;
(e) All of Seller's right, title and interest in all
inventory and supplies used primarily in, or otherwise primarily related
to or necessary for, the Distribution Business, including without
limitation all finished goods, office and distribution supplies and all
other materials and supplies on hand to be used or consumed in the
Distribution Business (collectively, the "Inventory");
(f) All trade receivables, notes receivable, rights with
respect to returned checks and receivables from loans and advances to
employees of Seller outstanding at the close of business on the last
business day immediately preceding the Closing Date or thereafter
relating to the Distribution Business (collectively, the "Receivables"),
including within the Receivables, but not limited to, all customer
accounts receivable and all rights of Seller to earned but unpaid
rebates from its suppliers relating to the Distribution Business
("Supplier Rebates");
(g) All of Seller's right, title and interest in any
processes, copyrights, patents, trademarks, trade names, logos,
industrial designs, trade styles, trade secrets and other like property,
whether registered or unregistered, and all pending applications for any
of the foregoing used primarily in, or otherwise primarily related to or
necessary for, the Distribution Business other than the processes,
copyrights, patents, trademarks, trade names, logos, industrial designs,
trade styles, trade secrets and other like property constituting a part
of the Excluded Assets (collectively, the "Intellectual Property"),
including within the Intellectual Property, but not limited to, those
identified on Schedule 1.01(g) attached hereto and made a part hereof
and all licenses granted to Seller to use any Intellectual Property in
connection with the Distribution Business, and all goodwill relating to
the Distribution Business;
(h) All books and records of Seller, including, but not
limited to, all customer lists and customer data, supplier lists and
supplier data and other operating data, files, accounting records,
credit information, records of past sales and inventory data used
primarily in, or otherwise primarily related to or necessary for, the
Distribution Business, but excluding the books and records of Seller
constituting a part of the Excluded Assets (provided that Seller and the
Shareholder shall have reasonable access to the books and records
conveyed to Buyer pursuant hereto to the extent reasonably necessary for
the preparation, following the Closing Date, of their tax returns and
financial statements for periods ending prior to the Closing Date or in
connection with litigation or arbitration proceedings or regulatory
filings, inquiries or proceedings involving Seller or the Shareholder);
(i) All right, title and interest of Seller under the leases,
contracts and agreements listed and described on Schedule 1.01(i)
attached hereto and made a part hereof and all other leases, contracts
and agreements primarily related to, or necessary for, the Distribution
Business other than Excluded Assets;
(j) All right, title and interest of Seller under purchase
orders issued by or to it in the ordinary course of operating the
Distribution Business, including, but not limited to, the purchase
orders listed on Schedule 1.01(j) attached hereto and made a part
hereof; and
(k) In addition to the warranties, guaranties and bonds
referred to in paragraph (d) above, all rights of Seller under any other
warranty or guarantee by any manufacturer, supplier or other transferor
of any of the foregoing assets, properties or rights to the extent they
are assignable;
(l) All right, title and interest of Seller in the other
assets identified in Schedule 1.01(l), other than those specifically
identified as Excluded Assets.
1.02 Shareholder's Purchased Assets. On the terms and subject
to the conditions of this Agreement, the Shareholder agrees to sell,
assign, transfer and convey to Buyer, and Buyer agrees (and Parent
agrees to cause Buyer) to purchase from the Shareholder, on and as of
the Closing Date, the following property, assets and rights of the
Shareholder:
(a) The real property described legally and by street address
on Schedule 1.02(a) attached hereto (the "Shareholder's Land"), together
with all buildings, other improvements, fixtures, easements, rights-of-
way and privileges appurtenant thereto or situate thereon (including the
furniture, fixtures and equipment located therein owned by the
Shareholder), and all other rights, title, interests and appurtenances
of the Shareholder in or pertaining to the Shareholder's Land and/or
such buildings, improvements, fixtures, easements, rights-of-way and
privileges (collectively, the "Shareholder's Owned Real Property"); and
(b) All originals and copies of drawings, plans and
specifications of the buildings and improvements constituting a part of
the Shareholder's Owned Real Property (including marked-up "as built"
plans and specifications) to the extent that they are in the
Shareholder's custody or control; all original surveys of the real
estate constituting a part of the Shareholder's Land; all warranties,
guaranties or bonds given to the Shareholder by any contractor,
installer or supplier of labor and/or materials to the buildings,
improvements or fixtures constituting a part of the Shareholder's Owned
Real Property; and all right, title and interest of the Shareholder in
and to any licenses and permits obtained by the Shareholder in
connection with the construction and/or installation or occupancy of any
such buildings, improvements or fixtures which are assignable to Buyer.
1.03 Certain Definitions. All of the assets, properties and
rights described in Section 1.02 are hereinafter sometimes called the
"Shareholder's Purchased Assets". The Seller's Purchased Assets and the
Shareholder's Purchased Assets are hereinafter sometimes collectively
called the "Purchased Assets". The Seller's Land and the Shareholder's
Land are hereinafter sometimes collectively called the "Land". The
Seller's Owned Real Property and the Shareholder's Owned Real Property
are hereinafter sometimes collectively called the "Owned Real Property".
2. Excluded Assets.
The following property, assets and rights of Seller are
excluded from the sale to Buyer (the "Excluded Assets"):
(a) Cash, cash equivalents, bank accounts and tax refunds
(other than tax refunds under leases which are included in the Purchased
Assets) derived by Seller in the normal course of the operation of the
Distribution Business;
(b) All insurance proceeds receivable, prepaid insurance and
insurance premium refunds and other prepaid expenses identified as
Excluded Assets in Schedule 1.01(l) hereto, investments in stocks and
bonds, and officers' life insurance;
(c) All property, assets and rights not used primarily in,
and not otherwise primarily related to or necessary for, the
Distribution Business, including without limitation all property, assets
and rights that (i) are used primarily in and primarily related to
Seller's manufacturing business (the "Manufacturing Business") or
Seller's over-the-road refrigerated transportation services business
generally involving transportation of products in truckload quantities
and operated by Seller as a separate business unit independent from the
Distribution Business (the "LTC Business") and (ii) are not necessary
for the Distribution Business;
(d) Seller's IBM AS 400 computer, model F-70 and all attached
peripherals except those used primarily in or primarily related to the
Distribution Business, located at Seller's corporate headquarters,
together with any other assets that Buyer determines in the exercise of
its reasonable business judgment are not used in the ordinary course of
operating the Distribution Business and that Buyer so notifies Seller of
in writing prior to the Closing (as hereinafter defined);
(e) Intellectual property in the form of any patent;
industrial design; trade style; copyright; trademark; trade name; logo
and other like property that uses the name "Leprino" (whether as all or
part of the copyright, trademark, trade name, logo or other like
property as to any of the foregoing) or any derivative thereof, whether
or not stylized, provided, however, that the right to use such name is
licensed by Seller to Buyer pursuant to the License Agreement attached
hereto as Exhibit A (the "License Agreement");
(f) Any lease, contract, agreement or purchase order (but not
the claims, rights and benefits of Seller thereunder, which shall be
dealt with in accordance with Section 4.02 hereof) that is not
assignable without the consent, approval or waiver of a third party, or
with respect to which an assignment without such consent, approval or
waiver would result in a violation of or default under the terms thereof
or the creation of any Lien (as hereinafter defined) upon any of the
Purchased Assets or enable another party to terminate such lease,
contract, agreement or purchase order or impose a penalty or additional
payment obligations or accelerate any obligations of Seller or Buyer
thereunder and with respect to which (i) one or more necessary third
party consents, approvals or waivers shall not have been received at or
prior to the Closing and (ii) Buyer shall not have elected to assume the
lease, contract, agreement or purchase order with respect to the
obligations thereunder accruing after the Closing;
(g) Licenses and permits that are not transferable without
the consent of the government or a governmental agency or other
authority and with respect to which the requisite consent is not
received at or prior to the Closing;
(h) The minute books, stock records and similar records of
Seller, records relating to Seller's election to be treated as an S
corporation for income tax purposes and records relating solely to other
Excluded Assets, provided that Buyer shall have reasonable access
thereto to the extent reasonably necessary for the operation of the
Distribution Business, the preparation of tax returns and financial
statements of Buyer after the Closing or in connection with litigation
proceedings involving Buyer or Parent;
(i) Seller's Employee Plans, as hereinafter defined, assets
held in Seller's Employee Plans and assets held for reserves for
worker's compensation claims;
(j) Seller's centralized computer system and related software
not used primarily in, or otherwise related to or necessary for, the
Distribution Business, and software licensed from third parties as set
forth on Schedule 2(j);
(k) All inventory of Seller that (i) is (or, at the time of
sale or use thereof in the ordinary course, based on the sales and use
rates therefor during the most recently completed twelve (12) months, is
expected to be) unmerchantable or otherwise not usable or saleable in
the ordinary course of operating the Distribution Business or that is
defective, infested, adulterated or otherwise misbranded within the
meaning of the Federal Food and Drug and Cosmetics Act or any other
applicable food and drug law, improperly packed or stored, or obsolete,
or that otherwise bears product expiration code dates on or prior to the
Closing Date or on or prior to the date such inventory is expected to be
sold or used in the ordinary course, based upon sales and use rates
during the most recently completed twelve (12) months and (ii) is not
set forth in the Closing Statement described in Section 3.04 hereof;
(l) Packaging, labels, stationery and similar supplies
bearing the name or logo "Leprino" that are not reasonably likely to be
used during the period for which Buyer is licensed by Seller to use the
name "Leprino";
(m) All land owned by Seller other than the Seller's Land
(the "Excluded Land") and all buildings, other improvements, fixtures,
easements, rights-of-way and privileges situate on the Excluded Land,
and all other rights, title, interests and appurtenances of Seller in or
relating solely to the Excluded Land and/or such buildings,
improvements, fixtures, easements, rights-of-way and privileges; and
(n) The rights of Seller under this Agreement or under any
other agreement between Seller and Buyer entered into on or after the
date of this Agreement.
3. Consideration; Payment; and Allocation.
3.01 Consideration. The aggregate consideration to be paid
for the Purchased Assets and the covenant not to compete of Seller and
the Shareholder under the Noncompetition Agreement (as hereinafter
defined) shall be the sum of the following:
(i) An amount, as the total purchase price for all of
Seller's Purchased Assets, equal to the sum of (A) Fifty One Million
Five Hundred Thousand Dollars ($51,500,000) minus the allocation in
clause (iii) to the covenant not to compete, plus (B) the book value of
Seller's Closing Net Assets (as hereinafter defined);
(ii) An amount, as the total purchase price for all of
the Shareholder's Purchased Assets, equal to Twelve Million Dollars
($12,000,000); and
(iii) One Million Dollars ($1,000,000) as consideration
for the covenant not to compete contained in the Noncompetition
Agreement.
3.02 Payment. The purchase price (the "Purchase Price") for
the Purchased Assets and the consideration to be paid for the covenant
not to compete contained in the Noncompetition Agreement shall be
payable in cash at the Closing by wire transfer of immediately available
federal funds of all amounts due Seller to such accounts as shall be
specified by Seller and by wire transfer of immediately available
federal funds of all amounts due the Shareholder to such accounts as
shall be specified by the Shareholder.
3.03 Allocation. Seller and Buyer recognize that reporting
requirements as imposed by Section 1060(b) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations promulgated
thereunder may apply to the transactions contemplated by this Agreement.
Seller and Buyer agree that, except as hereinafter provided, the
Purchase Price for the Seller's Purchased Assets shall be allocated
among the Seller's Purchased Assets as provided in Schedule 3.03 which
shall be prepared and agreed to by Seller and Buyer prior to Closing
(the "Allocation") and that the Allocation shall be used to satisfy the
requirements of Section 1060 of the Code and the regulations for the
preparation of Internal Revenue Service Form 8594. Each party to this
Agreement agrees not to assert any allocation of the Purchase Price that
differs from the Allocation in connection with any income, transfer or
gains tax return or tax audit or similar proceeding or in connection
with any other judicial or administrative filing or proceeding before
any court or any governmental agency charged with the collection of any
such tax, provided, however, that a party shall not be bound by the
Allocation in the event the Internal Revenue Service or another tax
authority successfully challenges the Allocation. If, subsequent to the
Closing, Seller and Buyer adjust the Purchase Price for any reason, then
the parties hereto agree to adjust the Allocation in conformity with
Section 1060 of the Code and the regulations promulgated thereunder.
The Purchase Price for the Shareholder's Purchased Assets shall be
allocated to each parcel of the Shareholder's Owned Real Property in
accordance with Schedule 3.03; provided, however, that a party shall not
be bound by such allocation in the event the Internal Revenue Service or
another tax authority successfully challenges such allocation. In the
event of any challenge to an allocation by the Internal Revenue Service
or another tax authority, the parties will give each other notice of the
challenge and advise each other periodically of the status of such
challenge and reasonably cooperate with each other with respect to such
challenge.
3.04 Closing Statement.
(a) Prior to the Closing, Seller shall prepare, with Buyer's
full participation, a statement (the "Closing Statement") setting forth
the Net Assets (as hereinafter defined) of the Distribution Business
("Closing Net Assets") as of the close of business on the last business
day immediately preceding the Closing Date. Subject to Section 3.04(f)
the Closing Statement shall be prepared in accordance with generally
accepted accounting principles consistent with those followed in the
preparation of Seller's audited financial statements, the financial
statements described in Section 13.01(y) and the Audited Distribution
Business Financial Statements described in Section 15.01(k), it being
understood that they shall not include Excluded Assets and prepaid
expenses in the categories included in Schedule 1.01(l), all Receivables
shall be valued net of any valid offsets thereto claimed by customers
and all Inventory shall be valued at the lower of cost or market on a
first-in, first-out basis consistent with past practice. A physical
inventory of the Distribution Business shall be conducted by Seller,
commencing on the second Saturday (or in the case of Phoenix, Arizona;
the third Saturday) immediately preceding the Closing Date, consistent
with past practice (and in accordance with the written inventory
policies of the Distribution Division, copies of which have been
delivered to Buyer) and brought forward to the close of business on the
last business day immediately preceding the Closing Date, and Buyer
shall have the right to observe the taking of such physical inventory
and the reconciliation thereof. The value of the Inventory shown on the
Closing Statement and included in the determination of the Closing Net
Assets shall be based on such physical inventory.
(b) If there are any disputes between Seller and Buyer with
respect to any matters regarding Closing Net Assets, Seller and Buyer
shall use all reasonable efforts to resolve such disputes prior to the
scheduled time of Closing, which resolutions shall be reflected in the
determination of Closing Net Assets and shall be final and binding and
not subject to any post- Closing adjustment except as may be necessary
to correct computational errors.
(c) If there are any disputes between Seller and Buyer with
respect to matters regarding Closing Net Assets which Seller or Buyer
conclude they will be unable to resolve prior to the scheduled time of
Closing, then promptly after either such party reaching such conclusion,
each party, acting in good faith and exercising reasonable judgment,
shall prepare a written statement setting forth in reasonable detail
such matters which remain in dispute and the Closing Net Assets
determined by such party, and shall submit copies of the same to the
other party. If the Closing Net Assets set forth in Seller's written
statement exceed the Closing Net Assets set forth in Buyer's written
statement by Two Hundred Fifty Thousand Dollars ($250,000) or less, then
the Closing shall proceed as scheduled based on the average of the
Closing Net Assets set forth in Seller's and Buyer's written statements,
which Closing Net Assets (based on the average of the Closing Net Assets
set forth in Seller's and Buyer's written statements) shall be final and
binding and not subject to any post-Closing adjustment except as may be
necessary to correct computational errors. If the Closing Net Assets
set forth in Seller's written statement exceed the Closing Net Assets
set forth in Buyer's written statement by more than Two Hundred Fifty
Thousand Dollars ($250,000), then Seller and Buyer shall immediately
submit copies of their written statements to Deloitte & Touche or, if
Deloitte & Touche is unable or unwilling to act, such nationally
recognized independent public accounting firm as shall be agreed upon by
Seller and Buyer in writing (the "Arbitrator"). The Arbitrator shall
review all matters which remain in dispute and endeavor to render in
writing decisions resolving such matters at or prior to the scheduled
time of Closing, which decisions shall be reflected in the determination
of Closing Net Assets (provided that the Closing Net Assets so
determined shall in no event be less than those set forth in Buyer's
written statement nor more than those set forth in Seller's written
statement) and shall be final and binding and not subject to post-
Closing adjustment except as may be necessary to correct computational
errors. If the Arbitrator informs Seller and Buyer that it is unable at
or prior to the scheduled time of Closing to render a decision resolving
all matters which remain in dispute, then, except as set forth in
Section 3.04(d) hereof, the Closing shall be delayed until such time as
the parties shall agree or the first business day to occur following the
date on which all remaining disputes have been resolved, subject to the
provisions of Section 5.02 hereof, provided that the Arbitrator shall in
all events render its decision within five (5) business days after the
previously scheduled time of Closing.
(d) Notwithstanding the foregoing, if the Arbitrator informs
Seller and Buyer that it is unable at or prior to the scheduled time of
Closing to render a decision only as to any dispute regarding the value
of Inventory, then the Closing shall proceed as scheduled based on a
determination of Closing Net Assets that reflects the average of the
value of such disputed Inventory set forth in Seller's and Buyer's
written statements (the "Closing Inventory Amount"). If the value of
such disputed Inventory set forth in Seller's written statement exceeds
the value of such disputed Inventory set forth in Buyer's written
statement by Two Hundred Fifty Thousand Dollars ($250,000) or less in
the aggregate, then the Closing Inventory Amount shall be the final and
binding value of such Inventory for purposes of determining Closing Net
Assets and not subject to any post-Closing adjustment except as may be
necessary to correct computational errors. If the value of such
disputed Inventory set forth in Seller's written statement exceeds the
value of such disputed Inventory set forth in Buyer's written statement
by more than Two Hundred Fifty Thousand Dollars ($250,000) in the
aggregate, then the Arbitrator shall promptly (but in any event within
thirty (30) days after the Closing) render in writing a decision
resolving all remaining disputes regarding such Inventory and Seller or
Buyer, as the case may be, shall, within ten (10) business days after
the Arbitrator renders such written decision, make payment to Buyer or
Seller, as the case may be, by wire transfer in immediately available
federal funds of the amount, if any, by which the Closing Inventory
Amount differs from the value of such Inventory determined by the
Arbitrator (provided that the value determined by the Arbitrator shall
in no event be more than the value of such Inventory set forth in
Seller's written statement or less than the value of such Inventory set
forth in Buyer's written statement), together with interest thereon at a
rate of 4% per annum from the Closing Date to the date of payment.
