<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 7, 1996
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SILVERADO FOODS, INC.
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(Exact name of registrant as specified in its charter)
Oklahoma 1-13260 73-1369218
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(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification No.)
incorporation)
6846 South Canton, Suite 110, Tulsa, Oklahoma 74136
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (918) 496-2400
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Not applicable
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(Former name or former address, if changed since last report)
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Item 1. Changes in Control of Registrant.
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Not applicable.
Item 2. Acquisition or Disposition of Assets.
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On August 7, 1996, the Registrant acquired from The Bagel Place,
Inc. certain assets of The Bagel Place, Inc. used in its business of
producing bagels and bagel related products at its bakery in Santa Ana,
California. The assets purchased included inventory and tangible assets
consisting principally of machinery, equipment, furniture and fixtures
used in The Bagel Place, Inc.'s business. The Registrant intends to
continue such use of the assets acquired. The consideration for this
acquisition consisted of (a) cash consideration of $2,789,000, and
assumption by the Registrant of current liabilities of The Bagel Place,
Inc. of approximately $342,000.
Prior to closing of this acquisition, there was no material
relationship between The Bagel Place, Inc. and the Registrant or any of
its affiliates, any director or officer of the Registrant or any of
their associates. The purchase price was determined through arms-length
negotiation between The Bagel Place, Inc. and the Registrant.
The cash portion of the consideration for the purchase was provided
by a short-term loan in the amount of $2,775,000 from Lawrence D.
Field, the Registrant's Chief Executive Officer and Chairman of the
Board of Directors. Such loan bears interest at the rate of 10% annum
and is due and payable as to principal and interest on December 31,
1996. It is anticipated that such loan will be repaid out of the
proceeds of a private placement of convertible subordinated notes.
Item 3. Bankruptcy or Receivership.
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Not applicable.
Item 4. Changes in Registrant's Certifying Accountant.
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Not applicable.
Item 5. Other Events.
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Not applicable.
Item 6. Resignation of Registrant's Directors.
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Not applicable.
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Item 7. Financial Statements and Exhibits.
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(A) Financial Statements of Business Acquired.
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It is impracticable to provide the historical financial
statements required by this Item within the time this Current
Report on Form 8-K is required to be filed. Such historical
financial statements will be filed as soon as practicable, but not
more than 60 days after this Current Report on Form 8-K is
required to be filed.
(B) Pro Forma Financial Information.
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It is impracticable to provide the pro forma financial
statements required by this Item within the time this Current
Report on Form 8-K is required to be filed. Such pro forma
financial statements will be filed as soon as practicable, but not
more than 60 days after this Current Report on Form 8-K is
required to be filed.
(C) Exhibits.
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The Exhibit listed in the Index to Exhibits is filed as part
of this Current Report on Form 8-K.
Item 8. Change In Fiscal Year.
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Not applicable.
* * * * * * * * * *
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SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
SILVERADO FOODS, INC.
By:/s/ DORVIN D. LIVELY
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Dorvin D. Lively
Vice President and
Chief Financial Officer
Date: August 21, 1996
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<PAGE>
EXHIBIT TO INDEX
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Exhibit No. Description of Exhibit
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2.1 Asset Purchase Agreement dated July 25, 1996, between Silverado
Foods, Inc. and The Bagel Place, Inc.
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
by and between
THE BAGEL PLACE, INC.
and
SILVERADO FOODS, INC.
July 25, 1996
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TABLE OF CONTENTS
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Page
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ARTICLE 1
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PURCHASE AND SALE OF ASSETS
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Section 1.01 Basic Transaction.................................. 1
Section 1.02 Consideration for Purchased Assets................. 4
Section 1.03 Assumption of Liabilities.......................... 7
Section 1.04 The Closing........................................ 9
ARTICLE 2
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CONDITIONS TO CLOSING
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Section 2.01 Conditions to Buyer's Obligations.................. 10
Section 2.02 Conditions to Seller's Obligations................. 12
ARTICLE 3
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REPRESENTATIONS AND WARRANTIES OF SELLER
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Section 3.01 Corporate Organization and Power................... 14
Section 3.02 Authority; Authorization........................... 14
Section 3.03 No Violation....................................... 14
Section 3.04 Financial Statements............................... 15
Section 3.05 No Undisclosed Liabilities......................... 15
Section 3.06 Absence of Certain Changes......................... 15
Section 3.07 Inventory.......................................... 16
Section 3.08 Title to Assets.................................... 17
Section 3.09 Real Estate Leases................................. 17
Section 3.10 Personal Property Leases........................... 18
Section 3.11 Motor Vehicles..................................... 18
Section 3.12 Condition of Assets................................ 19
Section 3.13 Intellectual Property.............................. 19
Section 3.14 Contracts.......................................... 19
Section 3.15 Employees.......................................... 21
Section 3.16 Taxes.............................................. 22
Section 3.17 Litigation......................................... 23
Section 3.18 Compliance with Law, and Licenses and Permits
and Consents.................................... 23
Section 3.19 Environmental Matters.............................. 24
Section 3.20 Promotional Programs............................... 25
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Page
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ARTICLE 4
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REPRESENTATIONS AND WARRANTIES OF BUYER
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Section 4.01 Corporate Organization and Power................... 25
Section 4.02 Authorization...................................... 25
Section 4.03 No Violation....................................... 25
Section 4.04 Litigation......................................... 26
ARTICLE 5
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TERMINATION
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Section 5.01 Termination........................................ 26
Section 5.02 Effect of Termination.............................. 27
Section 5.03 Confidentiality.................................... 27
ARTICLE 6
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ADDITIONAL AGREEMENTS
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Section 6.01 Survival........................................... 27
Section 6.02 Indemnification.................................... 28
Section 6.03 WARN Act Indemnification........................... 29
Section 6.04 Continuing Assistance.............................. 30
Section 6.05 Expenses and Transfer Taxes........................ 30
Section 6.06 Press Releases and Announcements................... 31
Section 6.07 Change of Seller's Name............................ 31
Section 6.08 Continuing Access to Records....................... 31
Section 6.09 Bulk Transfer Laws................................. 32
Section 6.10 Allocation of Purchase Price and Assumed
Liabilities..................................... 32
Section 6.11 Third Party Beneficiaries.......................... 32
Section 6.12 Payroll Taxes...................................... 33
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Page
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ARTICLE 7
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MISCELLANEOUS
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Section 7.01 Amendment and Waiver............................... 33
Section 7.02 Notices............................................ 33
Section 7.03 Assignment......................................... 34
Section 7.04 Severability....................................... 34
Section 7.05 No Strict Construction............................. 34
Section 7.06 Captions........................................... 34
Section 7.07 Complete Agreement................................. 35
Section 7.08 Governing Law...................................... 35
Section 7.09 Counterparts....................................... 35
Section 7.10 Brokerage.......................................... 35
Section 7.11 Schedules.......................................... 35
Section 7.12 Waiver of Trial by Jury............................ 35
Section 7.13 Representation by Counsel, Interpretation.......... 36
<PAGE>
LIST OF EXHIBITS AND SCHEDULES
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Exhibit A Software License Agreement
Exhibit B Trademark License Agreement
Exhibit C Non-Compete Agreement
Schedule 3.01 Corporate Organization and Power
Schedule 3.04 Financial Statements
Schedule 3.06 Absence of Certain Changes
Schedule 3.07 Inventory
Schedule 3.09 Real Estate Leases
Schedule 3.10 Personal Property Leases
Schedule 3.11 Motor Vehicles
Schedule 3.13 Intellectual Property
Schedule 3.14 Contracts
Schedule 3.15 Employees
Schedule 3.17 Litigation
Schedule 3.18 Compliance with Law, and Licenses and Permits and Consents
Schedule 3.19 Environmental Matters
Schedule 3.20 Promotional Programs
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ASSET PURCHASE AGREEMENT
------------------------
THIS AGREEMENT is entered into as of this 25th day of July, 1996 by and
between SILVERADO FOODS, INC., an Oklahoma corporation ("Buyer"), and THE BAGEL
PLACE, INC., a California corporation ("Seller").
