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) July 18, 1997
(May 5, 1997)
Seneca Foods Corporation
(Exact name of registrant as specified in its charter)
New York 0-1989 16-0733425
(State or other jurisdiction of (Commission (I. R. S. Employer
incorporation or organization) File Number) Identification No.)
1162 Pittsford-Victor Road, Pittsford, New York 14534
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 716/385-9500
Not Applicable
Former name, former address and former fiscal year,
if changed since last report
<PAGE>
Form 8-K
Seneca Foods Corporation
Item 2. Acquisition or Disposition of Assets
On May 5, 1997 Seneca Foods Corporation ("Registrant") acquired certain assets
of the Curtice Burns Foods, Inc. ("Curtice Burns"), a wholly owned subsidiary of
Pro-Fac Cooperative, Inc., used in the canned vegetable business of Curtice
Burns. The 1996 sales of the acquired assets were approximately $37 million. The
Registrant purchased two plants, inventories, and trademarks of the business.
Assets purchased include a warehouse located in LeRoy, New York and a processing
plant located in Leicester, New York.
In conjunction with the acquisition, the Registrant and Curtice Burns entered
into a long-term strategic alliance, combining their New York agricultural
departments into one organization, now managed by Curtice Burns.
This acquisition was funded primarily out of working capital. A proposed $15
million long-term debt financing to fund the long-term assets of this
acquisition and another acquisition recently completed is being negotiated by
the Registrant. The Registrant expects to consummate the financing sometime in
August 1997.
Item 7. Financial Statements and Exhibits
Financial Statements
The Registrant had concluded that the assets purchased did not constitute a
significant subsidiary within the language and intent of Regulation S-X. On June
9, 1997 the Commission advised that it did not agree with the Registrant's
position. The Commission staff further advised that it would accept audited
statements for the most recent fiscal year in satisfaction of the requirements
of Rule 3-05 of Regulation S-X. The audited financial statement information
required by Article 11 of Regulation S-X follows:
<PAGE>
CURTICE BURNS VEGETABLE PROCESSING PLANT AND FOOD STORAGE WAREHOUSE
(Locations Owned by Curtice
Burns Foods, Inc.)
Statements of Net Assets to be Acquired as of
March 29, 1997 (Unaudited) and June 29, 1996 and
Statements of Revenue and Direct Operating
Expenses for the Nine Months Ended March 29, 1997
(Unaudited) and for the Year Ended June 29, 1996
and Independent Auditors' Report
<PAGE>
CURTICE BURNS VEGETABLE PROCESSING
PLANT AND FOOD STORAGE WAREHOUSE
(Locations Owned by Curtice Burns Foods, Inc.)
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS:
Statements of Net Assets to be Acquired 2
Statements of Revenue and Direct Operating Expenses 3
Notes to Financial Statements 4
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
Curtice Burns Foods, Inc.
We have audited the accompanying statement of net assets to be acquired of the
Curtice Burns Vegetable Processing Plant and Food Storage Warehouse ("the
Curtice locations"), locations owned by Curtice Burns Foods, Inc. ("the
Company") a wholly owned subsidiary of Pro-Fac Cooperative, Inc., as of June 29,
1996 and the related statement of revenue and direct operating expenses for the
year ended June 29, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets to be acquired of the Curtice Burns Vegetable
Processing Plant and Food Storage Warehouse as of June 29, 1996 and the results
of its revenue and direct operating expenses for the year ended June 29, 1996 in
conformity with generally accepted accounting principles.
As discussed in Note 1 to the financial statements, the Curtice locations are
owned by the Company. Certain expenses included in the financial statements
represent allocations of amounts applicable to the Company. As a result, the
accompanying financial statements may not necessarily be indicative of
conditions that would have existed or the results of operations that would have
occurred had the Curtice locations been operated as an unaffiliated entity.
/s/Deloitte & Touche LLP
Rochester, New York
July 15, 1997
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CURTICE BURNS VEGETABLE PROCESSING
PLANT AND FOOD STORAGE WAREHOUSE
(Locations Owned by Curtice Burns Foods, Inc.)