(e) The procedures for any arbitration pursuant to this
Section 3.04 shall be determined by the Arbitrator, provided that all
disputed matters shall be resolved by the Arbitrator in accordance with
the provisions of paragraph (f) hereof. A fraction of the fees and
disbursements of the Arbitrator pursuant to this Section 3.04, the
numerator of which is the amount by which Seller's determination of
Closing Net Assets (or Inventory) exceeds the Arbitrator's determination
and the denominator of which is the difference between Seller's and
Buyer's determination of Closing Net Assets (or Inventory) set forth in
their written statements, shall be borne by Seller and the remainder of
such fees and disbursements of the Arbitrator shall be borne by Buyer.
(f) As used in this Section 3.04, the term "Net Assets" shall
mean (i) the book value (net of appropriate reserves) of all of Seller's
Purchased Assets owned by Seller, less (ii) the book value of all
Assumed Liabilities (as hereinafter defined); which book value of
Seller's Purchased Assets and Assumed Liabilities shall be determined on
a basis consistent with generally accepted accounting principles applied
by Seller in the preparation of Seller's audited financial statements,
the financial statements described in Section 13.01(y) and Section
15.01(k) and the methodology set forth in the Statement of Principles
and Methodology attached as Exhibit B hereto (the "Statement of
Principles") except for inconsistencies which arise from the methodology
set forth in Schedule 13.01(y).
4. Assumption of Certain Liabilities.
4.01 Assumed Liabilities. At the Closing, Buyer will assume
the following:
(i) All trade accounts payable of Seller primarily
incurred in connection with the Distribution Business that accrue on or
prior to the close of business and remain unpaid (except for outstanding
checks) on the last business day immediately preceding the Closing Date
("Accounts Payable"), to the extent reflected on Seller's Closing
Statement as accounts payable (including within Accounts Payable
liabilities for inventory received but not invoiced, but excluding
liabilities for Taxes (as hereinafter defined), provided that nothing
shall limit the assumption by Buyer of those Accrued Liabilities
described in clause (ii) of this Section);
(ii) All Property Taxes of Seller or the Shareholder (as
defined in Section 9.01) accrued on or prior to the close of business
and remaining unpaid on the last business day immediately preceding the
Closing Date ("Accrued Liabilities"), to the extent reflected on
Seller's Closing Statement as accrued taxes;
(iii) The obligations of Seller first accruing on or
after the Closing Date under the Middletown Lease and the Phoenix Lease,
all other leases, contracts, agreements and purchase orders disclosed on
Schedule 1.01(i) or 1.01(j) attached hereto, all other leases, contracts
and agreements primarily related to, or necessary for, the Distribution
Business (other than Excluded Assets) that are not required to be listed
in Schedule 1.01(i) in order to avoid a misrepresentation under Section
13.01(m) and all other purchase orders issued by or to Seller in the
ordinary course of operating the Distribution Business consistent with
past practices that are not required to be listed in Schedule 1.01(j) in
order to avoid a misrepresentation under Section 13.01(m) (collectively,
the "Contracts" and individually, a "Contract"); and
(iv) such other liabilities, if any, as Buyer may agree
to include on the Closing Statement.
Except for Buyer's obligation, subject to the provisions of this Section
4, to assume the liabilities and obligations of Seller and the
Shareholder described in clauses (i), (ii), (iii) and (iv) above (which
liabilities and obligations described in clauses (i), (ii), (iii) and
(iv) above are referred to in this Agreement as the "Assumed
Liabilities"), Buyer shall not assume any liabilities or obligations of
Seller or the Shareholder, contingent or otherwise, and Seller and the
Shareholder shall be solely liable for all losses, injuries, damages,
deficiencies, liabilities, obligations, costs and expenses directly or
indirectly resulting or arising from the ownership or condition of their
respective Purchased Assets, operation of the Distribution Business, and
incidents and occurrences relating to the Distribution Business or the
Purchased Assets, prior to the Closing, whether or not reflected in the
books and records of Seller or the Shareholder. Without limiting the
generality of the immediately preceding sentence describing liabilities
and obligations that are not included within Assumed Liabilities, Buyer
shall not assume the following:
(1) liabilities and obligations (including obligations in
default) of Seller under the Contracts accruing prior to the Closing
Date;
(2) liabilities and obligations, if any, directly or
indirectly resulting or arising from the matters described on Schedule
13.01(j) attached hereto;
(3) any Indebtedness (as hereinafter defined) of Seller or
the Shareholder, whether or not related to the Distribution Business;
(4) any liability or obligation of Seller or the Shareholder
for unpaid Taxes under the Code or under any other federal, foreign,
state, municipal or local tax laws or regulations or otherwise (whether
or not related to the Distribution Business) (including Taxes arising
from or incurred in connection with the transfer to Buyer of the
Purchased Assets), except that nothing stated herein shall limit the
liability of Buyer under Section 4.01(ii) of this Agreement;
(5) any liability or obligation of Seller or the Shareholder
for costs and expenses incurred in connection with this Agreement or the
consummation of the transactions contemplated hereby;
(6) any liability or obligation of Seller or the Shareholder
created under this Agreement or under any other agreement between Seller
and/or the Shareholder, on the one hand, and Buyer or Parent, on the
other hand, entered into on or after the date of this Agreement;
(7) any liability or obligation of Seller or the Shareholder
that is not disclosed (or arises under a lease, contract, agreement or
purchase order that is not disclosed) in this Agreement or in the
Schedules hereto and the non-disclosure of which constitutes a
misrepresentation under this Agreement (unless Buyer elects, by notice
to Seller or the Shareholder, to take the benefit of the lease,
contract, agreement or purchase order, provided that no such election
shall limit Buyer's rights or remedies arising out of such
misrepresentation);
(8) any liability or obligation of Seller (a) under any of
Seller's Employee Plans or (b) arising from any claim relating to, or
alleged to relate to, the termination of employment or engagement of any
employee, agent or representative by Seller prior to, at or after the
Closing (including any such termination that occurs immediately before
the hiring of any such person by Buyer), for which Buyer is not liable
under Section 10 of this Agreement;
(9) any liability or obligation of Seller, including without
limitation worker's compensation claims, (a) arising from any claim made
by any employee or former employee of Seller who does not become an
employee of Buyer after the Closing (whether or not offered employment
by Buyer), or (b) otherwise arising from any incident, occurrence or
condition occurring, commencing or in existence during the term of
employment or engagement by Seller of any employee, former employee,
agent or representative of Seller, whether or not such person is later
employed or engaged by Buyer, provided that nothing stated herein shall
limit the obligations of Buyer under Section 10 of this Agreement;
(10) any liability or obligation of Seller or the Shareholder
arising from any claim against Seller or the Shareholder for damage to
the environment or any liability for environmental cleanup costs, in any
case to the extent arising out of any incident, occurrence or condition
occurring, commencing or in existence prior to the Closing Date;
(11) any liability or obligation arising from any cause of
action or judicial or administrative action, suit, proceeding or
investigation against, or with respect to, Seller, the Shareholder, the
Distribution Business or the Purchased Assets, relating to any incident,
occurrence or condition occurring, commencing or in existence prior to
the Closing Date;
(12) any liability or obligation arising from any failure of
Seller or the Shareholder to comply with, or any violation by Seller or
the Shareholder of, any law, rule, regulation, statute, ordinance,
permit, judgment, injunction, order, decree, license or other
authorization or approval of any governmental official, agency,
instrumentality or other authority, which failure or violation occurred
prior to the Closing Date;
(13) any liability or obligation of Seller or the Shareholder
for any infringement or alleged infringement of the rights of any other
person or entity arising out of the use, or alleged use, of any
Intellectual Property prior to the Closing Date;
(14) any liability or obligation related to the Excluded
Assets; or
(15) any liability or obligation of Seller to make any rebate
or discount payments to any customer of Seller with respect to products
sold by Seller to such customer except to the extent accrued in the
Closing Statement.
For purposes of this Agreement, "Indebtedness" means (w) the Bank
Indebtedness and all other indebtedness for borrowed money created,
incurred or accrued by Seller or the Shareholder, or guaranteed by
Seller or the Shareholder or for which Seller or the Shareholder is
otherwise liable or responsible (including an agreement to assume the
indebtedness of others), (x) all indebtedness of Seller or the
Shareholder under capital leases, (y) all amounts owing by Seller or the
Shareholder under purchase money mortgages, indentures, deeds of trust
or other purchase money liens or conditional sale or other title
retention agreements, and (z) all indebtedness secured by any mortgage,
indenture or deed of trust upon any of the Purchased Assets even though
neither Seller nor the Shareholder may have assumed or become liable for
the payment of such indebtedness. For purposes of this Agreement, the
"Bank Indebtedness" shall mean all indebtedness of Seller to lending
institutions.
For purposes of this Agreement, "Taxes" means all federal, foreign,
state, municipal and local taxes, levies, fees, imposts, duties and
governmental charges of whatever kind, including income, profits, gross
receipts, withholding, social security, employment, payroll, excise,
severance, stamp, occupation, premium, environmental, customs duties,
value added, unemployment compensation, utility, franchise, property,
sales, use, service, motor vehicle transfer and real estate transfer
taxes, together with all interest and penalties on or associated with
any taxes or tax returns and all additions to any taxes.
4.02 Nonassumption of Certain Contracts. Notwithstanding
anything to the contrary stated in this Agreement, if (i) any Contract
is not capable of being sold, assigned, transferred or conveyed without
the approval, consent or waiver of another party thereto or if such
sale, assignment, transfer or conveyance without such approval, consent
or waiver would constitute a violation of or default under the terms of
a Contract or result in any Lien on any of the Purchased Assets or
enable another party to a Contract to terminate the Contract or impose a
penalty or additional payment obligations or accelerate any obligation
of Seller or Buyer under the Contract, and (ii) all necessary approvals,
consents and waivers of all parties to such Contract have not been
obtained on or prior to the Closing, then Buyer shall not be obligated
to assume such Contract (and if Buyer does not assume such Contract,
such Contract shall not be included in the Purchased Assets), provided
that Buyer may, at its sole discretion (so long as Buyer's elected
conduct is not prohibited by the Contract), elect to assume the
obligations and liabilities of Seller under such Contract (but not such
Contract itself), in which event (unless such Contract would have been
an Excluded Asset regardless of whether such approval, consent or waiver
was obtained) the claims, rights and benefits of Seller arising under
such Contract or resulting therefrom (but not such Contract itself)
shall be included in the Purchased Assets and transferred to Buyer
hereunder and any such payments or other benefits received by Seller
therefrom after the Closing shall immediately be transferred by Seller
to Buyer, and Seller shall, following the Closing, use all reasonable
efforts to assist Buyer in attempting to obtain the necessary approvals,
consents and waivers (but shall not be obligated to make any payment in
exchange for such approval, consent or waiver), and shall promptly
execute all documents necessary to complete the transfer of such
Contract if such approvals, consents and waivers are obtained. Nothing
stated in this Section 4.02 shall affect the right of Buyer to elect not
to consummate the transactions contemplated by this Agreement in the
event the conditions set forth in Section 15 hereof are not satisfied in
full on or before Closing.
5. Closing Date.
5.01 Closing. Subject to the provisions of Section 5.02 of
this Agreement, the closing of the transactions contemplated by this
Agreement (the "Closing"), unless delayed pursuant to Section 3.04(c) of
this Agreement, shall take place at the offices of Senn Lewis Visciano &
Strahle P.C. in Denver, Colorado at 10:00 a.m. on August 22, 1994, or on
such other date or at such other time or other place on such date as the
parties may agree upon in writing at least one (1) business day prior to
such date.
5.02 Closing Extension. Subject to Section 3.04(c) of this
Agreement providing for a delay of the Closing, if all of the conditions
to closing set forth in Sections 15 and 16 of this Agreement have not
been fulfilled, or waived in writing by the party entitled to waive such
conditions, on or before the time of Closing on August 22, 1994, each of
Seller and Buyer shall have the absolute right, at its sole discretion,
to extend the date on which the Closing shall occur for an additional
period of time specified by Seller or Buyer (as the case may be), but
not to exceed thirty (30) days, to provide Seller and the Shareholder or
Buyer (as the case may be) with additional time to satisfy any of the
conditions precedent to Closing described in Section 15 or 16 which
remain unsatisfied on August 22, 1994. Unless delayed pursuant to
Section 3.04(c), the date on which the Closing shall occur may only be
extended beyond the thirty (30) day period described above by an
agreement in writing of the parties hereto. The date on which the
Closing shall be required to occur, as determined in accordance with
this Section 5 and Section 3.04(c), is herein referred to as the
"Closing Date" and the Closing shall be deemed to have become effective
at 12:01 A.M. on the Closing Date. In the event that the Closing does
not occur by the date provided herein, as extended pursuant to Section
3.04(c), pursuant to this Section 5 or pursuant to agreement in writing
of the parties hereto, none of the parties hereto shall have any further
obligations or liabilities to any of the others under this Agreement,
except for any claims of default under this Agreement by any party
hereto against any other which shall have occurred prior to the
effective date of termination of this Agreement.
6. Title.
6.01 Real Property. At the Closing, the Shareholder shall
convey to Buyer good and marketable title in fee simple to the
Shareholder's Owned Real Property and Seller shall convey to Buyer good
and marketable title in fee simple to the Seller's Owned Real Property
and good and marketable title to the Leasehold Estates, in each case
free from any claims, liens (including, without limitation, mortgages,
deeds of trust, security interests, financing statements and mechanics,
materialmen's and judgment liens) or other encumbrances (including,
without limitation, tenancies, rights of parties in possession and
encroachments) whatsoever (collectively, "Liens"), except:
(a) General real estate taxes which are inchoate Liens
against the Owned Real Property or the Leased Real Property, as the case
may be, but which are not due and payable;
(b) Zoning, building and subdivision laws, ordinances and
regulations;
(c) The easements, restrictions, reservations, rights-of-way,
covenants and tenancies set forth and described in Schedule 6.01(c)
attached hereto and made a part hereof; and
(d) Matters referred to in the penultimate sentence of
Section 15.01(d).
The matters described in subparagraphs (a), (b), (c) and (d)
of this Section 6.01 shall hereinafter be called the "Permitted Title
Exceptions".
6.02 Personal Property. At the Closing, Seller shall convey
to Buyer all of Seller's right, title and interest to the Equipment,
Inventory, Receivables, Intellectual Property, personal property,
leases, contracts, agreements and purchase orders and all other personal
property included in the Seller's Purchased Assets, free and clear of
any Liens.
6.03 Termination of Shareholder Leases. At the Closing, the
Shareholder and Seller shall terminate each oral or written lease of the
Shareholder's Owned Real Property between them and any and all tenancies
of Seller in the Shareholder's Owned Real Property and shall deliver to
Buyer actual and exclusive possession of the Owned Real Property and the
Leased Real Property, free and clear of any tenancy, possession or other
right of Seller or the Shareholder.
7. Title Documents.
7.01 Seller's Conveyance Documents. Subject to the conditions
contained in this Agreement, Seller agrees to execute and deliver to
Buyer at the Closing the following documents:
(a) General warranty deeds of Seller conveying title to the
Seller's Owned Real Property to Buyer, subject only to the Permitted
Title Exceptions, in the forms attached hereto as Exhibit C (the
"Seller's Warranty Deeds");
(b) Assignments of Lease by Seller assigning the Leasehold
Estates to Buyer, subject only to the terms of the Middletown Lease and
the Phoenix Lease (the "Assignments of Lease");
(c) A Bill of Sale, General Assignment and Assumption
Agreement of Seller and Buyer conveying and assigning to Buyer all of
Seller's right, title and interest in the Equipment, Inventory,
Receivables, personal property leases, contracts, agreements, purchase
orders and other personal property included in Seller's Purchased
Assets, in the form attached hereto as Exhibit E (the "Seller's Bill of
Sale and Assumption Agreement");
(d) Such assignments by Seller of Intellectual Property as
Buyer shall request in form suitable for filing with the appropriate
governmental offices to evidence the transfer of such Intellectual
Property to Buyer (the "Intellectual Property Assignments").
(e) Certificates of Title to each motor vehicle included in
Seller's Purchased Assets noting the conveyance to Buyer of unencumbered
title to such motor vehicles (the "Certificates of Title"), together
with assignments by Seller in form suitable for filing with the
appropriate governmental offices to enable such office to issue new
Certificates of Title to such motor vehicles in Buyer's name;
(f) A general affidavit of Seller in recordable form, to the
effect that: (i) there are no judgments, tax liens (for delinquent
Taxes), unrecorded interests and bankruptcies against Seller or to
Seller's knowledge affecting Seller's Owned Real Property, and (ii)
there has been no labor or material furnished to Seller's Owned Real
Property at the request of Seller, or any subsidiary or affiliated
company of Seller, during the one hundred twenty (120) days immediately
prior to the Closing Date for which payment has not been made; and to
such other effects as may reasonably be required by the Title Company
hereinafter referred to as a condition to the issuance of the
endorsements to the Title Commitments (or policies in accordance with
the Title Commitments) required by Section 15.01(i) hereof and which
have been included in a representation or warranty of Seller made
elsewhere in this Agreement; and
(g) All other instruments and documents as may be reasonably
requested by Buyer or its counsel to transfer good and marketable title
to and possession of Seller's Purchased Assets to Buyer (the Seller's
Warranty Deeds, the Assignments of Lease, the Seller's Bill of Sale and
Assumption Agreement, the Intellectual Property Assignments, the
Certificates of Title and all such other instruments and documents being
hereinafter collectively called the "Seller's Conveyance Documents" and
individually called a "Seller's Conveyance Document").