Subject to the terms and conditions set forth herein, Buyer desires to
purchase from Seller (subject to certain associated liabilities) and Seller
desires to sell to Buyer (subject to Buyer assuming such liabilities) the assets
and properties which constitute Seller's bagel bar and bagel production business
located in Santa Ana, California (the "Business").
The parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
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SECTION 1.01 BASIC TRANSACTION.
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(a) PURCHASED ASSETS. Except as otherwise provided below, on and
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subject to the terms established in this Agreement, Buyer hereby agrees to
purchase from Seller, and Seller hereby agrees to sell, convey, assign, transfer
and deliver on the Closing Date (as defined in Section 1.04 below) to Buyer good
and marketable title to, free and clear of all liens, pledges, encumbrances,
claims, and equities of any kind, those properties, assets, and rights used
exclusively in the Business (the "Purchased Assets"), which are described below:
(i) All rights existing under those leases (of real and personal
property), licenses, permits, brokerage and distribution arrangements of
the Business, sales and purchase agreements, purchase orders, and other
agreements and business arrangements listed or otherwise described in the
Schedules to this Agreement;
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(ii) All vehicles, machinery and equipment (but not including
vehicles, machinery and equipment covered by leases) and furniture owned by
Seller and used in the Business;
(iii) All office supplies, production supplies, spare parts, other
miscellaneous supplies, and other tangible property owned by Seller and
used in the Business;
(iv) All raw materials, work-in-process, finished goods, packaging
and other inventories of the Business;
(v) All patents, inventions, trade secrets and confidential
information of the Business; all registered and unregistered trademarks,
service marks, logos, corporate names, trade names, trade dress and other
trademark rights used exclusively in the Business and described in the
Schedules to this Agreement; and all registrations for, and applications
for registration of, any of the foregoing, together with all of Seller's
rights to use all of the foregoing forever and all other rights in, to and
under the foregoing and all goodwill and going concern value of the
Business;
(vi) All rights to receive mail and other communications except with
respect to Excluded Assets (as defined below);
(vii) All business records, tangible data, documents, management
information systems, customer and supplier lists, personnel records,
invoices, credit records, sales literature, and all other books and records
of every kind of the Business;
(viii) All of Seller's right, title and interest in and to all
licenses and permits of the Business;
(ix) The corporate name "The Bagel Place, Inc." and the fictitious
name "Bakery Products Distributors"; and
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(x) The bagel and bagel bar product lines of the Business.
The Purchased Assets shall be conveyed free and clear of all liabilities,
obligations, liens and encumbrances excepting only those liabilities and
obligations which are expressly to be assumed by Buyer hereunder and those liens
and encumbrances securing the same which are specifically disclosed herein or
expressly permitted by the terms hereof.
(b) EXCLUDED ASSETS. Notwithstanding the foregoing, the parties agree
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that the following are expressly excluded from this purchase and sale and are
not included in the Purchased Assets (the "Excluded Assets"):
(i) All cash, cash equivalents, bank accounts, notes and accounts
receivable, shares of stock and other securities;
(ii) All rebates, refunds, claims, condemnation or eminent domain
claims, causes of action, choices in action, rights of recovery and
rights of set-off;
(iii) Seller's rights under or pursuant to this Agreement and the
other agreements with Buyer contemplated hereby;
(iv) Seller's minute books and stockholder and stock transfer
records and similar corporate records;
(v) The new corporate name to be adopted by Seller pursuant to
Section 7.08;
(vi) Insurance policies (and claims thereunder), claims for and
rights to receive tax refunds, all tax returns (and related tax
filings) of the Business and any notes, worksheets, files or documents
related thereto;
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(vii) The trademarks, tradedress and other trademark rights related
to the marks Henry's, Henry's Original and Nature's Harvest previously
utilized in the Business, as well as all packaging materials bearing
such trademarks;
(viii) The proprietary software utilized in the Business covered by
the Software License Agreement (as defined in Section 2.01(e)) and the
AS/400 computer on which such software is run;
(ix) All intercompany accounts listed on the Latest Balance Sheet
which are specifically designated thereon as Excluded Assets;
(x) A 1989 Nissan 26-foot Bobtail Truck, VIN JNAPB24HXKAR50239; and
(xi) All assets other than the assets expressly included within the
Purchased Assets.
SECTION 1.02 CONSIDERATION FOR PURCHASED ASSETS.
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(a) AGGREGATE CONSIDERATION. At Closing (as defined in Section 1.04),
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Buyer will pay to Seller $2,500,000, increased dollar for dollar to the extent
the amount set forth on the Estimated Net Current Assets Statement (as defined
in Section 1.02 (b)) exceeds Net Current Assets (as defined in Section 1.02(f))
as reflected in the Latest Balance Sheet (as defined in Section 3.04), or
decreased dollar for dollar to the extent Estimated Net Current Assets are less
than Net Current Assets reflected in the Latest Balance Sheet (the "Initial
Purchase Price"). The Initial Purchase Price will be paid by wire transfer or
equivalent means, in immediately available funds in the United States as Seller
shall direct to Buyer. The Initial Purchase Price shall be adjusted to reflect
changes in the Net Current Assets of the Business as set forth below. The
Initial Purchase Price, as so adjusted, is referred to as the "Purchase Price".
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(b) DELIVERY OF ESTIMATED CLOSING BALANCE SHEET. Seller shall deliver
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to Buyer five days prior to the Closing Date a statement of the Estimated Net
Current Assets at Closing (the "Estimated Net Current Assets Statement"),
accompanied by the calculation of the amount of the Initial Purchase Price. The
Estimated Net Current Assets Statement shall be prepared by Seller in accordance
with GAAP applied on a basis consistent with the preparation of the Latest
Balance Sheet.
(c) ADJUSTMENT OF INITIAL PURCHASE PRICE. The Initial Purchase Price
------------------------------------
shall be (a) increased dollar for dollar to the extent Net Current Assets
reflected in the Closing Date Net Current Asset Statement (as defined in Section
1.02(d)) exceeds Net Current Assets reflected in the Latest Balance Sheet, or
(b) decreased dollar for dollar to the extent Net Current Assets reflected in
the Closing Date Net Current Asset Statement are less than Net Current Assets
reflected in the Latest Balance Sheet. Any adjustments to the Initial Purchase
Price made pursuant to this Section 1.02(c) shall, within five business days
after the Adjusted Closing Date Net Current Asset Statement (as defined in
Section 1.02(e)) is agreed to by Buyer and Seller or any remaining disputed
items are ultimately determined by the Neutral Auditors, be paid by wire
transfer in immediately available funds to the account in the United States
specified by the party to whom such payment is owed.
(d) PROCEDURES FOR DETERMINATION OF THE CLOSING DATE NET CURRENT ASSET
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STATEMENT. As soon as practicable, but in no event later than 60 days following
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the Closing Date, Seller shall prepare a listing of the Net Current Assets of
the Business as of the close of business on the day prior to the Closing Date
(the "Closing Date Net Current Asset Statement"). The Closing Date Net Current
Asset Statement shall fairly present the Net Current Assets of the Business in
accordance with United States generally accepted accounting principles
consistently applied; provided, however, that for purposes of the Closing Date
Net Current Asset Statement, Inventory shall be valued at the lower of cost or
fair market value. The Closing Date Net Current Asset Statement will reflect
adjustments of a normal year-end nature and as set forth in the Latest Balance
Sheet and appropriate prorations for personal property, real estate, occupancy
and water taxes, the amount of any license or registration fees with respect to
any licenses or registrations which are being assigned or transferred hereunder;
the amount of sewer rents and charges for water, telephone, electricity and
other utilities and fuel; and any other items which are normally prorated in
connection with similar transactions.
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<PAGE>
During the preparation of the Closing Date Net Current Asset Statement
and the period of any dispute within the contemplation of this Section 1.02,
Buyer shall (i) provide Seller and Seller's authorized representatives with full
access during normal business hours to the books, records (including work
papers, schedules, memoranda and other documents), facilities and employees of
the Business, (ii) provide Seller as promptly as practicable after the Closing
Date (but in no event later than 20 business days after the Closing Date) with
normal month-end closing financial information for the Business for the period
ending on the date prior to the Closing Date, and (iii) cooperate fully with
Seller and Seller's authorized representatives, including the provision on a
timely basis of all information necessary or useful in preparing the Closing
Date Net Current Asset Statement.
