<PAGE> 1
UNITED STATES
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):
April 13, 1994
THE MORNINGSTAR GROUP INC.
(Exact name of registrant as specified in its charter)
Delaware 0-19075 75-2217488
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
5956 Sherry Lane, Suite 1100
Dallas, Texas 75225-6522
(Address of principal executive offices including zip code)
Registrant's telephone number,
including area code: (214) 360-4777
<PAGE> 2
INFORMATION TO BE INCLUDED IN REPORT
Item 2. Acquisition or Disposition of Assets.
On April 13, 1994, the registrant The Morningstar Group Inc.
("Morningstar" or "Company"), completed the previously announced divestiture of
its Florida fluid milk operation Velda Farms Inc. to Engles Dairy Acquisition
L.P. ("Purchaser") at a selling price of $48 million consisting of $45 million
cash and $3 million of 9% Series A Preferred Stock (the "Preferred Stock").
Morningstar expects to record a gain of approximately $1.5 million after
expenses of sale and income taxes. The Company has recognized no gain on the
Preferred Stock received in the divestiture. Also, as part of this
transaction, Morningstar entered into a Dairy Products Supply Agreement with
the Purchaser.
The foregoing summary is subject to the full text of the Amended and Restated
Agreement and Plan of Merger referenced in Exhibit 10 (a) below and the Dairy
Products Supply Agreement referenced in Exhibit 10 (b) below.
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits.
(b) Pro Forma Financial Information.
The following financial information is presented using the
discontinued operations format:
(1) Balance Sheet as of December 31, 1993 (unaudited).
(2) Statement of Operations for the year ended December 31,
1993 (unaudited).
(c) Exhibits.
Exhibit 10 (a) - Amended and Restated Agreement and Plan of
Merger dated April 8, 1994, among Engles Dairy Acquisition,
L.P., Velda Farms Inc. and The Morningstar Group Inc.
Exhibit 10 (b) - Form of Dairy Products Supply Agreement by
and among Morningstar, its named subsidiaries and Velda Farms
Inc. (Incorporated by reference to Exhibit 10 (fff) to
Morningstar's Annual Report on Form 10-K for the fiscal year
ended December 31, 1993.)
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THE MORNINGSTAR GROUP
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1993
DOLLARS IN THOUSANDS
(Unaudited)
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ASSETS
CURRENT ASSETS:
Cash $ 3,340
Receivables, net of allowance for doubtful
accounts of $974 26,762
Inventories 11,527
Prepaids & deposits 9,519
Net assets of discontinued operations - current 5,571
-------------
Total current assets 56,719
PROPERTY, PLANT & EQUIPMENT:
Land 6,062
Buildings 16,463
Machinery & equipment 29,334
-------------
Gross property, plant & equipment 51,859
Less: Accumulated depreciation (9,749)
-------------
Net property, plant & equipment 42,110
INTANGIBLE AND OTHER ASSETS:
Identifiable intangible assets 3,177
Goodwill 71,829
Deferred financing costs 2,705
Net assets of discontinued operations - noncurrent 33,822
Other assets 1,772
-------------
Total intangible and other assets 113,305
-------------
TOTAL ASSETS $ 212,134
=============
</TABLE>
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THE MORNINGSTAR GROUP
CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1993
DOLLARS IN THOUSANDS
(Unaudited)
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LIABILITIES & SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 17,850
Accrued liabilities 17,663
Current portion of long-term debt 14,750
-------------
Total current liabilities 50,263
LONG-TERM DEBT (net of current maturities) 105,425
OTHER LONG-TERM LIABILITIES 1,913
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Common stock, $.01 par value, 50,000,000
shares authorized; 14,287,212
shares issued and outstanding 143
Additional paid-in capital 69,541
Retained deficit (15,151)
-------------
Total shareholders' equity 54,533
-------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 212,134
=============
</TABLE>
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<PAGE> 5
THE MORNINGSTAR GROUP
CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1993
DOLLARS IN THOUSANDS
(Unaudited)
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NET SALES $ 273,949
COST OF GOODS SOLD 211,597
-------------
Gross Profit 62,352
OPERATING COSTS AND EXPENSES:
Distribution 17,661
Selling 19,008
General and administrative 13,427
Restructuring and other charges 7,100
-------------
Total operating costs and expenses 57,196
OPERATING INCOME 5,156
INTEREST EXPENSE 4,984
AMORTIZATION OF DEFERRED FINANCING COSTS 493
OTHER INCOME, NET (905)
-------------
INCOME BEFORE INCOME TAXES, DISCONTINUED
OPERATIONS AND EXTRAORDINARY ITEMS 584
PROVISION FOR INCOME TAXES 841
-------------
LOSS FROM CONTINUING OPERATIONS (257)
DISCONTINUED OPERATIONS:
Operating income, net of applicable tax provision of $1,044 1,241
-------------
NET INCOME BEFORE EXTRAORDINARY ITEM 984
EXTRAORDINARY ITEM (164)
-------------
NET INCOME $ 820
=============
EARNINGS (LOSS) PER COMMON SHARE:
Earnings (loss) from continuing operations $ (0.02)
Earnings (loss) from discontinued operations 0.08
-------------
Earnings (loss) before extraordinary item 0.06
Extraordinary item (0.01)
-------------
Earnings (loss) $ 0.05
=============
WEIGHTED AVERAGE SHARES OUTSTANDING 15,011,287
</TABLE>
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<PAGE> 6
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE MORNINGSTAR GROUP INC.
(Registrant)
By: /s/Tracy L. Noll
Tracy L. Noll
Vice President and Chief Financial Officer
Date: April 28, 1994
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<PAGE> 1
EXHIBIT 10(a)
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
ENGLES DAIRY ACQUISITION, L.P.
VELDA FARMS INC.
and
THE MORNINGSTAR GROUP INC.
April 8, 1994
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1 The Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.3 Certificate of Limited Partnership of the Surviving Entity . . . . . . . . . . . . . . . . . 7
Section 2.4 Limited Partnership Agreement of the Surviving Entity . . . . . . . . . . . . . . . . . . . . 8
Section 2.5 General Partner of the Surviving Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.6 Effective Time of the Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Conversion of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.8 No Further Ownership Rights in Company . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.9 Adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE III Representations and Warranties of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.2 Authorization and Validity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.6 Acquisition of Shares for Investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.8 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE IV Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.1 Organization and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.2 Authorization and Validity of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.3 Authorization and Validity of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.4 No Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.5 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6 Acquisition of Preferred Stock for Investment . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.7 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.8 Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.9 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.10 Corporate Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.11 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.12 Liabilities and Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
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Section 4.13 Employee Benefit Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 4.14 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 4.15 Title to Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 4.16 Real Property-Fee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.17 Real Property-Leased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 4.18 Condition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.19 Accounts Receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.20 Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.21 Relationship with Customers and Suppliers . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 4.23 Patents, Trademarks and Copyrights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 4.24 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 4.25 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 4.26 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 4.27 Brokers' or Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.28 Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 4.29 Product Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.30 Guarantees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.31 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.32 Section 1445 of the Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.33 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.34 Interests in Competitors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.35 Closing Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 4.36 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE V Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI Covenants of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.1 Corporate Action and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.2 Reasonable Efforts to Effectuate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 6.3 Status of Representations, Warranties and Conditions Before the Closing . . . . . . . . . . . . 32
Section 6.4 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.5 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 6.6 Interference with Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.8 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.9 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 6.10 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
ARTICLE VII Covenants of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.1 Corporate Action and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 7.2 Reasonable Efforts to Effectuate Transactions . . . . . . . . . . . . . . . . . . . . . . . . . 35
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Section 7.3 Status of Representations, Warranties and Conditions Before the Closing . . . . . . . . . . . . 35
Section 7.4 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.5 Access to Information and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.6 Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
Section 7.7 Affirmative Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 7.8 Material Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.9 Employee Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.10 Capital Assets; Payments of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.11 Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 7.12 Interference with Relationships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.13 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.14 Releases; Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.15 Cooperation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.16 No Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 7.17 Loss, Theft, Damage or Destruction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.18 Insured Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.19 Environmental Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
Section 7.20 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
ARTICLE VIII Conditions Precedent of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 8.4 Corporate Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.5 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.6 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.7 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.8 Supply Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.9 Tax Matters Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.10 Administrative Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.11 Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 8.12 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE IX Conditions Precedent of the Purchaser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.1 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.3 Officer's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 9.4 Corporate Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.5 Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.6 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.7 Governmental Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.8 Supply Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.9 Trademark Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.10 Trademark Licenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.11 Additional Deliveries of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 9.12 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
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Section 9.13 Non-Competition Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.14 Dairy Products Purchase Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.15 Tax Matters Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.16 Title Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 9.17 Administrative Services Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.18 Releases; Terminations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.19 FIRPTA Affidavit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 9.20 Secretary's Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
ARTICLE X Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 10.1. Survival of Representations and Warranties; Tax Matters . . . . . . . . . . . . . . . . . . . . . 47
Section 10.2. Limitations on Liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 10.3. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 10.4. Defense of Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE XI Access to Information and Other Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.1 Access to Information and Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
Section 11.2 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE XII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.1 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.2 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.3 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
Section 12.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.5 Costs, Expenses and Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
Section 12.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.8 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.9 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 12.10 Announcements, Press Releases or Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE XIII Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.1 Grounds for Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 13.2 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
</TABLE>
(iv)
<PAGE> 6
EXHIBITS
Exhibit Description
A Terms of Preferred Stock
B Form of Supply Agreement
C Form of Tax Matters Agreement
D Form of Trademark Assignment
E-1 Form of Trademark License
E-2 Form of Trademark License
E-3 Form of Trademark License
(v)
<PAGE> 7
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER, dated April
8, 1994 (this "Agreement"), by and among The Morningstar Group Inc., a Delaware
corporation (the "Seller"), Velda Farms Inc., a Delaware corporation and
wholly-owned subsidiary of the Seller (the "Company"), and Engles Dairy
Acquisition, L.P., a Delaware limited partnership (that will change its name to
Velda Farms, L.P. upon consummation of the transactions contemplated by this
Agreement) (the "Purchaser"). The Company and the Purchaser are sometimes
herein collectively referred to as the "Constituent Companies."
WHEREAS, the Seller, the Company and Engles Dairy Acquisition,
Inc. ("EDA") have entered into that certain Agreement and Plan of Merger dated
as of February 17, 1994 (the "Original Agreement"), pursuant to which the
Company agreed to merge with and into EDA with EDA being the surviving
corporation; and
WHEREAS, EDA has assigned all of its rights and interests
(other than the right to purchase the Transferred Receivables (as hereinafter
defined)) in and to and the Purchaser has assumed all of EDA's obligations
(other than the obligation to purchase the Transferred Receivables) under, the
Original Agreement, and each of the Company and the Seller has consented to
such assignment;
WHEREAS, the Purchaser, the Seller and the Company desire to
effect a merger ("Merger") of the Company into the Purchaser, pursuant to which
(i) the Seller shall receive consideration in the amounts set forth below, and
(ii) the Purchaser will be the surviving entity (the "Surviving Entity") of the
Merger; and
WHEREAS, the Purchaser has taken all necessary partnership
action to effect the Merger and the Board of Directors and stockholder of the
Company have approved the Agreement and the Merger.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements herein contained, the parties hereto
agree as follows:
<PAGE> 8
ARTICLE I
Definitions
Capitalized terms used herein shall have the meanings ascribed
to them in Article I unless such terms are defined elsewhere in this Agreement.
Administrative Services Agreement: an administrative services
agreement in form and substance satisfactory to the Purchaser and the Seller,
such Administrative Services Agreement to be entered into among the Seller, the
Purchaser and the Company at the Closing.
Affiliate: with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control", when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: this Amended and Restated Agreement and Plan of
Merger and all schedules and exhibits attached hereto.
Base Cash Amount: $45,000,000 in cash, subject to certain
adjustments set forth in Section 2.9 hereof.
Business Day: any day that commercial banks are open for
business in Dallas, Texas.
Closing: as defined in Section 2.1.
Closing Date: as defined in Section 2.1.
Code: the Internal Revenue Code of 1986, as amended.
Commitment: any (i) partnership or joint venture agreement;
(ii) deed of trust or other security agreement; (iii) guarantee or suretyship,
indemnification or contribution agreement or performance bond except for
guarantees and indemnities given to the Company's customers in the ordinary
course of business with respect to products sold or distributed by the Company
the form of which is set forth on Schedule 4.29; (iv) employment, consulting or
compensation agreement or arrangement, including the election or retention in
office of any
2
<PAGE> 9
director or officer; (v) labor or collective bargaining agreement; (vi) debt
instrument, loan agreement or other obligation relating to indebtedness for
borrowed money or money lent to another; (vii) lease or series of related
leases of real property or lease or series of related leases of personal
property providing for annual lease payments in excess of $25,000, whether as
lessor, lessee, sublessor or sublessee; (viii) any agreement or series of
related agreements for the acquisition of services, supplies, equipment or
other personal property involving more than $25,000 in the aggregate; (ix)
contracts containing noncompetition or similar covenants; (x) any other
contract or arrangement or series of related contracts or arrangements that
involves either an unperformed commitment in excess of $25,000 or that
terminates more than one year from the date hereof; (xi) any other material
written agreement or commitment not made in the ordinary course of business; or
(xii) any planned, budgeted or proposed capital expenditure in excess of
$50,000.
Company: Velda Farms Inc., a Delaware corporation.
Confidential Information: as defined in Sections 6.5 and 7.4.
Current Financial Statements: as defined in Section 2.9(a).
Delaware GCL: as defined in Section 2.1.
DRULPA: as defined in Section 2.1.
Effective Time: as defined in Section 2.6.
ERISA: the Employee Retirement Income Security Act of 1974,
as amended.
Estimated Cash Amount: the Base Cash Amount as adjusted as
set forth in Section 2.9(a) hereof.
Estimated Long-Term Liabilities: as defined in Section 2.9(a).
Estimated Net Working Capital: as defined in Section 2.9(a).
Facilities: the manufacturing plants, distribution centers
and offices and other installations and establishments used in the business of
the Company.
3
<PAGE> 10
Final Balance Sheet: as defined in Section 2.9(b).
