<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 of 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) January 20, 1997
-------------------------------
Central Garden & Pet Company
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(Exact name of registrant as specified in its charter)
Delaware 0-20242 68-0275553
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(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
3697 Mt. Diablo Boulevard, Lafayette, California 94549
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (510) 283-4573
------------------------------
Inapplicable
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(Former name or former address if changed since last report)
Exhibit Index located on page 3
<PAGE>
Item 2. Acquisition or Disposition of Assets
------------------------------------
On January 20, 1997, Central Garden & Pet Company ("Central") issued a
press release announcing the consummation of the acquisition of the
outstanding stock of Four Paws Products, Ltd. ("Four Paws") for $45
million in cash and $10 million in Central common stock (494,944
shares). All of such shares were issued to Allen Simon, the sole
shareholder of Four Paws, and are subject to a lockup agreement which
provides for certain restrictions on the resale of such shares for a
period of two years. Four Paws is a manufacturer of branded pet supply
products based in Hauppauge, New York.
Item 7. Financial Statement and Exhibits
--------------------------------
(a)(1) Financial Statements of Four Paws will be filed within 60
days by amendment to this Form 8-K.
(a)(2) Accountants' report will be filed within 60 days by
amendment to this Form 8-K.
(b)(1) Pro Forma Condensed Financial Information will be filed
within 60 days by amendment to this Form 8-K.
(c) See attached Exhibit Index.
2
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EXHIBIT INDEX
Number Exhibit
- ------ -------
1.1 Press Release dated January 20, 1997.
1.2 Stock Purchase Agreement dated as of
December 17, 1996.*
* The schedules and exhibits to this agreement, as set forth in the Table of
Contents located on page (i), have not been filed herewith, pursuant to Item
601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a
copy of any omitted schedule or exhibit to the Commission upon request.
3
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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 hereunto duly authorized.
CENTRAL GARDEN & PET COMPANY
By /s/ Robert B. Jones
-----------------------------------
Robert B. Jones, Vice President
and Chief Financial Officer
Dated: January 21, 1997
4
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EXHIBIT 1.1
[LETTERHEAD OF CENTRAL GARDEN & PET]
FOR IMMEDIATE RELEASE
- ---------------------
Contacts: Gregory Reams Debbie Miller/Shelley Young
Central Garden & Pet Sard Verbinnen & Co
510/283-4573 212/687-8080
CENTRAL GARDEN & PET COMPANY ACQUIRES
FOUR PAWS PRODUCTS LTD.
------------------------
LAFAYETTE, CA, JANUARY 20, 1997 -- Central Garden & Pet Company
(NASDAQ:CENT) today announced that it has acquired Four Paws Products, Ltd., a
manufacturer of branded pet supply products based in Hauppauge, New York for $45
million in cash and $10 million in Central common stock.
Four Paws is one of the largest manufacturers of dog, cat, reptile and
small animal products in the United States, under brand names which include
Magic Coat(R), Four Paws(R) and Wee-Wee Pads(R). Four Paws products are
distributed throughout the United States, Canada, Europe and Asia. Sales in 1996
were approximately $30 million.
"The acquisition of Four Paws is another major step in our branded products
strategy, and continues to strengthen our position in the pet supplies
industry," said William E. Brown, Chairman and Chief Executive Officer of
Central. "Branded products are an increasingly significant part of Central's
business and an area in which Central has made great progress in the last year.
We're pleased that Allen J. Simon, President of Four Paws and the person most
responsible for its success, has agreed to join the Central team and continue to
contribute his expertise to our enterprise."
Said Simon: "Four Paws is a great fit with Central. With Central's strong
focus on branded products and commitment to growing that segment of its
business, I believe Four Paws products will quickly achieve a higher profile and
stronger presence in the rapidly growing pet supplies marketplace."
Central Garden & Pet Company is the leading national distributor of lawn,
garden and pet supply products, and a major national distributor of pool
supplies.
-more-
<PAGE>
-2-
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995: The statements contained in this release which are not historical facts
are forward-looking statements that are subject to risks and uncertainties that
could cause actual results to differ materially from those set forth in or
implied by forward-looking statements. These risks are described in the
Company's Securities and Exchange Commission filings.
# # #
<PAGE>
EXHIBIT 1.2
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STOCK PURCHASE AGREEMENT
Effective as of December 17, 1996
between
THE STOCKHOLDER OF
FOUR PAWS PRODUCTS, LTD.
and
CENTRAL GARDEN & PET COMPANY
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<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
I REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER.. 1
II ADDITIONAL REPRESENTATIONS AND WARRANTIES OF THE
STOCKHOLDER....................................... 10
III REPRESENTATIONS AND WARRANTIES OF CENTRAL.......... 11
IV COVENANTS.......................................... 13
V THE STOCKHOLDER'S CONDITIONS PRECEDENT............. 15
VI CENTRAL'S CONDITIONS PRECEDENT..................... 16
VII OTHER AGREEMENTS................................... 17
VIII TERMINATION........................................ 18
IX CLOSING............................................ 18
X [INTENTIONALLY LEFT BLANK]......................... 19
XI INDEMNIFICATION.................................... 20
XII GENERAL............................................ 21
Exhibit I - Stockholder List
Exhibit II - Text of Stockholder Counsel Opinion
Exhibit III - Text of Central's Counsel Opinion
Exhibit IV - Employment Agreement
Exhibit V - Noncompetition Agreement
Exhibit VI - Lockup Agreement
Exhibit VII - Sublease
i
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT intended by the parties to be effective for
accounting and change of control purposes as of December 17, 1996 (the
"Effective Date") between Central Garden & Pet Company, a Delaware corporation
("Central"), and Allen J. Simon ("Stockholder"), a stockholder of Four Paws
Products, Ltd., a New York corporation ("Four Paws"), PetLife, Inc. dba Jodi
International, a New York corporation ("Jodi"), and A.P.O.F.P, Inc. dba U.S.Pin,
a Delaware corporation ("APOFP"), (collectively, the "Company"). References
herein to the Subsidiaries shall be deemed to mean the Company's wholly owned
subsidiary, Cynal Corp. ("Cynal"), and its wholly owned subsidiary, Mustang
Products, Inc. ("Mustang").
WHEREAS, the Stockholder owns all of the issued and outstanding
capital stock of Four Paws and Jodi and 60% of the issued and outstanding
capital stock of APOFP ("Shares") of the Company.
WHEREAS, the Stockholder desires to sell to Central and Central
desires to purchase from the Stockholder all of the Shares.
WHEREAS, the Board of Directors of Central has approved the
acquisition of the Shares by Central on the term and conditions hereinafter set
forth.
NOW, THEREFORE, in consideration of the agreements hereinafter set
forth the parties hereto agree as follows:
I
REPRESENTATIONS AND
WARRANTIES OF THE STOCKHOLDER
-----------------------------
1.00 The Stockholder represents and warrants to Central, as follows:
1.01 Each of the Company and its Subsidiaries is a corporation duly
organized, existing and in good standing under the laws of its state of
incorporation, has full power and authority to own its properties and to carry
on its business as now conducted, and is in good standing and duly qualified to
conduct business as a foreign corporation in each of the jurisdictions in which
the ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to qualify will not have a
materially adverse effect on the Company and Subsidiaries, taken as a whole.
