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EXHIBIT 10.50
ASSET PURCHASE AGREEMENT
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THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered
into as of August 7, 2000 by and between OVERHILL FARMS, INC., a Nevada
corporation (herein called the "Purchaser") , and SSE MANUFACTURING, INC., a
California corporation (herein called the "Seller").
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Purchaser hereby agrees to
purchase from Seller and Seller hereby agrees to sell to Purchaser, for the
price, upon the terms and subject to the conditions hereinafter set forth (the
"Transaction"), certain assets used by the Seller at its San Diego facilities in
the conduct of its business of production of frozen food products and related
products (herein called the "Business") being:
(a) The production equipment and office equipment used in the conduct of
the Business, including those described in Schedule "A" hereto (the
"Equipment");
(b) All of Seller's leasehold interest in that certain real property
commonly known as 7666 Formula Place, San Diego, California (the
"Leasehold Interest"); and
(c) All of Seller's rights and interest in the Service Agreements (as
defined in paragraph 2(c)(i)).
Seller shall also cause Schwan's IP, LLC, a Minnesota limited liability
company ("Schwan's IP"), an affiliate of Seller, to execute and deliver on
the Date of Closing an Assignment of Trademark, in the form attached hereto
as Schedule "P", assigning, transferring and conveying to Purchaser all
right, title and interest to the intellectual property identified on
Schedule "B" attached hereto (the "Marks"), including all goodwill
associated with said intellectual property. The Marks consist of
trademarks registered with the United States Patent and Trademark Office
and applicable foreign trademark offices and proprietary trade secrets such
as recipes, formulae and specifications for the products identified on
Schedule "C" attached hereto (the "Products").
The Equipment, Leasehold Interest, Inventory (as defined in paragraph
1(b)), Service Agreements and Marks are herein collectively sometimes
called the "Assets". Any property not expressly included in the
description of "Assets" shall be excluded therefrom and not be subject to
this Transaction.
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Price
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1. (a) Subject to paragraph 1 (b), the price of the Assets hereinbefore
described shall be the sum of $4,200,000 (herein called the "Price") plus or
minus any adjustments made pursuant to paragraph 5 hereof, payable as follows:
(i) the sum of $3,300,000 (the "Cash") payable to the Seller via
wire transfer to the Seller's designated bank account on the Date
of Closing; and
(ii) a promissory note (the "Note") in the amount of $900,000 bearing
interest at the rate of 9% and containing the terms and
conditions set forth in Schedule "E".
(b) The Price shall not include raw materials and finished goods inventory
located at the Seller's plant in San Diego on the Closing Date or
owned by the Seller and located elsewhere on the Closing Date which is
to be used exclusively in the conduct of the Business (the
"Inventory"). On the Date of Closing (as defined below), the
Purchaser agrees to acquire all these raw materials at the Seller's
invoice cost, which shall be paid for by Purchaser as the raw
materials are used; provided, however, the entire invoice cost of all
raw materials shall be paid in full by Purchaser not later than ninety
(90) days after the Closing Date (as defined below). The Seller
represents and warrants that the raw materials are usable, as of the
Closing Date, with the Purchaser's sole remedies, at Purchaser's
option, being the replacement of any unusable raw materials or the
non-payment for such unusable raw materials. The Purchaser will not
acquire any finished goods inventory related to Home Service products.
For all other finished goods inventory, within thirty (30) days after
the Date of Closing (as defined below), the Purchaser will review and
inspect that Inventory and remit payment for those finished goods that
are in good and saleable condition at the current plant transfer
price. There is no obligation on the Seller to have any minimum
amount of the Inventory on hand on the Date of Closing or any at all.
(c) The Seller will retain all right, title and interest to its accounts
receivable arising out of the conduct of the Business prior to the
Date of Closing.
(d) Except for the liabilities and obligations expressly assumed by
Purchaser in this Agreement and in any agreement or document attached
as a Schedule hereto, Purchaser shall not assume, shall not take
subject to and shall not be liable for, any liabilities or obligations
of any kind or
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nature, whether absolute, contingent, accrued, known or unknown, of
Seller (collectively, "Excluded Liabilities").
Employment Obligations and Service Agreements
---------------------------------------------
2.(a)(i) The Purchaser shall offer to employ all of the Seller's
employees listed on Schedule "J" attached hereto on terms and
conditions within the sole discretion of the Purchaser.