7.02 Shareholder's Conveyance Documents. Subject to the
conditions contained in this Agreement, the Shareholder agrees to
execute and deliver to Buyer at the Closing the following documents:
(a) General warranty deeds of the Shareholder conveying title
to the Shareholder's Owned Real Property to Buyer, subject only to the
Permitted Title Exceptions, in the forms attached hereto as Exhibit F
(the "Shareholder's Warranty Deeds");
(b) A Bill of Sale of the Shareholder conveying and assigning
to Buyer all of the Shareholder's right, title and interest in the
personal property included in the Shareholder's Purchased Assets, in the
form attached hereto as Exhibit G (the "Shareholder's Bill of Sale");
(c) A general affidavit of the Shareholder in recordable
form, to the effect that (i) there are no judgments, tax liens (for
delinquent Taxes), unrecorded interests and bankruptcies against the
Shareholder or to the Shareholder's knowledge affecting the
Shareholder's Owned Real Property, and (ii) there has been no labor or
material furnished to the Shareholder's Owned Real Property at the
Shareholder's or Seller's request during the one hundred twenty (120)
days immediately prior to the Closing Date for which payment has not
been made; and to such other effects as may reasonably be required by
the Title Company as a condition to the issuance of the endorsements to
the Title Commitments (or policies in accordance with the Title
Commitments) required by Section 15.01(i) hereof and which have been
included in a representation or warranty of the Shareholder or Seller
made elsewhere in this Agreement; and
(d) All other instruments and documents as may be reasonably
requested by Buyer or its counsel to transfer good and marketable title
to and possession of the Shareholder's Purchased Assets to Buyer (the
Shareholder's Warranty Deeds, the Shareholder's Bill of Sale and all
such other instruments and documents being hereinafter collectively
called the "Shareholder's Conveyance Documents" and individually called
a "Shareholder's Conveyance Document").
8. Title Commitments and Surveys.
8.01 Title Commitments. Buyer has obtained commitments (the
"Title Commitments") for extended coverage American Land Title
Association ("ALTA") Owner's Policy Form B-1992 (or prior) title
insurance policies by Chicago Title Insurance Company (the "Title
Company") covering the Owned Real Property, except that the Title
Commitment for the Seller's Land in Texas is issued on a Texas Land
Title Commitment form. Buyer has objected to the exceptions to title
reflected in the Title Commitments that are set forth on Schedule 8.01.
Seller shall pay the costs for the Title Commitments, including, without
limitation, the costs of continuing the abstracts, if any, for Seller's
Owned Real Property. The Shareholder shall pay the costs for the Title
Commitments, including, without limitation, the costs of continuing the
abstracts, if any, for the Shareholder's Owned Real Property. If Buyer
elects to purchase title insurance, Buyer shall pay the premium for the
policies on the Shareholder's Owned Real Property and on Seller's Owned
Real Property.
8.02 Surveys. Seller and the Shareholder have prepared and
delivered to Buyer current, accurate as built surveys (the "Surveys") of
the Owned Real Property, showing, except as noted in Schedule 8.02,
access and the location and dimensions of all easements, buildings,
improvements, parking spaces, encroachments, if any, and utility lines
to their point of connection with public systems, together with the
legal description of the Land, which conform to the minimum standard
detail requirements for land title surveys adopted by ALTA and ACSM in
1992. Except as noted in Schedule 8.02, the Surveys have been certified
to Buyer and the Title Company by the respective Registered Land
Surveyors preparing the Surveys, pursuant to certifications satisfactory
to Buyer and the Title Company. Seller and/or the Shareholder have paid
or shall pay the costs of the Surveys.
9. Property Taxes and Utilities.
9.01 Property Taxes. All real estate Taxes and personal
property Taxes assessed against either the Purchased Assets (including
without limitation the Owned Real Property) or, to the extent Seller is
obligated to pay the same under the Middletown Lease or the Phoenix
Lease, the Leased Real Property, or any amounts assessed against the
Purchased Assets or the Leased Real Property in lieu thereof
(collectively the "Property Taxes"), with respect to the tax year (of
the applicable taxing authority) in which the transactions contemplated
by this Agreement are consummated, shall be apportioned by and between
Seller or the Shareholder, as the case may be, and Buyer as of the
Closing Date, so that Seller or the Shareholder, as the case may be,
shall be responsible for that portion of the full amount of the Property
Taxes assessed with respect to such tax year determined by multiplying
the full amount of such Property Taxes assessed with respect to such tax
year times a fraction, the numerator of which is the number of days in
such tax year occurring prior to the Closing Date and the denominator of
which is the total number of days in such tax year. If the Property
Taxes assessed with respect to the tax year in which the transactions
contemplated by this Agreement are consummated are unknown at the
Closing Date, then for purposes of the apportionment between Seller or
the Shareholder and Buyer provided above, such Property Taxes shall be
deemed to be equal in amount to the Property Taxes assessed with respect
to the prior tax year. That portion of the full amount of the Property
Taxes assessed with respect to the tax year in which the transactions
contemplated by this Agreement are consummated which Seller or the
Shareholder shall be responsible for, as provided above, shall be offset
by Buyer against the amount Buyer would otherwise be obligated to pay
hereunder for the Seller's Purchased Assets or the Shareholder's
Purchased Assets, as the case may be, and Buyer shall thereafter be
obligated to pay such amount to the appropriate taxing authorities when
the same becomes due and owing. In the event Property Tax statements
are sent directly to Seller or the Shareholder, Seller or the
Shareholder, as the case may be, shall cause such statements to be
forwarded promptly to Buyer. Seller or the Shareholder (i) shall pay,
at or prior to the Closing, all Property Taxes, including all penalties
and interest thereon, assessed by the taxing authorities with respect to
all tax years prior to the tax year in which the transactions
contemplated in this Agreement are consummated and (ii) shall pay, at or
prior to the Closing, or accrue on the Closing Statement, all remaining
installments of special assessments assessed or pending prior to the
Closing and payable in any tax year (whether such tax year commences or
ends before or after the Closing Date) with respect to the Owned Real
Property and (to the extent Seller is obligated to pay the same at any
time under the Middletown Lease or the Phoenix Lease) the Leasehold
Estates.
9.02 Agreements. Seller and Buyer shall prorate, as of the
Closing Date, based upon the number of days in the applicable period
occurring before, on and after the Closing Date, all charges and
payments based on performance over a period of time under each lease or
other Contract to which Seller is a party that is included in the
Purchased Assets and shall credit deposits or prepayments to Seller.
9.03 Utilities. Seller, the Shareholder and Buyer will use
reasonable efforts so that all providers of utility services to the
Owned Real Property and, to the extent that Seller is being billed
directly therefor, the Leased Real Property, will bill Seller or the
Shareholder, as the case may be, for all costs incurred prior to the
Closing Date and will bill Buyer for all costs incurred on or after the
Closing Date. If the providers do not submit separate bills, there will
be such prorations as of the Closing Date respecting such utility costs
as are equitable. In the event of any such utility prorations, Seller
or the Shareholder, as the case may be, and Buyer shall read the
applicable meter(s), if any, and make a written report of each
respective reading as of the Closing Date. Notwithstanding anything to
the contrary contained above in this paragraph, Seller or the
Shareholder, as the case may be, shall be responsible for all costs of
utility services to the Owned Real Property and, to the extent that
Seller is being billed directly therefor, the Leased Real Property
incurred prior to the Closing Date. Should the actual costs for such
period be different from the sum of the utility prorations made at the
Closing, Seller or the Shareholder, as the case may be, shall promptly
reimburse Buyer, or the Buyer shall promptly reimburse Seller or the
Shareholder, as the case may be, for any overpayment made thereby, as
appropriate.
9.04 Accrued Liabilities. Notwithstanding anything to the
contrary stated herein, no Property Tax, charge, payment or cost shall
be prorated pursuant to this Section to the extent such Property Tax,
charge, payment or cost has been reflected on the Seller's Closing
Statement as an Accrued Liability of Seller and required to be assumed
by Buyer under Section 4.01 hereof, and in such event any proration
provided herein shall be made only to the extent the obligation provided
for in this Section 9 exceeds, or is exceeded by, the amount reflected
on the Seller's Closing Statement as an Accrued Liability of Seller and
required to be assumed by Buyer under Section 4.01 hereof.
9.05 Transfer, Sales and Use Taxes. Seller shall pay all real
estate transfer Taxes, if any, in connection with the sale and
conveyance of the Seller's Owned Real Property and the Leasehold Estates
to Buyer, and all transfer (including, without limitation motor vehicle
transfer), sales and use Taxes, if any, applicable to the sale and
transfer of the Seller's Purchased Assets to Buyer. The Shareholder
shall pay all real estate transfer Taxes, if any, in connection with the
sale and conveyance of the Shareholder's Owned Real Property to Buyer,
and all transfer, sales and use Taxes, if any, applicable to the sale
and transfer of the Shareholder's Purchased Assets to Buyer. Buyer
agrees to provide Seller with all necessary resale certificates relative
to such Inventory.
10. Seller's Employees.
10.01 No Required Offers of Employment. Seller shall, to the
extent permitted by law, deliver to Buyer, promptly following the
execution of this Agreement, a list identifying and summarizing the
employment history of all employees engaged in the Distribution Business
(including employees at Seller's corporate headquarters whose time is
primarily dedicated to the Distribution Business) who are active
employees of Seller immediately prior to the Closing ("Seller's
Employees") and a summary of the employee benefits currently provided to
each such employee by Seller, as prepared by Seller, including
specifically but not limited to the earned (but not taken) and accrued
vacation, if any, of each of Seller's Employees. To the extent
permitted by law, Seller shall promptly deliver to Buyer updated lists
and summaries of the foregoing information as Seller's Employees are
hired and terminate employment with Seller prior to Closing. Buyer in
its discretion may determine the Seller's Employees to whom it offers
employment but shall use reasonable efforts to deliver to Seller at
least fifteen (15) days prior to Closing a list of all Seller's
Employees to whom it intends to offer employment. With respect to those
offers of employment made by Buyer to Seller's Employees, such offered
employment shall in each case be made at a base salary or hourly rate,
as the case may be, substantially equivalent to the base salary or
hourly rate paid to each such employee by Seller immediately prior to
the Closing Date. Nothing in this Section 10.01 shall obligate Buyer to
continue the employment of any such employee for any specific period
following the Closing Date or prevent Buyer from reducing the salary,
wages and benefits or modifying the duties or working conditions of any
such employee following the Closing Date or from terminating or
modifying Employee Plans, as hereinafter defined, or policies of Buyer
following the Closing Date except as otherwise expressly provided in
this Section 10.
10.02 Wages, Salaries, Bonuses, Accrued Vacation and
Severance. Seller will pay all wages, salaries, bonuses and accrued
vacation, if any, of the Seller's Employees accrued through the Closing
Date, and all severance and other amounts, if any, which may become
payable to or receivable by the Seller's Employees (by contract, as a
matter of law or otherwise) as a result of the termination of their
employment with Seller (whether or not such employees are offered or
accept employment with Buyer), and, as provided in Section 4.01, Buyer
shall not assume or be responsible for the payment of any such amounts.
On the Closing Date, Seller shall pay Buyer with respect to each
Seller's Employee who accepts employment with Buyer an amount equal to
the earned (but not taken) and accrued vacation, if any, of such person
(based upon the level of compensation paid by Seller to such person
immediately prior to the Closing Date) except to the extent such amount
is reflected as an accrued liability on the Closing Statement, and Buyer
will recognize entitlement to such accrued vacation of each such
employee.
10.03 Buyer's Employee Plans. On the Closing Date, Buyer
shall establish the Employee Plans (as hereinafter defined) of the
nature described in Schedule 10.03 or which, in the aggregate, are at
least substantially as beneficial to such employees as the Employee
Plans described in Schedule 10.03, subject to the right of Buyer to
terminate or modify such Employee Plans in its discretion after the
Closing. Buyer shall not be obligated to establish plans entitling
employees or former employees of Seller to post-retirement health,
dental or life insurance benefits or to establish for Seller's Employees
employed by Buyer after the Closing Employee Plans comparable to any of
Seller's Employee Plans described in Schedule 13.01(u). To the extent
such expenses are covered by Buyer's Employee Plans, Buyer will pay, or
cause the applicable Buyer's Employee Plan to pay, as the case may be,
any expenses incurred on or after the Closing Date by Seller's Employees
who become employees of Buyer immediately after Closing and their
dependents resulting from injuries, disabilities, illnesses or
conditions incurred by such employees or their dependents prior to the
Closing Date, other than workers' compensation benefits. Seller shall
be responsible and liable to pay or make provision for pension, profit
sharing and welfare benefit amounts under any of Seller's Employee Plans
through the Closing Date with respect to the Seller's Employees. Buyer
shall succeed to no rights of Seller under any of Seller's Employee
Plans and shall neither assume nor incur any liability, including
liability under Title IV of ERISA (as hereinafter defined), with respect
to any of Seller's Employee Plans or any entity aggregated with Seller
under Section 414(b), (c), (m), (n) or (o) of the Code. As used herein,
the term "Employee Plans" shall mean bonus, incentive compensation,
deferred compensation, pension, profit-sharing, retirement, stock
purchase, stock option, life, health, accident, disability, workers'
compensation, and other employee benefit plans, practices, policies and
arrangements of any kind, whether written or oral, including, but not
limited to, employee benefit plans within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Buyer shall, solely for eligibility and vesting purposes,
but not for benefit accrual purposes, or any other purposes whatsoever,
recognize under Buyer's Employee Plans all past services with Seller of
Seller's Employees who become employees of Buyer immediately after the
Closing.
10.04 Seller's Employees Claims. Without limiting the
generality of the foregoing, Seller shall pay or cause the applicable
Seller's Employee Plan to pay, as the case may be, all amounts payable
in the form of health, dental, sick pay or disability payments, life
insurance benefits, or otherwise by reason of or in connection with (i)
any claims filed or expenses incurred resulting from injuries,
disabilities, illnesses or conditions incurred by Seller's Employees and
their dependents prior to the Closing Date under any of Seller's
Employee Plans covering Seller's Employees and their dependents other
than workers' compensation benefits, (ii) the death of Seller's
Employees or their dependents prior to the Closing Date or (iii) any
claims subject to COBRA or any comparable state law relating to
continuation of such benefits with respect to any individual who had a
"qualifying event" as defined in COBRA prior to the Closing Date,
including any claims for such benefits made on or after the Closing
Date. Seller shall pay all such amounts when due (before or after the
Closing Date) in accordance with the provisions of any such Seller's
Employee Plan and the prior practices of Seller.
10.05 Workers' Compensation Benefits. Without limiting the
generality of the foregoing, Seller shall pay or cause the applicable
Seller's Employee Plan to pay, as the case may be, all amounts payable
in the form of workers' compensation benefits in connection with any
claims resulting from injuries, disabilities, illnesses or conditions
incurred by Seller's Employees (including without limitation a
recurrence after the Closing of such an injury, disability, illness or
condition incurred prior to the Closing) or the death of Seller's
Employees prior to the Closing Date. For purposes of this Section
10.05, a claim shall be deemed to have been "incurred" on the date of
occurrence of an injury, or the onset of an illness or condition, or any
other event giving rise to such claims or series of related claims, and
any disputes concerning the date of such an occurrence, onset or event
shall be resolved by determination of a medical expert knowledgeable and
qualified as to workers' compensation matters acceptable to both Seller
and Buyer and confirmed by a medical certificate, provided however, that
Buyer agrees not to assert after the second anniversary of the Closing
Date that any injury, disability, illness or condition was incurred
prior to the Closing. Notwithstanding any other provision herein, if
with respect to any workers' compensation claim filed after the Closing,
the medical expert selected by the parties determines that the expense
of such claim shall be equitably apportioned between Seller and Buyer,
such claim shall be apportioned as specified in the medical certificate
delivered by the medical expert. Seller shall pay all such amounts when
due (before or after the Closing Date) in accordance with the provisions
of any such Seller's Employee Plan and the prior practices of Seller.
10.06 Non-assumption of Liabilities. Without limiting the
generality of Section 4.01, Seller acknowledges that in making offers of
employment to Seller's Employees, Buyer is not assuming any of the
liabilities of Seller to such Seller's Employees except as set forth in
Section 10.02.
10.07 No Third-Party Beneficiaries. Without limiting the
generality of Section 35 hereof, nothing stated in this Section 10 shall
give any rights, remedies or benefits to any person or entity other than
the parties hereto and their successors and permitted assigns.
11. Noncompetition Agreement.
On the terms and subject to the conditions of this Agreement,
at the Closing Seller, the Shareholder and Buyer will execute and
deliver a noncompetition agreement in substantially the form attached
hereto as Exhibit H (the "Noncompetition Agreement").
12. Supply Agreement, Transition Services Agreement and
Cheese Storage Agreement.
On the terms and subject to the conditions of this Agreement,
at the Closing Seller, the Shareholder and Buyer and, in the case of the
Supply Agreement, Parent will execute and deliver (i) a supply agreement
in substantially the form attached hereto as Exhibit I (the "Supply
Agreement"), (ii) a transition services agreement in substantially the
form attached hereto as Exhibit J (the "Transition Services Agreement")
and (iii) a cheese storage agreement in substantially the form attached
hereto as Exhibit J-1 (the "Cheese Storage Agreement").
13. Representations and Warranties of Seller and the
Shareholder.