<PAGE>
1.02 Attached hereto as Schedule 1.02 is a schedule setting forth the
outstanding capital stock of the Company and each of its Subsidiaries. Except as
set forth on Schedule 1.02, all of the Shares are owned of record and
beneficially by the Stockholder. No other shares of capital stock of the Company
and Subsidiaries are issued or outstanding. Except as set forth in Schedule
1.02, all of the Shares are validly issued, fully paid and nonassessable, and
there are no options, calls, warrants or other securities or rights outstanding
which are convertible into, exercisable for or relate to any shares of capital
stock of the Company or Subsidiaries.
1.03 Except as set forth in Schedule 1.02, the Company owns all of
the stock of Cynal, and Cynal owns all of the stock of Mustang. All of the
outstanding shares of Cynal and Mustang are validly issued, fully paid and
nonassessable, and there are no options, calls, warrants or other securities or
rights outstanding which are convertible into, exercisable for or relate to any
shares of capital stock of Cynal or Mustang. Except for Cynal and Mustang, the
Company does not own, directly or indirectly, any interest or have any
investment or financial interest in any corporation or other business.
1.04 Except for the ownership of non-controlling interests in
securities of corporations the shares of which are publicly traded or as set
forth on Schedule 1.04, the Stockholder does not own directly or indirectly, any
interest or have any investment or profit participation in a corporation or
other entity which is a competitor or which directly or indirectly, does
business with the Company or Subsidiaries.
1.05 Schedule 1.05(a) consists of copies of the Four Paws' unaudited
statements of income and cash flows for, each of the two fiscal years ended
December 31, 1994 and 1995. On or before the Closing, Schedule 1.05(a) will be
amended to include copies of the draft consolidated balance sheet and statements
of income and cash flows of the Company and consolidated subsidiaries (exclusive
of footnotes) as of December 31, 1996 and for the fiscal year then ended, which
will subsequently be audited by Deloitte & Touche LLP. The financial statements
contained or to be contained in Schedule 1.05(a) inclusive of the Audited 1996
Financial Statements (hereinafter defined) (hereinafter collectively referred to
as the "Company Financial Statements"):
(i) present fairly the results of operations and cash flows for the
Company for 1994 and 1995.
(ii) in the case of the audited financial statements which will be
prepared from the draft 1996 financial statements contained in Schedule
1.05(a) and will subsequently be incorporated in Schedule 1.05(a) (the
"Audited 1996 Financial Statements"), (x) present fairly the results of
operations and cash flows for the Company and Subsidiaries for the fiscal
year ended December 31, 1996 (y) present fairly the financial position of
the Company as of December 31, 1996 and (z) have been prepared pursuant to
and in accordance with generally accepted accounting principles.
2
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Notwithstanding anything else herein contained, the representations
contained in this Agreement with respect to the Audited 1996 Financial
Statements shall be inoperative to the extent of any material differences (other
than the inclusion of the footnotes) between the Audited 1996 Financial
Statements and the draft 1996 financial statements included in Schedule 1.05(a).
1.06 Adequate provision has been timely made in the Company Financial
Statements for doubtful accounts and other receivables in accordance with
generally accepted accounting principles; and the Company and Subsidiaries did
not and do not have any liability or obligation, whether accrued, absolute or
contingent, arising out of transactions entered into or any fact existing on or
prior to the dates of the Company Financial Statements, not reflected therein
that should be reflected therein in accordance with generally accepted
accounting principles. Any items of income or expense which are unusual or of a
nonrecurring nature have been separately disclosed in the Company Financial
Statements in accordance with generally accepted accounting principles or will
be separately shown on Schedule 1.06.
1.07 Except as set forth in Schedule 1.07, all federal, state and
local tax returns and reports of the Company and Subsidiaries required by law to
be filed have been duly and timely filed or an extension obtained, and all
taxes, fees or other governmental charges of any nature shown on such returns
and reports have been paid or are currently provided for on the books of the
Company and Subsidiaries. There is no deficiency or additional tax or
governmental charge proposed or asserted by any taxing authority, and there is
no tax proceeding pending before any agency or court to which the Company or the
Subsidiaries is a party, nor is there any basis for any such proceeding.
With respect to all taxing authorities having jurisdiction, no
material unpaid tax liabilities of the Company or the Subsidiaries exist which
are not disclosed in the balance sheet of the Company included in the Audited
1996 Financial Statements that should be disclosed therein in accordance with
generally accepted accounting principles assuming for purposes hereof that the
Company files a consolidated tax return with Central for the fiscal year ending
September 30, 1997. There are no unpaid taxes of the Company which are a lien
on its properties and assets, except liens for taxes not yet due and payable.
The charges, accruals and reserves shown in the Audited 1996 Financial
Statements in respect of all taxes for all fiscal periods to date, whether or
not yet ended, are adequate and in accordance with generally accepted accounting
principles.
The federal income tax returns of Four Paws have been examined by the
Internal Revenue Service through December 31, 1995. There are no open returns
for any period ending on or before such date. No consents extending the statute
of limitations have been filed by the Company with respect to the Company's tax
liability for any fiscal year. Neither the Company nor any Subsidiary has made
or become obligated to make any payments that will not be deductible under
Section 280(g) of the Internal Revenue Code of 1986, as amended (the "Code").
Neither the Company nor any Subsidiary has been a United States real property
holding corporation within the meaning of Section 897(c) of the Code. All
monies required to be withheld by the Company or the Subsidiaries from employees
for income taxes, social
3
<PAGE>
security and unemployment insurance taxes, or required to be withheld with
respect to backup withholding or U.S. tax withholding, have been collected or
withheld, and either paid to the respective governmental agencies or set aside
in accounts for such purpose, or accrued, reserved against, and entered upon the
books of the Company. The Company has not filed any consent under Section
341(f) of the Internal Revenue Code. Neither the Company nor any Subsidiary is
a party to any election or consent with respect to taxes not disclosed in
Schedule 1.07. Neither the Company nor any Subsidiary owns any interest in a
"passive foreign investment company" as that term is defined in 1296 of the
Code, is a beneficiary of a foreign trust the distributions of which may be
subject to the interest charge determined under section 668 of the Code.
1.08 Except as set forth in Schedule 1.08, since December 31, 1995,
there has been no material adverse change in the business, properties, financial
position, results of operations, assets, prospects or net worth of the Company
and the Subsidiaries.