Final Cash Amount: as defined in Section 2.9(d).
Final Long-Term Liabilities: as defined in Section 2.9(b).
Final Net Working Capital: as defined in Section 2.9(b).
Financial Statements: the Company's balance sheets at each of
December 31, 1989, 1990, 1991, 1992 and 1993 and the Company's related
statements of income for each of the years ended December 31, 1989, 1990, 1991,
1992 and 1993, including the notes thereto.
HSR Act: the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended.
Indemnifiable Loss: as defined in Section 10.2(a).
Indemnifying Party: as defined in Section 10.2(a).
Indemnitee: as defined in Section 10.2(a).
Indemnity Payment: as defined in Section 10.2(a).
Independent Accountant: Coopers & Lybrand.
Initial Net Working Capital: as defined in Section 2.9(a).
Inventory: all parts, supplies, products, fluid milk and
other raw materials, ingredients, work in process, finished goods, packaging
materials and other items of inventory.
Issuer: as defined in the definition of Preferred Stock.
Legal Requirements: any and all currently effective
applicable (a) federal, state and local laws (statutory and administrative),
ordinances and regulations and (b) judgments, orders, writs, injunctions and
decrees.
Liens: any and all liens, claims, assessments, levies,
charges, adverse claims, security interests, pledges, deeds of trust, mortgages
or other encumbrances, whether imposed by
4
<PAGE> 11
operation of law or pursuant to a written or oral agreement or other
understanding or otherwise asserted.
Long-Term Liabilities: as of a particular date, will be the
sum of the Company's liabilities that are not current liabilities, determined
in accordance with generally accepted accounting principles, consistently
applied but including other post-employment benefit liabilities in the agreed
amount of $250,000 and excluding any such liabilities to be released or paid at
or prior to the Closing by the Seller or the Company.
March 31, 1993 Balance Sheet: as defined in Section 2.9(a).
Material Adverse Effect: as to any Person, any condition,
event or circumstance that has, produces or results in an adverse effect that
is material to the business, financial condition or results of operations of
any Person or Persons and its wholly-owned subsidiaries, taken as a whole.
Merger: as defined in the preamble to this Agreement.
Net Working Capital: the Net Working Capital, as of a
particular date, will be the sum of the Company's current assets (which shall
include the Transferred Receivables classified as current assets) minus the sum
of the Company's current liabilities, in accordance with general accepted
accounting principles consistently applied excluding any prepaid expenses or
other assets which will have no tangible benefit to the Company after the
Closing Date. Schedule 2.9 reflects the Net Working Capital calculation as of
March 31, 1993.
Non-Competition Agreement: a non-competition agreement for
the benefit of the Purchaser in form and substance satisfactory to the
Purchaser and the Seller, such Non-Competition Agreement to be entered into
between the Seller, the Company and the Purchaser at the Closing.
Person: an individual, partnership, joint venture,
corporation, bank, trust, unincorporated organization and/or a government or
any department or agency thereof.
Preferred Stock: shares representing $3,000,000 original
stated value of 9% Series A Preferred Stock containing the provisions set forth
in Exhibit A hereto, issued by OC Holdings, Inc., a Delaware corporation and
the sole limited partner of the Purchaser (the "Issuer"), to the Company and
5
<PAGE> 12
distributed to the Seller immediately prior to the consummation of the Merger.
Properties: all real estate owned or leased by the Seller or
the Company for use in the business of the Company.
Proprietary Rights: as defined in Section 4.23.
Purchaser: Engles Dairy Acquisition, L.P., a Delaware limited
partnership that will change its name to Velda Farms, L.P. upon consummation of
the Merger.
Reasonable Efforts: the diligent pursuit by a party, in good
faith, of all such acts as may be commercially reasonable.
Returns: all returns, declarations, reports, statements and
other documents required to be filed in respect of Taxes, including any
schedule or attachment thereto, and including any amendments thereto.
Securities Act: the Securities Act of 1933, as amended.
Seller: The Morningstar Group Inc., a Delaware corporation.
Shares: 1,000 shares of common stock, par value $1.00 per
share, of the Company.
Supply Agreement: the Supply Agreement in substantially the
form set forth as Exhibit B hereto.
Surviving Entity: as defined in the preamble to this
Agreement.
Tax Matters Agreement: the Tax Matters Agreement in
substantially the form as set forth as Exhibit C hereto, among the Seller, the
Purchaser and the Company, such Tax Matters Agreement to be entered into at the
Closing.
Taxes: all federal, state, local, foreign and other net
income, gross income, gross receipts, sales, use, ad valorem, transfer,
franchise, profits, license, intangibles, withholding, payroll, employment,
excise, severance, stamp, occupation, premium, property, windfall profits,
customs, duties, or other taxes, fees, assessments or charges of any kind
whatever, together with any interest and any penalties, additions to tax or
6
<PAGE> 13
additional amounts with respect thereto, and the term "Tax" means any of the
foregoing Taxes.
Third Party Claim: as defined in Section 10.2(a).
Trademark Assignment: the Trademark Assignment in
substantially the form set forth as Exhibit D hereto, such Trademark Assignment
to be granted by the Seller to the Company.
Trademark Licenses: the Trademark Licenses in substantially
the form set forth as Exhibits E-1, E-2 and E-3 hereto, such Trademark Licenses
to be granted by the Seller to the Company.
Transferred Receivables: accounts receivable of the Company
in the amount of $3,000,000 transferred by the Company to the Issuer
immediately prior to the Merger as consideration for the Preferred Stock.
ARTICLE II
The Merger
Section 2.1 The Merger. Upon the terms and subject to
the conditions hereof, and in accordance with the provisions of the Delaware
General Corporation Law, as amended (the "Delaware GCL") and the Delaware
Revised Uniform Limited Partnership Act, as amended ("DRULPA"), the Company
shall be merged with and into the Purchaser. Following the Merger, the
separate existence of the Company shall cease, and the Purchaser shall continue
as the Surviving Entity in the Merger. The closing of the transactions
contemplated hereby (the "Closing") shall occur commencing at 10:00 a.m.,
Dallas, Texas time, on the first Monday at least two Business Days following
the satisfaction or waiver of the conditions to the Closing set forth in
Articles VIII and IX of this Agreement (the "Closing Date"), in the offices of
Weil, Gotshal & Manges, 100 Crescent Court, Suite 1300, Dallas, Texas 75201, or
at such other time and place as shall be mutually agreed to in writing by the
parties hereto. At the Closing, (i) the Seller shall deliver to the Purchaser
for cancellation in good delivery form all certificates representing the Shares
and (ii) the Purchaser shall deliver to the Seller the Estimated Cash Amount in
immediately available funds.
Section 2.2 Effect of the Merger. The Merger shall have
the effects set forth in Delaware GCL Section 259 and DRULPA Section 17-211.
7
<PAGE> 14
Section 2.3 Certificate of Limited Partnership of the
Surviving Entity. At the Effective Time (as defined below) and without any
further action on the part of the Constituent Companies, the Certificate of
Limited Partnership of the Purchaser shall be the Certificate of Limited
Partnership of the Surviving Entity.
Section 2.4 Limited Partnership Agreement of the
Surviving Entity. At the Effective Time and without any further action on the
part of the Constituent Companies, the Limited Partnership Agreement of the
Purchaser shall be the Limited Partnership Agreement of the Surviving Entity.
Section 2.5 General Partner of the Surviving Entity. At
the Effective Time, the directors of the Company and the officers of the
Company immediately prior to the Effective Time shall be removed and the
business and operations of the Surviving Entity shall be managed by Velda
Holdings, Inc., a Delaware corporation, as General Partner of the Purchaser, in
accordance with the Limited Partnership Agreement of the Purchaser (the
"Limited Partnership Agreement").
Section 2.6 Effective Time of the Merger. The
Constituent Companies will cause a certificate of merger and such other
documents as are required by the Delaware GCL and DRULPA to be duly filed with
the Secretary of State of the State of Delaware prior to 10:00 a.m. Dallas,
Texas time on the Closing Date. The Merger shall become effective upon the
filing of the certificate of merger and such other documents as are required by
the Delaware GCL and DRULPA to be filed (the time of such filing being the
"Effective Time").
Section 2.7 Conversion of Capital Stock. As of the
Effective Time, by virtue of the Merger and without any action on the part
either the holder of the capital stock of the Company or the holders of limited
partnership interests in Purchaser:
(a) Purchaser Partnership Interests. The issued
and outstanding partnership interests of the Purchaser shall remain
outstanding after the consummation of the Merger and shall constitute
the issued and outstanding partnership interests of the Surviving
Entity.
(b) Conversion of Common Stock. The issued and
outstanding Shares shall be converted into the right to receive the
Base Cash Amount.
8
<PAGE> 15
Section 2.8 No Further Ownership Rights in Company. At
and after the Effective Time, the Seller shall cease to have any rights as a
stockholder of the Company.
Section 2.9 Adjustments. The Base Cash Amount will be
adjusted as follows:
(a) Preliminary Adjustment. The Net Working
Capital, as of March 31, 1993, as set forth on Schedule 2.9 hereto
(the "March 31, 1993 Balance Sheet"), is referred to as the "Initial
Net Working Capital". On or before the day that is the second
Business Day preceding the Closing Date, the Seller will provide the
Purchaser with a good faith estimate of the Company's Net Working
Capital (the "Estimated Net Working Capital") as of 12:01 a.m. (Miami,
Florida time) on April 10, 1994 (the "Calculation Time") and Long-Term
Liabilities at such time (the "Estimated Long-Term Liabilities")
calculated from the most recently available financial statements (the
"Current Financial Statements") plus such adjustments as are mutually
acceptable to the Purchaser and the Seller. The Seller will provide
the Purchaser with a copy of the Current Financial Statements as soon
as such statements are available. The Base Cash Amount will be
reduced (or increased) by the amount, if any, by which the Estimated
Net Working Capital is less (or greater) than the Initial Net Working
Capital and will be reduced by the amount of the Estimated Long-Term
Liabilities.
(b) Determination of Final Cash Amount. Within
90 Business Days after the Closing, the Purchaser shall prepare and
deliver to the Seller a balance sheet of the Company and a calculation
of the Net Working Capital and Long-Term Liabilities as of the
Calculation Time. Such calculations shall be made in a manner
consistent with the respective calculations of the Initial Net Working
Capital, the Estimated Net Working Capital and the Estimated Long-Term
Liabilities under Section 2.9(a) above. The Purchaser will make
available to the Seller the work papers and other accounting records
used in preparing such balance sheet and calculations. Within 30 days
following the delivery of the balance sheet and Net Working Capital
and Long-Term Liabilities calculations, the Seller will deliver to the
Purchaser a detailed written statement describing its objections (if
any) to the Purchaser's calculation of the Net Working Capital and
Long-Term Liabilities. If the Seller does not deliver a detailed
written statement describing any such objections within such 30-day
period, the calculations of the Net Working Capital and Long-Term
9
<PAGE> 16
Liabilities shall be final and binding on the parties hereto. If the
Seller does deliver a detailed written statement raising any such
objections, the Purchaser and the Seller will use reasonable efforts
to resolve any disputes related thereto, but if a final resolution is
not obtained within 30 days after the Seller has submitted its written
objections to the Purchaser, any remaining disputes regarding the
calculations of the Net Working Capital and Long-Term Liabilities will
be submitted for resolution in accordance with the provisions of this
Agreement to the Independent Accountant. The determination of the
Independent Accountant will be submitted in writing to each of the
Purchaser and the Seller not later than 30 days after the submission
of such dispute to the Independent Accountant, and the determinations
contained in that report will be conclusive and binding upon the
parties. The Purchaser and the Seller will each pay one-half of the
fees and expenses of the Independent Accountant. The Company's Net
Working Capital and Long-Term Liabilities, as finally determined
pursuant to this subsection (b), are referred to herein respectively
as the "Final Net Working Capital" and the "Final Long-Term
Liabilities" and the balance sheet setting forth the Final Net Working
Capital and the Final Long-Term Liabilities is referred to herein as
the "Final Balance Sheet".
(c) Physical Inventory. In order to prepare the
Estimated Net Working Capital calculation and the Final Balance Sheet
and to determine the Estimated Net Working Capital and Final Net
Working Capital, a physical count of the Company's Inventory will be
completed as of the close of business on the Sunday immediately
preceding the Closing Date. The Purchaser and the Seller will follow
the procedures set forth in Schedule 2.9(c) hereto, and each of the
Purchaser and the Seller will be entitled to have its representatives
present at the taking of the physical count by the Company.
(d) Final Adjustments. Within five Business Days
after the determination of the Final Net Working Capital, the
Estimated Cash Amount will be adjusted pursuant to this subsection
(d). The Final Cash Amount will be equal to the Estimated Cash Amount
reduced (or increased) by the amount, if any, by which the Final Net
Working Capital is less (or greater) than the Estimated Net Working
Capital and the amount, if any, by which the Final Long-Term
Liabilities are greater (or less) than the Estimated Long-Term
Liabilities. If the Estimated Cash Amount exceeds the Final Cash
Amount,
10
<PAGE> 17
such difference shall be paid by the Seller to the Purchaser in
immediately available funds within three Business Days after the
determination of the Final Cash Amount, together with interest thereon
from the Closing Date to the date of payment at the annual rate of 7%.
If the Final Cash Amount exceeds the Estimated Cash Amount, such
difference shall be paid by the Purchaser to the Seller in immediately
available fund within three Business Days after the determination of
the Final Cash Amount, together with interest thereon from the Closing
Date to the date of payment at the annual rate of 7%.
ARTICLE III
Representations and Warranties of the Purchaser
The Purchaser hereby represents and warrants the following to
the Seller:
Section 3.1 Organization and Good Standing. The
Purchaser is a limited partnership validly formed and existing under the laws
of the state of Delaware, with all requisite power and authority to carry on
the business in which it is engaged and to own or lease the properties and
assets it owns or leases. The Purchaser is duly qualified to do business as a
foreign limited partnership in good standing in each jurisdiction other than
its state of formation where the nature of its business or the character of its
property makes such qualification necessary, except where the failure to be so
qualified would not have a Material Adverse Effect on the Purchaser.