(e) DELIVERY OF THE CLOSING DATE NET CURRENT ASSET STATEMENT; DISPUTE
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RESOLUTION. Seller shall deliver a copy of the Closing Date Net Current Asset
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Statement to Buyer promptly after it has been prepared. After receipt of the
Closing Date Net Current Asset Statement, Buyer shall have 30 days to review the
Closing Date Net Current Asset Statement. Unless Buyer delivers written notice
to Seller on or prior to the 30th day after Buyer's receipt of the Closing Date
Net Current Asset Statement specifying in reasonable detail the characterization
and amount of all disputed items and the basis therefor, Buyer shall be deemed
to have accepted and agreed to the Closing Date Net Current Asset Statement. If
Buyer so notifies Seller of its objection to the Closing Date Net Current Asset
Statement, Buyer and Seller shall, within 30 days following such notice (the
"Resolution Period"), attempt to resolve their differences and any resolution by
them as to any disputed amounts shall be final, binding and conclusive.
If at the conclusion of the Resolution Period there remain items in
dispute, then all disputed items shall be submitted to a firm of nationally
recognized independent public accountants (the "Neutral Auditors") selected by
Seller and Buyer within 10 days after the expiration of the Resolution Period.
If Seller and Buyer are unable to agree on the Neutral Auditors, a "big six"
accounting firm will be selected by lot after eliminating one such firm selected
by Seller and one such firm selected by Buyer. All fees and expenses relating
to the work, if any, to be performed by the Neutral Auditors shall be borne
equally by Seller and Buyer. The Neutral Auditors shall act as an arbitrator to
determine, based solely on
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<PAGE>
presentations by Seller and Buyer, and not by independent review, only those
issues still in dispute. The Neutral Auditors' determination shall be made
within 30 days of their selection, shall be set forth in a written statement
delivered to Seller and Buyer and shall be final, binding and conclusive. The
term "Adjusted Closing Date Net Current Asset Statement," as hereinafter used,
shall mean the definitive Closing Date Net Current Asset Statement agreed to by
Buyer and Seller in accordance with this Section 1.02(e) or the definitive
Closing Date Net Current Asset Statement resulting from the determinations made
by the Neutral Auditors in accordance with this Section 1.02(e) (in addition to
those items theretofore agreed to by Seller and Buyer).
(f) DEFINITION OF NET CURRENT ASSETS. For purposes of this Agreement,
--------------------------------
"Net Current Assets" shall mean (x) the sum of the total current assets of the
Business (other than Excluded Assets) determined in accordance with GAAP minus
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(y) the sum of the accounts payable liabilities of the Business assumed by
Buyer, all as determined in accordance with GAAP.
SECTION 1.03 ASSUMPTION OF LIABILITIES.
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(a) LIABILITIES ASSUMED. Subject to the conditions specified in this
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Agreement, and as additional consideration for the sale and transfer of the
Purchased Assets, Buyer will assume on the Closing Date and pay, discharge or
perform when due the following liabilities and obligations of Seller with
respect to the Business as they exist on the Closing Date (hereinafter referred
to as the "Assumed Liabilities"):
(i) The liabilities and obligations reflected on the Adjusted
Closing Date Net Current Asset Statement in the amounts stated therein
(but not in excess of such amounts);
(ii) Seller's liabilities and obligations arising after the Closing
Date under the contracts or commitments relating to the Business
listed on the Schedules to this Agreement;
(iii) All obligations and liabilities arising after the Closing
Date that are associated with leasing, operating and maintaining the
Leased
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<PAGE>
Real Estate or arising out of the operation of the Business after the
Closing Date or the use or ownership following the Closing Date of the
Purchased Assets, other than obligations and liabilities with respect
to taxes (except taxes specifically allocated to, prorated to or
assumed by Buyer under this Agreement); and
(iv) All liabilities and obligations for all consumer complaints,
trade complaints, written product guarantees set forth on the
packaging therefore and unsalable merchandise returned or received on
and after the Closing.
(b) EXCLUDED LIABILITIES. Buyer will not assume or be liable for any
--------------------
of the following liabilities or obligations (herein referred to as "Excluded
Liabilities") and, notwithstanding any implication to the contrary above, none
of the following liabilities or obligations are "Assumed Liabilities" for
purposes of this Agreement:
(i) Any of Seller's liabilities or obligations under this Agreement
and the other agreements with Buyer contemplated hereby;
(ii) Any of Seller's liabilities or obligations for expenses or fees
incident to or arising out of the negotiation, preparation, approval,
or authorization of this Agreement or the consummation (or preparation
for the consummation) of the transactions contemplated hereby,
including without limitation, attorneys' and accountants' fees;
(iii) Any liability or obligation of Seller with respect to
federal, state, local or foreign taxes; and any liabilities for
interest, penalties or additions to any of such taxes (except taxes
specifically allocated to, prorated to or assumed by Buyer under this
Agreement);
(iv) Any of Seller's liabilities or obligations for product
liability and warranty claims with respect to products sold prior to
Closing or, to the extent due to facts and circumstances existing or
arising solely prior
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<PAGE>
to the Closing Date, or by reason of any violation or alleged
violation by Seller of any federal, state, local or foreign law or
regulation;
(v) Except as otherwise expressly provided herein, any of Seller's
obligations or liabilities which relate to any bonus, retirement,
retiree, disability, pension, profit sharing, stock bonus, thrift,
stock option, incentive, deferred or other compensation or welfare
benefit plan, program or arrangement;
(vi) Any liability resulting from any environmental practice that
took place prior to Closing or from the presence, storage, escape,
seepage, leakage, disposal, discharge or release prior to Closing of
any contaminant, pollutant, or toxic or hazardous waste;
(vii) Any liability or obligation of Seller which relates to the
Excluded Assets;
(viii) All other liabilities listed on the Latest Balance Sheet
which are specifically designated thereon as Excluded Liabilities;
(ix) Any liability resulting from a workers' compensation claim or
other claim made by an employee of the Business which relates to or
arises out of facts and circumstances existing or arising solely prior
to the Closing Date; and
(x) Any other liability or obligation of Seller not expressly
assumed by Buyer under Section 1.03(a) hereof.
SECTION 1.04 THE CLOSING. The closing of the purchase and sale of the
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Purchased Assets, the assumption of the Assumed Liabilities and the other
transactions contemplated by this Agreement (the "Closing") will take place at
the offices of Metz Baking Company, at 10:00 a.m. local time on July 31, 1996 or
at such other place or on such other date as is mutually agreeable to the
parties; provided, however, that if any of the conditions to Closing set forth
-----------------
in
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<PAGE>
this Agreement have not been satisfied or waived by the party entitled to the
benefit of such condition, the Closing will take place on the third business day
after all conditions have been satisfied or waived. The date and time of the
Closing are herein referred to as the "Closing Date."
ARTICLE 2
CONDITIONS TO CLOSING
---------------------
SECTION 2.01 CONDITIONS TO BUYER'S OBLIGATIONS. The obligation of
---------------------------------
Buyer to consummate the transactions contemplated by this Agreement are subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 4 hereof
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Seller will have performed in all material respects all of the
covenants and agreements required to be performed by them under this Agreement;
(c) All consents, approvals, or other actions by third parties that
are set forth in Schedule 3.14 will have been obtained;
(d) No action, proceeding, or investigation by or before any court or
governmental or administrative body will have been initiated wherein it is
likely a judgment, decree or order would be issued that would prevent any of the
transactions contemplated by this Agreement or cause such transactions to be
declared unlawful or rescinded;
(e) On the Closing Date, Seller will have delivered to Buyer the
following:
(i) A certificate dated the Closing Date executed by the President
or a Vice President of Seller, stating that the preconditions
specified in subsections (a) and (b) hereof have been satisfied;
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<PAGE>
(ii) Certified copies of the resolutions duly adopted by Seller's
board of directors authorizing the execution, delivery and performance
of this Agreement and the other agreements contemplated hereby,
including the change in Seller's name as contemplated by Section 6.08;
(iii) Good standing certificates for Seller from its state of
organization, dated not earlier than 15 days prior to the Closing
Date;
(iv) Copies of all third party and governmental consents (or other
evidence satisfactory to Buyer) that Seller is required to obtain in
order to effect the transactions contemplated by this Agreement;
(v) Such instruments of sale, transfer, assignment, conveyance and
delivery, in form and substance satisfactory to counsel for Buyer, as
are required in order to transfer to Buyer Seller's right, title and
interest to the Purchased Assets, including without limitation
Seller's rights under contracts and leases included in the Purchased
Assets;
(vi) A certificate from Seller, under penalties of perjury, stating
that Seller is not a foreign corporation, foreign partnership, foreign
trust or foreign estate and listing Seller's U.S. Employer
Identification Number and address of its principal business office;
(vii) The Software License Agreement in the form of Exhibit A
hereto (the "Software License Agreement"), duly executed by the
President or a Vice President of Seller;
(viii) Duly executed Articles of Amendment changing Seller's
corporate name as contemplated by Section 6.08;
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<PAGE>
(ix) The Trademark License Agreement in the form of Exhibit B (the
"Trademark License Agreement"), duly executed by the President or a
Vice President of Seller;
(x) The Non-Compete Agreement in the form of Exhibit C hereto (the
"Non-Compete Agreement"), duly executed by the President or a Vice
President of Seller; and
(xi) Such other documents as Buyer may reasonably request in
connection with the transactions contemplated hereby.