1.09 Except as set forth in Schedule 1.09, since December 31, 1995,
the business of the Company and the Subsidiaries has been conducted in the
ordinary course. Without limiting the generality of the foregoing, except as
set forth in Schedule 1.09, neither the Company nor the Subsidiaries have:
(i) issued capital stock or declared or paid a dividend or made any
other payment from capital or surplus or other distribution of any nature,
or, directly or indirectly, redeemed, purchased or otherwise acquired or
recapitalized or reclassified any of its capital stock or liquidated in
whole or in part;
(ii) merged or consolidated with another corporation;
(iii) created, incurred or assumed or committed to create, incur or
assume indebtedness or other liability, except for (x) indebtedness or
other liabilities less than $100,000 in the aggregate, or (y) for accounts
payable or other current liabilities which (1) are not for borrowed money,
(2) were incurred in the usual and ordinary course of business, and (3) are
not materially adverse to the business, properties, financial position or
results of operations of the Company and the Subsidiaries;
(iv) mortgaged, pledged or otherwise encumbered any of its assets
other than in the ordinary course of business;
(v) raised salaries, hourly rates or the rate of bonuses or
commissions or other compensation, except for normal increases therein
consistent with past practice;
(vi) altered or amended its Articles of Incorporation or By-laws;
(vii) entered into, materially amended or terminated any material
contract, agreement, franchise, permit or license except in the ordinary
course of business;
4
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(viii) acquired or agreed to acquire any assets which are material,
individually or in the aggregate, to the Company and the Subsidiaries,
except in its ordinary course of business consistent with prior practice;
(ix) sold, leased or otherwise disposed of any of its assets, which
are material, individually or in the aggregate, to the Company and the
Subsidiaries, except in the ordinary course of business consistent with
prior practice;
(x) adopted or amended in any material respect any agreement with
employees or benefit plans, other than in the ordinary course of business
consistent with prior practice; or
(xi) sustained any material loss or damage to its properties, whether
or not insured.
1.10 Schedule 1.10 contains a true and correct list of the Company's
largest 20 customers for the last two years. Except as set forth in Schedule
1.10, neither the Company nor the Stockholder has knowledge which might
reasonably indicate that any of the Company's 20 largest customers (based on
Company sales for fiscal 1996) intends to cease dealing with the Company or
materially reduce its business with the Company.
1.11 Included in Schedule 1.11 is a list and complete description of
all executory contracts, agreements and commitments, written and oral, and other
instruments to which the Company or any Subsidiary is a party of the following
nature (the "Contracts"): (i) written contract for employment of any employee;
(ii) profit sharing, bonus, deferred compensation, stock option, severance pay,
pension or retirement plan or material agreement or other employee benefit plan
or material agreement; (iii) agreement or arrangement for the sale (otherwise
than in the ordinary course of business) of any material assets; (iv) agreement,
contract or indenture relating to the borrowing of money; (v) agreement with
unions; (vi) material governmental permit or registration; (vii) lease of any
real or personal property involving an annual rental of $50,000 or more; (viii)
agreement restricting the Company or any Subsidiary from competing with any
person or in any geographic area; and (ix) any other material contract,
agreement or commitment to which the Company or any Subsidiary is a party.
Except as indicated in Schedule 1.11 hereto, none of the Contracts
involves as a party any officer or director of the Company or any Subsidiary or
any corporation, firm or individual in which any such person has any direct or
indirect interest, or with whom such person has any direct or indirect relation
by blood or marriage or adoption.
The Company and the Subsidiaries have performed in all material
respects all the obligations required to be performed by them to date under the
Contracts, are not in default in any respect under any such Contract except as
will not have a material adverse effect on the Company and the Subsidiaries and
except as set forth in Schedule 1.11 have not received any notice, written or
oral, of any claim, charge or threat that it has materially breached any such
Contract. All other parties to such Contracts are in compliance therewith and
none are in default
5
<PAGE>
thereunder except as will not have a material adverse effect on the Company and
the Subsidiaries.
1.12 Neither the Company nor the Stockholder has knowledge that any
officer or other key employee of the Company intends to terminate or has
indicated that he is considering the termination of his employment.
1.13 No employees of the Company are, and since January 1, 1993 no
employees of the Company have been, represented by a union or other labor
organization. Since January 1, 1993, there have been no labor disputes to which
the Company has been a party and it has not received notice from any union or
employee setting forth demands for representation, elections or for present or
future changes in wages, terms of employment or working conditions.
1.14 Except as set forth on Schedule 1.14 hereto, neither the Company
-------------
nor the Subsidiaries maintains or has any obligation to make contributions to,
any employee benefit plan (an "ERISA Plan") within the meaning of Section 3(3)
----- ----
of the United States Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or any other retirement, profit sharing, stock option, stock bonus or
-----
employee benefit plan (a "Non-ERISA Plan"). All such ERISA Plans and Non-ERISA
--------------
Plans have been maintained and operated in all material respects in accordance
with all federal, state and local laws applicable to such plans and the terms
and conditions of the respective plan documents. The Internal Revenue Service
has issued a favorable determination letter with respect to each ERISA Plan that
is intended to be a "qualified plan" within the meaning of Section 401(a) of the
Internal Revenue Code of 1986, as amended (the "Code"). Except as set forth on
----
Schedule 1.14 hereto, no ERISA Plan is subject to Title IV or Section 302 of
ERISA or Section 412 of the Code. No ERISA Plan is a "multiemployer plan"
within the meaning of Section 4001(a)(3) of ERISA (a "Multiemployer Plan") or a
------------- ----
plan that has two or more contributing sponsors at least two of whom are not
under common control, within the meaning of Section 4063 of ERISA (a "Multiple
--------
Employer Plan"), nor has the Company at any time contributed to, or been
- -------- ----
obligated to contribute to, any Multiemployer Plan or any Multiple Employer
Plan. The Company has never been a member of a group described in Sections
414(b), (c), (m) or (o) of the Code. Except for continuation coverage as
required by Section 4980(B) of the Code or by applicable state insurance laws,
no ERISA Plan or Non-ERISA Plan provides life, health, medical or other welfare
benefits to former employees or beneficiaries or dependents thereof.
1.15 The Company has full corporate power and authority to perform
all of the transactions contemplated by this Agreement. This Agreement has been
duly authorized, executed and delivered by the Stockholder in accordance with
law and is a valid and legally binding obligation of the Stockholder. The
consummation of the transactions contemplated herein will not constitute or
cause a breach or violation of the Articles of Incorporation, By-Laws or other
covenants or obligations binding upon the Company or materially and adversely
any of its properties, or cause a lien or other encumbrance to attach to any of
its properties, or result in the acceleration of or the right to accelerate any
obligation under or the termination of or the right to terminate any license,
franchise, lease, permit, approval or
6
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agreement to which the Company is a party, or require a consent of any person to
prevent such breach, default, violation, lien, encumbrance, acceleration, right
or termination.
1.16 Except as set forth on Schedule 1.16, no approval of or filing
with a federal, state or local court, authority or administrative agency is
necessary to authorize the execution and delivery of this Agreement, an
Employment Agreement in substantially the form of Exhibit IV attached hereto, a
Noncompetition Agreement in substantially the form of Exhibit V attached hereto
and a Lockup Agreement in substantially the form of Exhibit VI attached hereto
(collectively the "Ancillary Agreements") by the Company or the Stockholder or
the consummation by the Company or the Stockholder of the transactions
contemplated herein or therein, except for the filing with the United States
Federal Trade Commission and the Department of Justice of premerger notification
reports generally required by law.