STATEMENTS OF NET ASSETS TO BE ACQUIRED
MARCH 29, 1997 (UNAUDITED) AND JUNE 29, 1996 (In thousands)
- --------------------------------------------------------------------------------
March 29, June 29,
1997 1996
(Unaudited)
ASSETS
CURRENT ASSETS:
Inventories:
Finished products $ 14,693 $ 5,978
Supplies 455 6,594
------ -----
15,148 12,572
Prepaid expenses 77 38
------ ------
Total current assets 15,225 12,610
------ ------
PROPERTY, PLANT AND EQUIPMENT:
Land 94 94
Buildings 6,820 6,754
Machinery and equipment 12,976 10,512
Construction in progress 132 1,154
------ ------
20,022 18,514
Less accumulated depreciation and amortization 3,420 2,279
------ ------
Net property, plant, and equipment 16,602 16,235
Total Assets 31,827 28,845
LIABILITY
CURRENT LIABILITY:
Accrued vacation 194 188
---- ----
NET ASSETS TO BE ACQUIRED $ 31,633 $ 28,657
=========== ===========
See notes to financial statements.
<PAGE>
CURTICE BURNS VEGETABLE PROCESSING
PLANT AND FOOD STORAGE WAREHOUSE
(Locations Owned by Curtice Burns Foods, Inc.)
STATEMENTS OF REVENUE AND DIRECT OPERATING EXPENSES
NINE MONTHS ENDED MARCH 29, 1997 (UNAUDITED) AND
YEAR ENDED JUNE 29, 1996 (In thousands)
- --------------------------------------------------------------------------------
Nine Months
Ended Year
March 29, Ended
1997 June 29,
(Unaudited) 1996
REVENUE $ 32,264 $ 36,744
---------- ---------
DIRECT OPERATING EXPENSES:
Cost of product sold 29,117 37,103
Selling, general and administrative expense 3,097 3,427
--------- ---------
32,214 40,530
--------- ---------
REVENUE OVER (UNDER) DIRECT OPERATING EXPENSES$ 50 $ (3,786)
========= =========
See notes to financial statements.
<PAGE>
CURTICE BURNS VEGETABLE PROCESSING
PLANT AND FOOD STORAGE WAREHOUSE
(Locations Owned by Curtice Burns Foods, Inc.)
NOTES TO FINANCIAL STATEMENTS
NINE MONTHS ENDED MARCH 29, 1997 (UNAUDITED) AND YEAR ENDED JUNE 29, 1996
- --------------------------------------------------------------------------------
(Amounts in Thousands)
- --------------------------------------------------------------------------------
1. ORGANIZATION, OPERATIONS AND BASIS OF PRESENTATION
The Curtice Burns Vegetable Processing Plant in Leicester, New York and
Food Storage Warehouse in LeRoy, New York ("the Curtice locations") are
locations owned by Curtice Burns Foods, Inc. ("the Company"), a
wholly-owned subsidiary of Pro-Fac Cooperative, Inc. ("Pro-Fac"). The
Company processes and markets a variety of product lines of regional
branded, private label and foodservice products in facilities located
throughout the United States. Pro-Fac, an agricultural marketing
cooperative which consists of over 600 members, processes fruits,
vegetables and popcorn through the Company.
The Curtice locations are not "stand-alone" divisions or subsidiaries of
the Company and were not generally accounted for separately. As a result,
the distinct and separate accounts necessary to present individual balance
sheets and income statements for the Curtice locations as of March 29,
1997 (unaudited) and June 29, 1996 and for the nine months ended March 29,
1997 (unaudited) and for the year ended June 29, 1996 have not been
maintained.
The Curtice locations do not maintain stand-alone corporate treasury,
legal, tax and other similar corporate support functions. In addition, the
Company's systems and procedures do not provide sufficient information to
develop a reasonable cost allocation for corporate general and
administrative expenses, income taxes, corporate debt and interest
expense.
With respect to cash flows, purchases of inventory along with payroll,
capital and other expenditures are funded by the Company. Sales are billed
and collected by the Company.