13.01 Representations and Warranties. Seller and the
Shareholder hereby jointly and severally represent and warrant to Buyer
and Parent as follows:
(a) Organization and Qualification of Seller. Seller is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Colorado. Seller is duly qualified or licensed
to do business as a foreign corporation in each jurisdiction where the
operation of its business or ownership of its assets makes such
qualification or licensing necessary, except where the failure to be so
qualified or licensed would not have a material adverse effect upon the
business, assets, condition (financial or otherwise), operations,
results of operations or prospects of the Distribution Business or upon
the enforceability by Seller of any Contract. Each jurisdiction in
which Seller is qualified to do business is listed in Schedule 13.01(a).
Seller has the corporate power and authority to own its properties, to
carry on the Distribution Business as now being conducted by it, and to
execute, deliver and perform this Agreement, the Noncompetition
Agreement, the Supply Agreement, the Transition Services Agreement, the
Cheese Storage Agreement, the License Agreement, the Livermore Lease (as
defined in Section 15.01(o)) and the Seller's Conveyance Documents.
(b) Legal Capacity of the Shareholder. The Shareholder has
the legal capacity to execute, deliver and perform this Agreement, the
Noncompetition Agreement and the Shareholder's Conveyance Documents.
(c) Authority of Seller. The execution, delivery and
performance by Seller of this Agreement, the Noncompetition Agreement,
the Supply Agreement, the Transition Services Agreement, the Cheese
Storage Agreement, the License Agreement, the Livermore Lease and the
Seller's Conveyance Documents, and the transactions contemplated herein
and therein, have been duly and effectively authorized by all necessary
and required corporate action of Seller.
(d) Due Execution by Seller. This Agreement has been duly
executed and delivered by Seller and is the valid and binding obligation
of Seller enforceable against it in accordance with its terms (subject,
as to enforcement of remedies, to bankruptcy, reorganization,
insolvency, moratorium and other similar laws relating to or affecting
creditors' rights generally and to general equitable principles). Upon
due execution and delivery by Seller at the Closing of the
Noncompetition Agreement, the Supply Agreement, the Transition Services
Agreement, the Cheese Storage Agreement, the License Agreement, the
Livermore Lease and the Seller's Conveyance Documents, each such
agreement or instrument will constitute the valid and binding obligation
of Seller enforceable against Seller in accordance with its terms
(subject, as to enforcement of remedies, to bankruptcy, reorganization,
insolvency, moratorium and other similar laws relating to or affecting
creditors' rights generally and to general equitable principles).
(e) Due Execution by the Shareholder. This Agreement has
been duly executed and delivered by the Shareholder and is the valid and
binding obligation of the Shareholder enforceable against him in
accordance with its terms (subject, as to enforcement of remedies, to
bankruptcy, reorganization, insolvency, moratorium and other similar
laws relating to or affecting creditors' rights generally and to general
equitable principles). Upon due execution and delivery by the
Shareholder at the Closing of the Noncompetition Agreement and the
Shareholder's Conveyance Documents, each such agreement or instrument
will constitute the valid and binding obligation of the Shareholder
enforceable against the Shareholder in accordance with its terms
(subject, as to enforcement of remedies, to bankruptcy, reorganization,
insolvency, moratorium, and other similar laws relating to or affecting
creditors' rights generally and to general equitable principles).
(f) No Conflict - Seller. The execution, delivery and
performance by Seller of this Agreement, the Noncompetition Agreement,
the Supply Agreement, the Transition Services Agreement, the Cheese
Storage Agreement, the License Agreement, the Livermore Lease and the
Seller's Conveyance Documents do not and will not violate, conflict
with, result in a breach or termination of, or constitute a default
under (or an event which with due notice or lapse of time, or both,
would constitute a breach of or default under), or require a notice or
consent under, or result in the creation of any Lien under, or result in
any penalty or additional payment obligations or the acceleration of any
obligations under, (i) the charter or bylaws, as amended to date, of
Seller, (ii) any note, agreement, contract, license, instrument,
mortgage, deed of trust, lease or other obligation to which Seller is a
party or by which Seller or any of the Purchased Assets is bound (except
as set forth in Schedule 13.01(f)), (iii) any judgment, order, writ,
decree, ruling or injunction of any governmental official, agency,
instrumentality or other authority applicable to Seller or any of the
Purchased Assets, or (iv) any statute, law, regulation or rule of any
governmental agency, instrumentality or other authority applicable to
Seller or any of the Purchased Assets other than bulk sales laws,
provided that the parties hereto acknowledge that a filing and the
expiration or termination of the waiting period under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976 (the "HSR Act") is required to
consummate the transactions contemplated by this Agreement.
(g) No Conflict - the Shareholder. The execution, delivery
and performance by the Shareholder of this Agreement, the Noncompetition
Agreement and the Shareholder's Conveyance Documents, do not and will
not violate, conflict with, result in a breach or termination of, or
constitute a default under (or an event which with due notice or lapse
of time, or both, would constitute a breach of or default under), or
require a notice or consent under, or result in the creation of any Lien
under, or result in any penalty or additional payment obligations or the
acceleration of any obligations under, (i) any note, agreement,
contract, license, instrument, mortgage, deed of trust, lease or other
obligation to which the Shareholder is a party or by which the
Shareholder or any of the Purchased Assets is bound, (ii) any judgment,
order, writ, decree, ruling or injunction of any governmental official,
agency, instrumentality or other authority applicable to the Shareholder
or any of the Purchased Assets, or (iii) any statute, law, regulation or
rule of any governmental agency, instrumentality or other authority
applicable to the Shareholder or any of the Purchased Assets.
(h) Real Property. Seller uses and occupies the Owned Real
Property and the Leased Real Property, and has good and marketable title
in fee simple to the Seller's Owned Real Property and a good and
marketable leasehold interest in the Leasehold Estates free and clear of
any and all Liens other than Permitted Title Exceptions. The
Shareholder has good and marketable title in fee simple to the
Shareholder's Owned Real Property free and clear of any and all Liens
other than Permitted Title Exceptions. Except as set forth in Schedule
13.01(h), there are no current or pending special assessments against
the Owned Real Property. Neither Seller nor the Shareholder has granted
to any person or entity any right of first refusal, right of first
opportunity, option or similar rights to purchase the Owned Real
Property or any interest therein or part thereof or any interest in the
Leasehold Estates or any Leased Real Property. Neither Seller nor the
Shareholder has received notice since June 30, 1992 from any insurance
company that it will require alteration of any Owned Real Property or
Leased Real Property for continuance of a policy insuring the Owned Real
Property or Leased Real Property or the maintenance of rates with
respect thereto nor have either of them entered into any, and to the
knowledge of Seller or the Shareholder, there is no, development
agreement or agreement that limits either of their ability to protest
taxes, fixes minimum taxes or requires continued business operations.
All water, sewer, gas, electric, telephone, drainage and other utility
equipment, facilities and services now used for the operation of the
Owned Real Property and the Leased Real Property are adequate to service
Seller's use of such properties. Except as shown on the Surveys, each
principal building, improvement or structure on each parcel of real
estate constituting a part of the Owned Real Property or the Leased Real
Property is located within the boundary lines of such parcel and does
not encroach onto any easement area or extend beyond any set-back line.
Except with respect to Environmental Laws, as to which separate
representations and warranties are made in Section 13.01(l), the Owned
Real Property and the Leased Real Property are in compliance in all
material respects with all applicable federal, state and local laws,
ordinances, rules, bylaws and regulations, and all applicable insurance
requirements, including, but not limited to, laws, ordinances, rules,
bylaws and regulations pertaining to zoning matters, and conform to all
such requirements on a current basis without reliance on any so-called
"grandfather" or other exception and without reliance on any variance or
other special limitation or condition or special use permit, including
without limitation the Americans with Disabilities Act. Except as set
forth in the Title Commitments or Surveys, the buildings and
improvements constituting a part of the Owned Real Property and the
Leased Real Property do not rely on any facilities (other than the
facilities of the public utility and community water and sewer
companies) not located on the Land or the real estate subject to the
Middletown Lease or the Phoenix Lease (i) to fulfill any zoning,
building code or other municipal or governmental requirement, (ii) for
structural support or the furnishing to such buildings and improvements
of any essential buildings systems utilities, including, but not limited
to, electrical, plumbing, mechanical, heating, ventilating and air
conditioning systems, or (iii) to fulfill requirements of any lease.
There are no pending or, to the knowledge of Seller or the Shareholders,
threatened actions or proceedings regarding condemnation or other
eminent domain actions or proceedings with respect to the Owned Real
Property or the Leased Real Property, or any part or parts thereof.
Except for the Owned Real Property and the Leased Real Property,
customers' places of business and warehouses used to make deliveries to
customers, and public roads, no real property is regularly used in the
operation of the Distribution Business.
(i) Personal Property. Seller possesses and has good title
to the Equipment, Inventory, Receivables and all other personal property
included in the Purchased Assets free and clear of any and all Liens.
Schedule 1.01(c) hereto correctly lists and describes all material
Equipment. Except for the motor vehicles and other personal property
leased by Seller pursuant to leases which are listed in Schedule 1.01(i)
hereto, no personal property is used in the operation of the
Distribution Business or is located on the Land or the real estate
constituting a part of the Leased Real Property other than the personal
property included in the Purchased Assets or included in the Excluded
Assets. Except for personal property included within the definition of
the Shareholder's Owned Real Property or the Excluded Assets, the
Shareholder neither owns nor has any interest in the Equipment
identified in Section 1.01(c) or any other personal property used in the
operation of the Distribution Business or located on the Land or the
real estate constituting a part of the Leased Real Property. EXCEPT AS
SET FORTH EXPRESSLY IN THIS AGREEMENT, SELLER AND THE SHAREHOLDER
DISCLAIM ANY EXPRESS OR IMPLIED WARRANTY WITH RESPECT TO THE PURCHASED
ASSETS, INCLUDING WITHOUT LIMITATION IMPLIED WARRANTIES OF FITNESS,
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
(j) Proceedings. Except as disclosed on Schedule 13.01(j)
attached hereto and made a part hereof, there is no action, suit,
proceeding or investigation pending or, to the knowledge of Seller or
the Shareholder, threatened against Seller, the Shareholder or any of
the Purchased Assets (and, to the knowledge of Seller and the
Shareholder, no claim has been asserted against Seller, the Shareholder
or any of the Purchased Assets) which, if decided adversely to such
person or any of the Purchased Assets, may (i) prevent the consummation
of the transactions contemplated by this Agreement on the Closing Date,
or (ii) place a Lien before, on or after the Closing Date upon the
Purchased Assets or any item or part thereof, or (iii) have an adverse
effect upon the Distribution Business. None of Seller, the Shareholder
or the Purchased Assets are subject to any judicial or administrative
judgment, order, writ, injunction, decree or restraint, or in violation
of any applicable law, statute, rule, regulation, ordinance or code,
with respect to the use, occupancy or right to sell and convey the
Purchased Assets or the operation of the Distribution Business or which
would otherwise have an adverse effect upon the Distribution Business.
(k) Notices. No notices have been issued and served upon
Seller or the Shareholder by any governmental authority having
jurisdiction over the Purchased Assets ordering Seller or the
Shareholder to make any alterations or repairs to the Purchased Assets
alleged by such governmental authority to be required by any ordinance,
rule, regulation or law, or to correct any condition of the Purchased
Assets alleged by such governmental authority not to comply with any
ordinance, rule, regulation or law, which have not been made or
corrected.
(l) Environmental Matters. No Hazardous Substances (as
hereinafter defined) have been released, emitted or disposed of, or
otherwise deposited, on or in any of the Owned Real Property or the
Leased Real Property by Seller or the Shareholder or, to the knowledge
of Seller or the Shareholder, by any other person which have been in
quantities, or involved methods of containment or use, that violate any
Environmental Laws.
Neither the Owned Real Property nor the Leased Real Property
is being used, or, to the knowledge of Seller or the Shareholder, has
ever been primarily used, in connection with the business of
manufacturing, storing, transporting, handling, disposing or treating
Hazardous Substances.
Neither Seller nor the Shareholder has generated at or
transported from any of the Owned Real Property or the Leased Real
Property any Hazardous Substances at any time which have been
transported to or disposed of in any landfill or other facility, which
transportation or disposal (under laws applicable as of the date hereof
to the landfill or other facility) could create liability to any unit of
government or any third party.
Except as disclosed in Schedule 13.01(l), there is no
Environmental Claim (as hereinafter defined) pending or, to the
knowledge of Seller or the Shareholder, threatened against Seller or the
Shareholder or against any person or entity whose liability for such
Environmental Claim Seller or the Shareholder have or may have retained
or assumed either contractually or by operation of law.
Except as disclosed in Schedule 13.01(l), there are no present
or, to the knowledge of Seller or the Shareholder, past actions,
activities, circumstances, conditions, events or incidents, that could
form the basis of any Environmental Claim against Seller or the
Shareholder or against any person or entity whose liability for such
Environmental Claim Seller or the Shareholder have or may have retained
or assumed either contractually or by operation of law.
Without in any way limiting the generality of the foregoing,
(a) all underground storage tanks or other containment facilities of any
kind deposited, placed or buried by, or pursuant to authorization of,
Seller or any of its affiliates on the Owned Real Property or the Leased
Property (whether currently or formerly located on the Owned Real
Property or the Leased Real Property) or, to the knowledge of Seller or
the Shareholder, otherwise currently or otherwise formerly located on
the Owned Real Property or the Leased Real Property are identified in
Schedule 13.01(l), (b) all wells or other borings on the Owned Real
Property or the Leased Real Property (regardless of whether such wells
or borings are in use) are identified in Schedule 13.01(l) except that
with respect to wells or borings that were not dug or made by, or
pursuant to the authorization of, Seller or any of its affiliates, this
representation is made only to the knowledge of Seller or the
Shareholder, (c) except as disclosed in Schedule 13.01(l), there is no
asbestos contained in or forming part of any building, building
component, structure or office space on the Owned Real Property or the
Leased Real Property built by, or pursuant to the authorization of,
Seller or any of its affiliates and, to the knowledge of Seller or the
Shareholder, there is no asbestos contained in or forming a part of any
other building, building component, structure or office space on the
Owned Real Property or the Leased Real Property, and (d) except as
disclosed in Schedule 13.01(l), no polychlorinated biphenyls ("PCBs")
are used or stored on the Owned Real Property or the Leased Real
Property that were placed on the Owned Real Property or the Leased Real
Property by, or pursuant to the authorization of, Seller or any of its
affiliates or are in or on Purchased Assets built or placed on or in the
Owned Real Property or the Leased Real Property by, or pursuant to the
authorization of, Seller or any of its affiliates and, to the knowledge
of Seller or the Shareholder, there are no other PCBs used or stored on
the Owned Real Property or the Leased Real Property.
All licenses, permits and other authorizations, pursuant to
any Environmental Law, necessary for the lawful operation of the
Distribution Business in the manner in which it has been operated by
Seller are in Seller's possession and are in full force and effect as of
the date hereof.
Except as disclosed in Schedule 13.01(l), Seller and the
Shareholder are in compliance in all material respects with all
applicable Environmental Laws. Except as disclosed in Schedule
13.01(l), there are no circumstances that may prevent or interfere with
compliance in all material respects in the future, including any failure
to make a timely application or submission for renewal of a permit or
other license. All permits and other governmental authorizations
currently held by Seller and the Shareholder pursuant to any
Environmental Laws are identified in Schedule 13.01(l).
None of the Owned Real Property or the Leased Real Property is
or, to the knowledge of Seller or the Shareholder, ever has been listed
on the United States Environmental Protection Agency's National
Priorities List of Hazardous Waste Sites, the Comprehensive
Environmental Response, Compensation and Liability Information System
("CERCLIS") or on any other similar list, schedule, log, inventory or
data base maintained by any federal, state or local agency.
Seller and the Shareholder have disclosed and delivered to
Buyer all environmental reports and investigations which Seller or the
Shareholder has obtained or ordered since June 30, 1992 with respect to
any of the Owned Real Property or the Leased Real Property, including
all drafts and letters and other documents which order, or describe or
limit the scope of, such reports and investigations.
As used herein, the term "Environmental Laws" shall mean all
federal, state, local and foreign statutes, laws, duties, regulations
and ordinances (including common law) which relate to or deal with
pollution, compensation for damage or injury caused by pollution or
protection of human health or the environment as of the Closing.
As used herein, the term "Hazardous Substance(s)" shall mean
(i) any flammable substances, explosives, radioactive materials,
hazardous wastes, toxic substances, pollutants and contaminants, and all
other materials or substances identified in or regulated by any of the
Environmental Laws, and (ii) asbestos, PCBs, urea formaldehyde, nuclear
fuel or material, chemical waste, explosives, known carcinogens,
petroleum products and by-products (including any fraction thereof), and
radon.
"Environmental Claim" means any notice received by Seller or
the Shareholder from a person or entity alleging Seller's or the
Shareholder's non-compliance with, or failure to perform any duty under,
any Environmental Laws or potential liability (including, without
limitation, potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property
damages, personal injuries, or penalties) arising out of, based on or
resulting from (i) the presence, or release into the environment, of any
material or form of energy at any location, whether or not owned by
Seller or the Shareholder or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law.
The representations and warranties in this Section 13.01(l)
are made solely with respect to the Distribution Business and the
Purchased Assets.