Notwithstanding the foregoing, each employee who chooses to become
employed by the Purchaser shall be offered employment with the
Purchaser for no less than thirty (30) days, and shall not be
terminated during said time frame unless "good cause" exists to so
terminate. If prior to the Time of Closing (as defined below), an
employee chooses not to become employed by Purchaser, all amounts
owing to said employee, including accrued salary, vacation, and other
benefits, if any, shall be paid by Seller. If an employee accepts
employment with the Purchaser, then all amounts owing to said employee
with respect to vacation benefits only, if any, accrued at any time
prior to and after the Time of Closing, shall be paid by the
Purchaser; provided that, if such employee voluntarily terminates his
or her employment within thirty (30) days after the Date of Closing,
Seller will pay fifty percent (50%) of such employee's accrued
vacation benefits, if any, accrued prior to the Time of Closing, and
Purchaser will pay all other amounts of accrued vacation benefits to
such employee. Schedule J attached hereto, sets forth the accrued and
unused vacation benefits for all hourly and salaried employees, as of
the Date of Closing. Except for the obligations of Purchaser under
this paragraph 2(a)(i) and paragraph 2(a)(iii), Seller shall be liable
and responsible for any claims, losses, payments, demands or
obligations whatsoever arising from the employment of Seller's
employees prior to the Time of Closing, including, without limitation,
any and all accrued benefits other than vacation benefits as provided
above and other than the employee benefits expenses as set forth on
the Statement of Adjustments attached as Schedule "M" hereto.
(ii) The Seller makes no representation as to whether any of the employees
of the Seller will choose to accept employment with the Purchaser and
there shall be no restriction on any shareholder of or party related
to the Seller hiring any of the former employees of the Seller who may
choose to accept employment with Seller; provided, however, that
Seller will refrain from soliciting any former employee for a period
of one (1) year after the Time of Closing;
(iii) The Purchaser shall and hereby does indemnify and save the Seller
harmless from and against (1) any and all claims, damages,
liabilities, demands, costs and attorney's fees resulting from any
failure by the
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Purchaser to comply with its obligations under Section 2 (a)(i) to pay
the employees any and all sums due and owing for accrued vacation at
the Time of Closing and thereafter, as set forth herein, and (2) any
and all notice requirements, and any other obligation under or
violation of the notice requirements, and any other obligation under
or violation of the Worker Adjustment and Retraining Notification Act
(WARN), 29 USC Section 2101 et seq., the Department of Labor
regulations promulgated thereunder, 20 CFR Section 639.1 et seq., and
any other similar federal or state laws, rules and regulations,
resulting from, arising out of or in connection with the consummation
of the Transaction, whether arising prior to or after the
Date of Closing.
(b) The Seller shall indemnify and save the Purchaser harmless from and
against any and all claims, damages, liabilities, demands, costs and attorneys'
fees resulting from, arising out of, or in connection with the Seller's failure
to comply with its obligations under Section 2(a) and any and all of its
employee-related obligations, including, without limitation, any and all
applicable federal, state and local employment and workers' compensation laws
and regulations, and any and all employee benefit plans, employment or severance
agreements, and other similar arrangements, relating to violations or events
occurring during the period prior to the Time of Closing.
(c) (i) The Seller shall assign the service agreements set forth on Schedule
"F" hereto (the "Service Agreements") and the Purchaser shall assume the
Seller's obligations under the Service Agreements from and after the Date of
Closing, but only to the extent such obligations remain unsatisfied and are
required to be fulfilled.
(ii) The Purchaser shall indemnify and save the Seller harmless against any
and all liabilities, claims and demands resulting from any failure by the
Purchaser to comply with its contractual obligations under the Service
Agreements assigned to it. The Purchaser shall pay any assignment or transfer
fees payable in respect of the assignment of the Service Agreements and the
Purchaser shall obtain, with the reasonable cooperation of Seller, any consents
necessary to allow such assignment.
Allocation of Price
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3. The Assets shall be classified and the Price payable pursuant to paragraphs
1(a) and (b) shall be allocated amongst and paid for the Assets of each class as
may be determined by the parties using their best efforts on or before the Date
of Closing, but in no event later than ninety (90) days after the Date of
Closing. The allocation agreed to by the parties shall be binding for purposes
of federal, state and local taxes.