Section 3.2 Authorization and Validity. The Purchaser
has all requisite partnership power and authority to enter into this Agreement
and each other agreement and document contemplated hereby to be entered into by
it and to perform its obligations hereunder and thereunder and to consummate
the transactions contemplated hereby and thereby. The execution and delivery
of this Agreement and each other agreement and document contemplated hereby,
and the consummation and performance of the transactions contemplated hereby
and thereby by the Purchaser, have been duly authorized and approved by all
requisite partnership action on the part of the Purchaser. This Agreement has
been duly executed and delivered by the Purchaser and constitutes the legal,
valid and binding obligation of the Purchaser, enforceable against it in
accordance with its terms, except as such enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors'
11
<PAGE> 18
rights generally or the application of general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at law).
Each other agreement to be executed by the Purchaser in connection with this
Agreement at or prior to the Closing will be duly executed and delivered by the
Purchaser and will constitute the legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with the respective
terms of each such agreement, except as such enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the application of general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Section 3.3 Capitalization. (a) As of the Closing Date
the Issuer shall have no outstanding capital stock having any preference as to
dividends or on liquidation other than the Preferred Stock nor shall the Issuer
have any outstanding securities convertible into or exchangeable or exercisable
for such capital stock or any commitment to issue any such capital stock.
(b) All shares of capital stock of the Issuer outstanding
at the Closing Date shall have been duly authorized, validly issued and shall
be fully paid and nonassessable.
Section 3.4 No Violation. The execution and delivery by
the Purchaser of this Agreement and each other agreement and document
contemplated hereby to be executed and delivered by the Purchaser, and
consummation and performance of the transactions contemplated hereby or thereby
by the Purchaser, will not (a) violate or conflict with the Limited Partnership
Agreement, (b) violate, conflict with, or result in a breach of the terms,
conditions and provisions of, constitute a default under, or permit the
acceleration of any obligation under, or require the consent under, any
material agreement, indenture, mortgage, lease or other instrument under which
the Purchaser or any of its property is bound or subject or (c) violate or
conflict with any judgment, decree, order, statute, law, ordinance, rule or
regulation of any court or any public, governmental or regulatory agency or
body having jurisdiction over the Purchaser or the properties or assets of the
Purchaser, except to the extent valid consents and approvals have been, or will
be, obtained prior to the Closing.
Section 3.5 Litigation. There are no actions, suits,
proceedings, orders or governmental investigations or inquiries pending, or, to
the best knowledge of the Purchaser,
12
<PAGE> 19
threatened, against the Purchaser or any of its Affiliates or their respective
properties, assets, operations or businesses seeking to prevent, or which would
adversely affect, the consummation of the transactions contemplated hereby.
Section 3.6 Acquisition of Shares for Investment. The
Purchaser is acquiring the Shares for investment and not with a view toward, or
for sale in connection with, any distribution thereof, nor with any present
intention of distributing or selling the Shares within the meaning of the
Securities Act.
Section 3.7 Consents. No authorization, consent,
approval, order, permit or license of, or filing with, any court or other
governmental or public body or authority is required to be made or obtained by
the Purchaser in connection with the execution, delivery and performance of
this Agreement and each other agreement contemplated hereby to be executed and
delivered by the Purchaser or the consummation of the transactions contemplated
hereby or thereby by the Purchaser except for (i) such authorizations,
consents, approvals, orders, permits or licenses required for the operation of
the business of the Company after the Closing and (ii) any required filings
under the HSR Act.
Section 3.8 Brokers' or Finders' Fees. The Purchaser has
not incurred any liability to any broker, finder or agent for any brokerage
fees, finder's fees or commissions with respect to the transactions
contemplated by this Agreement for which the Seller or the Company would be
responsible.
ARTICLE IV
Representations and Warranties of the Seller
The Seller represents and warrants the following to the Purchaser:
Section 4.1 Organization and Good Standing. The Seller
is a corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Company is a corporation duly
organized, validly existing and the good standing under the laws of the State
of Delaware, with all requisite power and authority to carry on the business in
which it is engaged and to own or lease the properties and assets it owns or
leases. The Company is duly qualified to do business as a foreign corporation
in good standing in each jurisdiction set forth in Schedule 4.1, which are all
of the jurisdictions where
13
<PAGE> 20
the nature of the Company's business or the character of its property makes
such qualification necessary, except where the failure to be so qualified would
not have a Material Adverse Effect on the Company.
Section 4.2 Authorization and Validity of the Seller.
The Seller has all requisite corporate power and authority to enter into this
Agreement and each other agreement and document contemplated hereby to be
entered into by the Seller and to perform its obligations hereunder and
thereunder. The execution and delivery of this Agreement by the Seller and
each other agreement and document contemplated hereby to be entered into by the
Seller and the Seller's consummation and performance of the transactions
contemplated hereby and thereby, have been duly authorized and approved by all
requisite corporate action on the part of the Seller. This Agreement has been
duly executed and delivered by the Seller and constitutes the legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, except as such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the application of general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law). Each other
agreement to be executed by the Seller in connection with this Agreement at or
prior to the Closing will be duly executed and delivered by the Seller and will
constitute the legal, valid and binding obligation of the Seller, enforceable
against the Seller in accordance with the respective terms of each such
agreement, except as such enforcement may be limited by applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally or the
application of general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law).
Section 4.3 Authorization and Validity of the Company.
The Company has all requisite corporate power and authority to enter into this
Agreement and each other agreement and document contemplated hereby to be
entered into by the Company and to perform its obligations hereunder and
thereunder. The execution and delivery of each agreement and document to be
executed by the Company in connection with this Agreement at or prior to the
Closing and the Company's consummation and performance of the transactions
contemplated thereby have been duly authorized and approved by all requisite
corporate action on the part of the Company. Each such agreement and document
will be duly executed and delivered and will constitute the legal, valid and
binding obligation of the Company, enforceable against the Company in
accordance with the respective terms of each such
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<PAGE> 21
agreement and document, except as such enforcement may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
the application of general principles of equity (regardless whether such
enforcement is considered in a proceeding in equity or at law).
Section 4.4 No Violation. Except as described in
Schedule 4.4, the execution and delivery by the Seller or the Company, as the
case may be, of this Agreement and each other agreement and document
contemplated hereby to be executed and delivered by the Seller or the Company,
and the Seller's or the Company's, as the case may be, consummation and
performance of the transactions contemplated hereby or thereby, will not (a)
violate or conflict with the Certificate of Incorporation or Bylaws of the
Seller or the Company, (b) violate, conflict with, or result in a breach of the
terms, conditions and provisions of, or constitute a default under, or permit
the acceleration of any obligation under, or require the consent under, any
agreement, indenture, mortgage, lease or other instrument under which the
Seller or the Company or any of the property of either of them is bound or
subject, or (c) violate or conflict with any judgment, decree, order, statute,
law, ordinance, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Seller or the Company or
any of the properties or assets of the Seller or the Company.
Section 4.5 Litigation. There are no actions, suits,
proceedings, orders or governmental investigations or inquiries pending, or, to
the knowledge of the Seller, threatened, against the Seller or any of its
Affiliates or their respective properties, assets, operations or businesses
seeking to prevent, or which would adversely affect, the consummation of the
transactions contemplated hereby. Except as described in Schedule 4.5, (a)
there are no actions, suits, arbitrations, proceedings, orders or known
investigations instituted, pending or, to the knowledge of the Seller,
threatened against or affecting the Company or its properties, assets,
operations or business, at law or in equity, or before any federal, state or
municipal court or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, and (b) the Company is not
subject to any continuing court or administrative order, writ, judgment,
injunction or decree applicable to the Company or its business, operations,
properties or assets or in default with respect to any such order, writ,
judgment, injunction or decree described in Schedule 4.5. There are no
arbitration proceedings pending under collective bargaining agreements or
otherwise to which the Company is a party.
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Section 4.6 Acquisition of Preferred Stock for
Investment. The Seller is acquiring the Preferred Stock for investment and not
with a view toward, or for sale in connection with, any distribution thereof,
nor with any present intention of distributing or selling the Preferred Stock
within the meaning of the Securities Act.
Section 4.7 Consents. Schedule 4.7 sets forth each
authorization, consent, approval, permit or license of, or filing with, any
governmental or public body or authority, any lender or lessor or any other
Person that is required to authorize, or is required in connection with, the
execution, delivery and performance of this Agreement or the agreements and
documents contemplated hereby on the part of the Seller or the Company except
for any required filings under the HSR Act.
Section 4.8 Capitalization. Schedule 4.8 sets forth the
authorized, issued and outstanding capital stock of the Company. All the
Shares are issued and outstanding and are owned of record and beneficially by
the Seller, free and clear of all Liens. The Shares have been duly authorized,
validly issued and are fully paid and nonassessable. Except as contemplated by
the Merger, there are no rights, subscriptions, warrants, options, puts,
proxies, conversion rights or agreements of any kind outstanding to purchase or
otherwise acquire or otherwise affecting any shares of capital stock of the
Company or securities or obligations of any kind convertible into or
exchangeable or exercisable for any shares of capital stock of the Company.
Upon delivery of payment for the Shares as provided in this Agreement, the
Seller will convey to the Purchaser pursuant to the Merger, and the Purchaser
will acquire, good title to the Shares, free and clear of any Liens. No shares
of the capital stock of the Company are reserved for any purpose and there are
no preemptive or similar rights with respect to the issuance, sale or other
transfer of the capital stock of the Company.
Section 4.9 Subsidiaries. Except as set forth on
Schedule 4.9, the Company does not own, directly or indirectly, any stock,
partnership interests, joint venture interest or other security or interest in
any other Person.
Section 4.10 Corporate Records. True, correct and
complete copies of the certificate of incorporation and all amendments thereto,
and the Bylaws, as currently in effect, of the Company have been delivered to
the Purchaser. The minute books of the Company, copies of which have been made
available to the Purchaser, contain accurate minutes of all meetings of, and
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<PAGE> 23
accurate consents to all actions taken without meetings by, the Board of
Directors (and any committee thereof) and the stockholders of the Company since
its formation and reflect all actions taken by the Company required to be
reflected under the Delaware GCL. At the Closing, the Seller will tender to
the Purchaser all of such books and records.
Section 4.11 Financial Statements. The Seller has
furnished to the Purchaser the Financial Statements as set forth on Schedule
4.11 and the March 31, 1993 Balance Sheet and will furnish to the Purchaser the
Current Financial Statements. The Financial Statements, the March 31, 1993
Balance Sheet and the Current Financial Statements, as applicable (i) fairly
reflect (or in the case of the Current Financial Statements, will reflect) the
financial condition and results of operations of the Company as of the dates
and for the periods indicated and (ii) have been (or in the case of the Current
Financial Statements, will be) prepared in accordance with (a) generally
accepted accounting principles, consistently applied, except for those
differences from generally accepted accounting principles which are described
in Schedule 4.11 attached hereto, and (b) the Seller's internal accounting
principles, methods and procedures, consistently applied throughout the periods
indicated.
Section 4.12 Liabilities and Obligations. Except for
those ordinary course liabilities incurred since the date of the Financial
Statements, the Financial Statements reflect all liabilities of the Company
that are required to be included in the Financial Statements under generally
accepted accounting principles consistently applied by the Company throughout
the periods indicated and consistent with Schedule 4.11.
Section 4.13 Employee Benefit Matters. (a) Except as set
forth in Schedule 4.13(a), there are no Plans (as herein defined) in which (A)
any present or former directors, officers, agents or employees of the Company
participate or (B) with respect to which the Company has any liability. As
used herein, the term "Plan" shall include any of the following: (i) any
"employee benefit plan" within the meaning of Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"); (ii) any profit
sharing, pension, deferred compensation, bonus, stock option, stock purchase,
severance, stock appreciation right, supplemental unemployment, layoff,
retirement, life insurance, disability, group insurance, retainer, consulting,
health, welfare or incentive plan or agreement; (iii) any plan or policy
providing for "fringe benefits" to its directors, officers, agents or
employees, including but not limited to vacation, paid holidays, personal
17
<PAGE> 24
leave, employee discount, educational benefit or similar programs; (iv) any
employment agreement; or (v) any trust, escrow or other agreement or
arrangement related to any of the foregoing. For purposes of this Agreement,
"ERISA Affiliate Plan" is any "employee benefit plan" within the meaning of
Section 3(3) of ERISA which is (a) subject to Title IV of ERISA or Section 412
of the Internal Revenue Code of 1986, as amended (the "Code"), (b) a
"multiemployer plan" within the meaning of Section 4001(a)(3) of ERISA
("Multiemployer Plan"), (c) a multiple employer plan within the meaning of
Section 4063(a) of ERISA or (d) a "group health plan" within the meaning of
Section 5000(b) of the Code which is subject to the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended ("COBRA"), sponsored, maintained,
contributed to or obligated to be contributed to by Seller, the Company or any
trade or business (whether or not incorporated) which are under common control,
or are treated as a single employer, with the Company under Section 414(b),
(c), (m) or (o) of the Code ("ERISA Affiliate"). With respect to each
applicable Plan listed in Schedule 4.13(a), the Company has furnished to the
Purchaser true, correct and complete copies of: (i) the plan documents and
summary plan descriptions; (ii) the most recent determination letter received
from the Internal Revenue Service; (iii) the last Form 5500 Annual Report; and
(iv) all related trust agreements, insurance contracts or other funding
agreements which implement such Plans.
(b) Except as set forth in Schedule 4.13(b), the Company
has not contributed, or been obligated to contribute, to any Multiemployer
Plan.
(c) Each Plan listed on Schedule 4.13(a), complies in all
material respects with all Legal Requirements currently in effect and
applicable to the Plan, including but not limited to ERISA and the Code; and
the employee pension benefit plans maintained by the Company meet the
requirements of "qualified plans" under Section 401(a) of the Code, and each
such employee pension benefit plan, and each trust (if any) forming a part
thereof, has received a favorable determination letter from the Internal
Revenue Service as to the qualification under the Code of such plan and the
tax-exempt status of such related trust.