(m) Contracts. Except for the Middletown Lease, the Phoenix
Lease, the leases of the Shareholder's Owned Real Property between the
Shareholder and Seller (all of which leases between the Shareholder and
Seller will be terminated at or prior to Closing), the other leases,
contracts, agreements and purchase orders listed on Schedule 1.01(i) or
1.01(j) attached hereto, the agreements included in the Excluded Assets
and any purchase orders issued by or to Seller after the date of this
Agreement in the ordinary course of operating the Distribution Business,
Seller is not a party to or bound by, and none of the Purchased Assets
are bound by or subject to, any written or oral:
(i) agreement for the sale of any Purchased Assets other than
Inventories in the ordinary course of business consistent with past
practice;
(ii) non-competition or other agreement restricting the
conduct of the Distribution Business in any material respect;
(iii) agreement relating to the Distribution Business which
contains any provisions requiring Seller to indemnify or act as
guarantor for any other person or entity or to reimburse any maker of a
letter of credit or banker's acceptance, or any endorsement by Seller of
any promissory note or bill of exchange;
(iv) agreement, note, debenture, mortgage, indenture, deed of
trust, security agreement, capitalized lease or other instrument
evidencing or securing Indebtedness relating to the Distribution
Business or any sale-leaseback arrangement pertaining to any real
property or equipment used in the Distribution Business;
(v) partnership or joint venture agreement or similar
agreement relating to the Distribution Business;
(vi) agreement, other than with respect to the sale of
Inventories in the ordinary course of business consistent with past
practice, granting any person or entity any lease, sublease, license or
other interest, legal or equitable, in any of the Purchased Assets;
(vii) agreement with the Shareholder or any other affiliate of
Seller relating to the Distribution Business;
(viii) franchise agreement relating to the Distribution
Business in which Seller is a franchisor or franchisee;
(ix) agreement with any supplier for the purchase or sale of
raw materials, supplies or products (excluding any purchase order
entered into in the ordinary course of business on an order-by-order
basis, unless the terms of delivery thereunder are three months or more
or the amount exceeds $80,000), distributor, broker or agent relating to
the Distribution Business;
(x) agreement for the sale of products with any customer of
the Distribution Business (excluding any purchase order entered into in
the ordinary course of business on an order-by-order basis, unless the
terms of delivery thereunder are three months or more or the amount
thereof exceeds $80,000);
(xi) private label or co-packing agreement relating to the
Distribution Business;
(xii) leases of real property by Seller relating to the
Distribution Business or any lease of tangible personal property by
Seller relating to the Distribution Business if the lease of tangible
personal property involves expenditures by Seller in excess of $25,000
per year;
(xiii) agreement for capital expenditures relating to the
Distribution Business in excess of $25,000 per agreement or $200,000 in
the aggregate for all such agreements;
(xiv) contract for advertising or promotional services
relating to the Distribution Business;
(xv) agreement (either as licensor or licensee or in any
similar capacity) to pay or receive any royalty or license fee or any
other agreement (as licensor or licensee or in any similar capacity) to
license any Intellectual Property;
(xvi) employment agreement relating to Seller's Employees; or
(xvii) other material agreement relating to the Distribution
Business.
A true, correct and complete copy of each such written lease, contract,
agreement and purchase order and a summary of each oral lease, contract,
agreement and purchase order has been delivered to Buyer. The
Middletown Lease and the Phoenix Lease, the other leases, contracts,
agreements and purchase orders required to be identified on Schedule
1.01(i) or 1.01(j) in order to avoid a misrepresentation hereunder and
the purchase orders issued by or to Seller after the date of this
Agreement in the ordinary course of operating the Distribution Business
are (or, in the case of the purchase orders issued by or to Seller after
the date of this Agreement in the ordinary course of operating the
Distribution Business, will be) each valid, binding and in full force
and effect (subject, as to enforcement of remedies, to bankruptcy,
reorganization, insolvency, moratorium and other similar laws relating
to or affecting creditors' rights generally and to general equitable
principles); Seller has received no prepayments under any such lease,
contract, agreement or purchase order; and there are no material
defaults under, or events which with due notice or lapse of time, or
both, would constitute material defaults under, any such lease,
contract, agreement or purchase order or, to the knowledge of Seller or
the Shareholder, any other party thereto. The Middletown Lease, the
Phoenix Lease, the other leases, contracts, agreements and purchase
orders required to be identified on Schedule 1.01(i) or 1.01(j) in order
to avoid a misrepresentation hereunder and the purchase orders issued by
or to Seller after the date of this Agreement in the ordinary course of
operating the Distribution Business are (or, in the case of the purchase
orders issued by or to Seller after the date of this Agreement in the
ordinary course of operating the Distribution Business, will be) each
assignable to Buyer without the consent of third parties, except as
noted on Schedule 13.01(f), and Seller has not waived or assigned any of
its rights thereunder. Neither Seller nor the Shareholder has assigned
any of its or his rights under the leases of the Shareholder's Owned
Real Property.
(n) Compliance with Laws. Schedule 13.01(n) attached hereto
and made a part hereof correctly describes all material licenses,
permits and certificates granted to or granted or obtained by Seller or
the Shareholder in connection with the construction and/or installation
of the buildings or improvements constituting a part of the Purchased
Assets, or the use or occupancy of the Owned Real Property or the Leased
Real Property, or the operation of the Distribution Business. Except as
set forth on Schedule 13.01(n), no material licenses, permits or
certificates are required by law or otherwise necessary for the proper
operation of the Distribution Business in the manner in which it has
been operated by Seller or to permit the lawful use and occupancy of the
Owned Real Property and the Leased Real Property or the lawful use of
all other Purchased Assets in the manner in which they have been used by
Seller. All of such licenses, permits and certificates are in full
force and effect, and no action to terminate any such license, permit or
certificate is pending or, to the knowledge of Seller or the
Shareholder, threatened by any governmental official, agency,
instrumentality or other authority or other party. Except as set forth
on Schedule 13.01(n), the consummation of the transactions contemplated
by this Agreement will not violate the provisions of any such license,
permit or certificate, or require any governmental consents or
approvals. Neither Seller nor the Shareholder is in violation of any
statutes, laws, ordinances, rules or regulations concerning the
Distribution Business which individually or in the aggregate could have
a material adverse effect upon the business, assets, condition
(financial or otherwise), operations, results of operations or prospects
of the Distribution Business.
(o) Intellectual Property. Except as set forth in Schedule
1.01(g) attached hereto, Seller does not own, or have any interest in or
to, any material Intellectual Property primarily related to or necessary
for the Distribution Business. The registration numbers of all
registered Intellectual Property are set forth in Schedule 1.01(g).
Unless otherwise expressly set forth in Schedule 1.01(g), Seller is the
sole owner of and has the sole right to use the Intellectual Property
and the Intellectual Property is free and clear of all Liens. The
Shareholder does not have any interest in any of the Intellectual
Property described in Schedule 1.01(g) or any other Intellectual
Property used in the operation of the Distribution Business. No item of
Intellectual Property other than those listed on Schedule 1.01(g) is
necessary for the operation of the Distribution Business. The operation
of the Distribution Business in the ordinary course does not infringe in
any respect upon any Intellectual Property of others (except that this
representation and warranty is made only to the knowledge of Seller or
the Shareholder with respect to any infringing products bearing labels
of others that are distributed by Seller) and, to the knowledge of
Seller and the Shareholder, there has been no infringement by any third
party upon any Intellectual Property of Seller. Seller has not used or
enforced, or failed to use or enforce, any of the Intellectual Property
in any manner which could limit its validity or result in its
invalidity.
(p) Condition of Assets. The Equipment and the buildings and
improvements constituting a part of the Owned Real Property and the
Leased Real Property are, subject to normal wear and tear, clean and in
good operating condition and in a state of good maintenance and repair.
(q) Inventory and Supplies. Except to the extent reserved
against by Seller in its financial statements in accordance with the
policies used in preparing the financial statements described in Section
13.01(y) and with the written inventory policies of the Distribution
Business, copies of which have been delivered to Buyer, and except as
disclosed to Buyer in writing prior to the date of this Agreement, as of
the date hereof no inventory or supplies of Seller relating to the
Distribution Business is physically damaged, defective, infested,
adulterated or otherwise misbranded within the meaning of the Federal
Food and Drug and Cosmetics Act or within the meaning of any other food
and drug law, improperly packed or stored, bears product expiration code
dates on or prior to the Closing Date or bears product expiration code
dates on or prior to the date such inventory is expected to be sold or
used in the ordinary course (based upon sales and use rates during the
most recently completed twelve (12) months), or constitute articles
which may not, under the provisions of Section 404 or 505 of the Federal
Food and Drug and Cosmetics Act, be introduced into interstate commerce.
Except as so disclosed or reserved against, as of the date hereof all
inventory and supplies are useable or merchantable in the ordinary
course of operating the Distribution Business and the inventory and
supplies that is usable and merchantable in the ordinary course of
business is at levels sufficient for Seller to conduct the Distribution
Business in the ordinary course of business in the manner in which it
has been conducted by Seller.
(r) Deliberately Omitted.
(s) Brokers; Finders. Neither Seller nor the Shareholder is
under any commitment or obligation to any broker or agent whereby a
finder's, brokerage or middleman's commission is payable or whereby any
claim therefor may be validly made with respect to the transactions
contemplated by this Agreement.
(t) Employee and Labor Relations. None of Seller's Employees
are members of a collective bargaining unit or currently represented by
any collective bargaining agent, and Seller has not received notice from
any Seller's Employee or collective bargaining agent, within the twelve
(12) months preceding the Effective Date, seeking to establish a
collective bargaining unit with respect to the Distribution Business or
has reason to believe that such a collective bargaining unit will be
sought. There are no existing labor disputes or disturbances which
materially and adversely affect the Distribution Business or the future
prospects of the Distribution Business, and Seller has not experienced
any strikes, work stoppages, claims of unfair labor practices or other
material labor disputes relating to the Distribution Business since
January 1, 1991.
(u) Seller's Employee Plans. Schedule 13.01(u) attached
hereto and made a part hereof lists and generally describes all Employee
Plans covering the Seller's Employees ("Seller's Employee Plans").
Seller has furnished to Buyer with respect to each of such Employee
Plans a copy thereof and the most recent summary plan description. The
provisions and operation of such Employee Plans are not in violation in
any material respect of any provision of ERISA, the Code, or any other
statute, rule, regulation, agreement or instrument by which they are
governed. All applicable ERISA requirements as to the filing of
reports, documents and notices regarding such Employee Plans with the
Department of Labor, the Internal Revenue Service and the Pension
Benefit Guaranty Corporation, and the furnishing of such documents to
participants and beneficiaries, have been complied with in all material
respects. Except as disclosed in Schedule 13.01(j), there are no
pending or, to the knowledge of Seller or the Shareholder, threatened
claims, lawsuits or arbitrations which have been asserted or instituted
against such Employee Plans or any fiduciaries thereof respecting their
duties to such plans or the assets or any of the trusts under any of
such plans or respecting any benefits payable under such plans. Since
January 1, 1989, neither Seller nor any entity affiliated with Seller
has maintained any defined benefit pension plan subject to Title IV of
ERISA or contributed on behalf of Seller's Employees to any multi-
employer plan as defined in Section 3(37) of ERISA.
(v) Taxes. Seller has duly and timely filed all state and
local Tax returns and reports required to be filed by it that relate in
whole or part to the Distribution Business, and has paid all Taxes
(including all interest, penalties, assessments and deficiencies) due or
claimed to be due under such duly filed tax returns, or has made
provision therefor. The Shareholder has duly and timely filed all
Property Tax returns and reports required to be filed by it relating to
the Shareholder's Owned Real Property and has paid all Property Taxes
(including all interest, penalties, assessments and deficiencies) due
under such duly filed tax returns, or has made provision therefor.
Seller is not delinquent, and there are no material asserted or assessed
deficiencies that have not been settled, with respect to the payment of
any sales, use and withholding Taxes, other employee benefit Taxes or
Property Taxes, if any, payable by it with respect to the Distribution
Business, the Purchased Assets or Seller's Employees (collectively
"Seller's Covered Taxes") (whether or not shown on any filed tax return)
and the Shareholder is not delinquent with respect to the payment of any
Property Taxes payable by it with respect to the Shareholder's Owned
Real Property (whether or not shown on any filed tax return). Seller
has made a valid and effective election to be treated as an S
corporation for income tax purposes and such election has not been
revoked or terminated. None of the Purchased Assets constitutes "tax
exempt use property" within the meaning of Section 168(h) of the Code,
and Seller is not a party to any lease relating to the Distribution
Business that is made pursuant to Section 168(f)(8) of the Internal
Revenue Code of 1954, as amended. There are no alleged material Tax
deficiencies of Seller proposed or discussed by the IRS or other
appropriate tax authority with Seller (whether or nor such matters have
been settled) that involve the Distribution Business, Seller's Purchased
Assets or Seller's Employees that are likely to be proposed or asserted
against Buyer or the Purchased Assets if Buyer continues to operate the
Distribution Business after the Closing in substantially the same manner
as it has been operated by Seller. To the knowledge of Seller and the
Shareholder, no tax returns of Seller with respect to such issues (and
no Property Tax returns of the Shareholder or Seller with respect to
Seller's Owned Real Property, the Equipment or the Shareholder's Owned
Real Property or other Tax returns of Seller relating to Seller's
Covered Taxes or other state and local Tax returns of Seller) filed or
required to be filed are being examined (nor has any action, audit,
proceeding or investigation been threatened, to the knowledge of Seller
or the Shareholder) by the Internal Revenue Service or other appropriate
taxing authority that is out of the ordinary course of business of
Seller or the Distribution Business or that has the possibility of a
material adverse effect on Seller or the Distribution Business if
decided adversely to Seller. There has been no waiver or extension of
any applicable statute of limitations for the assessment or collection
of any Seller's Covered Taxes or state or local Taxes granted by Seller
(or for the assessment or collection of any Property Taxes with respect
to the Shareholder's Owned Real Property granted by the Shareholder).
(w) Nonforeign Certification. Neither Seller nor the
Shareholder is a "foreign person" within the meaning of Section 1445 of
the Code.
(x) Suppliers and Customers. Neither Seller nor the
Shareholder has notice or, with respect to customers accounting for more
than $5,000,000 of revenues for fiscal 1993 or $3,000,000 of revenues
for the 31 week period ended June 4, 1994, reason to believe that any of
Seller's suppliers or customers intends to cancel or otherwise modify
its relationship with Seller in any manner which individually or in the
aggregate with respect to all such parties, if any, would have a
material adverse effect on the business, assets, condition (financial or
otherwise), operations, results of operations or prospects of the
Distribution Business; and the purchase of the Purchased Assets by Buyer
will not, to the knowledge of Seller or the Shareholder, materially and
adversely affect the relationship of any supplier or customer with the
Distribution Business.
(y) Financial Statements. Seller has delivered to Buyer true
and correct copies of (i) unaudited balance sheets of the Distribution
Business as of the last day of Seller's fiscal years 1991 through 1993,
inclusive, and unaudited statements of earnings of the Distribution
Business for the fiscal years ended on such dates, and (ii) an unaudited
balance sheet of the Distribution Business as of June 4, 1994, and
unaudited statements of earnings of the Distribution Business for the
31-week period ended on such date, all of which have been prepared by
Seller. Each such financial statement presents fairly in all material
respects the financial position of the Distribution Business as of its
date and the results of operations of the Distribution Business for the
period then ended, in conformity with generally accepted accounting
principles consistently applied except as disclosed in Schedule
13.01(y). Other than as and to the extent disclosed or reserved against
in the most recent balance sheet of the Distribution Business referred
to above, Seller has no liabilities or obligations of any nature
whatsoever (whether accrued, absolute, contingent, known, unknown,
asserted, unasserted or otherwise, and whether due or to become due)
relating to the Distribution Business, except (i) liabilities and
obligations incurred in the ordinary course of operating the
Distribution Business since the date of such balance sheet and (ii)
liabilities and obligations that are not in default and are set forth
in, or arising under, the Middletown Lease, the Phoenix Lease, the
leases of the Shareholder's Owned Real Property between the Shareholder
and Seller, any of the other leases, contracts, agreements or purchase
orders listed on Schedule 1.01(i) or 1.01(j) attached hereto or which
are not required to be listed therein to avoid a misrepresentation under
this Agreement, or any of the agreements included in the Excluded
Assets. The books and records of Seller relating to the Distribution
Business are accurate in all material respects and have been maintained
in accordance with good business practice.
(z) Insurance. Seller or the Shareholder has in force
property and casualty insurance on all tangible Purchased Assets
(including the Owned Real Property and, to the extent Seller is
obligated to maintain the same under the Middletown Lease or the Phoenix
Lease, the Leased Real Property) on a replacement cost basis and general
and product liability insurance relating to the Distribution Business in
the amounts set forth in the certificates of insurance which have been
provided by Seller to Buyer, which certificates of insurance are true
and correct certificates and summaries of Seller's and the Shareholder's
existing coverage. Set forth on Schedule 13.01(z) attached hereto and
made a part hereof is a true and correct schedule of all such policies.
All required premiums have been paid with respect to such policies.
(aa) Trade Allowances. Except as set forth on Schedule
13.01(aa) attached hereto and made a part hereof, Seller does not have
in effect any trade allowance, billback, rebate, discount or similar
program with its customers, regardless of whether Seller currently has
any actual or contingent unpaid liability thereunder. Except as set
forth on Schedule 13.01(aa), no supplier of Seller has in effect, or has
had in effect since October 30, 1993, and Seller has received no
payments, other than payments disclosed in writing to Buyer, under, any
trade allowance, billback, rebate, discount or similar program pursuant
to which Seller has any actual or contingent right to receive payment or
has received payment since October 30, 1993.