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Closing Date and Seller Deliveries
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4. This transaction shall be completed at the offices of the Seller's attorneys
at 221 N. Figueroa Street, in Los Angeles, California (or at such other place as
Seller and Purchaser may agree) on August 7, 2000 (which date or earlier or
later date as may be mutually agreed upon being herein called the "Date of
Closing" or "Closing Date") at 10:00 a.m. (which time or earlier or later time
as may be mutually agreed upon being herein called the "Time of Closing"), but
effective as of 12:01 a.m. on that date, by the Purchaser delivering the Cash,
the executed Note as aforesaid, plus or minus the adjustments agreed upon in
Schedule "M", and the documents referred to in paragraph 12 to the Seller's
attorneys in exchange for possession of the Assets, or any undertaking from the
Seller to discharge any encumbrances affecting the Assets, except as herein
provided, and such other documents to be delivered to the Purchaser's attorneys
as they may reasonably request, including, without limitation:
(a) a Bill of Sale with respect to the Assets (in the form attached as
Schedule "L" hereto) and any consents or other documents required
pursuant to the assignment of the Service Agreements;
(b) a Statement of Adjustments prepared by the Seller for the purposes of
paragraph 5 hereof (in the form attached as Schedule "M" hereto);
(c) Resolutions of the Seller, duly adopted by its Board of Directors
approving this Transaction and this Agreement, and authorizing the sale
of the Assets to the Purchaser (in the form attached as Schedule "N"
hereto);
(d) a Certificate of an authorized officer of the Seller confirming that the
representations and warranties of the Seller herein set forth remain
true and correct on the Date of Closing (in the form attached as
Schedule "O" hereto); and
(e) Assignment of Trademarks as identified in Schedule B; and
(f) Assumption and Assignment of Lease (in the form of Schedule "K" attached
hereto) (the "Assignment of Lease") relating to the Leasehold Interest.
Adjustments
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5. Real property taxes (including local improvement levies), business taxes,
rents and common area maintenance charges under leases assumed by the Purchaser,
and gas, water, hydro and sewage rates and charges, prepaid expenses, deposits
to utilities and other accrued liabilities in the total amount of $246,868.96,
as set forth in the Statement of Adjustments attached as Schedule "M" hereto,
shall be paid by Purchaser in cash to Seller on the Date of Closing.
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Real Property Leases
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6. Seller is currently the tenant under three leases (collectively the "Real
Property Leases," copies of which are included in Schedule "D" attached hereto)
with respect to the following properties (collectively, the "Real Properties"
and individually, a "Real Property"): (i) the Entree Production Facility,
located at 9090 Kenamar Drive, San Diego, California (ii) the Pasta Production
Facility, located at 7666 Formula Place, San Diego, California and (iii) the
Administrative Office Building, located at 7696 Formula Place, San Diego,
California. With respect to the 7666 Formula Place Property, Seller is
assigning to Purchaser the Leasehold Interest pursuant to the Assignment of
Lease. The Purchaser may enter into new leases with respect to the 7696 Formula
Place and the 9090 Kenamar Drive Real Properties. The Seller makes no
representations or warranties that the rents and additional rents charged to the
Purchaser shall be the same as is payable under the existing Real Property
Leases. With respect to all three of the Real Property Leases referred to in
Schedule "D" hereto, the Purchaser hereby assumes (a) any and all obligations
under the Real Property Leases, whenever arising, relating to premises repair
and restoration only, (b) only those obligations of Seller as tenant with
respect to rent, common area maintenance charges, taxes and utilities as set
forth on Schedule "M" hereto, and (c) any and all obligations and liabilities
whatsoever relating to, arising out of, or in connection with the Real
Properties, arising from and after the Time of Closing, except as expressly
provided as to environmental matters in paragraph 8(o) below. The Purchaser
also agrees not to obligate the Seller in any manner through its lease
negotiations and arrangements with the landlords of the new leases with respect
to the Real Properties. The Purchaser hereby indemnifies, defends, and holds
the Seller harmless from any and all obligations and liabilities assumed and
agreed to by Purchaser pursuant to this paragraph 6. Any deposits under any of
the Real Property Leases not paid to Seller by Purchaser at Closing will be
returned to the Seller; any of such deposits in excess of the amounts due to
Seller are hereby assigned to Purchaser.
Failure of Representations and Warranties
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7. The obligation of the Purchaser to complete the Transaction shall be subject
to performance of the covenants and the accuracy, in all material respects, of
the representations and warranties contained in paragraph 8 hereof. If the
foregoing condition shall not be met on or before the Date of Closing or shall
not be waived by the Purchaser, the Purchaser may terminate this Agreement by
notice to the Seller and, in such latter event, the Purchaser shall be released
from all obligations under or in connection with this Agreement and the amount
of any and all monies paid by the Purchaser thereunder shall be returned to the
Purchaser. Any waiver of the foregoing condition shall not relieve the Seller
of any obligation with respect to the accuracy of its representations and
warranties set forth herein nor diminish the Purchaser's rights pursuant to
paragraph 11.