1.17 All inventory classified as such in the December 31, 1996
balance sheet included in the Audited 1996 Financial Statements (the "Balance
Sheet") and all additions to inventory since the date of the Balance Sheet
consist of items of a quantity and quality usable or salable in the ordinary
course of business, and all reserves pertaining to such inventory in the Balance
Sheet are adequate.
1.18 All accounts receivable of the Company and the Subsidiaries
represent or will represent valid obligations arising from sales actually made
in the ordinary course of business and, subject to the reserve for doubtful
accounts set forth in the Balance Sheet, will be collected within 180 days.
1.19 Schedule 1.19 includes a complete list of all real property
owned by the Company ("Owned Real Property") and all real property leased by the
Company ("Leased Real Property"). Except as set forth on Schedule 1.19, the
Company has, or will have at Closing, good title to the Owned Real Property, and
valid leasehold interests in all Leased Real Property, free and clear of all
mortgages, liens claims, charges, easements, covenants, rights of way and other
encumbrances or restrictions of any nature whatsoever, except the following
encumbrances or restrictions, whether or not disclosed in Schedule 1.19: (i)
zoning and other similar restrictions; (ii) easements, covenants, rights of way
or other restrictions which do not materially adversely affect the use of the
property to which they relate; (iii) mechanics', carriers', workmen's,
repairmen's or other like liens arising or incurred in the ordinary course of
business; (iv) liens for taxes, assessments and other governmental charges which
are not due and payable or which may thereafter be paid without penalty; and (v)
other imperfections of title or encumbrances, if any, none of which liens, title
imperfections or encumbrances are substantial in amount, materially detract from
the usefulness of the property subject thereto or individually or in the
aggregate adversely affect the operation of the business of the Company (all
such exceptions set forth in clauses (i)-(v) being referred to collectively as,
"Permitted Liens").
1.20 Except as set forth in Schedule 1.20, there are no lawsuits,
claims, proceedings or investigations pending or, to the best knowledge of the
Stockholder or the Company, threatened by or against or affecting the Company or
the Subsidiaries or any of their
7
<PAGE>
properties, assets, operations or business which could reasonably be expected in
any way to adversely affect the transactions contemplated by this Agreement or
adversely affect in any material respect the value to Central of the Company or
its assets or Central's right to utilize the assets of the Company.
1.21 Schedule 1.21 contains a true and correct listing of each
license, permit or other governmental authorization (collectively hereinafter
referred to as "Licenses") held by the Company or the Subsidiaries. Except as
set forth on Schedule 1.21 the Company holds all Licenses which are required for
the operation of their business and, all such Licenses are in full force and
effect and will be effectively transferred to Buyer at the time of Closing.
1.22 To the best knowledge of the Stockholder and the Company, there
are no employment-related claims, actions, proceedings or investigations pending
or threatened against or relating to the Company before any court, governmental,
regulatory or administrative authority or body, or arbitrator or arbitration
panel. Neither the Company nor any Subsidiary is subject to any outstanding
order, writ, judgment, injunction, decision, award, compliance order, consent
decree, conciliation agreement, settlement agreement, affirmative action plan,
determination letter or advisory of any court, governmental, regulatory or
administrative authority or body, or arbitrator or arbitration panel. Neither
the Company, nor any Subsidiary is not in compliance with any collective
bargaining agreements, contracts or laws or regulatory requirements pertaining
to employment and employee benefits.
1.23 Neither the Company nor any Subsidiary is in violation of any
law, order, ordinance, rule or regulation of any governmental authority which
could have a material adverse effect on the Company and the Subsidiaries.
1.24 No agent, broker, investment banker, person or firm acting on
behalf of the Company or the Stockholder is or will be entitled to any broker's
or finder's fee or any other commission or similar fee in connection with any of
the transactions contemplated herein.
1.25 Except as set forth in Schedule 1.25, there are no patents,
registrations or applications for trademark registration, service marks,
copyright registrations, trade names, or applications therefor or registrations
thereof (collectively, "Intellectual Property"), which have been used or owned
within the last three years by the Company with respect to the Business.
Schedule 1.25 contains a true and complete description of each of such items of
Intellectual Property. Except as set forth in Schedule 1.25, the Company has
sole title to all of such items of Intellectual Property, without any liens,
encumbrances or restrictions whatsoever, and upon closing of the transactions
contemplated hereby, the Company will continue to possess sole title to all of
such items of Intellectual Property, without any liens, encumbrances or
restrictions whatsoever. The Company is not and, during the last two years, has
not (i) infringed or violated any trademark, service mark, trade name, patent or
copyright or other Intellectual Property right; or (ii) unlawfully or improperly
used any trade secrets belonging to any third party.
8
<PAGE>
1.26 Except as disclosed in Schedule 1.26, there have been no private
or governmental claims, citations, complaints, notices of violation or letters
made, issued to or threatened against the Company or the Subsidiaries by any
governmental entity or other party for the impairment or diminution of, or
damage, injury or other adverse effects to, the environment or public health
resulting, in whole or in part, from the ownership, use or operation of any of
the facilities of the Company or any Subsidiary which will be occupied or
operated by Buyer as a result of the transactions contemplated hereby ("the
Property").
Except as disclosed in Schedule 1.26, the Property has not been used
for the disposal of "hazardous waste" or "hazardous materials" as those terms
are defined below other than the disposal in accordance with applicable law of
substances and materials used by the Company in the ordinary course of its
business, including, but not limited to, gasoline, oil and related petroleum
products, janitorial and cleaning supplies, solvents, insecticides and
pesticides used in the manufacture of the Company's products. As used in this
Agreement, the term "hazardous materials" or "hazardous waste" means any
hazardous or toxic substances, materials, and wastes listed in the United States
Department of Transportation Hazardous Materials Table (49 CFR 172.101) or by
the Environmental Protection Agency as a hazardous substance (40 CFR Part 302)
and amendments thereto, or such substances, materials and wastes which are or
may become regulated under any applicable local, state or federal law,
including, without limitation, any material, waste or substance which is (i)
petroleum, (ii) asbestos, (iii) polychlorinated biphenyls, (iv) defined as a
"hazardous waste," "extremely hazardous waste" or "restricted hazardous waste"
or "hazardous material" under applicable state laws and regulations, (v)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. (S) 1251, et seq. (33 U.S.C. (S) 1321) or U.S.C. (S) 1317, (vi)
defined as a "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, 42 U.S.C. (S) 6901, et seq. (42 U.S.C. (S) 6903)
or (vii) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C.
(S) 9601, et seq. (42 U.S.C. (S) 9601).
Except as disclosed in Schedule 1.26, there are no hazardous materials
or hazardous waste on, under, in or about the Property, including but not
limited to the air above the Property, the soil and groundwater at and below the
Property, and surface water on and running through the Property other than the
storage in accordance with applicable law of substances and materials used by
the Company in the ordinary course of its business, including, but not limited
to, gasoline, oil and related petroleum products, janitorial and cleaning
supplies, solvents, insecticides and pesticides used in the manufacture of the
Company's products.
The Company and the Subsidiaries have duly complied with, and the
Property is in material compliance with, the provisions of all federal, state
and local environmental, health and safety laws, codes and ordinances and all
rules and regulations promulgated thereunder.