All reports, forms and other documents required to be filed
with any government entity and/or to be distributed to participants with
respect to any Plan (including without limitation, summary plan descriptions,
Forms 5500 and summary annual reports) have been timely filed or distributed
and are accurate in all material respects.
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(d) The Company has no liability nor is it threatened
with any liability nor is there any condition existing that presents a risk of
liability whether directly or as a result of joint and several liability among
the controlled group as determined under Sections 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA (i) for the termination of any single
employer plan under Section 4062 or 4064 of ERISA or any multiple employer plan
under Section 4063 of ERISA, (ii) for any lien imposed under Section 302(f) of
ERISA or Section 412(n) of the Code, (iii) for any interest payments required
under Section 302(e) or any excise taxes imposed by Sections 4971, 4975, 4976,
4977 or 4979 of the Code, (iv) for a fine under Section 502 of ERISA, (v) for a
transaction within the meaning of Section 4069 of ERISA, or (vi) for any other
breaches or violations of applicable Legal Requirements with respect to any
Plan.
(e) The Seller, the Company and each ERISA Affiliate, to
the extent applicable, are in good faith material compliance with the
continuation of group health coverage provisions contained in Section 4980B of
the Code and Sections 601 through 608 of ERISA.
(f) The Company has not incurred any withdrawal liability
with respect to any Multiemployer Plan within the meaning of Sections 4201 and
4204 of ERISA, and no liabilities exist with respect to withdrawals from any
Multiemployer Plans which could subject the Company to any controlled group
liability under Section 4001(b) of ERISA. The Company is not subject to any
current liabilities with respect to withdrawals from any Multiemployer Plan as
a member of Seller's controlled group under Section 4001(b) of ERISA.
(g) Except for those employees for whom there are
employment agreements listed on Schedule 4.13(a), all employees of the Company
are terminable at the will of the Company and neither the Seller, nor the
Company, nor any present or former director, officer, employee or agent of the
Seller or the Company has made any binding commitments of the Company to any
present or former director, officer, agent or employee concerning his term,
condition, benefits or employment, other than the description of rights under
instruments described in Schedule 4.13(a) hereof, including, without
limitation, the tenure of such employment, the conditions under which such
employment may be terminated by the Company or with respect to the continuation
of medical, dental, life or disability coverage for any period of time beyond
the end of the current Plan year, except to the extent of coverage required
under Section 4980B of the Code. The consummation of the transactions
contemplated by this Agreement will not
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accelerate the time of payment or vesting, or increase the amount, of
compensation due to any present or former director, officer, employee or agent
of the Company.
Except as set forth in Schedule 4.13(a), the Company is not a
party to any agreement providing for severance or termination payments to, or
any employment agreement with, any current or former director, officer,
employee or agent of the Company. None of such agreements provides for
payments which would be "excess parachute payments" under Section 280G of the
Code.
(h) There are no unfunded liabilities existing under the
Plans listed on Schedule 4.13(a), and each such Plan could be terminated as of
the Closing Date with no liability to the Purchaser, the Company or any ERISA
Affiliate.
Section 4.14 Absence of Certain Changes. Except as set
forth in Schedule 4.14 or as contemplated by this Agreement, since December 31,
1993, the Company has not:
(a) suffered any Material Adverse Effect;
(b) contracted for any capital expenditures in excess of
$50,000;
(c) incurred any indebtedness for borrowed money or
incurred or become subject to any liability, except current
liabilities incurred in the ordinary course of business;
(d) discharged or satisfied any lien or paid any
liability, other than in the ordinary course of business;
(e) mortgaged, pledged or subjected any property or
assets to any Lien, except Liens for property taxes or assessments not
yet due and payable or due but not yet delinquent and those mechanics'
and materialman's liens and statutory liens imposed on milk supplies
and other raw materials arising in the ordinary course of business;
(f) paid any amount on any indebtedness prior to the due
date, forgiven or cancelled any debts or claims or released or waived
any material rights or claims;
(g) acquired or disposed of any material assets or
incurred any material liabilities or obligations, except purchases and
sales of Inventory in the ordinary course of business, the transfer of
the Transferred Receivables to the
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Issuer for the Preferred Stock, the transfer of the Kinnett note and
the distribution of the Preferred Stock to the Seller;
(h) changed any accounting or costing systems or methods
in any material respect;
(i) terminated, cancelled or modified or received notice
or a request for termination, cancellation or modification of an
existing material agreement, arrangement or understanding between the
Company and any of its customers, suppliers or distributors;
(j) made or granted any bonus or increased the
compensation payable or to become payable to any employee, except in
the ordinary course of business and consistent with past practice;
(k) made any payments to or loaned any money to any
Affiliate except to the Seller and its wholly-owned subsidiaries in
the ordinary course of business;
(l) breached, nor received in writing any claim or threat
that it has breached, any of the terms or conditions of any
Commitment;
(m) waived any material right under any Commitment;
(n) suffered any theft, casualty, loss or destruction of
any of its assets where the uninsured portion of the cost and expense
of the repair, replacement or reconstruction of such assets would be
equal to or greater than $300,000;
(o) declared, set aside, made or paid any dividend or
other distribution in respect of its capital stock;
(p) redeemed, purchased or otherwise acquired, sold,
granted or otherwise disposed of, directly or indirectly, any of its
capital stock or securities or any rights to acquire such capital
stock or securities, or agreed to change terms and conditions of any
such rights; or
(q) entered into any agreement or commitment to do any of
the things described in any of the preceding subsections (a) through
(p).
Section 4.15 Title to Assets. (a) The Company has good
and indefeasible title to all of the assets and properties
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used in the business of the Company, including, without limitation, the assets
reflected on the Financial Statements, other than (i) assets disposed of since
the date of the Financial Statements in the ordinary course of business, (ii)
assets being leased under capitalized or operating leases, (iii) the Properties
(all representations with respect to which appear in Sections 4.16 and 4.17),
(iv) the assets described in the second paragraph of Schedule 4.15, (v) the
Proprietary Rights to be assigned and licensed to the Purchaser pursuant to
Sections 9.9 and 9.10, and (vi) certain non-exclusive intangible property
rights of the Company. Except for Liens disclosed on Schedule 4.15, which
Liens will be removed prior to the Closing, all such assets and properties are
free of any Liens, except for mechanics' and materialman's liens and statutory
liens imposed on milk supplies and other raw materials arising in the ordinary
course of business.
(b) The assets and properties of the Company that will be
conveyed to the Purchaser as a consequence of the consummation of the Merger,
together with the Proprietary Rights that will be assigned and licensed to the
Purchaser pursuant to Sections 9.9 and 9.10, constitute all assets and
properties used in the operation of the business as presently conducted other
than those assets described in the second paragraph of Schedule 4.15.
Section 4.16 Real Property-Fee. (a) Schedule 4.16 sets
forth a summary description of the real property owned in fee by the Company,
including a list of agreements with respect to such real property to which the
Company is a party or by which such real property is bound. The Company has
good and indefeasible title to the real property set forth in Schedule 4.16,
subject only to: (i) Liens that will be removed prior to the Closing; and (ii)
any defects, exceptions or other matters acceptable to the Purchaser, Liens for
property taxes not yet due and payable and any recorded easements, covenants
and other encumbrances or restrictions (other than mortgages, deeds of trusts
and security interests) that do not materially impair the value or materially
interfere with the use of the property in the conduct of the business as it is
currently conducted (collectively, "Permitted Liens"). The Company owns no
real property not listed on Schedule 4.16 and does not lease any real property
not listed on Schedule 4.17.
(b) The real properties described in Schedule 4.16 each
have sufficient access to public roads and are supplied with utilities,
including electricity, sanitary and storm sewers, potable water, natural gas
and other utilities to the extent used in the operation of the business
conducted thereon to permit the
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operation of the business as it is currently conducted. The Company has
received no notice of termination of such access or utilities.
(c) Except as set forth in Schedule 4.16, each of the
real properties (including buildings and improvements located thereon)
described in Schedule 4.16 and the Company's occupancy, operation and use
thereof conform in all material respects to all applicable subdivisions,
building codes, health, safety, setback and zoning ordinances, and other laws,
regulations and requirements applicable to the current occupancy, use and
operation thereof, except where the failure to so comply would not interfere
with the present use of any such real property.
(d) Neither the Seller nor the Company has received any
notice of any violation of any law, ordinance, rule or regulation referred to
in (c) above, or any notice of the existence of any condemnation or eminent
domain proceeding with respect to any real property described in Schedule 4.16.
(e) Except as set forth on Schedule 4.16 hereto, there
are no leases, subleases, licenses, concessions or other agreements, written or
oral, granting to any party or parties the right of use or occupancy of any
portion of the real property described in Schedule 4.16. There are no options
or rights of first refusal to purchase any of such real properties, or any
portion thereof or interest therein. There are no parties other than the
Company in possession of any such real properties.
Section 4.17 Real Property-Leased. Schedule 4.17 contains
a complete list and a brief description of all the real property leased by the
Company. With respect to each written or oral real property lease listed in
Schedule 4.17: (i) each has been executed (in the case of written leases) and
is in full force and effect; (ii) the Company is not in material breach or
default and no event has occurred which, with notice or lapse of time, would
constitute such a material breach or default or permit termination,
modification or acceleration under such lease; (iii) subject to the obtaining
of any necessary consents, each such lease will continue to be binding against
the landlord in accordance with the terms following the Closing, except as may
be limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally or the availability of equitable remedies; and (iv)
no party to any such lease has repudiated any provision thereof. The Company's
occupancy, operation and use of each such leased property conform in all
material respects to all applicable subdivisions, building codes, health,
safety, setback and zoning ordinances, and other laws,
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regulations and requirements applicable to the current occupancy, operation and
use thereof.
Section 4.18 Condition of Assets. The assets and
properties utilized by the Company, whether owned or leased, are in good
operating condition (reasonable wear and tear excepted), and are suitable for
the purposes for which they are presently being used.
Section 4.19 Accounts Receivable. The accounts receivable
of the Company reflected on the Financial Statements, including the Transferred
Receivables, (i) have arisen in the ordinary course of business, and (ii)
represent or will represent valid and bona fide obligations due to the Company.
Section 4.20 Commitments. Except as set forth in Schedule
4.20, the Company is not a party to, nor are its properties, assets or business
bound by, any Commitment. There is no existing default, event of default or
event, occurrence or act that, with the giving of notice or lapse of time or
both, would constitute a default, or result in a remedial or penalty provision
being invoked, with respect to the Commitments identified on Schedule 4.20.
The Commitments are in full force and effect and are valid and enforceable
obligations of the parties thereto in accordance with their terms except (i) as
set forth on Schedule 4.20, and (ii) as such enforcement may be limited by
applicable bankruptcy, insolvency or similar laws affecting creditors' rights
generally or the application of general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at law).
Except as described in Schedule 4.20, the Company has not received or given
notice of any plan or intention of any party to any Commitment to exercise any
right to cancel, terminate or amend any Commitment in any respect.
Section 4.21 Relationship with Customers and Suppliers.
Schedule 4.21 lists the ten (10) largest customers of the Company as determined
by the dollar volume of sales for the year ended December 31, 1993 together
with such sales volumes. Schedule 4.21 lists the six (6) largest suppliers of
the Company as determined by the dollar volume of purchases for the year ended
December 31, 1993 together with such purchase volumes. In the last twelve (12)
months no such supplier or customer of the Company has notified the Company in
writing or otherwise that it has cancelled or otherwise terminated, or
threatened in writing or otherwise to cancel or otherwise terminate, its
relationship with the Company nor, to the Seller's knowledge, has there been
any material dispute with any such customer or supplier.
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Section 4.22 Insurance. Schedule 4.22 attached hereto
lists and briefly describes each insurance policy maintained by the Seller or
the Company which relates to the properties, assets or businesses of the
Company. All such insurance policies are in full force and effect, and neither
the Seller nor the Company is in default with respect to its obligations under
any of such insurance policies and neither the Seller nor the Company has ever
received any notice of cancellation of any insurance policy maintained by it or
been denied insurance coverage.
Section 4.23 Patents, Trademarks and Copyrights. (a) Set
forth in Schedule 4.23 hereto is a list of the following (collectively referred
to as the "Proprietary Rights"):
(i) Each trademark, trade name, brand name, service mark
or other trade designation owned or licensed by or to the Company and
each patent, copyright and similar intellectual property owned or
licensed to or by the Company and each license, royalty, assignment or
other similar agreement and all registrations and applications
relating to the foregoing; and
(ii) Each agreement relating to technology, know-how or
processes that the Company is licensed or authorized to use by others,
or which it licenses or authorizes others to use.
(b) Except as described in Schedule 4.23, the Company
owns, or has or will have at the Closing the right to use the Proprietary
Rights without infringing or violating the rights of any third parties. None
of the registrations and applications set forth in Schedule 4.23 are in the
Company's name. Except as set forth in Schedule 4.23, no consent of third
parties will be required for the use thereof by the Purchaser upon consummation
of the transactions contemplated by this Agreement. No claim has been asserted
by any person against the Seller or the Company to the ownership of or right to
use any Proprietary Right or other such intellectual property or challenging
the validity or effectiveness of any such license or agreement. None of the
Proprietary Rights has been cancelled or otherwise terminated and, if
applicable, each has been duly issued or filed.
(c) Except as described in Schedule 4.23, the Seller has
no knowledge of any claim that any product, activity or operation of the
Company infringes upon or involves, or has resulted in the infringement of, any
proprietary right of any other person, corporation or other entity; and no
proceedings have been instituted, are pending or, to the knowledge of the
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<PAGE> 32
Seller, are threatened which challenge the rights of the Company with respect
thereto.
Section 4.24 Taxes. (a) The Seller and the Company have
timely filed all Returns required to be filed by or with respect to the Company
on or prior to the date hereof. Such Returns are true and complete in all
material respects. Schedule 4.24 attached hereto sets forth all material
Returns currently under extension.
(b) The Company has (i) timely paid (or there has been
paid on its behalf) all Taxes that are due, or claimed or asserted by any
taxing authority to be due, from or with respect to the Company for the periods
prior to the date hereof or (ii) provided for all material Taxes in its
Financial Statements in accordance with generally accepted accounting
principles, including any Taxes that may be owing under any tax sharing
agreements.