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Seller Covenants, Representations and Warranties
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8. The Seller hereby covenants, represents and warrants as follows:
(a) that the Seller is a corporation duly incorporated, existing and in
good standing under the laws of its jurisdiction of incorporation and
has power, authority and capacity to enter into and consummate this
Agreement and to carry out the Transaction, and neither the execution
and delivery of this Agreement not the consummation by Seller of the
transactions contemplated hereby will violate or conflict with, or
constitute a default under any term or provision of the Articles of
Incorporation or By-Laws of Seller or of any contract, commitment,
understanding, arrangement, agreement to which Seller is a party or by
which Seller or any of its assets or properties may be bound or
affected;
(b) that the Seller has and will at the Date of Closing have good and
marketable title to the Assets, except the Marks, free and clear of
all liens, security interests, charges, encumbrances and
registrations, except for: (i) security interests, to be paid out and
discharged on the Date of Closing using part of the Price upon
conditions acceptable to the Purchaser, acting reasonably; and (ii)
those liens, charges and encumbrances set forth in Schedule "G" which
the Purchaser shall assume ("Permitted Encumbrances").
(c) that there is not and there will not on the Date of Closing be any
claim, litigation or other proceedings pending or threatened with
respect to the Assets or the use thereof by the Seller or which could
materially and adversely affect the right of the Purchaser to use or
own the Assets;
(d) the internally generated financial information of Seller that Seller
has provided to the Purchaser accurately and fairly represents the
financial condition of the Assets and Inventory;
(e) that the transfers, conveyances, bills of sale, assurances,
assignments, consents and certificates to be delivered by the Seller
on the Date of Closing will be sufficient in themselves, subject to
the Purchaser complying with conditions or obligations therein set
forth to be fulfilled by all purchasers at law, in general, to vest
legal and beneficial ownership to the Assets in the Purchaser, free
and clear of all liens, charges, security interests, encumbrances and
registrations except as herein provided;
(f) the Seller is, and on the Date of Closing will be, in good standing
under each of the Service Agreements without any default thereunder on
its part and, to its knowledge, without default by any other party to
the Service Agreements;
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(g) there are not outstanding work orders, deficiency notices, non-
compliance orders or similar processes or notices issued by any
government agency or tribunal, including, without limitation, OSHA and
the USDA, affecting any of the Equipment, Inventory, processes,
formulae or any of the Real Property Leases nor, to the knowledge of
the Seller, are any investigations or proceedings, including work
place safety and environmental agency investigations, including,
without limitation, by OSHA or the USDA, under way or being carried
out by any government agency or tribunal with respect to any of the
Equipment, Inventory or any of Real Property Leases;
(h) that the Seller has paid all taxes and source deductions with respect
to the Assets and the Business which were due and payable prior to the
Time of Closing, and there are no current property tax liens against
the Assets, however, the Purchaser acknowledges and agrees that the
Seller has not requested any tax clearance certificates with respect
to the Business or the Assets from any taxing authority including with
respect to Franchise Tax or the Sales Tax;
(i) that the Seller holds all licenses, permits, consents, franchises and
certificates necessary in order to carry on the Business as it is
currently being conducted utilizing the Assets and, to the extent any
of the foregoing are transferable, the Seller will transfer such
licenses, permits, consents, franchises and certificates, at the
Purchaser's cost, on the Date of Closing or as soon as reasonably
possible thereafter and, with respect to any such licenses, permits,
consents, franchises and certificates which are not transferable, the
Seller will provide the Purchaser with reasonable assistance, before
and after the Date of Closing, in connection with obtaining same,
provided the Purchaser shall reimburse promptly the Seller for any
reasonable out-of-pocket costs or expenses incurred by the Seller in
providing such assistance (other than the actual cost of such license
or permit);
(j) there are no expropriation proceedings in effect with respect to any
of the Assets, nor has the Seller received any notice of any intended
expropriation proceeding;
(k) there are no licenses, permits, consents, approvals, certificates,
registrations or authorizations required from third parties in order
for the Seller to complete its obligations under this Agreement
pursuant to the transaction which have not been, or will not be,
obtained by the Seller, except compliance pursuant to any applicable
bulk sales legislation and with respect to any consent of any
landlord, if required;
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(l) that each of the Real Property Leases is a good valid and subsisting
lease and that any rent payable under any Real Property Leases by the
Seller has been, and will be, duly paid to the Date of Closing and the
terms and conditions therein contained on the part of the Seller will
have been duly observed and performed by the Seller to the Date of