Financial Statement Presentation - Based upon the above information, the
following financial information is presented:
Statements of Net Assets to be Acquired. These statements
include only the net assets of the Curtice locations being
purchased by Seneca Foods Corporation. (See Note 6.)
Statements of Revenue and Direct Operating Expenses of the Curtice
locations acquired by Seneca Foods Corporation. Direct expenses
include all costs necessary for the production, marketing and
distribution of the products including selling costs and direct
overhead other than cost of general corporate activities.
Statements of Cash Flow are not presented for the Curtice locations as all
cash flow activitiy is handled by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Interim Financial Information - In the opinion of management, the
unaudited information presented as of and for the period ended March 29,
1997 reflects all adjustments which consist of normal recurring
adjustments necessary for a fair presentation of the interim period.
Operating results for the interim period are not necessarily indicative of
the results that may be expected for a full year.
Fiscal Year-The Company's fiscal year ends on the last Saturday in June.
Inventories - Inventories are stated at the lower of cost (first-in,
first-out) or market.
Property, plant and equipment is recorded at cost. Depreciation is
provided using a straight line method over the estimated useful lives of
the assets. The carrying amount of long-lived assets is evaluated annually
to determine if adjustment to the depreciation period or to the
unamortized balance is warranted. Ranges of estimated useful lives for
computing depreciation are as follows:
Buildings 15-40 years
Machinery and equipment 4-17 years
Purchases of property, plant and equipment and depreciation expense
for the year ended June 29, 1996 were $742 and $1,327, respectively.
Revenue Recognition - Sales are recorded at the date of shipment.
Fair Value of Financial Instruments - The carrying value of accrued
vacation approximates fair value because of the short maturity of this
item.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities and
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. LEASE COMMITMENTS
The Curtice locations have long-term noncancelable leases for the use of
certain buildings, equipment and land. The leases are for varying periods
and the rental expense under such agreements totaled approximately $547
for the year ended June 29, 1996.
As of June 29, 1996, the aggregate minimum future rental commitments under
such noncancelable leases with terms in excess of one year are as follows:
Fiscal year ending June:
1997 $ 545
1998 446
1999 413
2000 115
2001 90
Thereafter 41
------
$1,650
======
4. EMPLOYEE BENEFIT PLANS
Employees of the Curtice locations participate in the Company's benefit
plans which primarily include defined benefit pension plans, a defined
contribution plan and various health and medical plans. Expenses for the
various benefit plans have been allocated to the Curtice locations by the
Company as disclosed in Note 5.
Upon the sale of the Curtice locations to Seneca Foods Corporation in May
1997 (see Note 6), the employees of the Curtice locations were terminated
from the various benefit plans. Additionally, employees of the Curtice
locations became generally eligible to participate in the Seneca Foods
Corporation benefit plans. Separate calculations for the components of net
pension expense for the Curtice locations and the Curtice location's
funded status are not available.
5. CORPORATE ALLOCATIONS AND RELATED PARTY INFORMATION
The Curtice locations do not maintain stand-alone corporate treasury,
legal, tax and other similar corporate support functions. The Curtice
locations record certain expenses allocated from the Company related
primarily to employee benefits and property insurance. For purposes of
preparing the financial information for the Curtice locations, these
expenses were allocated based upon a variety of factors which include the
number of employees of the Curtice locations and the identification of
costs specifically attributable to the Curtice locations. Management
believes that these allocations are based on assumptions that are
reasonable under the circumstances; however, the statements of net assets
to be acquired and revenue and direct operating expenses of the Curtice
locations may not necessarily be indicative of the conditions that would
have existed or results of operations that would have occurred had the
Curtice locations been operated as an unaffiliated entity.
The following represents a summary of the costs allocated to the Curtice
locations by the Company which were included in the statement of revenue
and direct operating expenses:
Year Ended
June 29,
1996
Employee benefits $ 339
Property insurance 98
The Curtice location's purchases from Pro-Fac and other related entities
for the year ended June 29, 1996 totaled $7,258 and $11,065, respectively.