(f) All proceedings to be taken by Seller in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all documents required to be delivered by Seller in
connection with the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer.
Any condition specified in this Section 2.01 may be waived by Buyer,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Buyer.
SECTION 2.02 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
----------------------------------
Seller to consummate the transactions contemplated by this Agreement is subject
to the satisfaction of the following conditions on or before the Closing Date:
(a) The representations and warranties set forth in Article 5 hereof
shall be true and correct in all material respects at and as of the Closing
Date;
(b) Buyer will have performed in all material respects all the
covenants and agreements required to be performed by it under this Agreement;
(c) All consents, approvals, or actions by third parties that are
required for consummation of the transactions contemplated hereby will have been
obtained;
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(d) No action or proceeding before any court or government body will
be pending wherein a judgment, decree or order would prevent any of the
transactions contemplated by this Agreement or cause such transactions to be
declared unlawful or rescinded;
(e) On the Closing Date, Buyer will have delivered to Seller the
following:
(i) An officers' certificate executed by the President or a Vice
President of Buyer dated the Closing Date, stating that the
preconditions specified in subsections (a) and (b) hereof have been
satisfied;
(ii) Certified copies of the resolutions adopted by Buyer's board of
directors authorizing the execution, delivery and performance of this
Agreement and the other agreements contemplated hereby;
(iii) Buyer will have executed such agreements or instruments as
are reasonably necessary to evidence Buyer's assumption of any of the
Assumed Liabilities in form satisfactory to Seller;
(iv) The Software License Agreement, the Trademark License Agreement
and the Non-Compete Agreement, each duly executed by the President or
a Vice President of Buyer; and
(v) Such other documents as Seller may reasonably request in
connection with the transactions contemplated hereby.
(f) All proceedings to be taken by Buyer in connection with the
consummation of the Closing on the Closing Date and the other transactions
contemplated hereby and all documents required to be delivered by Buyer in
connection with the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Seller.
Any condition specified in this Section 2.02 may be waived by Seller,
provided that no such waiver will be effective unless it is set forth in a
writing executed by Seller.
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants as follows:
SECTION 3.01 CORPORATE ORGANIZATION AND POWER. Seller is a
--------------------------------
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has the corporate power and
authority to carry on its business as now being conducted and to own and operate
the properties and assets now owned and being operated by it. Seller is
qualified as a foreign corporation for the transaction of business and is in
good standing under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification, except
such jurisdictions where the failure to qualify will not have a materially
adverse effect on the operation or financial condition of the Business. A list
of all such jurisdictions where Seller is so qualified is set forth on Schedule
3.01. Seller has full corporate power and authority to execute, deliver and
perform this Agreement and the other agreements contemplated hereby.
SECTION 3.02 AUTHORITY; AUTHORIZATION. The execution, delivery and
------------------------
performance by Seller of this Agreement and the other agreements contemplated
hereby have been duly authorized by Seller. The performance of this Agreement
and the other agreements contemplated hereby constitutes a valid and binding
obligation of Seller enforceable in accordance with their terms.
SECTION 3.03 NO VIOLATION. The execution, delivery and performance of
------------
this Agreement and the other agreements contemplated hereby by Seller and the
consummation of the transactions contemplated hereby and thereby do not and will
not: (a) conflict with or result in any breach of any of, (b) constitute a
default under, (c) result in a violation of, (d) result in the creation of any
lien, security interest, charge or encumbrance upon the Purchased Assets, (e)
give any third party the right to accelerate any obligation under the provisions
of, or (f) require any authorization, consent, approval, exemption or other
action by any court, other governmental body, or other third party under the
provisions of, the charter or by-laws of Seller or any indenture, mortgage,
lease, loan agreement or other agreement or instrument by which
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Seller is bound or to which any of the Purchased Assets are subject, or any law,
statute, rule, regulation, judgment or decree to which Seller is subject.
SECTION 3.04 FINANCIAL STATEMENTS. Attached as Schedule 3.04 are
--------------------
copies of Seller's unaudited balance sheet as of June 29, 1996 (the "Latest
Balance Sheet"), and summary earnings information for the six months ended June
29, 1996. The Latest Balance Sheet (including the notes thereto if any) and
such summary information (including the notes thereto if any) are complete and
accurate and in accordance with the books and records of Seller (which are
accurate and complete), have been prepared in accordance with GAAP, and present
fairly the financial position of Seller at said date and the results of its
operations for said period covered. The Latest Balance Sheet and the summary
earnings data are subject to normal year-end adjustments.
SECTION 3.05 NO UNDISCLOSED LIABILITIES. Except as disclosed herein
--------------------------
or in the schedules hereto, and except as reflected, reserved against or
otherwise disclosed in the Latest Balance Sheet or incurred thereafter in the
ordinary course of business, the Business has no liabilities or obligations that
would be required to be reflected on a balance sheet (or required to be
disclosed in the notes thereto) prepared in accordance with United States
generally accepted accounting principles that would, individually or in the
aggregate, have a material adverse effect on the Business.
SECTION 3.06 ABSENCE OF CERTAIN CHANGES. Except as set forth in
--------------------------
Schedule 3.06, since the date of the Latest Balance Sheet, Seller has not:
(a) created, incurred, assumed or guaranteed any indebtedness or
become subject to any liabilities, except current liabilities incurred in the
ordinary course of business and liabilities under contracts entered into in the
ordinary course of business;
(b) mortgaged, pledged or subjected to any lien, security interest,
charge or any other encumbrance, any of the Purchased Assets, tangible or
intangible, except liens for current property taxes not yet due and payable;
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(c) sold, assigned or transferred any material amount of assets,
except in the ordinary course of business and consistent with past practices;
(d) suffered any extraordinary losses, whether or not covered by
insurance, forgiven or canceled any debts or claims, or waived any right of
material value;
(e) increased the compensation, bonuses, special compensation, or
benefits payable or to become payable by Seller to any of its officers or,
except for increases in the normal course of operations not exceeding ten
percent (10%), to any other employees;
(f) suffered any work stoppage or labor dispute;
(g) extended credit other than in the ordinary course of business or
permitted any change in its credit practices or in its methods of maintaining
its books, accounts or business records;
(h) made charitable contributions or pledges in the aggregate in
excess of $10,000; or
(i) entered into any agreement to do any of the things previously
described in this Section 3.06.
SECTION 3.07 INVENTORY. All inventories existing on the Closing Date
---------
will be:
(a) properly valued at the lower of cost or fair market value in
accordance with the prior practices of Seller; and
(b) in conformity with warranties customarily given to purchasers of
like products.
Except as set forth on Schedule 3.07, no inventory is held on
consignment by or for Seller. All ingredients and finished products in
inventory (a) comply in all material respects with the Federal Food, Drug and
Cosmetic Act, approved June 25, 1938 (the "Act") and all acts
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amending or supplementing the Act (including, without limitation, the Food
Additive Amendment of 1958), and with the pure food and drug laws of each and
all states of the United States into which any such product would normally be
shipped by Seller, (b) are not adulterated or misbranded within the meaning of
the Act or such state laws, (c) are not prohibited from introduction into
interstate commerce under the provisions of Section 404 or 505 of the Act, and
(d) do not contain a hazardous substance or a banned substance.