Closing, subject to the termination and holdover provisions of such
Real Property Leases, whose lease terms expire June 30, 2000;
(m) Not later than thirty (30) days after the Closing Date, Seller will
transfer and deliver to Purchaser all repair and service agreements,
and all maintenance agreements and history of repairs relating to the
Equipment included in the Assets;
(n) Schwan's IP has good and marketable title to the Marks, free and clear
of all liens, claims and encumbrances, neither Seller nor Schwan's IP
is aware of any actual or threatened adverse claims made by any third
party concerning the Marks since the date the Seller or Schwan's IP
owned such Marks, whichever date is earlier, to the Date of Closing,
and Seller and/or Schwan's IP has not licensed any of the Marks to any
third party; and
(o) Seller and the Business are and have at all times during which Seller
has been in possession and control of the Real Properties been in
compliance in all material respects with all environmental and safety
Laws (the "Environmental Laws") related to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling,
release, emission or discharge of any pollutant, contaminant, hazardous
substance or hazardous waste. During the period of time relating to
Seller's possession and control of the Real Properties, and, to the
knowledge of Seller prior to that time, there are no conditions,
activities, actions or plans which may prevent compliance with any of
the Environmental Laws, and Seller has not received any notice, of
otherwise formally been advised, of any violations of Environmental
Laws applicable to the Business, the Real Properties or the Assets, and
Seller knows of no basis for the allegation of any such violation. For
purposes of this Agreement, the terms "disposal," "release," "hazardous
substance," and "hazardous waste" shall have the definitions assigned
to them under federal, state and local Laws applicable to Seller,
including, without limitation, the Federal Comprehensive Environmental
Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et
seq., as amended, and any regulations promulgated thereunder.
(p) Seller represents and warrants that at the Time of Closing there are no
employment agreements, written or (to the knowledge of Seller) oral,
existing between Seller and any employee of Seller, other than the
employment agreement of Craig Dixon, as to which Seller will hold the
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Purchaser harmless from any and all obligations thereunder, other than
as set forth in paragraph 2(a)(i) hereof and in Schedule "M" hereto
with respect to severance.
All of the foregoing representations and warranties shall survive
the Date of Closing and shall continue and remain in full force and
effect for the benefit of the Purchaser for a period of one (1) year
after the Date of Closing.
Purchaser's Conditions
----------------------
9. Notwithstanding anything herein contained, the Purchaser's obligations
hereunder shall be conditional upon the performance of or compliance with the
following terms and conditions to be fulfilled or performed on or before August
10, 2000:
(a) the Purchaser shall receive possession of the Assets and all of the
documents and evidence as referred to in paragraph 4, including the
License Agreement duly executed by the Seller and the Assignment of
Lease, duly executed by the Seller and the Landlord (as defined in the
Assignment of Lease); provided, however, that Purchaser will continue
to use commercially reasonable efforts to obtain from the Landlord a
release of Seller from any and all obligations and liabilities with
respect to the 7666 Formula Place Property, including, without
limitation, for repair and restoration;
(b) that no material adverse damage, depletion, loss, depreciation or
other deterioration of any nature or kind to any of the Equipment
shall have occurred from the date of this Agreement until the Date of
Closing other than in the ordinary normal course of business;
(c) that the Seller will enter simultaneously into a Co-Pack Agreement
with the Purchaser (the "Co-Pack Agreement") in the form attached
hereto as Schedule "H";
(d) the Purchaser shall receive consent from its secured lenders to enter
into the transactions contemplated by the Agreement;
(e) the Purchaser shall have entered into new leases with respect to the
7696 Formula Place and the 9090 Kenamar Drive Real Properties; and
(f) the Environmental Report with respect to the Real Properties shall
have been approved in substance by Purchaser.
In case any of the said terms or conditions shall not be performed or
complied with in whole or in part on or before August 10, 2000, or such other
time as provided
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herein, the Purchaser may, at its option and without liability of any nature or
kind whatsoever, rescind this Agreement by notice to the Seller and the
Purchaser shall be fully released of all obligations of any nature or kind
hereunder. Alternatively, at the Purchaser's option, the Purchaser may elect to
close the Transaction without prejudice to its right, which the Seller hereby
grants the Purchaser, to specific performance hereof and of each and every term
and condition hereof by the Seller and also to any damages from the Seller for
any loss suffered or to be suffered by the Purchaser by virtue of any
misrepresentation or inaccuracy of any of the Seller's representations and
warranties.
Insurance and Risk of Loss
--------------------------
10. The Seller covenants that it shall, up to the Date of Closing, maintain
all of its currently existing insurance policies covering the Assets.