(bb) No Changes. Except as contemplated or permitted hereby,
or as set out in Schedule 13.01(bb), since January 1, 1994, there has
not been:
(i) any entry by Seller or the Shareholder into any
commitment or transaction relating to the Distribution Business other
than in the ordinary course of business, including (A) the incurrence
of, or commitment to incur, any capital expenditures with respect to the
Distribution Business in excess of $25,000 individually or $200,000 in
the aggregate, (B) the incurrence of any Indebtedness relating to the
Distribution Business, or (C) the sale, lease or other disposition of,
or entry into any agreement to sell, lease or otherwise dispose of, any
assets that, but for such disposition, would constitute Purchased
Assets, except for sales of Inventory in the ordinary course of
business;
(ii) any change by Seller in accounting methods or principles
applicable to any portion of the Distribution Business;
(iii) any material change in practices of Seller with respect
to the manner and timing of payment of trade and other payables relating
to the Distribution Business;
(iv) any material change in practices of Seller with respect
to the collection of receivables relating to the Distribution Business;
(v) any declaration, making or payment of any dividend or
other distribution of non-cash assets of Seller which are included in
the Purchased Assets to any shareholder or affiliate of Seller;
(vi) any sums or other assets of Seller paid to or withdrawn
by Seller's Employees, except for ordinary compensation and fees and
ordinary expense reimbursement and similar payments;
(vii) any substantial increase in the total number of
employees engaged in the Distribution Business, any increase in
compensation or benefits of any employees engaged in the Distribution
Business (other than pursuant to customary salary and employee benefit
administration in the ordinary course of business in accordance with
past practice), or any retroactive increase in compensation or benefits
of any employees engaged in the Distribution Business; or
(viii) any other change that has had, or could be reasonably
expected to have, a material adverse effect upon the business, assets,
condition (financial or otherwise), operations, results of operations or
prospects of the Distribution Business.
(cc) Powers of Attorney. Seller has not given any power of
attorney relating to the Distribution Business to any Person for any
purpose whatsoever.
(dd) No Recalls. Except as set forth on Schedule 13.01(dd),
no products related to the Distribution Business have been recalled
voluntarily or involuntarily since January 1, 1991, no recall is being
considered by Seller or, to the knowledge of Seller or the Shareholder,
has been requested or ordered by any governmental official, agency,
instrumentality or other authority or consumer group and, to the
knowledge of Seller and the Shareholder, there is no basis therefor.
(ee) Principal Shareholder. The Shareholder is the principal
shareholder of Seller and he and members of his family will receive a
significant benefit from Buyer's execution and performance of this
Agreement.
(ff) Disclosure. None of the foregoing representations and
warranties contains any untrue statement of a material fact or omits to
state any material fact necessary to make any such representations and
warranties not misleading. Seller disclaims any representation or
warranty about the accuracy of projections or forecasts prepared by
Seller. The terms "knowledge of Seller and the Shareholder", "knowledge
of Seller or the Shareholder" or "knowledge of Seller" and their
grammatical equivalents mean the actual present knowledge of any of the
Shareholder, any director or officer of Seller, any distribution center
general manager or the food service distribution human resources
manager, food service distribution controller or corporate credit
manager of Seller. The term "knowledge of the Shareholder" and its
grammatical equivalents means the actual present knowledge of the
Shareholder.
13.02 Survival of Representations and Warranties. The
liability of Seller and the Shareholder for the representations and
warranties made to Buyer and Parent in Section 13.01 shall survive the
Closing (except for Section 13.01(q) which shall not survive Closing)
and shall not merge into the Seller's Conveyance Documents, the
Shareholder's Conveyance Documents or any other instrument or document
required to be executed by Seller or the Shareholder and delivered to
Buyer or Parent pursuant to the terms of this Agreement.
14. Representations and Warranties of Buyer and Parent.
14.01 Representations and Warranties. Buyer and Parent hereby
jointly and severally represent and warrant to Seller and the
Shareholder that:
(a) Organization and Qualification. Buyer is a corporation
duly organized, validly existing and in good standing under the laws of
the State of Delaware. Buyer is duly qualified to do business and in
good standing under the laws of the State of Colorado, and has the
corporate power and authority to own its properties, to carry on its
business as now being conducted by it, and to execute, deliver and
perform this Agreement, the Noncompetition Agreement, the Seller's Bill
of Sale and Assumption Agreement, the Supply Agreement, the Transition
Services Agreement, the Cheese Storage Agreement, the License Agreement,
the Livermore Lease and the Assignments of Lease. Parent is a
corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has the corporate power to
execute, deliver and perform this Agreement.
(b) Authority of Buyer and Parent. The execution, delivery
and performance by Buyer and Parent of this Agreement and the Supply
Agreement and by Buyer of the Noncompetition Agreement, the Transition
Services Agreement, the Seller's Bill of Sale and Assumption Agreement,
the Cheese Storage Agreement, the License Agreement, the Livermore Lease
and the Assignments of Lease, and the transactions contemplated herein
and therein, have been duly and effectively authorized, with respect to
Buyer, by all necessary and required corporate action of Buyer and, with
respect to Parent, by all necessary and required corporate action of
Parent.
(c) Due Execution by Buyer and Parent. This Agreement has
been duly executed and delivered by Buyer and Parent and is the valid
and binding obligation of Buyer and Parent enforceable against each of
them in accordance with its terms (subject, as to enforcement of
remedies, to bankruptcy, reorganization, insolvency, moratorium and
other similar laws relating to or affecting creditors' rights generally
and to general equitable principles). Upon due execution and delivery
by Buyer and Parent at the Closing of the Supply Agreement and by Buyer
of the Noncompetition Agreement, the Cheese Storage Agreement, the
Transition Services Agreement, the Seller's Bill of Sale and Assumption
Agreement, the License Agreement, the Livermore Lease and the
Assignments of Lease, each such agreement will constitute the valid and
binding obligation of Buyer enforceable against it in accordance with
its terms (subject, as to enforcement of remedies, to bankruptcy,
reorganization, insolvency, moratorium and other similar laws relating
to or affecting creditors' rights generally and to general equitable
principles).
(d) No Conflict. The execution, delivery and performance by
Buyer and Parent of this Agreement and the Supply Agreement and by Buyer
of the Noncompetition Agreement, the Cheese Storage Agreement, the
Transition Services Agreement, the Seller's Bill of Sale and Assumption
Agreement, the License Agreement, the Livermore Lease and the
Assignments of Lease do not and will not violate, conflict with, result
in a breach of, or constitute a default under (or an event which with
due notice or lapse of time, or both, would constitute a breach of or
default under), or require a consent under, (i) the charter or bylaws,
as amended to date, of Buyer or Parent, (ii) any note, agreement,
contract, license, instrument, mortgage, deed of trust, lease or other
obligation to which Buyer or Parent is a party or by which Buyer or
Parent is bound, (iii) any judgment, order, writ, decree, ruling or
injunction of any governmental official, agency, instrumentality or
other authority applicable to Buyer or Parent or (iv) any statute, law,
rule or regulation of any governmental agency, instrumentality or other
authority applicable to Buyer or Parent, provided that the parties
hereto acknowledge that a filing and the expiration or termination of
the waiting period under the HSR Act is required to consummate the
transactions contemplated by this Agreement.
(e) Proceedings. There is no action, suit, proceeding or
investigation pending or, to the knowledge of Buyer or Parent,
threatened against Buyer or Parent which, if decided adversely to Buyer
or Parent, may prevent the consummation of the transactions contemplated
by this Agreement on the Closing Date.
(f) Brokers; Finders. Neither Buyer nor Parent is under any
commitment or obligation to any broker or agent whereby a finder's,
brokerage or other middleman's commission is payable or whereby any
claim therefor may be validly made with respect to the transactions
contemplated by this Agreement.
(g) Sole Shareholder. Parent is the sole shareholder of
Buyer and will receive a significant benefit from Buyer's execution and
performance of this Agreement.
(h) Disclosure. None of the foregoing representations and
warranties contains any untrue statement of a material fact or omits to
state any material fact necessary to make any such representations and
warranties not misleading. The term "knowledge of Buyer or Parent" and
its grammatical equivalents means the actual present knowledge of any
director or officer of Buyer or Parent.
14.02 Survival of Representations and Warranties. The
liability of Buyer or Parent for the representations and warranties made
to Seller and the Shareholder in Section 14.01 shall survive the Closing
and shall not merge with and into any instrument or document required to
be executed by Buyer or Parent and delivered to Seller or the
Shareholder pursuant to the terms of this Agreement.
15. Conditions Precedent to Buyer's and Parent's Obligations
Hereunder.
15.01 Conditions Precedent. The obligation of Buyer and
Parent to consummate this Agreement, and the transactions contemplated
hereunder, shall be subject to and conditioned upon the satisfaction at
or before Closing of each of the following conditions; it being
understood that the following conditions precedent are included herein
for the exclusive benefit of Buyer and Parent and may be waived, in
writing, in whole or in part, by Buyer and Parent at any time:
(a) All of the covenants and agreements contained in this
Agreement to be complied with and performed by Seller or the Shareholder
on or before the Closing shall have been complied with and performed,
and Seller and the Shareholder shall not be in breach of any such
covenant or agreement and shall have delivered on the Closing Date to
Buyer all of the documents and instruments which are required to be
delivered by either of them on the Closing Date.
(b) All representations and warranties of Seller and the
Shareholder contained in or made pursuant to this Agreement shall be
true, correct and complete in all material respects as of the Closing
Date as if made at and as of the Closing Date.
(c) Seller and the Shareholder shall have delivered to Buyer
a certificate, dated the Closing Date, executed by a responsible officer
of Seller and by the Shareholder and certifying to the satisfaction of
the conditions specified in Sections 15.01(a) and (b) hereof.
(d) Seller and the Shareholder shall have obtained, without
cost to Buyer or Parent, (i) any and all written consents and authority
necessary and required to permit them to sell and convey the Purchased
Assets to Buyer, including without limitation the Leasehold Estates
created by the Middletown Lease and the Phoenix Lease (except for
consents which Buyer has waived by its election to assume such lease,
contract, agreement or purchase order under 2(f)(ii) hereof), (ii)
estoppel certificates, in form and substance satisfactory to Buyer, from
such third parties to leases, contracts and agreements included in the
Purchased Assets as Buyer may require, including without limitation the
Phoenix Lease and the Middletown Lease, and (iii) corrections to the
exceptions to the Title Commitments and Surveys noted in Schedules 8.01
and 8.02 and to the extent such corrections relate to the conformity to
survey standards or certification or relate to matters that materially
adversely affect the use (as such property is presently being used) or
marketability of any individual Owned Real Property or the Owned Real
Property in the aggregate. At the request of Buyer, Seller further
agrees to take such steps as may be reasonably necessary to correct
after the Closing such matters referred to on Schedules 8.01 and 8.02
which by their nature can be corrected and have not been corrected prior
to the Closing to the extent such matters affect the use or
marketability of any individual Owned Real Property or the Owned Real
Property in the aggregate.
(e) Buyer shall have obtained any required governmental
licenses, authorizations, certificates and permits required by
applicable governmental authorities to permit Buyer to acquire the
Purchased Assets, to establish and operate the Distribution Business in
the manner in which it was operated immediately prior to the Closing and
to use and occupy the Owned Real Property and the Leased Real Property
and the parties shall have complied with the HSR Act and the waiting
period thereunder shall have expired or been terminated.
(f) Seller and the Shareholder shall have obtained and
delivered to Buyer an opinion of counsel to Seller and the Shareholder
in substantially the form attached hereto as Exhibit K.
(g) Seller shall have delivered to Buyer copies of all
necessary corporate resolutions adopted by the board of directors (and
the shareholders, if necessary) of Seller authorizing the execution,
delivery and performance of this Agreement, the Noncompetition
Agreement, the Seller's Conveyance Documents, the Supply Agreement, the
Transition Services Agreement, the Cheese Storage Agreement, the License
Agreement, the Indemnification Protection Agreement, the Livermore Lease
and the transactions contemplated hereby and thereby, certified to be
true, correct, complete, unchanged and in full force and effect on the
Closing Date by the secretary of Seller.
(h) Buyer shall have received, as of a date no more than five
(5) days prior to the Closing Date, Uniform Commercial Code Searches
against Seller and the Shareholder from the Secretary of State of the
State of Colorado, and from such other states and/or counties in which
Seller or the Shareholder owns, leases, warehouses or stores Purchased
Assets, together with tax lien and judgment searches, in each case
certified by a reporting service satisfactory to Buyer and disclosing no
Liens against the Purchased Assets and, with respect to the Owned Real
Property and the Leasehold Estates, except the Permitted Title
Exceptions.
(i) Buyer shall have received endorsements to the Title
Commitments (or, at Buyer's request, a title insurance policy in
accordance with the Title Commitments) (i) changing the effective date
thereof to the Closing Date, (ii) correcting or deleting the matters
noted in Schedule 8.01 which materially adversely affect the use (as
such property is presently being used) or marketability of any
individual Owned Real Property or the Owned Real Property in the
aggregate, (iii) deleting the standard exceptions and insuring, among
other matters covered by the Title Commitments, zoning, access and
contiguity and such other matters as Buyer has reasonably requested and
(iv) affirmatively insuring against changes in the status of title to
the Owned Real Property through the date of recording of Seller's
Warranty Deeds and the Shareholder's Warranty Deeds, reflecting title to
the Owned Real Property vested in Buyer, subject to no Liens other than
Permitted Title Exceptions, and reflecting no other change, and the
Title Company shall have provided Buyer with assurances reasonably
satisfactory to Buyer that it has not insured over any title defects
except to the extent approved by Buyer. Buyer shall have also received
copies of all documents and agreements constituting specific exceptions.
(j) The buildings and improvements constituting part of any
of the Owned Real Property or the Leased Real Property shall not have
been damaged or destroyed by fire or other casualty to such a
substantial extent as to materially and adversely affect the occupancy
thereof by Buyer or the contemplated use thereof by Buyer in the
operation of the Distribution Business and there shall have been no
other material adverse change in the business, assets, condition
(financial or otherwise), operations or results of operations of the
Distribution Business.
(k) At least ten (10) days prior to the Closing Date, Seller
shall have delivered to Buyer audited balance sheets of the Distribution
Business as of the last day of the fiscal years in each of the years
1992 and 1993 and as of June 4, 1994 and audited statements of profits
and losses and cash flows for the years ended November 2, 1991, October
31, 1992 and October 30, 1993 and for the 31 week period ended June 4,
1994 (the "Audited Distribution Business Financial Statements") prepared
in accordance with generally accepted accounting principles consistent
with those followed in the preparation of Seller's audited financial
statements and the Statement of Principles (except as disclosed in
Schedule 13.01(y)), which Audited Distribution Business Financial
Statements shall be certified by Price Waterhouse, whose opinion
regarding the Audited Distribution Business Financial Statements shall
be unqualified. Seller and Buyer each shall pay one-half of the cost of
preparing the Audited Distribution Business Financial Statements and
reasonable and necessary costs incidental to their preparation such as
conferences with the accountants of Buyer and Parent, and Buyer and
Parent shall have the right to approve the engagement letter for such
audit. Buyer, Parent and their accountants shall have the right to
review the final draft of such audit report prior to its finalization
and shall have access to all work papers of Price Waterhouse at the time
of such review. At the Closing, Seller and the Shareholder shall
deliver to Buyer a certificate, dated the Closing Date, and executed by
the Chief Financial Officer of Seller on behalf of Seller and by the
Shareholder which represents and warrants (provided that such
representation and warranty by the Shareholder shall be to his
knowledge) that each of the Audited Distribution Business Financial
Statements presents fairly the financial position of the Distribution
Business as of its date and the results of operations of the
Distribution Business for the period then ended, in conformity with
generally accepted accounting principles consistently applied except as
disclosed in Schedule 13.01(y). The representations and warranties
contained in the certificate shall be deemed to constitute
representations and warranties under this Agreement. In no event shall
Buyer or Parent be obligated to consummate this Agreement, and the
transactions contemplated hereunder, unless (i) the Audited Distribution
Business Financial Statements as of, and for the fiscal years ended on,
the same dates as the unaudited financial statements of the Distribution
Business described in Section 13.01(y) are, in Buyer's and Parent's
reasonable judgment, no less favorable in all material respects than
such respective unaudited financial statements described in Section
13.01(y), and (ii) the income before provision for income taxes of
Seller for the thirty-one week period ended June 4, 1994 and fiscal
years ended October 30, 1993 and October 31,1992, as shown on the
Audited Distribution Business Financial Statements, is at least
$2,950,000, $6,900,000 and $4,800,000, respectively.
(l) Buyer shall have conducted at its cost such environmental
site investigations, assessments and tests of the Owned Real Property
and the Leased Real Property as Buyer shall determine to be necessary or
advisable, which environmental site investigations, assessments and
tests shall disclose no environmental conditions which could result in
any liability, cost or expense to Buyer or any other past, present or
future owner, user or occupant of the Owned Real Property or such Leased
Real Property other than those disclosed in Schedule 13.01(l).
(m) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing
Date which restrains or prohibits the consummation of the transactions
contemplated by this Agreement.
(n) Seller and the Shareholder shall have delivered to Buyer
an affidavit (a so-called "FIRPTA affidavit") in form and substance
reasonably satisfactory to Buyer duly executed and acknowledged,
certifying facts that would exempt the transactions contemplated hereby
from the provisions of the Foreign Investors Real Property Tax Act.
(o) Seller and Buyer shall have entered into a lease in
substantially the form of Exhibit L hereto (the "Livermore Lease")
providing for the lease by Buyer to Seller of a portion of Seller's Land
in Livermore, California.
(p) The parties shall have complied with the HSR Act and the
waiting period thereunder shall have expired or been terminated.
15.02 Effect of Failure to Satisfy. If any or all of the
conditions precedent to Buyer's and Parent's obligation hereunder set
forth in this Section 15 have not been satisfied or fulfilled to Buyer's
and Parent's satisfaction at or before the Closing or any extension
thereof pursuant to Section 5.02, and Buyer and Parent have not
expressly waived, in writing, any such unsatisfied condition at or
before the Closing or any extension thereof pursuant to Section 5.02,
then this Agreement and the obligations and rights of the parties under
this Agreement shall terminate and be cancelled, and none of Seller, the
Shareholder, Buyer or Parent shall have any further obligations or
liabilities to the others, except for any claims of default under this
Agreement by any of them against any of the others which shall have
accrued prior to the effective date of termination and cancellation of
this Agreement.
16. Conditions Precedent to Seller's and the Shareholder's
Obligations Hereunder.