(c) Neither the Seller nor the Company is a party to any
pending action, proceeding, or investigation for any alleged Tax deficiency for
which the Company or any of its assets would be liable, nor, to the best of the
Seller's knowledge, has any action, proceeding or investigation been threatened
by any governmental authority for the assessment or collection of any Taxes for
which the Company or any of its assets would be liable.
(d) Except as set forth on Schedule 4.24, no Returns
required to be filed by or on behalf of the Company (including any consolidated
returns for the group of which the Company is a member) for any taxable year
are currently being examined by the Internal Revenue Service ("IRS") or any
other state, local or foreign taxing authority or agency. Schedule 4.24
attached hereto lists all Returns that have been examined by the IRS for which
the applicable statute of limitations has not expired.
(e) There are no outstanding agreements or waivers that
would extend the statutory period in which a taxing authority may assess or
collect a tax against the Company or any of its assets.
(f) The Company has paid or has made adequate provision
for and will pay when due to the proper taxing authorities all withholding
amounts required to be withheld by or on behalf of the Company with respect to
all Taxes including, without limitation, income, unemployment, social security
and other similar tax withholding for all types of compensation.
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(g) The Company is not a party to or bound by (nor will
the Company become a party to or bound by) any tax indemnity, tax sharing or
tax allocation agreement, or if the Company is a party to or bound by any such
tax indemnity, tax sharing, or tax allocation agreement, as of the Closing Date
the Company shall not be a party to and shall not be bound by and shall have no
further obligation with respect to any tax indemnity, tax sharing or tax
allocation agreement.
(h) None of the assets of the Company is "tax-exempt use
property" within the meaning of section 168(h) of the Code.
(i) The Company is not a party to any agreement,
contract, arrangement or plan that has resulted or would result, separately or
in the aggregate, in the payment on or before the Closing Date of any "excess
parachute payments" within the meaning of section 280G of the Code.
(j) None of the assets of the Company directly or
indirectly secures any debt, the interest on which is tax- exempt under Section
103(a) of the Code.
(k) Except for the group of which the Company is
presently a member, the Company has never been a member of an affiliated group
of corporations within the meaning of Section 1504 of the Code.
(l) The Company is not a party to any joint venture,
partnership, or other arrangement or contract which could be treated as a
partnership for federal income tax purposes.
(m) Each of the statements in this Section 4.24 is
modified by any information disclosed in Schedule 4.24 attached hereto.
Section 4.25 Labor Matters. Except as described in
Schedule 4.25, the Company (i) is not a party to any collective bargaining
agreement, (ii) has not experienced and is not experiencing, and the Seller
does not know of any threatened strike, work stoppage, slowdown or other
material interference with or impairment of the business of the Company by
labor, (iii) is neither a party to nor the subject of an unfair labor practice
complaint or any other proceeding pending or, to the best knowledge of the
Seller, threatened before the National Labor Relations Board, (iv) is not the
subject of, nor does the Seller know of, any current or contemplated union
organization efforts or representation attempts or proceedings, or requests for
negotiations for any representation or any labor contract
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relating to any employees of the Company and (v) is neither a party to nor the
subject of a formal discrimination complaint or charge (relating to sex, age,
race, national origin, handicap or veteran status) before any federal, state or
municipal agency or authority.
Section 4.26 Compliance with Laws. (a) The Company has
complied in all material respects with all Legal Requirements regarding
pricing, illegal trade practices and antitrust activities.
(b) Except as set forth on Schedule 4.26(b) attached
hereto: (i) the Company has not deposited, stored or buried at, upon or under
any of the Real Property described in Schedule 4.16, the leased property
described on Schedule 4.17 (together the "Occupied Properties") or any other
site any Hazardous Substances (as herein defined) other than those used, stored
or disposed of in the ordinary course of business and reasonably necessary to
conduct its business in the ordinary course, the transportation, use, storage
and disposal of which comply in all material respects with applicable
Environmental Laws (as hereinafter defined); (ii) there are no citations,
notices, claims or proceedings pending or to the Seller's knowledge threatened,
against the Company, before any federal or state environmental protection
board, agency or authority or before any court alleging violations of law
involving Hazardous Substances or directly arising out of their use, storage,
transportation or disposal by the Company; (iii) neither the Seller nor the
Company has received any notice from any federal or state environmental
protection board, agency or authority or other Person of any violation or
alleged violation of any Environmental Law requiring the removal or cleanup of
any Hazardous Substance from any of the Occupied Properties or any other site,
or advising the Seller or the Company of any search or investigation with
respect thereto; (iv) neither the Seller nor the Company has discovered any
conditions on real property adjacent to or in the vicinity of the Occupied
Properties which cause the Occupied Properties to be subject to restrictions on
occupancy under any Environmental Laws; (v) the Company has obtained and is in
material compliance with all terms and conditions of all licenses, orders,
permits or other similar authorizations from all governmental authorities or
from any other Person that are required under any Environmental Laws; (vi) the
Company has otherwise complied and is currently complying with all
Environmental Laws applicable to its operations, assets and business; and (vii)
none of the Occupied Properties is on any federal or state "Superfund" list, is
subject to any federal or state government or private party environmental lien
or to the best of the Seller's knowledge has
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ever been the site of any activity that would violate any Environmental Law.
As used in this Section 4.26, "Hazardous Substances" shall mean flammable
explosives, radioactive materials, hazardous, toxic or dangerous materials,
substances or wastes, petroleum or waste oil products, PCB's, radon asbestos
and urea formaldehyde. "Environmental Law(s)" shall mean all federal, state
and local statutes, laws, ordinances, decrees, orders, rules and regulations,
to the extent binding on the Company relating in any way to pollution or
protection of human health or the environment, including without limitation
those relating to ambient air, surface water, ground water, land surface, or
subsurface strata, and those relating to emissions, discharges, releases or
threatened release of any Hazardous Substances, or otherwise relating to the
manufacture, storage, generation, clean-up, disposal, transportation or
handling of Hazardous Substances.
(c) Except as described in Schedule 4.26(c), the Company
has complied in all material respects with all Legal Requirements applicable to
its business including, without limitation, (i) those designated to protect
health and/or safety, (ii) those regarding employment and employment practices
or terms and conditions of employment, (iii) those regarding illegal payments
or contributions to any government or governmental agency or any employee or
official thereof or any political party or candidate; or (iv) commercial
bribery (provided, however, that any representations and warranties regarding
the specific matters set forth in Sections 4.26(a) and 4.26(b) are set forth in
such Sections).
(d) The Company possesses all material governmental
permits, approvals, licenses and similar authorizations necessary to its
business as currently conducted.
Section 4.27 Brokers' or Finders' Fees. Neither the
Seller nor the Company has incurred any liability to any broker, finder or
agent for any brokerage fees, finder's fees or commissions with respect to the
transactions contemplated by this Agreement for which the Purchaser would be
responsible.
Section 4.28 Inventory. The Inventory of the Company
consists of items of a quality and quantity usable or saleable in the ordinary
course of business for the purpose for which it is intended, and conforms with
all applicable Legal Requirements, the quality, content, packaging, labeling
and other requirements of any agreement under which it is produced and with
industry standards and practices. The Company has performed, in the ordinary
course of business, regular tests in accordance with
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industry practice to determine that its products comply with all applicable
Legal Requirements.
Section 4.29 Product Warranties. Schedule 4.29 attached
hereto sets forth all recalls and withdrawals of the Company's products during
the past three years and a description of all product warranties and guarantees
provided by the Company.
Section 4.30 Guarantees. Schedule 4.30 attached hereto
lists all (i) guarantees made by the Seller and provided in order to support
obligations of the Company to trade creditors and other Persons, (ii) letters
of credit of the Seller that support obligations relating to the Company or its
business and (iii) guarantees made by the Company, other than with respect to
products sold or distributed by the Company.
Section 4.31 Transactions with Affiliates. Except (i) as
set forth in Schedule 4.31 hereto, (ii) intra-company trade payables and (iii)
the contemplated distribution of the Preferred Stock by the Company to the
Seller, the Company has not engaged in any material transactions with any of
its Affiliates and there is no agreement between the Company and any of its
Affiliates that cannot be terminated by the Company on not more than 30 days'
notice without penalty.
Section 4.32 Section 1445 of the Code. The Company is not
a foreign person for purposes of Section 1445 of the Code.
Section 4.33 Employees. Schedule 4.33 attached hereto
contains a true and complete list of all of the current employees of the
Company, their current respective positions or job classifications, their
current respective wage scales or salaries, as the case may be, and any accrued
vacation or sick pay due to each of such employees. The Seller will update
such list (as of a date no more than one week prior to the Closing Date) and
deliver same to the Purchaser at or prior to the Closing.
Section 4.34 Interests in Competitors. Except as set
forth in Schedule 4.34 hereto, neither the Seller nor any subsidiary of the
Seller owns, directly or indirectly, an interest (but not including any
interest of less than five percent in any public company) in any Person that is
a customer, supplier or landlord of the Company, that otherwise has business
dealings with the Company or that is engaged in the manufacture and/or
distribution of dairy products (including frozen products and novelties),
cultured milk products or fruit and other juices in the State of Florida.
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Section 4.35 Closing Date. All of the representations and
warranties of the Seller contained in this Agreement and all information
delivered in any schedule, attachment or exhibit hereto or in any writing
delivered to the Purchaser are true, complete and correct in all material
respects on the date of this Agreement and will be true, complete and correct
in all material respects as if made on the Closing Date, except to the extent
that the Seller has advised the Purchaser in writing prior to the Closing.
Section 4.36 Knowledge. As used in this Article IV, the
term "to the Seller's knowledge" shall mean the actual knowledge of the persons
listed on Schedule 4.36 hereto.
ARTICLE V
Employees
(a) The Purchaser shall employ immediately after the
Effective Time all of the Company's employees at a salary or wage rate not less
than the rate in effect for such individual on the Closing Date. Nothing in
this Agreement shall diminish the right of Purchaser, subject to applicable
laws, at any time, to dismiss any or all of such employees with or without
cause and to change the terms and conditions of employment of any or all of
such employees; provided, however, that Purchaser covenants and agrees to
indemnify and hold harmless the Seller for any and all severance payments
arising out of the termination of any of such employees terminated following
the Closing Date. The Purchaser shall provide to all employees of the Company
as of the Closing Date all vacation benefits and other benefits reflected as an
accrued expense on the Final Balance Sheet.
(b) The Seller shall, subject to the consummation of the
transactions contemplated by this Agreement, take whatever action is necessary
or appropriate to terminate, as of the Closing Date, the participation of the
Company's employees in each Plan listed on Schedule 4.13(a).
(c) After the Closing, the Purchaser will cause
management employees of the Purchaser to provide reasonable assistance to the
Seller in administering worker's compensation, disability and other insurance
claims. The Seller will reimburse the Purchaser for all reasonable
out-of-pocket expenses incurred by the Purchaser in connection with the
Purchaser's rendering assistance to the Seller on such matters. After the
Closing, the Purchaser will maintain a "light-duty" program comparable to the
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light-duty program maintained by the Company prior to the Closing and will
comply with all applicable Legal Requirements regarding employees on leave as
of the Closing Date due to disability or as a result of job-related injury.
(d) For a period of one year after the Closing Date,
neither the Purchaser nor the Seller will hire any employee employed by the
other on the Closing Date.
ARTICLE VI
Covenants of the Purchaser
The Purchaser agrees that on or prior to or after the Closing,
as applicable:
Section 6.1 Corporate Action and Consents. The Purchaser
will take all necessary partnership and other action and will use its
Reasonable Efforts to obtain the consent required under any consents and
applicable approvals, including approvals of any regulatory authority, required
to be obtained by the Purchaser to enable it to carry out the transactions
contemplated by this Agreement and the other agreements contemplated hereby to
be entered into by the Purchaser and to enter into this Agreement and such
other agreements contemplated hereby.
Section 6.2 Reasonable Efforts to Effectuate
Transactions. The Purchaser agrees at all times to use its Reasonable Efforts
to take such actions (to the extent such actions are within the power of the
Purchaser) and execute such documents, applications and instruments, and to
assist others to take such actions, as may be necessary or advisable to ensure
that all conditions precedent to the obligations of the Seller hereunder are
fulfilled at or prior to the Closing and to use its Reasonable Efforts to
ensure that, as of the Closing Date, the Purchaser will not be subject to any
material contractual, regulatory or other restriction that would prohibit or
delay the Closing provided in this Agreement.
Section 6.3 Status of Representations, Warranties and
Conditions Before the Closing. The Purchaser shall use its Reasonable Efforts
to cause its representations and warranties contained in this Agreement or in
any schedule attached hereto to be true and correct on and as of the Closing
Date in all material respects. Prior to the Closing, the Purchaser shall
promptly notify the Seller in writing if (a) any representation or
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warranty contained in this Agreement is discovered to be or becomes untrue, (b)
the Purchaser fails to perform or comply with any of its covenants or
agreements contained in this Agreement, or (c) it is reasonably expected that
the Purchaser will be unable to perform or comply with any of its covenants or
agreements contained in this Agreement.
Section 6.4 Cooperation. The Purchaser will cooperate
with the Seller in supplying such information as may be reasonably requested by
the Seller in connection with obtaining consents and approvals to the
transactions contemplated by this Agreement and to enter into and perform each
of the other agreements contemplated hereby.