Notwithstanding anything herein contained, all risk of loss, damage or
destruction of or to the Assets or any of them by fire or by any other cause or
hazard shall remain with the Seller up to the Date of Closing and in the event
of any such loss, damage or destruction prior to the Date of Closing the Price
shall be reduced by the value of the Assets so lost, damaged or destroyed as
appraised for the purpose of the Seller's claim under its policies or policy and
the Transaction shall otherwise be completed in accordance with the provisions
of this Agreement; provided that if such loss, damage or destruction shall be
substantial in the context of the value of the Transaction, i.e. in excess of
----
$1,000,000, then either the Seller or the Purchaser, at its option, at any time
before the Date of Closing, may terminate such agreement by notice to the other
party and, in such event, the parties shall be released from all obligations
under or in connection with this Agreement and the amount of any and all monies
paid by the Purchaser thereunder shall be returned to the Purchaser.
Seller Indemnity
----------------
11. Subject to subparagraph 11(c) below, the Seller will indemnify and save
the Purchaser harmless from and against the following:
(a) any and all liabilities, claims and demands, losses, judgments,
damages, or any other obligations whatsoever in connection with the
Assets arising or occurring prior to the Date of Closing, other than
matters adjusted pursuant to Schedule "M" hereof, or as otherwise
expressly set forth in this Agreement, including the Schedules and
Exhibits attached hereto; and
(b) any and all liabilities, claims and demands, losses, judgments,
damages, or any other obligations whatsoever, arising out of,
resulting from or due to (i) any inaccuracy in or breach or
nonperformance of any the Seller's representations, warranties,
covenants or agreements set forth in this Agreement, including any
agreements, instruments or other documents
<PAGE>
attached as Schedules and Exhibits hereto and (ii) any third party
claims arising from Purchaser's bulk sales notices; provided that, as
to any third party claims arising from Purchaser's bulk sales notices,
Purchaser shall give Seller written notice of such claim and Seller
shall have thirty (30) days from Seller's receipt of such notice to
pay such claim or to assume and provide for the defense against such
third party claim (at Seller's sole cost and expense).
(c) Notwithstanding anything contained herein or elsewhere to the
contrary,
(i) except as herein expressly set forth, the Purchaser's sole
recourse with respect to any misrepresentation, breach of
warranty or non-fulfillment of covenants concerning the Equipment
or Marks shall be to return such particular piece of Equipment or
Mark to the Seller with in one (1) year of the Date of Closing
(or provide written notice within such one (1) year period and
return the piece of Equipment or Mark as soon as practicable
thereafter) or such earlier date as may be herein set forth, in
return for a credit against the principal balance owing under the
Note; provided, however, that in the event of such a
misrepresentation, breach of warranty or non-fulfillment of
covenants concerning any Mark that results in a third party
claim, Seller will also indemnify Purchaser therefor so long as
purchaser has immediately notified Seller of such claim and has
immediately discontinued the use of such Mark and has not
incurred any unreasonable expenses in connection therewith). The
Purchaser shall provide the Seller with thirty (30) days written
notice prior to so reconvening any such piece of Equipment or
Mark and at the time of such notice shall provide two estimates
of value of such piece of Equipment or Mark to be conveyed. Any
dispute to fair market value shall be resolved by arbitration.
Any arbitration decision shall be final and binding upon the
Seller and Purchaser;
(ii) the Seller shall indemnify the Purchaser against the payment of
any amount payable to third parties to discharge liens, charges
or encumbrances affecting the Assets in breach of the
representations in paragraph 8 (b).
(iii) The indemnity pursuant to this paragraph 11 shall continue
and remain in effect for one (1) year from the Date of Closing
unless otherwise expressed herein to be limited to a shorter
period of time. The basis of this transaction is a sale of
assets in "as is" condition, except as to the representations and
warranties of Seller expressly set forth herein, and
notwithstanding anything herein to the contrary, the Seller's
liability pursuant to the foregoing
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indemnity and pursuant to this Agreement shall be as expressly
herein before set forth and in no event shall the Seller be
liable for any loss of profits or business, indirect or
consequential damages.
Purchaser's Deliveries on Closing:
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12. On the Date of Closing the Purchaser shall deliver to the Seller:
(a) the amount of $3,300,000 via wire transfer;
(b) the Note,duly executed by the Purchaser;
(c) a certificate of an authorized officer of the Purchaser confirming the
representations and warranties of the Purchaser herein remain true and
correct on the Date of Closing; and
(d) the Co-Pack Agreement, in form and content attached hereto as Schedule
"H" duly executed by the Purchaser; the License Agreement, in form and
content attached hereto as Schedule "I", duly executed by the
Purchaser.