16.01 Conditions Precedent. The obligation of Seller and the
Shareholder to consummate this Agreement, and the transactions
contemplated hereunder, shall be subject to and conditioned upon
satisfaction at or before the Closing of each of the following
conditions; it being understood that the following conditions precedent
are included herein for the exclusive benefit of Seller and the
Shareholder, and may be waived, in writing, in whole or in part, by
Seller and the Shareholder at any time:
(a) All of the covenants and agreements contained in this
Agreement to be complied with and performed by Buyer on or before the
Closing shall have been complied with and performed, and Buyer shall not
be in breach of any such covenant or agreement and shall have delivered
on the Closing Date to Seller and the Shareholder all of the documents
and instruments which are required to have been delivered by it on the
Closing Date.
(b) All representations and warranties of Buyer and Parent
contained in or made pursuant to this Agreement shall be true, correct
and complete in all material respects as of the Closing Date as if made
at and as of the Closing Date.
(c) Buyer and Parent shall have delivered to Seller and the
Shareholder a certificate, dated the Closing Date, executed by a
responsible officer of Buyer and a responsible officer of Parent and
certifying to the satisfaction of the conditions specified in Sections
16.01(a) and (b) hereof.
(d) The parties shall have complied with the HSR Act and the
waiting period thereunder shall have expired or been terminated.
(e) Seller and the Shareholder shall have received an opinion
dated the Closing Date of Faegre & Benson, special counsel to Buyer and
Parent, in substantially the form attached hereto as Exhibit M and an
opinion of Frank W. Bonvino, General Counsel of Buyer, in substantially
the form attached hereto as Exhibit N.
(f) No injunction or order of any court or administrative
agency of competent jurisdiction shall be in effect as of the Closing
Date which restricts or prohibits the consummation of the transactions
contemplated by this Agreement.
(g) Buyer shall have delivered to Seller copies of all
necessary corporate resolutions adopted by the board of directors (and
sole shareholder, if necessary) of Buyer authorizing the execution,
delivery and performance of this Agreement, the Non-Competition
Agreement, the Supply Agreement, the Transition Services Agreement, the
Cheese Storage Agreement, the License Agreement, the Indemnification
Protection Agreement, the Livermore Lease, the Seller's Bill of Sale and
Assumption Agreement and the Assignment of Lease and the transactions
contemplated hereby and thereby, certified to be true, correct,
complete, unchanged and in full force and effect on the Closing Date by
the secretary of Buyer.
16.02 Effect of Failure to Satisfy. If any or all of the
conditions precedent to Seller's or the Shareholder's obligation
hereunder set forth in this Section 16 have not been satisfied or
fulfilled to Seller's and the Shareholder's satisfaction at or before
the Closing or any extension thereof pursuant to Section 5.02, and
Seller and the Shareholder have not expressly waived, in writing, any
such unsatisfied condition at or before the Closing or any extension
thereof pursuant to Section 5.02, then this Agreement and the
obligations and rights of the parties under this Agreement shall
terminate and be cancelled, and none of the parties hereto shall have
any further obligations or liabilities to the others, except for any
claims of default under this Agreement by any of the parties hereto
against any of the others which shall have accrued prior to the
effective date of the termination and cancellation of this Agreement.
17. Indemnification of Buyer and Parent by Seller and the
Shareholder.
Seller and the Shareholder hereby jointly and severally
agree to indemnify and hold harmless Buyer and Parent and all directors
and officers thereof (collectively, the "Buyer Indemnitees" and
individually a "Buyer Indemnitee") against and with respect to:
(a) Any and all liabilities and obligations of Seller or the
Shareholder, contingent or otherwise, that are not expressly assumed and
agreed to be paid by Buyer pursuant to Section 4 hereof, including
without limitation all liabilities and obligations of Seller and the
Shareholder for Taxes except to the extent otherwise provided in Section
4.01 and Section 9.01;
(b) Any and all losses, injuries, damages, deficiencies,
liabilities and obligations directly or indirectly resulting or arising
from the ownership or condition of the Purchased Assets, the operation
of the Distribution Business, or from incidents or occurrences relating
to the Distribution Business or the Purchased Assets, prior to the
Closing, whether or not reflected in the books and records of Seller or
the Shareholder, except to the extent expressly assumed and agreed to be
paid by Buyer pursuant to Section 4 hereof;
(c) Without limiting the generality of the foregoing, any and
all losses, injuries, damages, deficiencies, liabilities and obligations
directly or indirectly resulting or arising from (i) products liability
or similar claims in respect to products purchased, manufactured or sold
by Seller prior to the Closing or (ii) any litigation, proceeding or
investigation with respect to Seller required to be disclosed in any
Schedule hereto;
(d) Without limiting the generality of the foregoing, any and
all losses, injuries, damages, deficiencies, liabilities and obligations
directly or indirectly resulting or arising from (i) subject to Sections
10.02 and 10.03, claims by employees, former employees, agents or
representatives of Seller with respect to their employment or engagement
by Seller prior to or after Closing or the termination thereof by Seller
at, prior to or after Closing, and (ii) subject to Section 10.05,
worker's compensation claims of employees or former employees of Seller
arising out of incidents, occurrences or conditions occurring,
commencing or existing prior to Closing;
(e) Any and all losses, injuries, damages, deficiencies,
liabilities and obligations directly or indirectly resulting or arising
from any misrepresentation or breach of warranty on the part of Seller
or the Shareholder under this Agreement or any certificate given
pursuant hereto;
(f) Any and all losses, injuries, damages, deficiencies,
liabilities and obligations directly or indirectly resulting or arising
from any non-fulfillment of any covenant or agreement on the part of
Seller or the Shareholder under this Agreement (including without
limitation such covenants of Seller under Section 10 hereof);
(g) Without limiting the generality of the foregoing, any and
all losses, injuries, damages, deficiencies, liabilities and obligations
directly or indirectly resulting or arising from any failure to comply
fully with any applicable bulk transfer laws, except to the extent
assumed and agreed to be paid by Buyer pursuant to Section 4 hereof;
(h) Without limiting the generality of the foregoing, any and
all rebate or discount payments made by Buyer to any customer of Seller
pursuant to any trade allowance, billback, rebate, discount or similar
program which Seller has in effect with respect to its customers but
which Seller has failed to disclose on Schedule 13.01(aa) hereto;
(i) Without limiting the generality of the foregoing, any and
all losses, injuries, damages, deficiencies, liabilities and obligations
directly or indirectly resulting or arising from any release or emission
of Hazardous Substances on, in or from Owned Real Property or Leased
Real Property during such person's (whether Seller's or the
Shareholder's) ownership or lease of such Owned Real Property or Leased
Real Property;
(j) Without limiting the generality of the foregoing, any and
all losses, injuries, damages, deficiencies, liabilities and obligations
directly or indirectly resulting or arising from the Manufacturing
Business or the LTC Business or any other operations of Seller other
than the Distribution Business; and
(k) Any and all demands, claims, actions, suits, proceedings,
assessments, judgments, costs and reasonable legal and other expenses
incident to the foregoing, to the extent such person, whether Seller or
the Shareholder, has indemnification obligations for the foregoing.
The indemnification obligations of Seller and the Shareholder hereunder
relate to indemnification for all losses, injuries, damages,
deficiencies, liabilities, obligations, costs or expenses to a Buyer
Indemnitee, regardless of whether such loss, injury, damage, deficiency,
liability, obligation, cost or expense arises from a third-party claim
against such Buyer Indemnitee or otherwise.
If a third-party claim is made against a Buyer Indemnitee and
if such Buyer Indemnitee believes that such claim could give rise to a
right of indemnification under any of Section 17(a) through (j) against
Seller and/or the Shareholder, then such Buyer Indemnitee shall given
written notice to Seller and/or the Shareholder, as the case may be, of
such claim as soon as reasonably practicable after such Buyer Indemnitee
has received notice thereof (provided that failure to give timely notice
shall not limit the indemnification obligations of Seller and the
Shareholder hereunder except to the extent that the delay in giving, or
failure to give, such notice has a material adverse effect upon the
ability of Seller and the Shareholder to defend against the claim).
Such Buyer Indemnitee shall give Seller and the Shareholder an
opportunity to defend such claim, at Seller's and the Shareholder's own
expense and with counsel selected by them and reasonably satisfactory to
such Buyer Indemnitee, provided that such Buyer Indemnitee shall at all
times also have the right to fully participate in the defense at its own
expense (and may retain its own counsel at the expense of Seller and/or
the Shareholder, as the case may be, if it shall reasonably conclude
that representation of it and Seller or the Shareholder by the same
counsel would present a conflict). Failure of Seller and the
Shareholder to give a Buyer Indemnitee written notice of their election
to defend such claim within ten (10) days after notice thereof shall
have been given by such Buyer Indemnitee to Seller and the Shareholder
shall be deemed a waiver by Seller and the Shareholder of their right to
defend such claim. If Seller and the Shareholder shall elect not to
assume the defense of such claim (or if Seller and the Shareholder shall
be deemed to have waived their right to defend such claim by failure to
make an election within the ten (10) day time period) or shall not
diligently pursue such defense, such Buyer Indemnitee shall have the
right, but not the obligation, to undertake the defense of, and to
compromise or settle (exercising reasonable business judgment), the
claim on behalf, for the account, and at the risk and expense (including
without limitation the payment of the reasonable attorneys' fees of such
Buyer Indemnitee regardless of whether the Buyer Indemnitee prevails
against the third party claim), of Seller and the Shareholder. If
Seller and the Shareholder assume the defense of such claim, the
obligation of Seller and the Shareholder hereunder as to such claim
shall include taking all steps necessary in the defense or settlement of
such claim.
Neither Seller nor the Shareholder shall consent to the entry
of any judgment or settle or compromise any third-party demands, claims,
actions, suits or proceedings for which a Buyer Indemnitee has sought
indemnification from Seller or the Shareholder unless it shall have
given such Buyer Indemnitee not less than fifteen (15) days prior
written notice of the proposed consent, settlement or compromise, and
afforded such Buyer Indemnitee an opportunity to consult with Seller and
the Shareholder regarding the proposed consent, settlement or
compromise, and shall not consent to the entry of any judgment or enter
into any settlement or compromise without the approval of such Buyer
Indemnitee. A Buyer Indemnitee shall not unreasonably withhold or delay
its approval of a proposed consent, settlement or compromise; in
determining whether to give its approval, a Buyer Indemnitee may
consider whether the proposed consent, settlement or compromise (1)
includes as an unconditional term thereof the giving by the claimant to
such Buyer Indemnitee of a release from all liability in respect of such
claim except the liability satisfied by Seller or the Shareholder or (2)
would have a material adverse effect upon Buyer's future conduct of the
Distribution Business.
Notwithstanding anything to the contrary provided elsewhere in
this Agreement:
(i) the obligations of Seller and the Shareholder under this
Agreement to indemnify a Buyer Indemnitee shall be joint and several;
provided, however, that (a) Buyer and Parent agree to include Seller in
any claim brought against the Shareholder and (b) Seller and the
Shareholder shall be liable to the Buyer Indemnitee for amounts payable
only under Section 17 (other than claims of the nature described in
clause (ii) hereof) only to the extent such amounts in the aggregate
exceed One Hundred Thousand Dollars ($100,000) and in no event shall
Seller and the Shareholder be liable to the Buyer Indemnitee under
Section 17 (other than for claims of the nature described in any of
clause (ii)(A) and (ii)(B) inclusive hereof and third-party claims) for
amounts which exceed $50,000,000 in the aggregate;
(ii) except with respect to (A) claims based upon a breach of
any representation or warranty of Seller or the Shareholder pertaining
to unencumbered title to the Purchased Assets, (B) claims based upon
fraud or intentional misrepresentations by Seller or the Shareholder
(all of which claims and obligations described in clauses (A) and (B)
shall survive indefinitely), (C) claims based upon a breach of any
representation or warranty of Seller or the Shareholder pertaining to
compliance with Environmental Laws or other breaches of Section 13.01(l)
or indemnification claims under Section 17(i) (which claims described in
this clause (C) shall be of no force unless a Buyer Indemnitee has given
Seller and the Shareholder written notice prior to the third anniversary
date of the Closing Date), and (D) the representations and warranties
under Section 13.01(q), which shall not survive the Closing, the
obligations of Seller and the Shareholder under this Agreement to
indemnify Buyer Indemnitees shall be of no force with respect to claims
as to which a Buyer Indemnitee has not given Seller and the Shareholder
written notice prior to the fifth anniversary of the Closing Date; and
(iii) without limiting rights to indemnification for claims
arising from punitive damages attributable to third party claims, Buyer
and Parent agree that they will not assert direct claims for punitive
damages against Seller or the Shareholder.
18. Indemnification of Seller and the Shareholder by Buyer
and Parent.
Buyer and Parent hereby jointly and severally agree to
indemnify and hold harmless Seller and the Shareholder and all directors
and officers of Seller (collectively, the "Seller Indemnitees" and
individually, a "Seller Indemnitee") against and with respect to:
(a) Any and all Assumed Liabilities set forth in Section 4 of
this Agreement;
(b) Any and all losses, injuries, damages, deficiencies,
liabilities and obligations directly or indirectly resulting or arising
from any misrepresentation or breach of warranty on the part of Buyer or
Parent under this Agreement or any certificate given pursuant hereto;
(c) Any and all losses, injuries, damages, deficiencies,
liabilities and obligations directly or indirectly resulting or arising
from any non-fulfillment of any covenant or agreement on the part of
Buyer or Parent under this Agreement (including without limitation such
covenants of Buyer under Section 10 hereof);
(d) Any and all demands, claims, actions, suits, proceedings,
assessments, judgments, costs and reasonable legal and other expenses
incident to the foregoing.
The indemnification obligations of Buyer and Parent hereunder relate to
indemnification for all losses, injuries, damages, deficiencies,
liabilities, obligations, costs or expenses to a Seller Indemnitee,
regardless of whether such loss, injury, damage, deficiency, liability,
obligation, cost or expense arises from a third-party claim against such
Seller Indemnitee or otherwise.
If a third-party claim is made against a Seller Indemnitee,
and if such Seller Indemnitee believes that such claim could give rise
to a right of indemnification under any of Section 18(a) through (c)
against Buyer and Parent, then such Seller Indemnitee shall give written
notice to Buyer and Parent of such claim as soon as reasonably
practicable after such Seller Indemnitee has received notice thereof
(provided that failure to give timely notice shall not limit the
indemnification obligations of Buyer and Parent hereunder except to the
extent that the delay in giving, or failure to give, such notice has a
material adverse effect upon the ability of Buyer and Parent to defend
against the claim). Such Seller Indemnitee shall give Buyer and Parent
an opportunity to defend such claim, at Buyer's and Parent's own expense
and with counsel selected by Buyer and reasonably satisfactory to such
Seller Indemnitee, provided that such Seller Indemnitee shall at all
times also have the right to fully participate in the defense at its own
expense (and may retain its own counsel at the expense of Buyer and
Parent if it shall determine that representation of it and Buyer or
Parent by the same counsel would present a conflict). Failure of Buyer
and Parent to give a Seller Indemnitee written notice of their election
to defend such claim within ten (10) days after notice thereof shall
have been given by such Seller Indemnitee to Buyer and Parent shall be
deemed a waiver by Buyer and Parent of their right to defend such claim.
If Buyer and Parent shall elect not to assume the defense of such claim
(or if Buyer and Parent shall be deemed to have waived their right to
defend such claim by failure to make an election within the ten (10) day
period) or shall not diligently pursue such a defense, such Seller
Indemnitee shall have the right, but not the obligation, to undertake
the defense of, and to compromise or settle (exercising reasonable
business judgment), the claim on behalf, for the account, and at the
risk and expense (including without limitation the payment of the
reasonable attorneys' fees of such Seller Indemnitee regardless of
whether the Seller Indemnitee prevails against the third party claim),
of Buyer and Parent. If Buyer and Parent assume the defense of such
claim, the obligation of Buyer and Parent hereunder as to such claim
shall include taking all steps necessary in the defense or settlement of
such claim.
Neither Buyer nor Parent shall consent to the entry of any
judgment or settle or compromise any third-party demands, claims,
actions, suits or proceedings for which a Seller Indemnitee has sought
indemnification from Buyer and Parent unless it shall have given such
Seller Indemnitee not less than fifteen (15) days prior written notice
of the proposed consent, settlement or compromise, and afforded such
Seller Indemnitee an opportunity to consult with Buyer and Parent
regarding the proposed consent, settlement or compromise, and shall not
consent to the entry of any judgment or enter into any settlement or
compromise without the approval of such Seller Indemnitee. A Seller
Indemnitee shall not unreasonably withhold or delay its approval of a
proposed consent, settlement or compromise; in determining whether to
give its approval, a Seller Indemnitee may consider whether the proposed
consent, settlement or compromise (1) includes as an unconditional term
thereof the giving by the claimant to such Seller Indemnitee of a
release from all liability in respect of such claim except the liability
satisfied by Buyer or Parent or (2) would have a material adverse effect
upon Seller's future conduct of its operations.
Notwithstanding anything to the contrary provided elsewhere in
this Agreement, the obligations of Buyer and Parent under this Agreement
to indemnify a Seller Indemnitee shall be joint and several; provided,
however, that Buyer and Parent shall be liable to the Seller Indemnitees
for amounts payable under Section 18(b) (and with respect to any and all
demands, claims, actions, suits, proceedings, assessments, judgments,
costs and reasonable legal and other expenses incident thereto) only to
the extent such amounts in the aggregate exceed One Hundred Thousand
Dollars ($100,000), other than claims based on fraud or intentional
misrepresentations or misconduct by Buyer or Parent and in no event
shall Buyer and Parent be liable to the Seller Indemnitees for amounts
payable under Section 18(b) (or demands, claims, actions, suits,
proceedings, assessments, judgments, costs and reasonable legal and
other expenses incident thereto) which exceed $50,000,000 in the
aggregate, except with respect to third-party claims and claims based on
fraud or intentional misrepresentations or misconduct by Buyer or
Parent.