Section 6.5 Confidentiality. For a period of five years
from the date hereof, the Purchaser shall, and shall cause its employees,
agents and other representatives to, hold in confidence all Confidential
Information. The Purchaser shall not, and shall use its Reasonable Efforts to
ensure that any other Person that has access to or has obtained Confidential
Information through the Purchaser shall not, disclose the same to any Person
except to the Purchaser's financing sources in connection with this Agreement;
provided, that any such other Person shall be informed of the confidential
nature thereof and the restrictions in this Agreement. For purposes hereof,
"Confidential Information" means all material information of any kind obtained,
directly or indirectly, from the Seller or any of its employees, agents,
accountants, counsel or other representatives concerning the Seller, its
business, its Affiliates, their respective businesses, the Company or its
business, except information which constitutes public information, including,
without limitation, any information publicly filed with the Securities and
Exchange Commission. The provisions of this Section 6.5 shall terminate and
become inoperative with respect to information concerning the Company or its
business if the Closing occurs, and shall not apply to any portion of the other
Confidential Information which (a) becomes generally available to the public
other than as a result of a disclosure by the Purchaser, (b) was or is made
available to the Purchaser on a non-confidential basis by a Person not
affiliated with or acting on behalf of the Seller either before or after its
disclosure by the Seller to the Purchaser or (c) the Purchaser becomes legally
obligated to disclose other than due to voluntary actions by the Purchaser (in
which case the Purchaser shall nevertheless use its Reasonable Efforts to
obtain confidential treatment for such information). Upon termination of this
Agreement without the occurrence of the Closing, the Purchaser shall (and shall
cause its employees, agents and other
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representatives to) return any originals and all copies of any documents or
materials comprising a part of or containing any Confidential Information.
Section 6.6 Interference with Relationships. From the
date hereof until the Closing Date, the Purchaser will not take any action or
engage in any practice calculated or designed to impair the relationships of
the Seller and the Company with their customers, suppliers or others having
business dealings with any of them.
Section 6.7 Compliance with Laws. The Purchaser will
comply with all applicable laws, rules and regulations of all governmental
authorities including, without limitation, the HSR Act, in connection with its
execution, delivery and performance of this Agreement and each other agreement
contemplated hereby to be entered into by the Purchaser and the Purchaser's
consummation and performance of the transactions contemplated hereby and
thereby. In the event that the Purchaser determines that no filing is required
under the HSR Act, the Purchaser will provide a certificate to the Seller at
the Closing certifying as to such determination and setting forth the basis for
such determination. The Purchaser agrees to (i) determine its acquisition
structure as soon as practicable, (ii) make any required filing under the HSR
Act as soon as practicable thereafter and (iii) request early termination of
the waiting period under the HSR Act.
Section 6.8 Consents. The Purchaser will use its
Reasonable Efforts to assist the Seller (when necessary) in obtaining the
consents referred to in Schedule 7.1 and any other consents and applicable
approvals, including approvals of any regulatory authority, required to enable
the parties to (i) enter into this Agreement and the other agreements
contemplated hereby and (ii) consummate the transactions contemplated by this
Agreement and the other agreements contemplated hereby.
Section 6.9 Financing. The Purchaser will use Reasonable
Efforts to obtain the financing necessary to complete the transactions
contemplated hereby. The Purchaser will keep the Seller informed of its
efforts to obtain such financing, furnish to the Seller copies of any
commitment letters or similar indications of terms for such financing and
notify the Seller immediately if the Purchaser determines that it will not be
able to obtain such financing.
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Section 6.10 Insurance. After the Closing, the Purchaser
shall obtain and maintain Florida Storage Tank Third Party Liability and
Corrective Action Insurance provided the Purchaser can obtain such insurance at
a reasonable cost.
ARTICLE VII
Covenants of the Seller
The Seller agrees that on or prior to or after the Closing, as
applicable:
Section 7.1 Corporate Action and Consents. The Seller
will take all necessary corporate and other action and will use its Reasonable
Efforts to obtain the consents referred to in Schedule 7.1 (which schedule
shall be delivered to the Seller no later than ten (10) days from the date
hereof and shall be reasonably acceptable to the Seller) and any other consents
and applicable approvals, including approvals of any regulatory authority,
required to be obtained by the Seller or the Company to enable them to carry
out the transactions contemplated by this Agreement and the other agreements
contemplated hereby to be entered into by the Seller or the Company and to
enter into this Agreement and such other agreements contemplated hereby.
Section 7.2 Reasonable Efforts to Effectuate
Transactions. The Seller agrees at all times to use its Reasonable Efforts to
take such actions (to the extent such actions are within the power of the
Seller) and execute such documents, applications and instruments, and to assist
others to take such actions, as may be necessary or advisable to ensure that
all conditions precedent to the obligations of the Purchaser hereunder are
fulfilled at or prior to the Closing and to use its Reasonable Efforts to
ensure that, as of the Closing Date, the Seller will not be subject to any
material contractual, regulatory or other restriction that would prohibit or
delay the Closing provided in this Agreement.
Section 7.3 Status of Representations, Warranties and
Conditions Before the Closing. The Seller shall use its Reasonable Efforts to
cause its representations and warranties contained in this Agreement or in any
schedule attached hereto to be true and correct on and as of the Closing Date
in all material respects. Prior to the Closing, the Seller shall promptly
notify the Purchaser (a) if any representation or warranty contained in this
Agreement is discovered to be or becomes untrue or (b) if the Seller falls to
perform or comply with any of its covenants
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or agreements contained in this Agreement or it is reasonably expected that the
Seller will be unable to perform or comply with any of its covenants or
agreements contained in this Agreement.
Section 7.4 Confidentiality. For a period of five years
from the Closing Date, the Seller shall, and shall cause its employees, agents
and other representatives to, hold in confidence all Confidential Information.
The Seller shall not, and shall use its Reasonable Efforts to ensure that any
other Person that has access to or has obtained Confidential Information
through the Seller shall not, disclose the same to any Person. For purposes
hereof, "Confidential Information" means all material information of any kind
concerning the Company or its business except information which constitutes
public information, including, without limitation, any information publicly
filed with the Securities and Exchange Commission. The provisions of this
Section 7.4 shall terminate and become inoperative with respect to information
which (i) becomes generally available to the public other than as a result of a
disclosure by the Seller, (ii) was or is made available to the Seller following
the Closing on a non-confidential basis by a Person not affiliated with or
acting on behalf of the Purchaser or (iii) the Seller becomes legally obligated
to disclose other than due to voluntary actions by the Seller (in which case
the Seller shall nevertheless use its Reasonable Efforts to obtain confidential
treatment for such information).
Section 7.5 Access to Information and Employees. From
and after the execution and delivery of this Agreement and until the Closing
Date, the Seller will give representatives of the Purchaser full access, during
normal business hours and upon reasonable notice, to (i) the Facilities, which
shall include, without limitation, the right to conduct such environmental
sampling or testing as the Purchaser or its representatives deem to be
reasonably necessary, (ii) the books, records, agreements and other documents
of the Seller and the Company relating directly to the Company, and furnish
such representatives with such other information relating to the Company as the
Purchaser may reasonably request and (iii) all employees of the Company upon
reasonable approval of the Seller.
Section 7.6 Business. Except for the transfer by the
Company to the Issuer of the Transferred Receivables as consideration for the
Preferred Stock and the distribution of the Preferred Stock by the Company to
the Seller, until the Closing, the Seller shall operate the Company in the
ordinary course and consistent with past practice and not introduce any new
method of management or operation to the Company. Without limiting the
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foregoing, the Seller shall not, unless contemplated by this Agreement or the
other agreements contemplated hereby or approved by the Purchaser, take any
action to and shall prevent the Company from taking any action to:
(a) change in any respect the manner, scope or operation
of the Company as it has historically been conducted,
(b) except for sales of inventory in the ordinary course
of business, the transfer by the Company to the Issuer of the
Transferred Receivables as consideration for the Preferred Stock and
the distribution of the Preferred Stock by the Company to the Seller,
sell or commit to sell or distribute any properties or assets of the
Company having a net book value (as reflected in the Financial
Statements) or a fair market value of more than $25,000.00 in a single
transaction or series of related transactions,
(c) sell, assign, license or dispose of any rights with
respect to the Proprietary Rights,
(d) enter into any material contract, agreement,
commitment or transaction with respect to the Company or its assets,
(e) default in the performance of any term or condition
of any Commitment,
(f) declare or pay any dividend or distribution on the
outstanding securities of the Company except in the ordinary course of
business in connection with the Seller's cash management programs or
make any payments to Affiliates of the Company other than in the
ordinary course of business,
(g) make any loans, other than advances to employees of
the Company for travel and other expenses in the ordinary course of
business,
(h) effect any material change in the methods, principles
or practices used in the collection of the Company's accounts
receivable,
(i) with respect to the Company, enter into any
agreements, take any action or engage in any activity outside of the
ordinary course of business or inconsistent with the transactions
contemplated by this Agreement, the
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Seller's representations and warranties herein and the other agreements
contemplated hereby, or
(j) replace any cash deposit with a letter of credit,
bond or other surety.
Section 7.7 Affirmative Actions. Prior to the Closing,
the Seller shall and shall cause the Company to:
(a) use its Reasonable Efforts to maintain in full force
and effect, in accordance with past custom and practice, the existence
and effectiveness of all insurance policies relating to the Company,
(b) use its Reasonable Efforts to maintain good relations
with the suppliers, customers, landlords and employees of the Company
in accordance with past custom and practice,
(c) promptly pay, prior to delinquency, any and all Taxes
and other obligations which become due and payable with respect to the
ownership of the Company's properties or the operation of the
Company's business on or prior to the Closing in accordance with past
custom and practice,
(d) maintain its books and records in the ordinary course
of the Company's business,
(e) make capital expenditures in the ordinary course of
the Company's business, consistent with past practices,
(f) use its Reasonable Efforts to maintain all bonds,
letters of credit and letters of guarantee in the ordinary course of
the Company's business, consistent with past practices,
(g) except for the transfer by the Company to the Issuer
of the Transferred Receivables as consideration for the Preferred
Stock and the distribution of the Preferred Stock by the Company to
the Seller, use its Reasonable Efforts to maintain its assets and make
replacements in the ordinary course of the Company's business,
consistent with past practices, and
(h) do all things reasonably necessary to keep in full
force and effect the corporate existence of the Company including its
authority to conduct its business in Florida
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and keep in full force and effect all material rights and franchises
relating to the business of the Company.
Section 7.8 Material Change. Prior to the Closing, the
Seller shall promptly inform the Purchaser in writing of any change, condition
or event that has or could reasonably be expected to have a Material Adverse
Effect on the Company.
Section 7.9 Employee Compensation. Prior to the Closing,
except with the Purchaser's prior written consent and except for increases
granted in the ordinary course of business consistent with historical practices
of the Company, the Company will neither make nor agree to make any increase in
the compensation or rate of compensation payable or to become payable to the
directors, officers or employees of the Company, and will not pay, agree to pay
or set aside any bonus, profit sharing, retirement, insurance, death,
severance, fringe benefit or other extraordinary or indirect compensation to,
for or on behalf of any of such directors, officers or employees other than as
required by presently existing pension, profit sharing, bonus and similar
benefit plans or policies as presently constituted, and no agreement, policy or
plan other than those now in effect shall be adopted or committed for.
Section 7.10 Capital Assets; Payments of Liabilities.
Except with the Purchaser's prior written consent, or as otherwise contemplated
by this Agreement, the Company, will not acquire or dispose of any capital
asset having a net book value of $25,000 or more, nor will the Company
discharge or satisfy any lien or encumbrance or pay or perform any obligation
or liability with respect to the Company other than (i) liabilities and
obligations reflected in the Financial Statements, and (ii) current liabilities
and obligations incurred in the usual and ordinary course of business since
December 31, 1993, and, in either such case, only as required by the express
terms of the agreement or other instrument pursuant to which the obligation or
liability was incurred.
Section 7.11 Compliance with Laws. The Seller will, and
will cause the Company to, prior to the Closing, comply with all applicable
laws, rules and regulations of all governmental authorities, including, without
limitation, the HSR Act, in connection with the Seller's or the Company's, as
the case may be, execution, delivery and performance of this Agreement and each
other agreement contemplated hereby to be entered into by the Seller or the
Company and their consummation and performance of the transactions contemplated
hereby and thereby.
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Section 7.12 Interference with Relationships. From the
date hereof, the Seller will not take any action or engage in any practice
calculated or designed to impair the relationships of the Company with its
customers, suppliers or others having business dealings with the Company.
Section 7.13 Consents. The Seller will use Reasonable
Efforts to assist the Purchaser (when necessary) in obtaining any consents and
applicable approvals, including approvals of any regulatory authority, required
to enable the parties to (i) enter this Agreement and the other agreements
contemplated by this Agreement and the other agreements contemplated hereby and
(ii) consummate the transactions contemplated by this Agreement and the
agreements contemplated hereby.
Section 7.14 Releases; Terminations. The Seller shall
cause the Company to be released and discharged from, and its assets and the
Shares to be released from, any and all deeds of trust, mortgages and security
interests securing indebtedness of the Company or the Seller, including without
limitation, indebtedness under the Second Amended and Restated Credit Agreement
dated as of May 4, 1992 of the Seller, as amended, and shall provide the
Purchaser with evidence thereof in form and substance reasonably satisfactory
to the Purchaser. The Seller and the Company shall execute an agreement
terminating the Company's obligations under the terms of the instruments,
agreements and arrangements listed on Schedule 4.31.
Section 7.15 Cooperation. The Seller will cooperate with
the Purchaser in supplying such information as may be reasonably requested by
the Purchaser in connection with obtaining consents and approvals to the
transactions contemplated by this Agreement, and to enter into and perform each
of the other agreements contemplated hereby.
Section 7.16 No Other Agreements. From and after the date
of this Agreement neither the Seller nor the Company will enter into any
agreement or understanding, or utilize any resources of the Seller or the
Company for due diligence by any third party other than the Purchaser, that
contemplates the sale of any material assets of the Company or the sale of any
stock of the Company (whether by issuance, merger or other transfer).
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Section 7.17 Loss, Theft, Damage or Destruction.
(a) The Seller shall or shall cause the Company to make
all ordinary course repairs to the Company's assets except for such assets not
currently used by the Company in its operation.
(b) If the Seller or the Company shall become aware of
any loss, theft, damage or destruction affecting any of the assets of the
Company in any material respect, the Seller shall promptly advise the Purchaser
of such loss, theft or casualty.