Purchaser's Covenants, Representations and Warranties
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13. The Purchaser expressly covenants, represents and warrants that:
(a) it has the full power, authority, right and capacity to enter into and
execute this Agreement, to complete the Transaction and to duly
observe and perform all its covenants and obligations as herein set
forth;
(b) the Purchaser shall remove, by no later than thirty (30) days after
the Closing Date, from all of the Equipment and the property subject
to the Real Property Leases any markings, identification or other
indications of the word "Schwan's" and any other trademark or trade
name used by the Seller in the conduct of the Business (other than the
Marks transferred hereby as part of the Assets);
(c) the Purchaser shall execute a USDA/FSIS Form 5200-2 which informs the
USDA of ownership change related to the grant of plant inspection;
(d) the Purchaser shall maintain HACCP, SSOP, and other required retained
records in accordance with applicable regulations. If the Purchaser
establishes its own HACCP program, then it shall return to the Seller
all such records maintained by the Seller prior to the Date of
Closing; and
(e) Purchaser shall comply with any applicable Bulk Sales notice
requirements by no later than thirty (30) days after the Closing Date.
<PAGE>
All the foregoing representations and warranties shall survive the Date of
Closing and shall continue and remain in full force and effect for the benefit
of the Seller after the Date of Closing for a period of one (1) year and shall
not be merged in any document delivered by the Purchaser under this Agreement.
The Purchaser shall indemnify and save the Seller harmless against any and all
liabilities, claims and demands resulting from any breach of any representation
or warranty by the Purchaser contained in this Agreement.
Seller's Conditions
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14. Notwithstanding anything herein contained, the Seller's obligations
hereunder shall be conditional upon the performance or compliance with the
following terms and conditions to be fulfilled and performed at or prior to the
Time of Closing:
(a) that the Purchaser's representations and warranties contained herein
remain true and correct as at the Date of Closing;
(b) that the Seller receive from the Purchaser by the day before the Date
of Closing, the Purchaser's financial statements for the Purchaser's
most recently completed fiscal year prepared in accordance with
generally accepted accounting principles and internally prepared year-
to-date monthly financial statements for the most recently completed
fiscal quarter;
(c) that the Seller receive the Cash on the Date of Closing;
(d) that the Seller receive the Note on the Date of Closing; and
(e) that the Seller receive each of the documents to be delivered by or on
behalf of the Purchaser pursuant to this Agreement, all of which shall
be duly executed by the party or parties thereto other than the
Seller.
In case any of the said terms and conditions shall not be performed or
complied with in whole or in part at or before the Time of Closing, or such
other time as provided herein, the Seller may, at its option, without liability
of any nature or kind whatsoever, rescind this Agreement by notice to the
Purchaser and the Purchaser shall be fully released of all obligations of any
nature or kind hereunder or, alternatively, at the Seller's option, the Seller
may elect to close the Transaction without prejudice to its right, which the
Purchaser hereby grants to the Seller, to specific performance hereof and of
each and every term and condition hereof by the Purchaser and also to any
damages from the Purchaser for any loss suffered or to be suffered by the Seller
by virtue of any misrepresentation or inaccuracy of the Purchaser's
representations and warranties.
<PAGE>
Purchaser's Indemnity
---------------------
15. In addition to Purchaser's other indemnifications specifically set forth
in this Agreement, which shall be defined to include the Schedules and Exhibits
attached hereto, the Purchaser does hereby indemnify and save the Seller
harmless from and against the following:
(a) any and all liabilities, claims and demands, losses, judgments,
damages, or any other obligations whatsoever, arising out of,
resulting from or due to any inaccuracy in or breach or nonperformance
of any of Purchaser's representations, warranties, covenants or
agreements set forth in this Agreement; and
(b) any and all liabilities, claims and demands whatsoever in connection
with the conduct of the Business and the operation of the Assets after
the Date of Closing not otherwise conflicting with the terms of this
Agreement.
Confidentiality
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16. Unless and until the transaction contemplated herein is consummated, the
parties covenant and agree that, except as otherwise mutually authorized or as
required by applicable laws, judicial or legal process or regulations, neither
party nor its representatives, agents or employees will disclose to third
parties, directly or indirectly, any confidential information or confidential
data relating to the non-disclosing party or the transaction discovered by the
disclosing party or its representatives as a result of the non-disclosing
party's making available to the disclosing party and its representatives the
information requested by them in connection with the transaction.
Miscellaneous
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17. Upon execution and delivery of this Agreement by the parties hereto, this
Agreement shall constitute and be considered a binding and enforceable Agreement
between the parties.
18. Any notice, demand, acceptance, request, election or waiver required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to be sufficiently given if personally delivered to an officer of the
party to whom the same is given or, if mailed in a post box or office by
registered mail, postage prepaid, or if sent by facsimile and addressed to the
party to whom the same is given as follows:
(a) In the case of the Purchaser:
To: Overhill Farms, Inc.