Notwithstanding anything to the contrary provided elsewhere in
this Agreement, the obligations of Buyer and Parent to indemnify the
Seller Indemnitees shall be of no force or effect with respect to claims
under Section 18(b) and any and all demands, claims, actions, suits,
proceedings, assessments, judgments, costs and reasonable legal and
other expenses incident thereto as to which a Seller Indemnitee has not
given Buyer and Parent written notice prior to the fifth anniversary of
the Closing Date unless such claims are based on fraud or intentional
misrepresentation or misconduct by Buyer or Parent. Without limiting
rights to indemnification for claims arising from punitive damages
attributable to third party claims, Seller and the Shareholder agree
that they will not assert direct claims for punitive damages against
Buyer or Parent.
19. Effect of Taxes on Indemnification.
The amount of any loss, injury, damage, deficiency, liability,
obligation, cost or expense for which indemnification is provided under
Section 17 or 18, and the indemnification payment therefor, shall be
treated as an adjustment to the Purchase Price of the Purchased Assets
for tax purposes, unless a final determination (which shall include the
execution of a Form 870-AD or successor form) with respect to the
indemnified party causes any such payment not to constitute an
adjustment to the purchase price for federal income tax purposes.
20. Covenants of Seller and the Shareholder.
In addition to any other covenants of Seller and the
Shareholder in this Agreement, Seller and the Shareholder each covenant
and agree that from and after the date of this Agreement to the Closing
as follows:
(a) Buyer and its designated employees, agents,
representatives (including, without limitation, counsel and
accountants), contractors and engineers may have access to the
personnel, books and records and affairs of Seller relating to the
Distribution Business and to the Purchased Assets and Leased Real
Property of Seller at all reasonable times after notice to Seller,
provided that they do not unreasonably disrupt or interfere with the
conduct of the Seller's operations during any such visit.
(b) Seller will maintain its corporate existence in good
standing.
(c) To the extent Seller or the Shareholder has in force any
policies of property and casualty insurance insuring any of the
Purchased Assets (including the Owned Real Property) or the Leased Real
Property, any proceeds of insurance payable in respect of any event
which occurs from and after the date of this Agreement and prior to the
Closing Date shall be received by Seller or the Shareholder in trust for
Buyer and, to the extent the damage to the Purchased Assets to which the
proceeds pertain has not been repaired or restored, shall be paid over
to Buyer at the Closing or, if no proceeds have been received prior to
the Closing Date, Seller and the Shareholder shall assign any of their
claims thereto to Buyer at the Closing, but only if Seller, the
Shareholder and Buyer shall complete the sale and purchase of the
Purchased Assets, including the Purchased Assets to which the insurance
proceeds pertain (it being understood that nothing stated herein shall
affect the right of Buyer to elect not to consummate the transactions
contemplated by this Agreement in the event the conditions set forth in
Section 15 hereof are not satisfied in full on or before Closing). In
addition to paying over or assigning to Buyer proceeds of any policy of
property and casualty insurance as provided above, Seller or the
Shareholder shall pay to Buyer at the Closing any related deductible
amount provided under any such policy of insurance. Nothing herein
shall be construed to require Seller or the Shareholder to maintain such
policies in force beyond the Closing Date.
(d) Except as otherwise provided in this Agreement, Seller
and the Shareholder will not, without the prior written consent of
Buyer:
(i) enter into any agreement (other than in the ordinary
course of business) materially affecting or in any way pertaining to the
Purchased Assets or the Distribution Business;
(ii) sell, transfer, dispose of, encumber or abandon any
material Purchased Assets or enter into any agreement to do any of the
foregoing, provided that Seller may sell Inventory in the ordinary
course of operating the Distribution Business consistent with past
practice; or
(iii) take any other action of the nature described in Section
13.01(bb).
(e) Seller and the Shareholder will maintain their respective
tangible Purchased Assets and the Leased Real Property in good condition
and repair.
(f) Seller will use all reasonable efforts to preserve for
Buyer the good will of suppliers, customers and others having
relationships with Seller relating to the Distribution Business. Seller
will maintain its books and records relating to the Distribution
Business in a manner consistent with past practice.
(g) Seller will use reasonable efforts to keep available the
services of Seller's Employees.
(h) Seller will take all actions described in Schedule 20(h)
to remediate Seller's Owned Real Property and the Shareholder will take,
or cause the Seller to take, all actions described in Schedule 20(h) to
remediate the Shareholder's Owned Real Property.
(i) Seller will maintain inventory and supplies that are
usable and merchantable in the ordinary course of business at levels
sufficient for Seller, and immediately after the Closing, Buyer to
conduct the Distribution Business in the ordinary course of business in
the manner in which it has been conducted by Seller.
(j) Without limiting the generality of the foregoing, Seller
will in all other respects operate the Distribution Business in the
ordinary course.
21. Mutual Pre-Closing Covenants.
(a) Subject to the terms and conditions of this Agreement,
each party will take all necessary action and use all reasonable efforts
as promptly as practicable to satisfy all conditions to Closing set
forth in this Agreement that are within such party's control.
(b) The parties hereto will as promptly as practicable file
or cause to be filed with the United States Federal Trade Commission
(the "FTC") and the United States Department of Justice (the "DOJ") any
supplemental information requested in connection with the notification
and report forms filed by the parties on June 24, 1994. Such
notification and report form and all such supplemental information filed
or caused to be filed by the parties will be in substantial compliance
with the requirements of the HSR Act. Subject to the terms and
conditions of this Agreement, each of Seller and Buyer will use all
reasonable efforts to make or cause to be made all such other filings
and submissions, if any, as may be required under applicable laws and
regulations for the consummation of the transactions contemplated by
this Agreement. Each of the parties hereto shall furnish to the others
such necessary information and reasonable assistance as the others may
request in connection with the preparation of any of the foregoing
filings or submissions. The parties hereto shall keep each other
apprised of the status of any communications with, and inquiries or
requests for additional information from, the FTC or the DOJ, and shall
use all reasonable efforts to comply promptly with any such inquiry or
request. Each of the parties hereto will request the acceleration of
the termination of the waiting period required under the HSR Act as a
condition to the purchase and sale of the Purchased Assets.
(c) The Shareholder shall promptly notify Buyer if the
Shareholder determines to exchange any portion of the Shareholder's
Owned Real Property pursuant to a deferred exchange subject to Section
1031 of the Code. In such event, Buyer shall use reasonable efforts to
cooperate with the Shareholder in order to permit the Shareholder to
effect such exchange pursuant to documents in form and substance
satisfactory to Buyer and its legal counsel, if such exchange does not
require Buyer to take title to any exchange property and does not
adversely effect in any manner Buyer's rights under this Agreement and
its acquisition of all of the Shareholder's Owned Real Property at the
Closing and Buyer incurs no costs, expenses or liabilities that would
not have been incurred by Buyer in the absence of such an exchange and
Buyer is indemnified against the risk of any of the same to its
satisfaction.
22. Assignment.
None of the parties hereto shall assign this Agreement, in
whole or in part, without the prior written authorization and consent of
the others, except that Buyer may assign all of its right, title and
interest under this Agreement to Parent or any direct or indirect
wholly-owned subsidiary thereof (whose obligations under this Agreement
are assured by Parent) at any time on or prior to, or after, the Closing
Date without the prior written consent of Seller or the Shareholder.
23. Notices.
Any notice required or permitted to be given by any of the
parties hereto shall be in writing and shall be deemed to have been
given when personally served, or delivered by overnight messenger
service, or three (3) days after the same shall have been deposited in
the United States Mail, by registered or certified mail, postage
prepaid, addressed as follows:
If to Seller:
Leprino Foods Company
P. O. Box 173400
1830 West 38th Avenue
Denver, Colorado 80217-3400
Attention: Senior Vice President-Administration
With copies to:
Mark A. Senn
Senn Lewis Visciano & Strahle P.C.
1801 California Street, Suite 4300
Denver, Colorado 80202
If to the Shareholder:
James G. Leprino
Leprino Foods Company
P. O. Box 173400
1830 West 38th Avenue
Denver, Colorado 80217-3400
Attention: Senior Vice President-Administration
With copies to:
Mark A. Senn
Senn Lewis Visciano & Strahle P.C.
1801 California Street, Suite 4300
Denver, Colorado 80202
If to Buyer:
Multifoods Distribution, Inc.
P.O. Box 2942
33 South Sixth Street
Minneapolis, Minnesota 55402
If to the Parent:
International Multifoods Corporation
P.O. Box 2942
33 South Sixth Street
Minneapolis, Minnesota 55402
With copies, with respect to notices
to either Buyer or Parent, to each of:
John E. Sampson,
Vice President - Corporate Development and Planning
Frank W. Bonvino, Esq.,
Vice President and General Counsel
International Multifoods Corporation
P.O. Box 2942
33 South Sixth Street
Minneapolis, Minnesota 55402
or to such other address or addresses as may be designated by the
parties hereto in accordance with this Section 23.
24. Expenses.
Whether or not the transactions contemplated in this Agreement
are consummated on the Closing Date, the parties shall pay their own
costs and expenses incident to the preparation and execution of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
25. Further Assurances.
Seller, the Shareholder and Buyer agree from time to time upon
request of any other party hereto, whether on or after the Closing Date
and without additional consideration, to execute and to deliver such
further instruments of conveyance and transfer and take such other
action as such other party may reasonably request to further confirm
title to the Purchased Assets in Buyer or further confirm, and at no
cost to the party of whom the request is made, the assumption by Buyer
of the obligations to be assumed by Buyer pursuant to Section 4 hereof.
Seller further covenants that it will take such actions at its expense
at the end of the current term, or early termination, of that certain
lease between PJ Food Service, Inc. and Seller, dated March 1, 1993, of
a portion of the property in Kissimmee, Florida included in the Owned
Real Property as may be necessary to satisfy the obligations under the
lease of PJ Food Service, Inc. upon vacating the leased premises to
restore the leased premises.
26. Public Announcements.
The timing and content of any pre-Closing announcements, press
releases and public statements concerning the transactions contemplated
by this Agreement shall be subject to the prior written approval of
Seller and Buyer, which approval by either of such parties shall not be
unreasonably withheld or delayed. Notwithstanding the preceding
sentence, Seller or Buyer may disclose the terms of this Agreement if
either deems the transactions contemplated by this Agreement are
material with respect to its or Parent's business and if disclosure to
the public, to the New York Stock Exchange (with respect to Buyer and
Parent) or to any Federal, state or local governmental agency may be
required under applicable law or exchange regulation, without the prior
written approval of the other party hereto, in which case the party
required to make the disclosure shall, if practical under the
circumstances, allow the other parties reasonable time to comment on the
proposed disclosure in advance of such disclosure. Any party hereto may
disclose part or all of this Agreement to its employees and public
accountants whose assistance is necessary to consummate the transactions
contemplated by this Agreement. The Confidentiality Agreement dated
December 10, 1993 between Seller and Parent (the "Confidentiality
Agreement") will continue in full force and effect prior to Closing.
27. Specific Performance.
Seller and the Shareholder each hereby acknowledge and agree
that the Purchased Assets are special and unique and that money damages
payable to Buyer may be impossible to ascertain and an inadequate remedy
in respect of a breach or non-performance of this Agreement by Seller
and the Shareholder, so it is mutually agreed that, in addition to any
other remedies available to Buyer under this Agreement or at law or in
equity, Buyer shall have the right to require specific performance of
this Agreement by Seller and the Shareholder and to enforce this
Agreement by injunctive or other equitable relief.
28. Entire Agreement.
This Agreement, including the Schedules and Exhibits attached
hereto and made a part hereof, and, prior to Closing, the
Confidentiality Agreement, contain a complete expression of the
agreements between the parties with respect to the obligations and
rights of the parties set forth in this Agreement and supersedes all
prior written or oral agreements between the parties with respect to the
transactions contemplated hereby. There are no other agreements,
promises, representations or inducements made by the parties with
respect to the subject matter hereof, except as set forth in this
Agreement.
29. Severability.
If any provision of this Agreement or the application of any
such provision to any person or circumstance shall be held invalid,
illegal or unenforceable in any respect by a court of competent
jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision hereof.
30. Governing Law.
This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Colorado applicable to
agreements made and to be performed entirely within such state, without
regard to the conflicts of law principles of such state.
31. Schedules
In no event shall the mere listing in any Schedule hereto of a
document or other item be deemed adequate to disclose an exception to a
representation or warranty made herein (unless the representation or
warranty has to do with the existence of the document or other item
itself or the mere listing of the document or item in the Schedule
otherwise reasonably informs Buyer of an exception to such
representation or warranty).
32. Waiver of Compliance; Consents.
Except as otherwise provided in this Agreement, any failure of
any of the parties to comply with any obligation, covenant, agreement or
condition herein may be waived by the party entitled to the benefits
thereof only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a
waiver of, or estoppel with respect to, any subsequent or other failure.
Whenever this Agreement requires or permits consent by or on behalf of
any party hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance as set forth
in this Section 32.
33. Remedies Cumulative.
Except as otherwise provided herein, the rights and remedies
provided herein shall be cumulative and the assertion by a party of a
right or remedy hereunder shall not preclude the assertion by such party
of any other rights or remedies against another party provided herein.
34. Amendments.
This Agreement may be amended, changed or modified only by an
agreement, in writing, signed by the parties hereto.
35. Successors and Assigns; No Third Party Beneficiaries.
Subject to the provisions of Section 22 hereof, this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns. This Agreement shall
be for the sole benefit of the parties hereto and their respective
successors and permitted assigns, and nothing herein expressed or
implied shall give or be construed to give to any person or entity,
other than the parties thereto and such successors and permitted
assigns, any legal or equitable rights under this Agreement.
36. Interpretation.
In this Agreement and the Schedules and Exhibits annexed
hereto:
(a) Words denoting the singular include the plural and vice
versa and words denoting any gender include all genders;
(b) The word "including" shall mean "including without
limitation";
(c) The use of headings is for convenience of reference only
and shall not affect the meaning or interpretation of this Agreement or
the Schedules or any Exhibits annexed hereto;
(d) When calculating the period of time within which or
following which any act is to be done or step taken, the date which is
the reference day in calculating such period shall be excluded and, if
the last day of such period is not a business day (meaning for all
purposes of this Agreement any day other than a Saturday, Sunday or a
day which is a statutory holiday under the laws of the United States or
the States of Minnesota or Colorado), the period shall end on the next
day which is a business day;
(e) All dollar amounts are expressed in United States funds;
(f) Unless otherwise expressly provided herein, money shall
be tendered by wire transfer of immediately available federal funds;
(g) As used in this Agreement, the term "affiliate" shall
have the meaning set forth in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended; and
(h) As used in this Agreement, the term "person" shall mean
and include an individual, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization and a government or
any department or agency thereof.
37. Retention of Records.
Notwithstanding anything to the contrary provided in this
Agreement, if Buyer desires to destroy, seven (7) years or more after
the Closing, any information to which Seller or the Shareholder is
otherwise entitled to post-Closing access under this Agreement, it may
do so if it first gives notice to such party offering to send such
information to such party and such party does not accept such offer
within thirty (30) days after such notice.
38. Divisibility.
The rights of Seller and the Shareholder, on the one hand, to
sell the Purchased Assets, and Buyer and Parent, on the other hand, to
purchase the Purchased Assets under this Agreement are not divisible.
IN WITNESS WHEREOF, the parties hereto, intending to be
legally bound, have caused this Agreement to be executed and delivered
as of the day and year first above written.
LEPRINO FOODS COMPANY
(SELLER)
By /s/ Wesley J. Allen
Its President
/s/ James G. Leprino
JAMES G. LEPRINO
(THE SHAREHOLDER)
MULTIFOODS DISTRIBUTION, INC.
(BUYER)
By /s/ Anthony Luiso
Its Chairman of the Board
INTERNATIONAL MULTIFOODS
CORPORATION
(PARENT)
By /s/ Anthony Luiso
Its Chairman of the Board,
President and
Chief Executive Officer
Schedules and Exhibits Omitted:
Schedule 1.01(a) Seller's Land
Schedule 1.01(c) Equipment
Schedule 1.01(g) Intellectual Property
Schedule 1.01(i) Contracts
Schedule 1.01(j) Purchase Orders
Schedule 1.01(l) Other Assets
Schedule 1.02(a) Shareholder's Land
Schedule 2(j) Excluded Software
Schedule 3.03 Allocation
Schedule 6.01(c) Permitted Title Exceptions
Schedule 8.01 Objections to Title Commitments
Schedule 8.02 Objections to Surveys
Schedule 10.03 Buyer's Employee Plans
Schedule 13.01(a) Foreign Qualifications
Schedule 13.01(f) Seller Conflicts
Schedule 13.01(h) Real Property Assessments
Schedule 13.01(j) Litigation
Schedule 13.01(l) Environmental
Schedule 13.01(n) Licenses and Permits
Schedule 13.01(u) Seller's Employee Plans
Schedule 13.01(y) Changes to Consistent Presentation of
Financial Statements
Schedule 13.01(z) Insurance Schedule
Schedule 13.01(aa) Trade Allowance Programs
Schedule 13.01(bb) Changes
Schedule 13.01(dd) Recalls
Schedule 20(h) Remediation of Owned Real Property
Exhibit A License Agreement
Exhibit B Statement of Principles and Methodology
Exhibit C Seller's Warranty Deeds
Exhibit E Seller's Bill of Sale and Assumption Agreement
Exhibit F Shareholder's Warranty Deeds
Exhibit G Shareholder's Bill of Sale
Exhibit H Noncompetition Agreement
Exhibit I Supply Agreement
Exhibit J Transition Services Agreement
Exhibit J-1 Cheese Storage Agreement
Exhibit K Opinion of Senn Lewis Visciano & Strahle P.C.
Exhibit L Livermore Lease
Exhibit M Opinion of Faegre & Benson
Exhibit N Opinion of Frank W. Bonvino
The Registrant hereby agrees to furnish supplementally a copy of any omitted
schedule or exhibit to the Commission upon request.