(c) If any of the assets of the Company are lost or
stolen or suffer any damage or destruction, the Seller shall or shall cause the
Company to commence and thereafter diligently pursue the repair, replacement or
reconstruction of such assets, provided that (i) if the uninsured portion of
the cost and expenses of such repair, replacement or reconstruction would be
less than $300,000, the Base Cash Amount will be reduced by the aggregate cost
and expenses of such repair, replacement or reconstruction (in which event
neither the Purchaser nor the Seller shall have the right to terminate this
Agreement as a result of such damage or destruction) and (ii) if the uninsured
portion of the costs and expenses of such repair, replacement or reconstruction
would be equal to or greater than $300,000, either the Purchaser or the Seller
may terminate this Agreement.
Section 7.18 Insured Claims. From and after the Closing
Date, the Seller covenants and agrees to discharge, and indemnify and hold
harmless the Purchaser from, all insurable claims with respect to workers'
compensation, disability, employee medical, products liability, automobile and
other general liability matters arising with respect to the operation of the
business of the Company through the Closing Date.
Section 7.19 Environmental Liabilities. Subsequent to the
Closing Date, the Seller covenants and agrees to remediate all conditions
described in Schedule 7.19 in accordance with applicable Legal Requirements and
will indemnify and hold the Purchaser harmless with respect to all costs of
such remediation.
Section 7.20 Litigation. Subsequent to the Closing Date,
the Seller covenants and agrees to indemnify and hold harmless the Purchaser
from all damages, losses, liabilities, obligations and expenses arising from
the litigation described on Schedule 4.5; provided, however, that the Purchaser
agrees to continue to purchase products from the plaintiff in the action noted
on Schedule 4.5 with an asterisk, to the extent reasonable
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under the circumstances, in order to mitigate the liability of the Seller
thereunder.
ARTICLE VIII
Conditions Precedent of the Seller
Except as may be waived in writing by the Seller, the
obligations of the Seller hereunder are subject to the fulfillment at or prior
to the Closing of each of the following conditions:
Section 8.1 Representations and Warranties. The
representations and warranties of the Purchaser contained herein shall be true
and correct in all material respects as of the Closing (except to the extent
such representations and warranties relate solely to an earlier date), subject
to any changes contemplated by this Agreement.
Section 8.2 Covenants. The Purchaser shall have
performed and complied in all materials respects with all covenants or
conditions required by this Agreement to be performed and complied with by it
at or prior to the Closing.
Section 8.3 Officer's Certificate. There shall have been
delivered to the Seller a certificate of the general partner of the Purchaser
to the effect that (i) all representations and warranties of the Purchaser
contained herein are true and correct as if made on the Closing Date, (ii) the
Purchaser has complied with and performed all covenants and conditions required
to be complied with or performed by it prior to the Closing, (iii) no action,
proceeding or investigation is pending for any injunction, writ, preliminary
restraining order or any order of any nature issued by any court or
governmental agency of competent jurisdiction or regulatory authority directing
that the transactions contemplated by this Agreement or any agreement
contemplated hereby not be consummated, and no such injunction, writ,
preliminary restraining order or such other order has been issued and is in
effect; and (iv) no suit, action or other proceeding is pending before any
court or governmental agency or regulatory authority in which it is sought to
obtain damages or other relief in connection with this Agreement or any of the
transactions contemplated hereby, and, to the best knowledge of the Purchaser,
no investigation that might eventuate in any such suit, action or proceeding is
pending.
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Section 8.4 Corporate Proceedings. All corporate
proceedings of the Purchaser taken or to be taken in connection with the
execution and delivery of this Agreement and the agreements contemplated hereby
to he entered into by the Purchaser and the transactions contemplated hereby
and thereby and all documents incident thereto, shall be in substance and form
reasonably satisfactory to the Seller and the Seller shall have received all
such counterpart originals or certified or other copies of such documents as
the Seller may reasonably request.
Section 8.5 Opinion. Counsel to the Purchaser shall have
delivered to the Seller its opinion, dated the Closing Date, in form and
substance reasonably satisfactory to the Seller.
Section 8.6 Proceedings. No action, proceeding or order
by any court or governmental body or agency shall have been threatened in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated by this Agreement.
Section 8.7 Governmental Approval. All governmental
filings, authorizations and approvals that are required for the consummation of
the transactions contemplated hereby will have been duly made and obtained on
terms and conditions reasonably satisfactory to the Seller, except for any such
filings, authorizations or approvals that would not be material and which are
customarily obtained after the consummation of transactions of this nature.
Section 8.8 Supply Agreement. The Purchaser shall have
executed and tendered to the Seller the Supply Agreement.
Section 8.9 Tax Matters Agreement. The Purchaser shall
have executed and tendered to the Seller the Tax Matters Agreement.
Section 8.10 Administrative Services Agreement. The
Purchaser shall have executed and tendered to the Seller the Administrative
Services Agreement.
Section 8.11 Preferred Stock. The Company shall have
distributed to the Seller a certificate or certificates representing the
Preferred Stock.
Section 8.12 Secretary's Certificate. There shall have
been delivered to the Seller a certificate of the general partner of the
Purchaser certifying as to: (i) the Purchaser's
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certificate of limited partnership, (ii) the Limited Partnership Agreement of
the Purchaser and (iii) resolutions of the Purchaser's general partner
approving this Agreement, the Merger and the transactions contemplated by this
Agreement, each as in effect on the Closing Date.
ARTICLE IX
Conditions Precedent of the Purchaser
Except as may be waived in writing by the Purchaser, the
obligations of the Purchaser hereunder are subject to fulfillment at or prior
to the Closing of each of the following conditions:
Section 9.1 Representations and Warranties. The
representations and warranties of the Seller contained herein shall be true and
correct in all material respects as of the Closing subject to any changes
contemplated by this Agreement.
Section 9.2 Covenants. The Seller shall have performed
and complied in all material respects with all covenants or conditions required
by this Agreement to be performed and complied with by it at or prior to the
Closing.
Section 9.3 Officer's Certificate. There shall have been
delivered to the Purchaser a certificate of the President or Vice President of
the Seller to the effect that (i) all representations and warranties of the
Seller contained herein are true and correct in all material respects as if
made on the Closing Date, (ii) the Seller has complied with and performed all
covenants and conditions required to be complied with or performed by it prior
to the Closing, (iii) no action, proceeding or investigation is pending for any
injunction, writ, preliminary restraining order or any order of any nature
issued by any court or governmental agency of competent jurisdiction or
regulatory authority directing that the transactions contemplated by this
Agreement or any agreement contemplated hereby not be consummated, and no such
injunction, writ, preliminary restraining order or such other order has been
issued and is in effect; and (iv) no suit, action or other proceeding is
pending before any court or governmental agency or regulatory authority in
which it is sought to obtain damages or other relief in connection with this
Agreement or any of the transactions contemplated hereby, and, to the best
knowledge of the Seller, no investigation that might eventuate in any such
suit, action or proceeding is pending.
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Section 9.4 Corporate Proceedings. All corporate
proceedings of the Seller and the Company taken or to be taken in connection
with the execution and delivery of this Agreement and the agreements
contemplated hereby to be entered into by the Seller or the Company and the
transactions contemplated hereby and thereby and all documents incident
thereto, shall be in substance and form reasonably satisfactory to the
Purchaser and the Purchaser shall have received all such counterpart originals
or certified or other copies of such documents as the Purchaser may reasonably
request.
Section 9.5 Opinion. Counsel to the Seller shall have
delivered to the Purchaser its opinion, dated the Closing Date, in form and
substance reasonably satisfactory to the Purchaser.
Section 9.6 Proceedings. No action, proceeding or order
by any court or governmental body or agency shall have been threatened in
writing, asserted, instituted or entered to restrain or prohibit the carrying
out of the transactions contemplated by this Agreement.
Section 9.7 Governmental Approval. All governmental
filings, authorizations and approvals that are required for the consummation of
the transactions contemplated hereby will have been duly made and obtained on
terms and conditions reasonably satisfactory to the Purchaser, except for any
such filings, authorizations or approvals that would not be material and which
are customarily obtained after the consummation of transactions of this nature.
Section 9.8 Supply Agreement. The Seller and the Company
shall have executed and tendered to the Purchaser the Supply Agreement.
Section 9.9 Trademark Assignment. The Seller and the
Company shall have executed and tendered to the Purchaser the Trademark
Assignment.
Section 9.10 Trademark Licenses. The Seller and the
Company shall have executed and tendered to the Purchaser the Trademark
Licenses.
Section 9.11 Additional Deliveries of the Seller. On the
Closing Date, in addition to those other deliveries made pursuant to this
Article IX, the Seller shall have delivered to the Purchaser all of the
following:
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(a) certificates representing the Shares, duly endorsed
for transfer or accompanied by duly executed stock powers, the minute
book, stock transfer records, corporate seal and other documents and
materials relating to the Company's corporate administration and
recordkeeping;
(b) a long-form certificate of good standing of the
Company, dated as of a date within seven days prior to the Closing
Date; and
(c) the certificate of existence of the Company issued by
the Secretary of State of the State of Delaware.
Section 9.12 Consents. The Seller shall have obtained and
delivered to the Purchaser all consents listed in Schedule 7.1 except as waived
in writing by the Purchaser.
Section 9.13 Non-Competition Agreement. The Seller and
the Company shall have executed and tendered to the Purchaser the
Non-Competition Agreement.
Section 9.14 Dairy Products Purchase Agreement. The
Company shall have obtained an assignment of the rights of the Seller under the
Dairy Products Purchase Agreement dated April 1, 1988 between the Seller and
The Southland Corporation as such rights relate to the business of the Company,
which assignment shall be consented to by The Southland Corporation and shall
be in form and substance satisfactory to the Purchaser.
Section 9.15 Tax Matters Agreement. The Seller and the
Company shall have executed and tendered to the Purchaser the Tax Matters
Agreement.
Section 9.16 Title Policies. The Purchaser shall have
obtained, at Purchaser's expense, commitments for policies of title insurance
from a title insurance company reasonably satisfactory to the Purchaser, in
form and amount reasonably acceptable to the Purchaser, insuring at regular
rates, good and indefeasible fee simple title to all owned real property listed
on Schedule 4.16 hereto, subject only to the Permitted Liens; provided,
however, that this condition shall be deemed to have been waived by the
Purchaser if the reason for its non-satisfaction is the Purchaser's failure to
tender the consideration for such commitments or policies for a reason other
than the failure of any of the other conditions in this Article IX. If the
Purchaser is not required by its financing sources to secure title insurance,
then the Purchaser shall have determined to its reasonable satisfaction that it
has received
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good and indefeasible title to the owned real property listed on Schedule 4.16
hereto subject only to the Permitted Liens.
Section 9.17 Administrative Services Agreement. The
Seller and the Company shall have executed and tendered to the Purchaser the
Administrative Services Agreement.
Section 9.18 Releases; Terminations. The Seller shall
have effected the releases required pursuant to Section 7.14. The Seller and
the Company shall have executed an agreement terminating the Company's
obligations under the terms of the instruments, agreements and arrangements
listed on Schedule 4.31.
Section 9.19 FIRPTA Affidavit. The Purchaser shall have
received from the Company an affidavit declaring that it is not a foreign
corporation, foreign partnership, foreign trust or foreign estate as those
terms are defined in the Code and regulations issued thereunder.
Section 9.20 Secretary's Certificate. There shall have
been delivered to the Purchaser a certificate of the Secretary of each of the
Seller and the Company certifying as to: (i) its certificate of incorporation,
(ii) its bylaws and (iii) resolutions approving this Agreement, the Merger and
the transactions contemplated by this Agreement, each as in effect on the
Closing Date.
ARTICLE X
Indemnity
Section 10.1. Survival of Representations and Warranties; Tax
Matters. (a) Except as expressly set forth in this Section 10.1, each of the
representations and warranties contained in this Agreement will survive the
Closing and remain in full force and effect for fifteen months after the
Closing Date. The representations and warranties of the Seller contained in
Sections 4.1, 4.2, 4.3, 4.4 and 4.8 will survive the Closing and remain in full
force and effect thereafter. The representations and warranties of the Seller
contained in Sections 4.15(a), 4.16(a) and 4.26(a) will survive the Closing and
remain in full force and effect for a period of three years after the Closing
Date. The representations and warranties of the Seller contained in Section
4.13 shall survive the Closing and remain in full force and effect for the
applicable statute of limitations. Any claim for indemnification with respect
to any
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of such matters which is not asserted by notice given as herein provided
relating thereto within such specified period of survival, if any, may not be
pursued and is hereby irrevocably waived after such time. Any such notice
shall specifically identify the particular breach and the underlying facts and
Indemnifiable Loss relating thereto.
(b) Notwithstanding anything to the contrary herein, all
indemnification relating to Taxes shall be governed exclusively by the Tax
Matters Agreement.
Section 10.2. Limitations on Liability. (a) For purposes of
this Agreement, (i) "Indemnity Payment" means any amount of Indemnifiable
Losses required to be paid pursuant to this Agreement, (ii) "Indemnitee" means
any person or entity entitled to indemnification under this Agreement, (iii)
"Indemnifying Party" means any person or entity required to provide
indemnification under this Agreement, (iv) "Indemnifiable Losses" means any and
all damages, losses, liabilities, obligations, costs and expenses (including
reasonable attorneys' fees), and any and all claims, demands or suits (by any
person or entity, including any governmental entity), in any such case provided
that the underlying liability or obligation giving rise thereto is not the
result of any action taken or omitted to be taken by the Indemnified Party, or
any affiliate thereof, and (v) "Third Party Claim" means any claim, action or
proceeding made or brought by any person or entity who or which is not a party
to this Agreement or an affiliate of a party to this Agreement.
(b) Reserved.
(c) Notwithstanding any other provision hereof or of any
applicable statute, law, ordinance, rule or regulation:
(i) no Indemnitee will be entitled to make a claim
against an Indemnifying Party under Sections 10.3(a)(i) or 10.3(b)(i)
unless and until the aggregate amount of Indemnifiable Losses incurred
by the Indemnitee in respect of any individual event or occurrence or
series of related events or occurrences giving rise to such
Indemnifiable Losses exceeds $10,000, in which event (subject to the
following provisions of this Section 10.2), such Indemnitee may assert
its right to indemnification hereunder to the full extent of its
Indemnifiable Losses in respect thereof; and
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(ii) no Indemnitee will be entitled to make a claim
against an Indemnifying Party under Sections 10.3(a)(i) or 10.3(b)(i)
unless and until the aggregate amount of claims which may be asserted
for Indemnifiable Losses under Section 10.3(a)(i) or 10.3(b)(i), as
applicable, exceeds $225,000, and then only to the extent of the
excess;
(d) Notwithstanding any other provisions of this
Agreement, the indemnification obligations of the Seller under Section
10.3(a)(i) and of the Purchaser under Section 10.3(b)(i) will not exceed
$4,500,000.