The Company and the Subsidiaries have been issued, and will maintain
until the date of Closing, all required federal, state and local permits,
licenses, certificates and approvals with respect to the Property relating to
(i) air emissions, (ii) discharges to surface water or
9
<PAGE>
groundwater, (iii) noise emissions, (iv) solid or liquid waste disposal, (v) the
use, generation, storage, transportation or disposal of hazardous materials or
hazardous wastes, or (vi) other environmental, health or safety matters.
Neither the Company nor any Subsidiary has received notice of, and
knows of or has a reasonable basis to know of, any fact(s) which might
constitute violation(s) of any federal, state or local environmental, health or
safety laws, codes or ordinances, and any rules or regulations promulgated
thereunder, which could adversely affect the value, use, ownership or occupancy
of the Property, and is not in violation of any covenants, conditions,
easements, rights of way or restrictions affecting the Property or any rights
appurtenant thereto.
The Company has provided Buyer with true, accurate and complete copies
of any written information in the possession of the Company and the Subsidiaries
which pertains to the environmental history of the Property. The Company shall
also promptly furnish to Buyer true, accurate and complete copies of any
sampling and test results which may be obtained by the Company or the
Subsidiaries prior to the Closing from all environmental and/or health samples
and tests taken at and around the Property.
1.27 No representation or warranty made by the Stockholder in this
Agreement and no statement contained in a certificate, schedule, list or other
instrument or document attached to this Agreement and delivered by the Company
or the Stockholder, whether heretofore furnished to Central or hereafter
required to be furnished to Central (all such documents being taken as a whole),
contains any untrue statement of a material fact or omits to state any material
fact necessary to make the statements contained herein or therein not
misleading.
II
ADDITIONAL REPRESENTATIONS AND
WARRANTIES OF THE STOCKHOLDER
-----------------------------
2.00 The Stockholder represents and warrants to Central as follows:
2.01 The Stockholder owns 140 Class A Shares and 40 Class B Shares of
Four Paws, 100 Shares of Common Stock of Jodi and 600 Shares of Common Stock of
APOFP.
2.02 The Stockholder has full power and authority to enter into this
Agreement and the Ancillary Agreements to which the Stockholder is a party, and
to consummate the transactions contemplated herein and therein. This Agreement
has been duly executed and delivered by the Stockholder and is a valid and
legally binding obligation of the Stockholder enforceable in accordance with its
terms. The Ancillary Agreements to which the Stockholder is a party have been
approved by the Stockholder and will be duly executed and delivered by the
Stockholder and after such execution and delivery will be valid and legally
binding obligations of the Stockholder enforceable in accordance with their
terms. Except as provided in Schedule 2.02 hereto, neither the execution of
this Agreement, or the Ancillary Agreements
10
<PAGE>
to which the Stockholder is a party, nor the consummation of the transactions
contemplated herein or therein will constitute or cause a breach or violation of
a covenant or obligation binding upon the Stockholder or affecting his
properties that will materially adversely effect the Stockholder's ability to
consummate the transactions contemplated herein or therein.
2.03 The Stockholder is acquiring the shares of Central stock to be
issued to him for investment purposes and not with a view to distribution and
confirms that he or one of his representatives has reviewed the annual reports,
proxy statements and reports on Forms 8-K, 10-K and 10-Q of Central filed under
the Securities Exchange Act of 1934 since January 1, 1993.
2.04 The Stockholder acknowledges that the certificates representing
the Shares shall be stamped or otherwise imprinted with the legend referred to
in the Lockup Agreement.
2.05 At the Closing, the Stockholder will transfer and convey, and
Central will acquire, good and marketable title to the Shares, free and clear of
all liens and encumbrances, pledges, security interest and claims whatsoever.
III
REPRESENTATIONS AND
WARRANTIES OF CENTRAL
---------------------
3.00 Central represents and warrants to the Stockholder as follows:
3.01 Central is duly organized, validly existing and in good standing
under the laws of the State of Delaware.
3.02 Central has full corporate power to enter into this Agreement
and the Ancillary Agreements and to consummate the transactions contemplated
herein and therein, neither the execution of this Agreement or the Ancillary
Agreements nor the consummation of the transactions contemplated herein or
therein will constitute or cause a breach or violation of the charter or By-laws
of Central or of a covenant or obligation binding upon Central or affecting its
properties or cause a lien or other encumbrance to attach to any of its
properties, or result in the acceleration of or the right to accelerate any
obligation under or the termination of or the right to terminate any license,
franchise, lease, permit, approval or agreement to which Central is a party, or
require a consent of any person to prevent such breach, default, violation,
lien, encumbrance, acceleration, right or termination.
3.03 Central has received all consents, approvals and authorizations,
including but not limited to Board approval, necessary to enter into the
Agreement, the Ancillary Agreements and to consummate the transactions
contemplated therein, including the issuance of the Shares.
11
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3.04 Except as set forth in Schedule 3.04, no approval of or filing
with a federal, state or local court, authority or administrative agency is
necessary to authorize the execution and delivery of this Agreement or the
Ancillary Agreements by Central or Subsidiary or the consummation by Central or
Subsidiary of the transactions contemplated herein or therein, other than such
filings as may be required under the Securities Act and state blue sky laws and
the filing with the United States Federal Trade Commission and the Department of
Justice of premerger reports generally required by law, all of which has been
duly made and shall have been approved or declared effective, as the case may
be, prior to the Closing.
3.05 Central has heretofore delivered to the Stockholder copies of
its annual report on Form 10-K for the fiscal year ended September 28, 1996
filed with the SEC under the Securities Exchange Act of 1934 (the "Exchange
Act") and the other reports or documents required to be filed by Central under
Sections 13(a), 14(a), 14(c) and 15(d) of the Exchange Act subsequent to
September 28, 1996, (collectively, the "Reports") and will deliver to each
Stockholder a copy of each report or document required to be filed by Central
under said Sections prior to the Closing.
As of their respective date, the Reports did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements made therein, in light of the
circumstances in which they were made, not misleading, and subsequent to their
respective dates, no event has occurred that would make the Reports untrue or
misleading as of the dates of such Reports. Central's financial statements or
portions thereof included in or incorporated by reference into the Reports
(including the related notes and schedules) ("Financial Statements") complied in
all material respects with applicable rules and regulations of the Commission
and fairly present the consolidated financial position of Central and its
subsidiaries as of their respective dates, the results of operations, retained
earnings and changes in financial position, as the case may be. All of the
Reports have been timely filed in accordance with the rules and regulations of
the Commission. Central has not received any notice or other communication from
the Commission or other person that any of the foregoing Reports is deficient in
any respect, fails to comply with applicable laws, rules or regulations
governing the content or filing of such Reports or is misleading in any material
respect.