All of the assets of the Curtice locations served as collateral for
portions of the Company's debt at June 29, 1996.
6. SALE OF CURTICE BURNS VEGETABLE PROCESSING PLANT AND FOOD STORAGE
WAREHOUSE
On May 5, 1997, Seneca Foods Corporation acquired the Company's New York
State canned private label vegetable business, along with the Blue Boy
branded canned vegetable business from the Company, for a purchase price
totaling approximately $29,200. The purchase price included real property,
machinery and equipment, inventories, supplies, certain trademarks, and
the assumption of certain operating agreements in effect related to the
acquired assets, such as leases, supply agreements and a collective
bargaining agreement. The buyer and seller also formed a long-term
strategic alliance, combining their New York agricultural departments into
one organization managed by the Company.
<PAGE>
Pro Forma Financial Information
The pro forma financial information of Seneca Foods Corporation which
acquired part of Curtice Burns Foods, Inc.,whose balance sheet data is as of the
May 5, 1997 acquisition date, and the Income Statement data is twelve months
ended March 31, 1997, required by Article 11 of Regulation S-X follows:
<TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEETS
MARCH 31, 1997
(Unaudited)
(In Thousands of Dollars)
<CAPTION>
Seneca Curtice Burns
Consolidated (Acquired) Pro Forma Pro Forma
Historical Historical Adjustments Balance
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
ASSETS
Current Assets:
Cash and Short Term Investments $1,584 $1,584
Accounts Receivable, Net 36,477 36,477
Inventories 158,197 12,780 170,977
Deferred Tax Asset , Net 6,156 6,156
Other Current Assets 4,432 60 4,492
----------------------------------------------------------------------------------
Total Current Assets 206,846 12,840 219,686
Prop., Plant and Eq., Net 207,439 16,596 224,035
Other Assets 1,738 1,738
----------------------------------------------------------------------------------
$416,023 $29,436 $445,459
==================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Notes Payable $18,000 $23,282 (b) $41,282
Accounts Payable 24,435 24,435
Accrued Expenses 25,615 194 25,809
Income Taxes 599 599
Current Portion of Long Term Debt
and Capital Lease Obligations 9,465 9,465
----------------------------------------------------------------------------------
Total Current Liabilities 78,114 194 23,282 101,590
Long Term Debt 214,848 7,321 (b) 222,169
Capital Lease Obligations 9,280 9,280
Deferred Gain and Other Liabilities 4,248 4,248
Deferred Income Taxes 15,797 (421)(a) 15,376
Stockholders' Equity:
Preferred Stock 70 70
Common Stock 2,666 2,666
Additional Paid-in-Capital 5,913 5,913
Net Unrealized Gain on Available-
For-Sale Securities 435 435
Retained Earnings 84,652 (510) (430) 83,712
----------------------------------------------------------------------------------
Stockholders' Equity 93,736 (510) (430) 92,796
----------------------------------------------------------------------------------
$416,023 ($316) $29,752 $445,459
==================================================================================
<FN>
The accompanying notes are an integral part of these unaudited Pro Forma
Condensed Financial Statements.
</FN>
</TABLE>
<TABLE>
SENECA FOODS CORPORATION, AND SUBSIDIARIES
PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME
TWELVE MONTHS ENDED MARCH 31, 1997
(Unaudited)
(In thousands, except share data)
<CAPTION>
Seneca Curtice Burns
Consolidated (Acquired) Pro Forma Pro Forma
Historical Historical Adjustments Balance
---------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Revenue $738,443 $54,577 $793,020
Costs and Expenses:
Cost of Product Sold 669,261 50,344 719,605
Selling, General and Administrative 28,609 1,714 671 (b) 30,994
Interest Expense 28,827 3,314 32,141
----------------------------------------------------------------------------------
Total Costs and Expenses 726,697 55,372 671 782,740
Income Before Income Taxes and Extraordinary Item 11,746 (795) (671) 10,280
Income Taxes 4,215 (285) (241) (a) 3,974
----------------------------------------------------------------------------------
Earnings from Continued Operations $7,531 ($510) ($430) $6,591
==================================================================================
Net Earnings- Common Stock $7,531 ($510) ($430) $6,591
Earnings Per Share $1.27 $1.12
==================================================================================
Weighted Average Common Shares O/S 5,939,680 5,939,680
==================================================================================
<FN>
The accompanying notes are an integral part of these unaudited Pro Forma
Condensed Financial Statements.