(e) As between the Seller, on the one hand, and the
Purchaser, on the other hand, the rights and obligations set forth in Articles
V and X and Sections 7.18, 7.19 and 7.20 will be the exclusive rights and
obligations with respect to this Agreement, the events giving rise to this
Agreement and the transactions provided for herein or contemplated thereby.
Without limiting the generality or effect of the foregoing, as a material
inducement to the other parties hereto entering into this Agreement, each of
the parties to this Agreement hereby waives, to the extent permitted by law,
any claim or cause of action which it otherwise might assert, including without
limitation under the common law or any other statute, law, ordinance, rule or
regulation, by reason of this Agreement, the events giving rise to this
Agreement and the transactions provided for herein or contemplated hereby or
thereby, except for claims or causes of action brought under and subject to the
terms and conditions of this Article X or, as applicable, Article V, Sections
7.18, 7.19 and 7.20; provided, however, in no event shall any claim based on
fraud be waived by the foregoing provision.
Section 10.3. Indemnification. (a) Subject to Sections 10.1,
10.2 and 10.4, the Seller will indemnify, defend and hold harmless the
Purchaser from and against any and all Indemnifiable Losses to the extent
relating to, resulting from or arising out of:
(i) any breach by the Seller of any of the
representations or warranties of the Seller contained in Sections 4.1
through 4.25 inclusive, Sections 4.26(b), (c) and (d), and Sections
4.27 through 4.36 inclusive, of this Agreement;
(ii) any breach by the Seller of any covenant of the
Seller contained in this Agreement; and
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(iii) any breach by the Seller of the representations and
warranties of the Seller contained in Section 4.26(a).
(b) Subject to Sections 10.1, 10.2 and 10.4, the
Purchaser will indemnify, defend and hold harmless the Seller from and against
any and all Indemnifiable Losses to the extent relating to, resulting from or
arising out of:
(i) any breach by the Purchaser of any of the
representations or warranties of the Purchaser contained in this
Agreement; and
(ii) any breach by the Purchaser of any covenant of the
Purchaser contained in this Agreement.
(c) The Seller and the Purchaser agree that any indemnity
payment hereunder shall be treated as an adjustment to the purchase price.
Section 10.4. Defense of Claims. (a) If any Indemnitee
receives notice of the assertion or commencement of any Third Party Claim
against such Indemnitee with respect to which an Indemnifying Party is
obligated to provide indemnification under this Agreement, the Indemnitee will
give such Indemnifying Party reasonably prompt written notice thereof, but in
any event not later than 30 calendar days after receipt of such notice of such
Third Party Claim; provided, however, that the failure by an Indemnitee to give
such notice within 30 calendar days shall not relieve the Indemnifying Party of
its obligations, except to the extent that the Indemnifying Party is actually
prejudiced by such failure to give timely notice. Such notice will describe
the Third Party Claim in reasonable detail, will include copies of all material
written evidence thereof and will indicate the estimated amount, if reasonably
practicable, of the Indemnifiable Loss that has been or may be sustained by the
Indemnitee. The Indemnifying Party will have the right to participate in, or,
by giving written notice to the Indemnitee, to assume, the defense of any Third
Party Claim at such Indemnifying Party's own expense and by such Indemnifying
Party's own counsel (reasonably satisfactory to the Indemnitee), and the
Indemnitee will cooperate in good faith in such defense.
(b) If, within 10 calendar days after giving notice of a
Third Party Claim to an Indemnifying Party pursuant to Section 10.4(a), an
Indemnitee receives written notice from the Indemnifying Party that the
Indemnifying Party has elected to assume the defense of such Third Party Claim
as provided in the last sentence of Section 10.4(a), the Indemnifying Party
will not
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be liable for any legal expenses subsequently incurred by the Indemnitee in
connection with the defense thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of any
Third Party Claim unless the Indemnitee is fully released by the claimant from
all liability arising from such Third Party Claim.
(c) Any claim by an Indemnitee on account of an
Indemnifiable Loss which does not result from a Third Party Claim (a "Direct
Claim") will be asserted by giving the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than 30 calendar days after
the Indemnitee becomes aware of such Direct Claim, and the Indemnifying Party
will have a period of 30 calendar days within which to respond in writing to
such Direct Claim. If the Indemnifying Party does not so respond within such
30 calendar day period, the Indemnifying Party will be deemed to have rejected
such claim, in which event the Indemnitee will be free to pursue such remedies
as may be available to the Indemnitee on the terms and subject to the
provisions of this Article X.
(d) If the amount of any Indemnifiable Loss, at any time
subsequent to the making of an Indemnity Payment, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or
pursuant to any claim, recovery, settlement or payment by or against any other
entity, the amount of such reduction, less any costs, expenses, premiums or
taxes incurred in connection therewith, together with interest thereon from the
date of payment of such amount by the Indemnifying Party at a rate of interest
equal to 7% per annum will promptly be repaid by the Indemnitee to the
Indemnifying Party. Upon making any Indemnity Payment, the Indemnifying Party
will, to the extent of such Indemnity Payment, be subrogated to all rights of
the Indemnitee against any third party that is not an affiliate of the
Indemnitee in respect of the Indemnifiable Loss to which the Indemnity Payment
relates; provided, however, that (i) the Indemnifying Party shall then be in
compliance with its obligations under this Agreement in respect of such
Indemnifiable Loss and (ii) until the Indemnitee recovers full payment of its
Indemnifiable Loss, any and all claims of the Indemnifying Party against any
such third party on account of said Indemnity Payment will be subrogated and
subordinated in right of payment to the Indemnitee's rights against such third
party. Without limiting the generality or effect of any other provision
hereof, each such Indemnitee and Indemnifying Party will duly execute upon
request all instruments reasonably necessary to evidence and perfect the
above-described subrogation and subordination rights.
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ARTICLE XI
Access to Information and Other Agreements
Section 11.1 Access to Information and Employees. After
the Closing, upon reasonable notice, the Purchaser shall, and shall use its
Reasonable Efforts to cause its counsel and independent public accountants to,
afford to representatives of the Seller including its counsel and accountants,
reasonable access, during normal business hours, to all books, records, files,
and documents related to the Company in the Purchaser's possession or under the
Purchaser's control as may be reasonably requested by the Seller in order to
permit the Seller (at its cost and expense) to prepare and file federal, state
and local tax returns and to prepare for and participate in any investigation
with respect thereto, to prepare for, participate in, assert or defend any
other investigation or litigation relating to or involving the Seller or the
Company, and to discharge the Seller's obligations or contest and defend any
claims made under this Agreement and any other agreements contemplated hereby.
In addition, the Purchaser will cooperate and will instruct all of its
personnel to cooperate with the Seller in connection with the foregoing. After
the Closing, the Seller shall have the right, at its cost and expense, to copy
such books, records, files and documents related to the Company as may be
reasonably useful to the Seller in connection with any of the matters described
in the preceding provisions of this Section 11.1. If the originals of any such
books, records, files and documents related to the Company are required in
connection with any proceeding, litigation or similar matter, the Seller shall
have the right to use such originals; provided, the Seller shall use its
Reasonable Efforts to have such originals released from any such proceeding,
litigation or other matter and returned to the Purchaser as soon as reasonably
possible under the circumstances. The Purchaser will cause the books, records,
files and documents related to the Company to be maintained in original form
with respect to legal documents and photographic, micrographic or other storage
form with respect to other books, records, files and documents (to the extent
consistent with Legal Requirements applicable to the Seller and the Purchaser)
for not less than five years from the date of the Closing and in any case the
Purchaser shall not destroy or allow the destruction of the same without
providing to the Seller a reasonable opportunity to take possession thereof.
Section 11.2 Further Assurances. Each party shall execute
and deliver such other certificates, agreements,
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conveyances, certificates of title and other documents and take such other
actions as may reasonably be requested by the other party in order to (a)
consummate or implement the transactions contemplated by this Agreement and (b)
transfer and assign to the Purchaser the Shares.
ARTICLE XII
Miscellaneous
Section 12.1 Amendment and Waiver. This Agreement may be
amended, modified or supplemented or any provision of this Agreement may be
waived only by an instrument in writing executed by the party against which
enforcement of the amendment, modification or supplement is sought. No course
of dealing between or among any Persons having any interest in this Agreement
will be deemed effective to amend, modify, supplement, discharge or waive any
part of this Agreement or any rights or obligations of any Person under or by
reason of this Agreement.
Section 12.2 Assignment. This Agreement and all the
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, but neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned (other than by operation of law) by any party hereto without the prior
written consent of the other party.
Section 12.3 Notice. Any notice or communication must be
in writing and given by depositing the same in the United States mail,
addressed to the party to be notified, postage prepaid and registered or
certified with return receipt requested, or by delivering the same in person or
by telecopier. Such notice shall be deemed received on the date on which it is
hand-delivered or sent via telecopier or on the third business day following
the date on which it is so mailed. For purposes of notice, the addresses of
the parties shall be:
If to the Purchaser: Velda Farms, L.P.
c/o Engles Management Corporation
3811 Turtle Creek Blvd.
Suite 1950, LB 50
Dallas, TX 75219
Attention: Gregg L. Engles
Fax: (214) 528-9929
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with copies to: Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Attn: William A. McCormack
Fax: (214) 939-6100
If to the Seller: The Morningstar Group Inc.
5956 Sherry Lane, Suite 1100
Dallas, Texas 75225-6552
Attention: John P. Clarson
Fax: (214) 360-9100
with a copy to: Weil, Gotshal & Manges
100 Crescent Court, Suite 1300
Dallas, Texas 75201
Attention: R. Scott Cohen
Fax: (214) 746-7777
Any party may change its address for notice by written notice given to the
other parties.
Section 12.4 Entire Agreement. This Agreement and the
exhibits and schedules hereto and the agreements contemplated hereby supersede
all prior agreements and understandings relating to the subject matter hereof,
except that the obligations of any party under any agreement executed pursuant
to or otherwise contemplated by this Agreement shall not be affected by this
Section.
Section 12.5 Costs, Expenses and Legal Fees. Whether or
not the transactions contemplated hereby are consummated, each party hereto
shall bear its own costs and expenses (including attorneys' fees) incurred in
connection with the transactions contemplated by this Agreement.
Section 12.6 Severability. If any provision of this
Agreement is held to be illegal, invalid or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable and this Agreement shall be construed and enforced as if such
illegal, invalid or unenforceable provision never comprised a part hereof; and
the remaining provisions hereof shall remain in full force and effect and shall
not be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as part of this
Agreement, a provision as similar in its terms to such illegal,
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invalid or unenforceable provision as may be possible and be legal, valid and
enforceable.
Section 12.7 Governing Law. This Agreement and the rights
and obligations of the parties hereto shall be governed, construed and enforced
in accordance with the laws of the State of Texas.
Section 12.8 Captions. The captions in this Agreement are
for convenience of reference only and shall not limit or otherwise affect any
of the terms or provisions hereof.
Section 12.9 Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
Section 12.10 Announcements, Press Releases or Reports.
Any announcements, press releases or reports by any of the parties hereto
relating to the transactions contemplated by this Agreement and each other
agreement contemplated hereby shall be approved in advance by the Seller and
the Purchaser; except that any party, with reasonable advance notice to the
other party and opportunity to review the proposed disclosure, may make any
announcement, press release or report required by applicable law without such
advance approval.
ARTICLE XIII
Termination
Section 13.1 Grounds for Termination. This Agreement may
be terminated at any time prior to the Closing Date:
(a) by the mutual written agreement of the Seller and the
Purchaser;
(b) by the Seller or by the Purchaser if the purchase and
sale of the Shares contemplated hereby shall not have been consummated
by April 12, 1994 (or such other date, if any, as the Seller and the
Purchaser shall have agreed in writing), and if the failure to
consummate such purchase and sale on or before such date is not caused
by any breach of this Agreement by the party electing to terminate
pursuant to this Section 13.1(b);
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(c) by the Seller or by the Purchaser if the consummation
of such transactions would violate any nonappealable final order,
decree or judgment of any court or governmental body having competent
jurisdiction;
(d) by the Seller or by the Purchaser if the Purchaser
fails to secure and deliver to Seller copies of financing commitments
issued by responsible financial institutions providing for the
financing of the cash portion of the purchase price for the Shares on
or before March 1, 1994;
(e) by the Seller or by the Purchaser pursuant to
Section 7.17(c); or
(f) by the Seller or the Purchaser if either party shall
have received a second request for information under the HSR Act.
Section 13.2 Effect of Termination. If this Agreement is
terminated by the Seller or by the Purchaser as permitted under Section 13.1
hereof, such termination shall be without liability of either party to the
other party to this Agreement, or to any of its shareholders, directors,
officers, employees, agents, consultants or representatives; provided that the
provisions of Sections 6.5, 7.4 and 12.5 hereof shall remain in full force and
effect; and provided further that if such termination shall result from the
willful failure of a party to fulfill a condition to the performance of the
other party or to perform a covenant of this Agreement or from a willful breach
by a party to this Agreement, such party shall be fully liable for any and all
damages, costs and expenses (including, but not limited to, reasonable counsel
fees) sustained or incurred by the other party.
56
<PAGE> 63
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first written above.
THE MORNINGSTAR GROUP INC.
By:_______________________________
Tracy L. Noll
Vice President and Chief
Financial Officer
VELDA FARMS, L.P.
By:_______________________________
Tracy L. Noll
Vice President
ENGLES DAIRY ACQUISITION, L.P.
By: VELDA HOLDINGS, INC., its
general partner
By:_______________________________
Gregg L. Engles
Chairman of the Board