SECTION 3.08 TITLE TO ASSETS. Except as set forth in the Schedules to
---------------
this Agreement, Seller is the sole and exclusive legal and equitable owner of
all right, title and interest in and has good and marketable title to all of the
Purchased Assets.
SECTION 3.09 REAL ESTATE LEASES. Schedule 3.09 sets forth a
------------------
description of each parcel of real estate leased by Seller (the "Leased Real
Estate"), including identification of the lessor, street address and list of
contracts and agreements relating to or affecting any such Leased Real Estate to
which Seller is a party. Seller has delivered to Buyer complete and accurate
copies of all such written contracts and agreements. Seller has not exercised
or assigned any options to purchase any Leased Real Estate. The Leased Real
Estate has all easements and rights, including, but not limited to, easements
for all utilities, services, roadways and other means of ingress and egress,
necessary to conduct the Business as it is currently being conducted. Neither
the whole or any portion of any Leased Real Estate has been condemned,
requisitioned or otherwise taken by any public authority, and no notice of any
such condemnation, requisition or taking has been received, nor to the knowledge
of Seller is threatened or contemplated with respect to these leases.
(a) Such leases are in full force and effect and are valid, binding
and enforceable in accordance with their respective terms, except to the extent
such enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or affecting the enforcement of creditors'
rights or by general equitable principles;
(b) No amount payable under any such leases is past due;
(c) Each party thereto has complied with all material commitments and
obligations on its part to be performed or observed under each such lease; and
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(d) Seller has not received any notice of a default (which has not
been cured), offset or counterclaim under any such lease, or any other
communication calling upon Seller to comply with any provision of any such lease
or asserting non-compliance, and no event or condition has happened or presently
exists which constitutes a default or, after notice or lapse of time or both,
would constitute a default under any such lease.
SECTION 3.10 PERSONAL PROPERTY LEASES. Schedule 3.10 contains a
------------------------
complete and accurate list and summary description of all leases of personal
property used in the Business (the "Leases"). Seller has delivered to Buyer
true and complete copies of all the Leases. With respect to these Leases:
(a) The Leases are in full force and effect and are valid, binding and
enforceable in accordance with their respective terms, except to the extent such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other laws relating to or affecting the enforcement of creditors' rights or
by general equitable principles;
(b) No amount payable under any Lease is past due;
(c) Each party thereto has complied with all material commitments and
obligations on its part to be performed or observed under each Lease; and
(d) Seller has not received any notice of a default (which has not
been cured), offset or counterclaim under any Lease, or any other communication
calling upon Seller to comply with any provision of any Lease or asserting non-
compliance, and no event or condition has happened or presently exists which
constitutes a default or, after notice or lapse of time or both, would
constitute a default under any Lease.
SECTION 3.11 MOTOR VEHICLES. All motor vehicles of Seller used in the
--------------
Business, whether owned or leased, are listed in Schedule 3.11. All licenses,
permits, inspections and other authorizations necessary for the use of such
vehicles by Seller have been obtained and are in full force and effect. All of
such vehicles are and have been operated in compliance with all applicable laws,
ordinances, codes, rules and regulations except for any non-compliance
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with the foregoing which would not have a material adverse effect on Seller, the
Business or the Purchased Assets, and neither Seller has not received any notice
of any such non-compliance.
SECTION 3.12 CONDITION OF ASSETS. The Purchased Assets are, in all
-------------------
material respects, in operable condition (reasonable wear and tear excepted) and
are suitable for the purposes for which they are presently being used by Seller.
SECTION 3.13 INTELLECTUAL PROPERTY. Schedule 3.13 contains a complete
---------------------
and accurate list and description of all patents, trademarks, trademark rights,
logos, trade names, trade name rights, service marks, brand names, copyrights
and registered, assumed, or fictitious names under which the Business is
conducted. Schedule 3.13 also contains a complete and accurate list and
description of all licenses and other agreements relating to any of the
foregoing. With respect to the foregoing items of intellectual property:
(a) Seller is the sole and exclusive owner free and clear of any
rights of other persons and has the sole and exclusive right to use the same in
the conduct of its business;
(b) no proceedings have been instituted, are pending or, to the
knowledge of Seller, threatened which challenge any rights in respect thereto or
the validity thereof;
(c) none of the aforesaid infringes upon or otherwise violates the
rights of others or is being infringed upon by others, and none is subject to
any outstanding order, decree, judgment, stipulation or charge;
(d) no licenses, sublicenses or agreements pertaining to any of the
aforesaid have been granted or entered into by Seller; and
(e) Seller has not received any notice of interference or infringement
of any of the foregoing.
SECTION 3.14 CONTRACTS. All contracts, agreements, instruments, plans
---------
and leases which constitute Purchased Assets (the "Contracts"), are listed or
referred to in Schedule 3.14. Such contracts include:
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(a) all purchase orders, agreements or commitments obligating Seller
to purchase or sell any products or services and which (i) were not entered into
in the normal course of Seller's business, or (ii) are not terminable by Seller
without payment or penalty upon 60 days' (or less) notice, or (iii) are in
amounts which exceed $10,000;
(b) any joint venture, partnership or other arrangement involving a
sharing of profits involving Seller;
(c) any sales agency, brokerage, distribution or similar contract;
(d) any agreement which includes provisions regarding minimum
volumes or volume discounts;
(e) any agreement pursuant to which a rebate, discount, bonus,
commission or other payment with respect to the sale of any product of Seller
will be payable or required after the Closing; and
(f) any consulting agreement or arrangement.
Except as set forth in Schedule 3.14:
(i) all Contracts are in full force and effect and are valid,
binding and enforceable in accordance with their terms, except to the
extent such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights or by general equitable principles;
(ii) Seller is not, and, to the knowledge of Seller, no other
party to any Contract is, in breach of any provision of, in violation
of, or in default under the terms of any Contract;
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(iii) no event has occurred which, after the giving of notice or
passage of time or otherwise, would constitute a default under or
result in the breach of any Contract by Seller, or to the knowledge of
Seller, by any other party; and
(iv) Seller has delivered to Buyer accurate and complete copies of
each Contract.
SECTION 3.15 EMPLOYEES.
---------
(a) Schedule 3.15 contains a complete and accurate list and
description of all of the following to which Seller is a party or by which it is
bound:
(i) written employment contracts with employees of the
Business;
(ii) collective bargaining agreements;
(iii) incentive and bonus arrangements;
(iv) pension and retirement plans;
(v) profit sharing plans;
(vi) deferred compensation plans;
(vii) multi-employer health and welfare or benefit plans;
(viii) medical, life or health insurance plans;
(ix) stock purchase, stock option or similar plans; and
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(x) severance plans or policies.
(b) Schedule 3.15 also sets forth a list of all employees of the
Business on the Closing Date that have worked for the Company an average of 20
or more hours per week for the 90-day period prior to the Closing Date.
Except as set forth in Schedule 3.15, Seller has complied in all
material respects with its obligations related to, is not in default under, and
the transactions contemplated hereby will not affect, any of the foregoing.
Seller has delivered to Buyer a true and complete list of the name, position and
present rate of compensation, direct and indirect, including deferred payments
and accrued bonuses, of each employee of the Business. Except as set forth in
Schedule 3.15, there are no unfair labor practices, employment related
litigation, administrative proceedings or controversies pending or, to the
knowledge of Seller, threatened involving any employee of Seller. Seller is in
compliance in all material respects with its obligations under all statutes,
executive orders and other governmental regulations governing its employment
practices, including without limitation, provisions relating to wages, hours,
equal opportunity, discrimination in employment, and payment of social security
and other taxes. Seller has not suffered or sustained any labor disputes
resulting in any work stoppage and no such work stoppage is threatened. All
payments to employees which would have been paid in the ordinary course of
business on or before the Closing Date shall have been paid as of the Closing.