</FN>
</TABLE>
SENECA FOODS CORPORATION AND SUBSIDIARIES
NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997 Statements (Last previous fiscal year):
The Acquired Historical column reflects the addition of the assets and
liabilities and related income and expense accounts of the assets purchased
from Curtice Burns Foods, Inc. which was purchased May 5, 1997 as described
in Item 2 of this Form 8-K. Although the historical financial statements
only reflect revenues and direct expenses, based on the small magnitude of
the acquisition compared to our existing business, the amount of additional
expenses incurred should be minimal.
(a) The Pro Forma adjustments referenced as (a) reflect the estimated federal
and state income tax effect of 35.9% of adjustments for the Curtice Burns
purchase.
(b) The Pro Forma adjustments referenced as (b) reflect the source of the funds
used for the aforementioned purchase. The source of the funds used includes
long-term debt of $7,321M and the balance ($22,756M) from short-term
borrowings. The debt reflect a 9.17% interest rate which when applied to the
$7,321M principal gives the Pro Forma interest of $671M.
<PAGE>
Exhibits
The Asset Purchase Agreement related to the transaction with Curtice Burns
Foods, Inc. is attached hereto as Exhibit 2(A).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Seneca Foods Corporation
(Registrant)
/s/Kraig H. Kayser
July 18, 1997 Kraig H. Kayser
President and
Chief Executive Officer
<PAGE>
================================================================================
================================================================================
Exhibit 2(A)
ASSET PURCHASE AGREEMENT
between
SENECA FOODS CORPORATION
and
CURTICE BURNS FOODS, INC.
Dated May 5, 1997
<PAGE>
TABLE OF CONTENTS
ARTICLE 1 - DEFINITIONS......................................................1
Adjustment Amount...................................................1
Applicable Contract.................................................1
Assets..............................................................1
Assigned Contracts..................................................1
Assumed Liabilities.................................................1
Best Efforts........................................................2
Breach..............................................................2
Business............................................................2
Business Information and Records....................................3
Buyer...............................................................3
Closing.............................................................3
Closing Date........................................................3
Confidentiality Agreement...........................................3
Consent.............................................................3
Contemplated Transactions...........................................3
Contract............................................................3
Damages.............................................................3
Disclosure Memorandum...............................................3
Encumbrance.........................................................3
Environment.........................................................3
Environmental, Health, and Safety Liabilities.......................4
Environmental Law...................................................4
Equipment...........................................................5
ERISA...............................................................5
Excluded Assets.....................................................5
Facilities..........................................................5
GAAP................................................................6
Governmental Authorization..........................................6
Governmental Body...................................................6
Hazardous Activity..................................................6
Hazardous Materials.................................................6
HSR Act.............................................................6
Intellectual Property Rights........................................6
Inventory...........................................................6
IRC.................................................................7
IRS.................................................................7
Legal Requirement...................................................7
Occupational Safety and Health Law..................................7
Order...............................................................7
Permitted Encumbrances..............................................7
Permitted Title Exceptions..........................................7
Person..............................................................7
Prepaid Items.......................................................7
Proceeding..........................................................7
Related Person......................................................8
Release.............................................................8
Representative......................................................8
Retained Liabilities................................................8
Scheduled Closing Date..............................................8
Seller ...........................................................8
Tax ...........................................................8
Tax Return..........................................................8
Threatened..........................................................8
Transferred Employees...............................................8
ARTICLE 2 - SALE AND TRANSFER OF ASSETS; CLOSING.............................9
2.1 Assets.....................................................9
2.2 Purchase Price.............................................9
2.3 Closing....................................................9
2.4 Liabilities Assumed and Retained...........................9
2.5 Seller's Closing Obligations...............................9
2.6 Buyer's Closing Obligations...............................10
2.7 Estimated Purchase Price..................................10
2.8 Adjustment Procedure......................................10
2.9 Intentionally Omitted.....................................11
2.10 Employee Matters..........................................11
2.11 Consent of Third Parties..................................12
2.12 Payment of Taxes..........................................13
2.13 Proration of Taxes, Rents and Utilities...................13