3.06 The shares of Central Common Stock to be issued to the
Stockholder pursuant to this Agreement (the "Central Shares") will be validly
issued, fully paid and nonassessable. At closing, Stockholder will acquire good
and marketable title to all of such Central Shares, free and clear of any lien,
encumbrance, pledge, security interest or claim whatsoever. The Central Shares
are registered under the Securities Act of 1933, pursuant to an effective
current registration statement, no stop order has been issued by the Securities
and Exchange Commission or any state securities department or agency with
respect to such registration statement and no amendment is required to be filed
in connection with this transaction. The Central Shares are not subject to any
preemptive rights in favor of any other person.
12
<PAGE>
3.07 There are no lawsuits, claims, proceedings or investigations
pending or, to the best knowledge of Central, threatened by or against or
affecting Central or any of its properties, assets, operations or business which
could in any way adversely affect the transactions contemplated by this
Agreement.
3.08 No representation or warranty made by Central in this Agreement
or the Ancillary Agreements and no statement contained in any exhibit,
certificate, schedule, list or other instrument or document attached to this
Agreement or the Ancillary Agreements delivered by Central, whether heretofore
furnished to the Company or hereafter required to be furnished to the Company
(all such documents being taken as a whole), contains any untrue statement of a
material fact or omits to state any material fact necessary to make the
statements not misleading.
3.09 There are no lawsuits, claims, proceedings or investigations
pending or, to the best knowledge of Central, threatened by or against or
affecting Central or any of its properties, assets, operations or business which
could reasonably be expected in any way to adversely affect the transactions
contemplated by this Agreement.
3.10 Central is not in violation of any law, order, ordinance, rule
or regulation of any governmental authority which could have a material adverse
effect on its business.
3.11 The capitalization of the Company as of the date hereof, on a
fully diluted basis, is as set forth in Schedule 3.11.
IV
COVENANTS
---------
The Stockholder covenants and agrees pending the Closing as follows:
4.01 The Company and the Subsidiaries shall carry on their business
in a good and diligent manner consistent with prior practice in the usual and
ordinary course, and shall use their reasonable, best efforts to preserve their
business organization intact and conserve the goodwill and relationships of
their customers, suppliers and others having business relations with it and the
services of their officers, employees, agents and representatives.
4.02 The Company shall maintain its corporate existence and good
standing in New York and in each jurisdiction in which it is qualified to do
business, and will not amend its Articles of Incorporation or By-laws except as
contemplated hereby.
4.03 Except with regard to payments made pursuant to the stock
redemption agreement dated as of September 22, 1995 between Barry Askinasi (the
"Redemption Agreement") and the Company and payment made pursuant to the Stock
Purchase Agreement dated as of May 24, 1996 among Cynal Corp. and the Estate of
Elliott H. Wharton and Joyce E. Wharton and except with Central's written
consent, no payment, dividend or other
13
<PAGE>
distribution of any nature will be declared, made, set aside or paid on or in
respect of any capital stock or surplus of the Company or the Subsidiaries nor
will the Company or the Subsidiaries directly or indirectly, issue, redeem,
retire, purchase or otherwise acquire shares of their stock.
4.04 Except with Central's written consent or with respect to normal
increases consistent with past practice, no increase will be made in the
compensation or rate of compensation payable or to become payable to the
officers or employees of the Company, and no bonus, profit sharing, retirement,
insurance, death, fringe benefit or other extraordinary or indirect compensation
shall accrue, be set aside or be paid for or on behalf of any such officer or
employee, and no agreement or plan with respect to the same shall be adopted or
committed for provided, however, the Company may pay bonuses as contemplated by
Section 1.09 hereof.
4.05 The Company, and each of the Subsidiaries shall:
(i) not merge or consolidate with or acquire any assets of another
corporation, business or other person except for inventory, furniture,
fixtures and equipment in the ordinary course, or except as contemplated
hereby;
(ii) comply in all material respects with all of the Contracts;
(iii) from the date hereof on reasonable notice afford Central and its
representatives full access during normal business hours throughout the
period prior to the Closing to all of the Company's offices, properties and
records; provided, however, that any investigation or inquiry made by
Central shall not in any way affect the representations and warranties
contained in this Agreement or their survival of the Closing.
4.06 Neither the Stockholder nor the Company shall take any action or
omit to take any action within its reasonable control to the extent such action
or omission would result in any representation or warranty of the Stockholder
contained in this Agreement being inaccurate or incorrect in any material
respect on and as of the date of Closing.
Central covenants and agrees pending the Closing as follows:
4.07 With the exception of the acquisition of the "Zodiac" product
line and related business from Sandoz Agro, Inc., it will not prior to Closing
enter into an agreement for or complete the acquisition of a pet manufacturer or
related business which would require Central to amend its Hart-Scott-Rodino
application contemplated by Section 4.10 hereof.
4.08 Central will assist the Company or the Stockholder in the
preparation and filing of a Hart-Scott-Rodino application, will prepare and file
with the U.S. Federal Trade Commission and the Department of Justice, pre-merger
notification application in accordance with law and shall bear all the filing
fees associated with such application.
14
<PAGE>
4.09 Central shall take all steps necessary to issue the Central
Shares including obtaining requisite government approval (if required). Central
shall comply with all applicable securities laws required for the issuance of
the Central Shares.
V
THE STOCKHOLDER'S CONDITIONS PRECEDENT
--------------------------------------
5.00 All of the following shall be conditions precedent to the
obligations of the Stockholder to consummate the transactions contemplated by
this Agreement:
5.01 The representations and warranties made by Central contained in
this Agreement or in any written document (including exhibits and schedules
delivered by Central) shall be true and correct in all material respects on the
date of Closing.
5.02 The Company shall have been furnished the opinion of Orrick,
Herrington & Sutcliffe LLP, counsel to Central dated as of the Closing, as to
the matters set forth on Exhibit III hereto and as to such matters as counsel
for the Company may reasonably request.
5.03 Central shall have complied in all material respects with all of
its obligations under this Agreement.
5.04 The waiting period imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or have been terminated.
5.05 There shall not be in effect any statute, rule or regulation
which makes it illegal to consummate the transactions contemplated herein or any
order, decree or judgment which enjoins the consummation of the transactions
contemplated herein.
5.06 No suit, action or other proceeding shall be pending or
threatened before any court or governmental agency seeking to restrain, to
prohibit or to obtain material damages or other relief in connection with this
Agreement or the consummation of the transactions contemplated herein, and there
shall have been no investigation or inquiry threatened or commenced in
connection with this Agreement or with the transactions contemplated herein and
this Agreement.
5.07 The Ancillary Agreements shall have been duly executed and
delivered by Central.
5.08 The Stockholder shall have received a certificate dated the date
of Closing, signed by an executive officer of Central to the effect that the
representations and warranties of Central set forth herein are true and correct
in all material respects on the date of Closing.
15
<PAGE>
5.09 Central shall have consented to the amendment of the sublease
agreement as contemplated by Section 6.13 hereof.
5.10 During the period from the date hereof to the Closing there
shall not have been any material adverse change in the business, properties,
financial position, results of operations or net worth of Central.
VI
CENTRAL'S CONDITIONS PRECEDENT
------------------------------
6.00 All of the following shall be conditions precedent to the
obligations of Central to consummate the transactions contemplated by this
Agreement.