SECTION 3.16 TAXES. All federal, state and other tax returns, reports
-----
and declarations of every nature required to be filed by or on behalf of Seller
(either separately or as part of a consolidated group) prior to the Closing have
been timely filed and such returns, reports and declarations as so filed are
complete and accurate and disclose all taxes required to be paid for the periods
covered thereby. No extension of time in which to file any such returns,
reports and declarations is in effect, except for extensions to file federal and
related state income and franchise tax returns for the fiscal year ended
December 31, 1995. All taxes and all deficiency assessments, penalties and
interest relating to any period ending prior to the Closing shall have been paid
as of the Closing. All taxes, including estimated taxes, for periods beginning
before and ending on or after the Closing have been paid as required by law in a
timely manner. All taxes and other assessments and levies which Seller is
required by law to withhold or to collect
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for payment have been duly withheld and collected, and have been paid to the
proper governmental entity. There are no tax liens on any property of Seller and
no basis exists for any such liens. All deficiencies which have been asserted as
a result of such examinations have been fully paid or finally settled, and no
issue has been raised in any such examination which, by application of similar
principles, reasonably can be expected to result in assertion of a deficiency
for any other year not so examined. Seller has not executed or entered into a
closing agreement pursuant to Section 7121 of the Code, or any predecessor
provision or any similar provision of state, local or foreign law. There are no
outstanding agreements or waivers extending the statutes of limitations with
respect to the assessment of any federal income tax or other tax.
SECTION 3.17 LITIGATION. Except as set forth in Schedule 3.17, Seller
----------
is not engaged in or a party to or, to the knowledge of Seller, threatened with
any suit, action, proceedings, investigation or legal, administrative,
arbitration or other method of settling disputes or disagreements or
governmental investigation, and there exists no set of facts which could form a
basis for any such action with respect to Seller. There are no actions, suits,
proceedings, orders or investigations pending or threatened against or affecting
Seller at law or in equity, or before or by any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which might adversely affect Seller's
performance under this Agreement or the consummation of the transactions
contemplated hereby.
SECTION 3.18 COMPLIANCE WITH LAW, AND LICENSES AND PERMITS AND CONSENTS.
----------------------------------------------------------
(a) Except as set forth in Schedule 3.18 and in the other Schedules
attached hereto, Seller is not in violation of any law or regulation (including,
without limitation, any law or regulation pertaining to occupational safety or
health, environmental protection, price discrimination, antitrust, equal
employment opportunity, employees retirement income security) or other law,
ordinance, judicial decree, order or regulation caused by or resulting from its
use, possession or ownership of any of the assets or operation of the Business,
the violation of which would have a material adverse effect on the operation or
financial condition of the Business. No notice (the reason for which has not
been corrected) has been served upon Seller by any governmental body or other
person of any violation of any law, ordinance, code,
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rule or regulation or requiring or calling attention to the necessity of any
work, repairs, new construction, installation or alteration in connection with
any real or personal property or equipment of Seller.
(b) Seller has all material licenses, permits, approvals and other
authorizations as are necessary in order to enable it to own, operate, and use
its assets and conduct its business as it is currently being conducted and
occupy and lease its real property. All such licenses, permits, approvals,
franchises, clearances and authorizations are listed in Schedule 3.18, are in
full force and effect. Except as set forth in Schedule 3.18, no material
violations have been recorded or alleged in respect of any such licenses,
approvals or authorizations, and no proceeding is pending or, to the knowledge
of Seller, threatened or contemplated with respect to the revocation or
limitation of the same.
(c) Except as set forth on Schedule 3.18, there are no third party
consents required in order to permit or allow Buyer to own or operate the
Purchased Assets or the Business after Closing in materially the same way as
they were operated prior to Closing.
SECTION 3.19 ENVIRONMENTAL MATTERS. Except as disclosed in Schedule 3.19:
---------------------
(a) The use and operation by Seller of each facility used in the
Business has been and on the Closing Date will be in compliance in all material
respects with all Federal, state, and local environmental laws.
(b) Schedule 3.19 identifies all environmental audits or assessments
or occupational health studies undertaken by governmental agencies or by the
employees of Seller, the results of ground water and soil testing, the results
of underground fuel, water or waste tank tests and soil samples, written
communications with environmental agencies, and OSHA citations made within the
past five years.
(c) Except as provided in Schedule 3.19, Seller has never sent or
arranged for the transportation of hazardous substances or wastes to a site
which, pursuant to the Comprehensive Environmental Response Compensation and
Liability Act of 1980 ("CERCLA") or any similar state law: (i) has been placed
or is proposed (by the Environmental Protection
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Agency or relevant state authority) to be placed, on the "National Priorities
List" of hazardous waste sites or its state equivalent or on the Environmental
Response, Compensation and Liability Information System List, or (ii) is subject
to a claim, an administrative order or other request to take "removal" or
"remedial" action by any person as those terms are defined under CERCLA.
(d) Except as set forth in Section 3.19, there are no underground fuel
or other storage tanks located at any of the facilities of Seller.
SECTION 3.20 PROMOTIONAL PROGRAMS. Schedule 3.20 sets forth a general
--------------------
description of all performance, deal, promotional or other similar programs of
any kind, whether to the trade or consumers, which are outstanding and have not
been fully redeemed by Seller and the estimated costs of redemption associated
with all such programs.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
---------------------------------------
Buyer hereby represents and warrants:
SECTION 4.01 CORPORATE ORGANIZATION AND POWER. Buyer is a corporation
--------------------------------
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Buyer has full corporate power and authority
to execute, deliver and perform this Agreement and the other agreements
contemplated hereby.
SECTION 4.02 AUTHORIZATION. The execution, delivery and performance
-------------
by Buyer of this Agreement and the other agreements contemplated hereby have
been duly authorized by Buyer. The performance of this Agreement and the other
agreements contemplated hereby constitutes a valid and binding obligation of
Buyer, enforceable in accordance with its terms.
SECTION 4.03 NO VIOLATION. The execution, delivery and performance of
------------
this Agreement and the other agreements contemplated hereby by Buyer and the
consummation of the transactions contemplated hereby or thereby do not and will
not (a) conflict with or result in
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any breach of, (b) constitute a default under, (c) result in a violation of, or
(d) give any third party the right to accelerate any obligation under the
provisions of Buyer's certificate of incorporation or bylaws or any indenture,
mortgage, lease, loan agreement or other agreement or instrument to which Buyer
is bound or affected, or any law, statute, rule, regulation, judgment or decree
to which Buyer is subject.
SECTION 4.04 LITIGATION. There are no actions, suits, proceedings,
----------
orders or investigations pending or threatened against or affecting Buyer at law
or in equity, or before or by any federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which might adversely affect Buyer's performance under this
Agreement or the consummation of the transactions contemplated hereby.
ARTICLE 5
TERMINATION
-----------
SECTION 5.01 TERMINATION. This Agreement may be terminated at any
-----------
time prior to the Closing:
(a) by mutual written consent of Seller and Buyer;
(b) by either Seller or Buyer if there has been a material
misrepresentation or material breach of warranty on the part of the other party
in the representations and warranties set forth in this Agreement, or if events
have occurred which have made it impossible to satisfy a condition precedent to
the terminating party's obligations to consummate the transactions contemplated
hereby; or
(c) by either Seller or Buyer if the Closing hereunder has not been
consummated by August 15, 1996, provided that if a party's willful breach of
this Agreement has prevented the consummation of the transactions contemplated
hereby, that party shall not be entitled to terminate pursuant to this Section
5.01(c).
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SECTION 5.02 EFFECT OF TERMINATION. In the event of termination of
---------------------
this Agreement by either Seller or Buyer as provided above, this Agreement will
forthwith become void and there will be no liability on the part of either Buyer
or Seller, except for material willful breaches of and intentional misstatements
in or pursuant to this Agreement prior to the time of such termination.
SECTION 5.03 CONFIDENTIALITY. In the event of any termination of this
---------------
Agreement, each of Seller and Buyer shall treat as confidential and not
disclose, or use directly or indirectly for his, her or its benefit in any
manner whatsoever, or permit others under its control to disclose, or to use,
any information concerning another obtained pursuant to or in connection with
the transaction which is the subject of this Agreement which is not generally
known to the trade or a matter of public knowledge, and Seller and Buyer shall
each promptly return to the other or destroy upon written request all written
information and documents received from the other or its representatives,
including all copies thereof.