2.14 Silgan Agreement..........................................13
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER........................13
3.1 Organization and Good Standing............................13
3.2 Authority.................................................13
3.3 No Conflict...............................................14
3.4 Consents..................................................14
3.5 Financial Statements......................................14
3.6 Title to Properties; Encumbrances.........................14
3.7 Condition and Sufficiency of Assets.......................15
3.8 Inventory.................................................15
3.9 No Undisclosed Liabilities................................15
3.10 Taxes.....................................................15
3.11 No Material Adverse Change................................15
3.12 Benefit Plans.............................................15
3.13 ERISA Compliance..........................................16
3.14 Employee Relations........................................18
3.15 Compliance with Legal Requirements........................18
3.16 Governmental Authorizations...............................18
3.17 Legal Proceedings; Orders.................................19
3.18 Absence of Certain Changes and Events.....................19
3.19 Identification of Contracts...............................20
3.20 No Contract Defaults......................................21
3.21 Insurance.................................................21
3.22 Environmental Matters.....................................22
3.23 Intellectual Property.....................................23
3.24 Disclosure................................................23
3.25 Relationships with Related Persons........................23
3.26 Brokers or Finders........................................23
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BUYER.........................23
4.1 Organization and Good Standing............................23
4.2 Authority.................................................23
4.3 No Conflict...............................................24
4.4 Consents..................................................24
4.5 Certain Proceedings.......................................24
4.6 Brokers or Finders........................................24
ARTICLE 5 - COVENANTS OF SELLER PRIOR TO CLOSING DATE.......................24
5.1 Access and Investigation..................................24
5.2 Operation of the Business of Seller.......................25
5.3 Negative Covenant.........................................25
5.4 Required Approvals........................................25
5.5 Notification..............................................25
5.6 No Negotiation............................................26
5.7 Best Efforts..............................................26
5.8 Survey and Title Reports..................................26
ARTICLE 6 - COVENANTS OF BUYER PRIOR TO CLOSING DATE........................26
6.1 Approvals of Governmental Bodies..........................26
6.2 Best Efforts..............................................26
ARTICLE 7 - CONDITIONS TO BUYER'S OBLIGATION TO CLOSE.......................26
7.1 Accuracy of Representations...............................27
7.2 Seller's Performance......................................27
7.3 Consents..................................................27
7.4 Additional Documents......................................27
7.6 No Proceedings............................................28
ARTICLE 8 - CONDITIONS TO SELLER'S OBLIGATION TO CLOSE.....................28
8.1 Accuracy of Representations...............................28
8.2 Buyer's Performance.......................................28
8.3 Consents..................................................28
8.4 Additional Documents......................................28
8.5 No Proceedings............................................29
ARTICLE 9 - TERMINATION.....................................................29
9.1 Termination Events........................................29
9.2 Effect of Termination.....................................30
ARTICLE 10 - INDEMNIFICATION; REMEDIES......................................30
10.1 Survival..................................................30
10.2 Indemnification and Payment of Damages by Seller..........30
10.3 Indemnification and Payment of Damages:
Environmental Matters.....................................31
10.4 Indemnification and Payment of Damages by Buyer...........31
10.5 Calculation of Damages....................................31
10.6 Time Limitations..........................................32
10.7 Limitations on Amount of Liability of Seller..............32
10.8 Procedure for Indemnification - Third Party Claims........33
10.9 Procedure for Indemnification - Other Claims..............33
10.10 Exclusive Remedy..........................................33
ARTICLE 11 - GENERAL PROVISIONS.............................................34
11.1 Expenses..................................................34
11.2 Bulk Sales Laws...........................................34
11.3 Books and Records.........................................34
11.4 Public Announcements......................................34
11.5 Notices...................................................34
11.6 Jurisdiction; Service of Process..........................35
11.7 Further Assurances........................................35
11.8 Waiver....................................................35
11.9 Entire Agreement and Modification.........................36
11.10Disclosure Memorandum.........................................36
11.11Assignments, Successors, and No Third-Party Rights............36
11.12Severability..................................................36
11.13Section Headings, Construction................................37
11.14Time of Essence...............................................37
11.15Governing Law.................................................37
11.16Counterparts..................................................37
11.17Non-solicitation..............................................37
11.18Modifications for Inventory Assignment........................38
<PAGE>
================================================================================
================================================================================
ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement ("Agreement") is made as of May 5, 1997,
by Seneca Foods Corporation, a New York corporation ("Buyer"),and Curtice Burns
Foods, Inc., a New York corporation ("Seller").