James Rudis
<PAGE>
P.O. Box 6017
Inglewood, California 90312-6017
Facsimile No. (310) 641-0461
With a copy to: Ross Arbiter, Esq.
Freeman, Freeman & Smiley
3415 Sepulveda Blvd.
Penthouse
Los Angeles, CA 90034
Telephone: (310)-255-6100
Facsimile: (310)-391-4042
(b) In the case of the Seller:
To: c/o Bill McCormack
SSE Manufacturing, Inc.
115 West College Drive
Marshall, Minnesota 56258
Facsimile No.: (507)-537-8259
copy to: Schwan's Sales Enterprises, Inc.
115 West College Drive
Marshall, Minnesota 56258
Attention: Brian R, Sattler, Esq.
Facsimile No.: (507) 537-8182
and to: Eric C. Castro, Esq.
Lewis, D'Amato, Brisbois & Bisgaard LLP
221 North Figueroa Street, Suite 1200
Los Angeles, California 90012
Facsimile No.: (213) 680-5112
Any such notice, demand, acceptance, request, election or waiver sent
facsimile shall be deemed to have been given on the date of transmission and if
sent by mail as aforesaid shall be deemed to have been given on the second
business day following that of the date of mailing. Provided that, should there
be at the time of mailing or occur between the time of mailing and the time of
deemed receipt, a postal strike,
<PAGE>
slowdown or other labor dispute which might adversely effect delivery of
registered mail, then such notice shall only be effective if actually delivered
or sent by facsimile.
19. Time shall be of the essence of this Agreement.
20. This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns.
21. All dollar amounts referred to herein and all amounts payable hereunder
are in U.S. funds.
22. The Purchaser shall be liable for and shall pay all sales taxes, goods
and services tax, registration fees and transfer fees and taxes payable in
connection with the sale and transfer of the Assets by the Seller to the
Purchaser. The Seller shall not be liable to pay any of the foregoing taxes,
charges and fees which the Purchaser failed to pay or was exempt from paying
prior to the Date of Closing.
23. This Agreement shall be governed by and construed in accordance with the
laws of the State of California, without regard to principles of conflicts of
laws. The State of California shall be the forum for the resolution of any
disputes hereunder.
24. This Agreement, together with the Schedules and exhibits attached hereto,
shall represent the entire agreement between the parties with respect to the
matters herein and supersede any previous agreement made between the Purchaser
and the Seller pertaining to the purchase and sale of the Assets. This
Agreement shall not be amended except by written agreement signed by all parties
hereto.
25. The Purchaser shall be entitled to (a) assign its rights and obligations
hereunder to a corporation incorporated by the Purchaser (as consented to by
Seller, such consent not to be unreasonably withheld) provided that any such
assignment shall not relieve the Purchaser of its obligations hereunder and any
reference in this Agreement to the "Purchaser" shall include the Purchaser as
herein described and any such assignee, and (b)(i) collaterally assign and
transfer all of its rights, remedies, and other interests under this Agreement
to its secured lenders as additional security for the repayment of its
obligations to each such lender, provided, however, that as to the License
Agreement (Schedule "I") and the Co-Pack Agreement (Schedule "H"), Purchaser
shall be entitled to collaterally assign only its right to receive proceeds
under such License Agreement and Co-Pack Agreement; and (ii) irrevocably
authorize and empower each such lender or its agents in accordance with the loan
documents between the Purchaser and such lender, to assert either directly or on
behalf of the Purchaser any claims the Purchaser may, from time to time, have
with respect to this Agreement or with respect to any and all payments due to
the Purchaser under or pursuant to this Agreement as such lender may deem
proper.
<PAGE>
26. The Seller shall be entitled to assign its right hereunder without the
consent of the Purchaser, and to delegate its obligations hereunder, so long as
(a) the delegee agrees to be bound by this Agreement, (b) such delegee has the
financial capacity and ability to fulfill and comply with such obligations, and
(c) Seller remains bound by this Agreement.
27. Except as otherwise provided herein, each of the parties shall bear its
own expenses and the expenses of its counsel and other agents in connection with
the transactions contemplated hereby.
28. From time to time, the parties hereto shall execute and deliver such
documents and take such other action as the other party may reasonably request
in order to consummate more effectively the transactions contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, intending legally to be bound hereby, as of the date first above
written.
OVERHILL FARMS INC., a Nevada Corporation
By: _____________________
President
SSE MANUFACTURING, INC., a California Corporation
By: _____________________
CFO