ARTICLE 6
ADDITIONAL AGREEMENTS
---------------------
SECTION 6.01 SURVIVAL. The representations, warranties, covenants and
--------
agreements set forth in this Agreement will survive the Closing Date and the
consummation of the transactions contemplated hereby; provided, however, that
the representations and warranties of Seller contained in Section 3.16 shall
survive until 90 days after the later of (i) the date on which the applicable
period of limitation on assessment or refund, of tax has expired or (ii) the
date on which the applicable taxable year has been closed, and the
representations and warranties of Seller contained elsewhere in Article 3 and
the representations and warranties of Buyer contained in Article 4 shall survive
only until the first anniversary of the Closing Date. No claim for the recovery
of indemnifiable damages based upon the inaccuracy of such representations and
warranties may be asserted by a party after such representations and warranties
shall be thus extinguished; provided, however, that claims first asserted in
writing within the applicable period shall not thereafter be barred.
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SECTION 6.02 INDEMNIFICATION.
---------------
(a) Seller agrees to indemnify Buyer and hold it harmless against any
loss, liability, damage or expense (including reasonable legal expenses and
costs) which Buyer may suffer, sustain or become subject to, as the result of a
breach of any representation, warranty, covenant, or agreement by Seller
contained in this Agreement or the other agreements contemplated hereby, or the
failure of Seller to pay, discharge or perform any of the Excluded Liabilities;
provided, however, that Seller will not be liable for any such loss, claim,
damage, liability, or expense arising out of a breach by Seller of any
representation or warranty contained in Article 3 unless the aggregate amount of
all such losses, claims, damages, liabilities, and expenses resulting to Buyer
from all such breaches or claims exceeds $150,000 (the "Allowance"), in which
case Seller will be liable for all such amounts in excess of the Allowance.
(b) Buyer agrees to indemnify Seller and hold it harmless against any
loss, liability, damage or expense (including reasonable legal expenses and
costs) which Seller may suffer, sustain or become subject to, as the result of a
breach of any representation, warranty, covenant, or agreement by Buyer
contained in this Agreement, or any failure to perform the Assumed Liabilities,
and shall indemnify Seller and hold it harmless against any and all actions,
suits, claims and other proceedings which arise directly or indirectly out of
the operation of the Business after the Closing (other than any such losses
arising as a direct result of a breach by Seller of any representation or
warranty set forth in Article 3 hereof), including without limitation the
manufacture, distribution, marketing and sale of products; provided, however,
that Buyer will not be liable for any such loss, claim, damage, liability, or
expense arising out of a breach by Buyer of any representation or warranty
contained in Article 4 unless the aggregate amount of all such losses, claims,
damages, liabilities, and expenses resulting to Seller from all such breaches or
claims exceeds the Allowance, in which case Buyer will be liable for all such
amounts in excess of the Allowance.
(c) Promptly, but in no event later than 10 days, after receipt by
Buyer or Seller (in any such case, the "Beneficiary"), of written notice of any
claim or potential claim by any third party, which could give rise to a right to
indemnification pursuant to Section 6.02(a) or (b), the Beneficiary, as the case
may be, shall give the party who may become obligated to
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provide indemnification hereunder written notice describing such claim in
reasonable detail to the extent then known. Failure to give notice shall not
affect the indemnifying party's obligations hereunder, except to the extent it
is materially prejudiced by the Beneficiary's failure to give timely notice.
After the indemnifying party has acknowledged in writing that it is indemnifying
the other party with respect to litigation involving any claim, the indemnifying
party will be entitled to assume the defense of any such litigation, provided
that the other party may at its election participate in any such defense to the
extent that it in its sole discretion believes that such litigation will
materially affect its ongoing business. At the indemnifying party's reasonable
request, the other party will cooperate with the indemnifying party in the
preparation of any such defense (including Seller's defense of an Excluded
Liability or Buyer's defense of an Assumed Liability), and the indemnifying
party will reimburse the other party for any expenses incurred in connection
with such request.
(d) The indemnification rights provided in this Section 6.02, Section
6.03, Section 6.09 and Section 7.10 shall be the sole and exclusive remedy
available to each of the parties to this Agreement as against the other party
for any misrepresentation, breach of warranty or failure to fulfill any covenant
or agreement contained herein or in connection with any of the transactions
contemplated hereby.
SECTION 6.03 WARN ACT INDEMNIFICATION.
------------------------
(a) Buyer agrees to indemnify Seller from and against any loss,
liability or damage, including attorneys' fees, for severance liability or other
similar payments suffered by Seller with respect to any employee of the Business
as of the Closing Date who is not offered employment by Buyer following the
Closing Date, or who is hired by Buyer but discharged or laid off on or before
the 90th day after Closing.
(b) Buyer further agrees to indemnify Seller from and against any
loss, liability or damage, including any penalties of salaries and benefits
required to be paid by Seller to its former employees of the Business as of the
Closing Date in lieu of notice, as well as reasonable attorney's fees and
expenses, arising out of or related to any failure by Buyer or Seller to comply
with the provisions and requirements of the Work Adjustment and Retraining
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Notification Act (29 U.S.C. (S)2101 et seq.) (the "WARN Act"), or any similar
state law providing comparable protection to employees.
(c) Buyer represents that it does not contemplate a plant closing or
mass lay-off of employees of the Business (as such terms are defined in the WARN
Act), or any terminations that in the aggregate would constitute a mass lay-off
of employees of the Business, within 90 days of the Closing.
(d) The indemnification provisions of this Section 6.03 shall not be
subject to the Allowance limitations set forth in the last sentence of Section
6.02(b).
SECTION 6.04 CONTINUING ASSISTANCE. At any time and from time to time
---------------------
after the Closing, at Buyer's request and without further consideration or
compensation whatsoever, Seller will execute and deliver such other instruments
of sale, transfer, conveyance, assignment and confirmation and take such action
as Buyer may reasonably deem necessary or desirable in order to more effectively
transfer, convey and assign to Buyer, and to confirm Buyer's title to, all of
the Purchased Assets, to put Buyer in actual possession and operating control
thereof and to assist Buyer in exercising all rights with respect thereto.
Subsequent to the Closing, Seller will refer all customer, supplier, and other
inquires relating to the Business to Buyer.
SECTION 6.05 EXPENSES AND TRANSFER TAXES.
---------------------------
(a) Except as otherwise expressly provided herein, each party will pay
all of its expenses, including attorneys' and accountants' fees, in connection
with the negotiation of this Agreement, the performance of its obligations
hereunder (whether or not the Closing occurs), and the consummation of the
transactions contemplated by this Agreement.
(b) Buyer will pay all federal, state, county or local sales, excise,
value added, use, registration, stamp or other transfer taxes and similar taxes,
levies, charges or fees required to be paid on the transfer of any of the
Purchased Assets. The parties will cooperate in providing each other with
appropriate resale exemption certification and other similar tax and fee
documentation.
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SECTION 6.06 PRESS RELEASES AND ANNOUNCEMENTS. No press releases,
--------------------------------
announcements or other disclosure related to this Agreement or the transactions
contemplated herein will be issued or made without the joint approval of Buyer
and Seller, except for any public disclosure which Buyer or Seller in good faith
believes is required by law (in which case the disclosing party will consult
with the other party prior to making such disclosure), provided, however, that
nothing set forth above shall in any way prevent Buyer from making releases,
announcements, or other disclosures about the operation of the Business after
Closing. Buyer and Seller will cooperate to prepare a joint press release to be
issued on the Closing Date.
SECTION 6.07 CHANGE OF SELLER'S NAME. Immediately following the
-----------------------
Closing, Seller shall file all necessary documents to change its corporate name
to "TBP, Inc.," or to such other name subject to Buyer's approval which shall
not be unreasonably withheld or delayed and to withdraw its qualification to
transact business under its corporate name from each jurisdiction in which it
was qualified to transact business.
SECTION 6.08 CONTINUING ACCESS TO RECORDS.