6.01 The representations and warranties made by the Stockholder
contained in this Agreement or in any written document (including the Exhibits
and Schedules referred to herein) delivered to Central pursuant hereto, shall be
true and correct in all material respects on the date of Closing.
6.02 Central shall have been furnished with the opinion of Kane
Kessler P.C., counsel to the Stockholder, dated as of the Closing, as to the
matters set forth in Exhibit II hereto and as to such other matters as counsel
for Central may reasonably request.
6.03 The Stockholder shall have complied in all material respects
with all of his obligations under this Agreement.
6.04 There shall not be in effect any statute, rule or regulation
which makes it illegal to consummate the transactions contemplated herein or any
order, decree or judgment which enjoins the consummation of the transactions
contemplated herein.
6.05 Except for any suit, action or proceeding that may have been
brought by Central or its affiliates, no suit, action or other proceeding shall
be pending or threatened before any court or governmental agency seeking to
restrain, to prohibit or to obtain material damages or other relief in
connection with this Agreement or the consummation of the transactions
contemplated herein, and there shall have been no investigation or inquiry
threatened or commenced in connection with this Agreement or the transactions
contemplated herein and this Agreement.
6.06 During the period from the date hereof to the Closing there
shall not have been any material adverse change in the business, properties,
financial position, results of operations or net worth of the Company and the
Subsidiaries.
16
<PAGE>
6.07 Central shall have received evidence that Barry Askin has sold
to the Company all of the 10 shares of Class B Stock of the Company formerly
owned by him, and that the unpaid balance due Askin pursuant to the Redemption
Agreement has been paid.
6.08 The waiting period imposed by the Hart-Scott-Rodino Antitrust
Improvements Act of 1976 shall have expired or been terminated.
6.09 The Ancillary Agreements shall have been duly executed and
delivered by the Stockholder and/or the Company, as the case may be.
6.10 All loans from the Company or the Subsidiaries to past or
present employees or other individuals other than the Stockholder or his son
shall have been repaid.
6.11 Central shall have received a certificate dated the date of the
Closing, signed by the Stockholder to the effect that the representations and
warranties of the Stockholder set forth herein are true and correct in all
material respects on the date of Closing.
6.12 The Stockholder and the Company shall have entered into an
amendment in the form attached hereto as Exhibit VII to the sublease agreement
dated December 1, 1985, as amended September 7, 1989.
VII
OTHER AGREEMENTS
----------------
7.00 In addition to the covenants and agreements contained elsewhere
herein, the parties hereto agree as follows:
7.01 Survival of Confidentiality Agreement. Central agrees to return
-------------------------------------
to the Stockholder or certify the destruction of all due diligence materials,
including the Audited 1996 Financial Statements, if the transactions
contemplated herein are not consummated.
7.02 Forgiveness. Immediately prior to the Closing, the Company and
-----------
Central shall cancel and forgive all indebtedness owed by the Stockholder and
his son, directly or indirectly, to the Company or any of its affiliates to the
extent set forth on the Audited 1996 Financial Statements.
7.03 Subsequent to the Closing, the Stockholder agrees to obtain a
waiver of the acceleration provision from Chase Bank (successor to Chemical
Bank) which has granted a mortgage loan (the "Chase Bank Mortgage Loan") as
indicated on Schedule 1.19. If (x) the Stockholder has not obtained such waiver
from Chase Bank within thirty days after the Closing, of if (y) Chase Bank
refuses to grant its consent without fee or charge and Stockholder chooses not
to pay any such fee or charge, then Stockholder shall provide a mortgage loan to
Four Paws for the purpose of refinancing the Chase Bank Mortgage Loan upon the
same terms and
17
<PAGE>
conditions as the Chase Bank Mortgage Loan, except that (i) Stockholder shall be
the Mortgagee, (ii) the term of the loan shall be for the balance of the term as
of the date of the refinancing, and (iii) the loan amount shall be the balance
of the loan amount as of the date of the refinancing.
VIII
TERMINATION
-----------
8.01 This Agreement may be abandoned or terminated on or before the
Closing by mutual agreement of Central and the Stockholder.
8.02 If the Closing shall not have taken place on or prior to January
31, 1996, this Agreement may be terminated by written notice from Central to the
Stockholder or from the Stockholder to Central provided that the party giving a
written notice has complied with all of its obligations under this Agreement.
8.03 If this Agreement is abandoned or terminated as provided in
Sections 8.01 or 8.02, it shall forthwith become wholly void and of no effect,
without liability of any party to the other parties, and no party shall have the
right to bring or maintain any action hereunder; provided, however, that such
abandonment or termination shall not relieve any party of its liability for
breach of its obligation to consummate the transactions contemplated by this
Agreement upon satisfaction or waiver of the conditions precedent to such
obligation.
8.04 Regardless of whether the transactions contemplated by this
Agreement are consummated, each party shall pay all fees and expenses incurred
by such party in connection herewith; provided, however, that Central shall be
responsible for the HSR filing fees and the fees and expenses associated with
the audit of the Company's financial statements contemplated by Section 1.05
hereof.
8.05 In the event this Agreement terminates, Central shall continue
to be bound by the terms of the Confidentiality Agreement, and this obligation
shall survive the termination of this Agreement. Upon the request of the
Company, Central will return or destroy all Confidential Materials as may be
requested by the Company as such term is defined in the Confidentiality
Agreement.
IX
CLOSING
-------
9.01 Subject to the terms and conditions herein set forth, the
Stockholder shall sell, assign and transfer to Central and Central shall
purchase from the Stockholder shares of Common Stock of the Company,
constituting all of the issued and outstanding capital stock of
18
<PAGE>
Four Paws, and shares of Common Stock of Jodi, and of A.P.O.F.P. constituting
all of the issued and outstanding capital stock of Jodi and APOFP.
9.02 The closing of the transactions contemplated herein (the
"Closing") shall take place at the offices of Kane Kessler P.C. in New York, New
York or at such other place as is mutually agreed upon, on or before January 20,
1997 or as soon as reasonably practicable thereafter upon the satisfaction or
waiver of all conditions of Closing (but in no event later than January 31,
1997), unless this Agreement shall have been terminated as herein provided.
Each party agrees to use its or his reasonable best efforts to cause the Closing
to be consummated on or before January 20, 1997, and, to the extent not closed
on such date, as soon as is reasonably practicable thereafter.
9.03 At the Closing, in order to receive Central shares, the
Stockholder shall deliver to Central the following:
(i) certificates representing all of the Shares registered in the name
of the Stockholder, together with duly executed stock powers; and
(ii) certificates representing all of the outstanding shares of Jodi
and APOFP registered in the name of the Stockholder, together with duly
executed stock powers; and
(iii) a statement from the Stockholder that, except for any rights
that may inure to such Stockholder under this Agreement or any of the
Ancillary Agreements, the Stockholder either waives or has no claim, as may
be appropriate, against the Company, Jodi or APOFP for unpaid dividends,
bonuses, profit sharing or rights or other claims of whatsoever kind,
nature or description, except salaries and fringe benefits normally accrued
and payable to the Stockholder in the ordinary course of business.