----------------------------
(a) For a period of not less than five years from the Closing Date
(plus any additional time during which a party has been advised that (i) there
is an ongoing tax audit with respect to periods prior to the Closing Date, or
(ii) such period is otherwise open to assessment) Buyer agrees to give Seller
reasonable cooperation, access, and staff assistance, as needed, during normal
business hours with respect to books and records and other financial data
delivered to Buyer hereunder and Seller agrees to give Buyer reasonable
cooperation, access, and staff assistance as needed, during normal business
hours with respect to books and records and other financial data retained by
Seller, as may be necessary for general business purposes, including, without
limitation for (x) the preparation of tax returns and financial statements, and
(y) the management and handling of tax audits, to an extent as will not
unreasonably interfere with a party's conduct of its business, and to keep such
materials reasonably accessible, and a party will not destroy or otherwise
dispose of such materials for such time without the written consent of the other
party.
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(b) Within 60 days of the acceptance of the Adjusted Closing Date Net
Asset Statement, Buyer and its employees will assist Seller in providing all
necessary information for Seller to prepare its federal and state filings for
the fiscal year ended December 28, 1996.
SECTION 6.09 BULK TRANSFER LAWS. Buyer hereby waives compliance by
------------------
Seller with the provisions of any so-called bulk transfer laws of any
jurisdiction in connection with the sale of the Purchased Assets.
Notwithstanding anything to the contrary in Section 6.02, Seller agrees to
indemnify Buyer against all liability, damage or expense which Buyer may suffer
due to the failure to so comply.
SECTION 6.10 ALLOCATION OF PURCHASE PRICE AND ASSUMED LIABILITIES.
----------------------------------------------------
Buyer and Seller agree to discuss prior to the Closing Date the allocation of
the Purchase Price and the Assumed Liabilities. In the event Buyer and Seller
agree on such an allocation prior to the Closing Date, such allocation shall be
reflected in an allocation schedule which shall be attached to this Agreement
prior to the Closing. In the event such a schedule is so attached, Buyer and
Seller agree to allocate the Purchase Price and the Assumed Liabilities in
accordance with such schedule, to be bound by such allocations for all purposes,
to account for and report the purchase and sale contemplated hereby for all
purposes (including, without limitation, financial, accounting and tax purposes)
in accordance with such allocations, and not to take any position (whether in
financial statements, audits, tax returns or otherwise) which is inconsistent
with such allocations without the prior written consent of the other, except to
the extent such consistency is not permitted by applicable law or generally
accepted accounting principles. The parties will exchange drafts of any
information returns required by IRC Section 1060 and any similar state statutes,
at least ten days prior to filing such returns and will discuss in good faith
any modifications suggested by the receiving party. In the event Buyer and
Seller fail to agree on the allocation of the Purchase Price and the Assumed
Liabilities prior to the Closing Date, all references to an allocation of
Purchase Price and Assumed Liabilities in this Agreement shall be of no force
and effect. Buyer and Seller agree to make all reasonable efforts to agree to
an allocation of Purchase Price within 60 days of the acceptance of the Adjusted
Closing Date Net Asset Statement.
SECTION 6.11 THIRD PARTY BENEFICIARIES. This Agreement does not
-------------------------
create any rights in parties who are not a party to this Agreement.
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SECTION 6.12 PAYROLL TAXES. Buyer and Seller agree that the payroll
-------------
taxes of the employees of the Business who are hired by Buyer will be treated in
accordance with the Alternate Procedure of Section 5 in Revenue Procedure 84-77.
ARTICLE 7
MISCELLANEOUS
-------------
SECTION 7.01 AMENDMENT AND WAIVER.
--------------------
(a) This Agreement may be amended, or any provision of this Agreement
may be waived, provided that any such amendment or waiver will be binding upon
Seller only if set forth in a writing executed by Seller, and any such amendment
or waiver will be binding upon Buyer only if set forth in a writing executed by
Buyer.
(b) No course of dealing between or among any persons having any
interest in this Agreement will be deemed effective to modify, amend or
discharge any part of this Agreement or any rights or obligations of any person
under or by reason of this Agreement.
SECTION 7.02 NOTICES. Except as otherwise expressly set forth in this
-------
Agreement, all notices, demands and other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given and to have been received when
delivered personally, or by documented overnight delivery service, or sent by
telecopy, telefax, or other electronic transmission service, provided a
confirmation copy is also sent no later than the next business day by first
class mail, return receipt requested. Notices, demands and communications to
Buyer or Seller will, unless another address is specified in writing, be sent to
the address indicated below:
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NOTICES TO SELLER: WITH A COPY TO:
Metz Baking Company Specialty Foods Corporation
520 Lake Cook Road, Suite 520 9399 West Higgins Road, Suite 800
Deerfield, IL 60015 Rosemont, IL 60018
Attention: General Counsel Attention: General Counsel
Fax: 847/267-0015 Fax: 847/685-1010
NOTICES TO BUYER: WITH A COPY TO:
Silverado Foods, Inc. Conners & Winters
6846 S. Canton 2400 First National Tower
Suite 110 15 East 5th Street
Tulsa, OK 74136 Tulsa, OK 74103-4391
Attention: Lawrence Field Attention: R. Kevin Redwine, Esq.
Fax: 918/491-6290 Fax: 918/586-8549
SECTION 7.03 ASSIGNMENT. This Agreement and all of the provisions
----------
hereof will be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations hereunder may be
assigned by either party without prior written consent of the other party.
SECTION 7.04 SEVERABILITY. Whenever possible, each provision of this
------------
Agreement will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provisions will be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of such provision or the remaining provisions of this Agreement.
SECTION 7.05 NO STRICT CONSTRUCTION. The language used in this
----------------------
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be applied
against any person.
SECTION 7.06 CAPTIONS. The captions used in this Agreement are for
--------
convenience of reference only and do not constitute a part of this Agreement and
will not be deemed to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement will be enforced and
construed as if no caption had been used in this Agreement.
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SECTION 7.07 COMPLETE AGREEMENT. This document and the documents
------------------
referred to herein contain the complete agreement between the parties and
supersede any prior understandings, agreements or representations by or between
the parties, written or oral, which may have related to the subject matter
hereof in any way.
SECTION 7.08 GOVERNING LAW. The substantive law (and not the law of
-------------
conflicts) of the State of California will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
SECTION 7.09 COUNTERPARTS. This Agreement may be executed in one or
------------
more counterparts (including by means of Faxed signature pages), any one of
which need not contain the signatures of more than one party, but all such
counterparts taken together will constitute one and the same instrument.
SECTION 7.10 BROKERAGE. Buyer has not used a broker in connection
---------
with the transactions contemplated by this Agreement, and there are no claims
for brokerage commissions, finders' fees or similar compensation in connection
with the transactions contemplated by this Agreement based on any arrangement or
agreement by or on behalf of Buyer. Seller has not retained any broker or
finder or incurred any liability or obligation for any brokerage fees,
commissions or finder's fees with respect to this Agreement or the transactions
contemplated hereby. Notwithstanding anything to the contrary in Section 6.02,
Buyer will indemnify Seller for any breach of its representation in this
Section, and Seller will indemnify Buyer for any breach of their representation
in this Section.
SECTION 7.11 SCHEDULES. The disclosures in the Schedules hereto are
---------
to be taken as relating to the representations and warranties as a whole.
SECTION 7.12 WAIVER OF TRIAL BY JURY. Buyer and Seller each waive any
-----------------------
right to trial by jury with respect to any claim or action arising out of this
Agreement, any Schedule hereto or any action or omission of Buyer or Seller in
connection with the transactions contemplated hereby or thereby.
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SECTION 7.13 REPRESENTATION BY COUNSEL, INTERPRETATION. Seller and
-----------------------------------------
Buyer each acknowledges that it has been represented by counsel in connection
with this Agreement and the transactions contemplated by this Agreement.
Accordingly, any rule of law or any legal decision that would require
interpretation of any claimed ambiguities in this Agreement against the party
that drafted it has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to effect the intent
of Buyer and Seller.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SILVERADO FOODS, INC.
By: /s/ Lawrence D. Field
----------------------------
Name: Lawrence D. Field
----------------------------
Title: Chairman & CEO
----------------------------
"BUYER"
THE BAGEL PLACE, INC.
By: /s/ Robert B. Aiken
----------------------------
Name: Robert B. Aiken
----------------------------
Title: Vice President
----------------------------
"SELLER"
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