9.04 At the Closing, Central shall deliver to the Stockholder the
following:
(i) a cashier's check payable to the Stockholder or wire transfer of
funds in the amount of $45 million.
(ii) a stock certificate evidencing the number of shares of Common
Stock of Central determined by dividing $10,000,000 by the average closing
price of Central Common Stock as reported in the NASDAQ/NMS during the five
trading days ending on the third day prior to the Closing.
X
[INTENTIONALLY LEFT BLANK]
--------------------------
19
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XI
INDEMNIFICATION
---------------
11.01 (a) The Stockholder shall indemnify, defend and hold harmless
Central and its successors and assigns and its and their respective officers,
directors, shareholders, employees and agents, against, and in respect of, any
and all damages, claims, losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting and other expenses, which may arise out
of: (i) any breach or violation of this Agreement by the Company or the
Stockholder; or (ii) any breach of any of the representations, warranties or
covenants made in this Agreement by the Company or the Stockholder; or (iii) any
inaccuracy or misrepresentation in the Schedules hereto or in any certificate or
document delivered in accordance with the terms of this Agreement by the Company
or the Stockholder (collectively, "Warranty Claims"); provided however, that
Central shall be entitled to indemnification hereunder only to the extent that
the aggregate of all such Warranty Claims exceeds $750,000.
(b) Without regard to the limitations set forth in Section 11.01(a)
hereof, the Stockholder shall indemnify and hold harmless Central and its
successors and assigns and its and their respective officers, directors,
shareholders, employees and agents harmless on an after-tax basis against any
and all damages, claims, losses, liabilities and expenses, including, without
limitation, reasonable legal, accounting and other expenses, arising out of any
legal, governmental or administrative action, suit or proceeding against Central
or the Company, including (i) any such action, suit or proceeding relating to
any taxes owed for periods ending on or before the Effective Date, and (ii) all
such actions, suits or proceedings required to be included in Schedule 1.20
hereto, which legal, governmental or administrative action, suit or proceeding
(x) arises from the conduct of the business of the Company or the ownership or
condition of the properties owned or leased by Company prior to the Effective
Date, and (y) involves damages, claims, losses, liabilities and expenses in
excess of $50,000 but only to the extent that such damages, claims, losses,
liabilities and expenses exceed $50,000.
(c) The Stockholder may satisfy, pay or otherwise discharge its
indemnification obligation pursuant to this Section XI in the manner provided in
Paragraph 6 of the Lockup Agreement annexed hereto as Exhibit VI.
11.02 Central shall indemnify, defend and hold the Stockholder
against, and in respect of, any and all damages, claims, losses, liabilities and
expenses, including, without limitation, reasonable legal, accounting and other
expenses, which may arise out of: (i) any breach or violation of this Agreement
by Central; or (ii) any breach of any of the representations, warranties or
covenants made in this Agreement by Central; or (iii) any inaccuracy or
misrepresentation in the Schedules hereto or in any certificate or document
delivered in accordance with the terms of this Agreement by Central
(collectively, "Warranty Claims"); provided however, that the Stockholder shall
be entitled to indemnification hereunder only if the aggregate of all such
Warranty Claims exceeds $500,000.
20
<PAGE>
11.03 Upon obtaining knowledge thereof, the indemnified party shall
promptly (after the date on which the party seeking indemnification first
becomes aware of the existence of the claim for which indemnification is being
sought hereunder) notify the indemnifying party in writing of any damage, claim,
loss, liability or expense which the indemnified party has determined has given
or could give rise to a claim under Section 11.01 or 11.02 (such written notice
being hereinafter referred to as a "Notice of Claim"). A Notice of Claim shall
contain a brief description of the nature and estimated amount of any such claim
giving rise to a right of indemnification whether or not covered by the basket
set forth in 11.01 or 11.02 herein.
11.04 With respect to any claim or demand set forth in a Notice
of Claim relating to a third party claim, the indemnifying party may defend, in
good faith and at its expense, any such claim or demand, and the indemnified
party, at its expense, shall have the right to participate in the defense of any
such third party claim. So long as the indemnifying party is defending in good
faith any such third party claim, the indemnified party shall not settle or
compromise such third party claim. If the indemnifying party does not so elect
to defend any such third party claim, the indemnified party shall have no
obligation to do so. The indemnifying party shall have this right to defend,
settle or compromise any third-party claim for which it has indemnified the
indemnifying party on such terms and conditions as it determines, in its
reasonable discretion, provided that such settlement shall not result in any
expense or monetary loss to the indemnified party and shall contain any
provision which the indemnified party reasonably concludes could be materially
injurious to such indemnified party.
11.05 The indemnification rights provided in this Article XI shall be
the exclusive remedy available to any party hereto for misrepresentation or any
other breach of this Agreement.
XII
GENERAL
-------
12.01 Notwithstanding any investigation by a party hereto, the
representations and warranties herein contained shall survive the Closing and
shall continue in full force and effect for a period of two years after the
consummation of this transaction; provided, however, that representation set
forth in Section 1.07 hereof shall survive until the expiration of the
applicable statute of limitations.
12.02 This Agreement (including the Exhibits and Schedules referred to
herein), the Confidentiality Agreement and the Ancillary Agreements constitutes
the entire agreement among the parties pertaining to the subject matter hereof
and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties, and there
are no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as set forth specifically
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be implied or be binding (including, without limitation, any
alleged waiver based on a party's
21
<PAGE>
knowledge of a breach or inaccuracy in a representation or warranty contained
herein) unless in writing and signed by the party against which such amendment,
supplement, modification, waiver or termination is asserted.
12.03 All of the terms and provisions of this Agreement by or for the
benefit of the parties shall be binding upon and inure to the benefit of their
successors, permitted assigns, heirs and personal representatives. The rights
and obligations provided by this Agreement shall not be assignable, except, by
Central to a subsidiary or an affiliate provided that no such assignment shall
relieve Central of its obligations hereunder or the Ancillary Agreements or to a
successor to its business, and, except as expressly provided herein, nothing
herein is intended to confer upon any person other than the parties and their
successors, any right or remedy under or by reason of this Agreement.
12.04 This Agreement shall be construed, interpreted and the rights of
the parties determined in accordance with the laws of the State of Delaware.
12.05 This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
12.06 All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given
(except as may otherwise be specifically provided herein to the contrary) if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or mailed by certified or registered mail
with postage prepaid:
(a) If to Central to Central Garden & Pet Company
3697 Mt. Diablo Boulevard
Lafayette, CA 94549
William E. Brown
with a copy to Orrick, Herrington & Sutcliffe LLP
The Old Federal Reserve Bank Building
400 Sansome Street
San Francisco, CA 94111
John F. Seegal
(b) If to the Stock- The Stockholder's address set forth
holder to under his name on Schedule I hereto.
22
<PAGE>
with a copy to Kane Kessler P.C.
1350 Avenue of the Americas
New York, New York 10019
Ronald L. Nurnberg
23
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.
CENTRAL GARDEN & PET COMPANY
By: /s/ William E. Brown
----------------------------------------
THE STOCKHOLDER
/s/ Allen J. Simon
-------------------------------------------
Allen J. Simon
24