WHEREAS, Buyer has offered to buy, and Seller has offered to sell,
substantially all of the assets used in the canned vegetable business of Seller,
The parties, intending to be legally bound, agree as follows:
ARTICLE 1 - DEFINITIONS
For purposes of this Agreement, the following terms have the meanings
specified or referred to in this Article 1:
Adjustment Amount has the meaning set forth in Section 2.8.
Applicable Contract means any Contract relating to Business or the
Assets (a) under which Seller has or may acquire any rights, (b) under which
Seller has or may become subject to any obligation or liability, or (c) by which
Seller or any of the Assets is or may become bound.
Assets means certain of the tangible and intangible property of Seller
used in Seller's Business as of the close of business on the Closing Date,
including Facilities, Equipment, Inventory, Intellectual Property Rights,
Business Information and Records, Assigned Contracts, Prepaid Items, and
goodwill, but excluding the Excluded Assets.
Assigned Contracts means, subject to Section 2.11, all leases of
Equipment, and all licenses, commitments, purchase orders, sales orders, rebate
programs, and other Applicable Contracts, including any right to receive payment
for products sold or services rendered, and to receive goods and services,
pursuant to such Contracts, and to assert claims and take other rightful actions
in respect of breaches, defaults and other violations thereof, all of which are
disclosed as Assigned Contracts in the Disclosure Memorandum delivered by Seller
to Buyer. Except as listed in Schedule A approved by Buyer, insurance policies
are not Assigned Contracts. Seller's collective bargaining agreements pertaining
to truck drivers at the Leroy Facility and to certain employees at the Leicester
Facility in a bargaining unit represented by the International Association of
Machinists and Aerospace Workers are not Assigned Contracts. The Supply
Agreement between Silgan Containers Corporation and Seller (the "Silgan
Agreement") is not an Assigned Contract, but shall be governed by the provision
of Section 2.14 of this Agreement.
Assumed Liabilities means the following (and only the following)
liabilities and obligations of Seller with respect to the Business:
(a) obligations for the sale and delivery of products of Seller not
shipped prior to the close of business on the Closing Date under open
sales orders, open bids and sales contracts included in the Assigned
Contracts;
(b) obligations of Seller for the purchase of raw materials, supplies
and repair and maintenance materials (except Excluded Assets) not
received prior to the close of business on the Closing Date and not
included in the Inventory under open supply contracts, purchase orders
and commitments included in the Assigned Contracts;
(c) liabilities and obligations of Seller arising under the Assigned
Contracts in accordance with their respective terms, subject to the
limitation of paragraph (e) below;
(d) all liabilities and obligations of Seller (other than federal,
state or local income tax or franchise tax liabilities) reflected or
reserved against (but only to the extent so reflected or reserved
against) on the Closing Schedule, but only if and to the extent the
same have not been paid or discharged prior to the Closing Date;
(e) all liabilities and obligations associated with or relating to the
Assets or the Business which accrue and arise after the Closing Date,
but the following are not Assumed Liabilities: (i) liabilities with
respect to the wholesomeness, safety and quality of products of Seller
shipped prior to the close of business on the Closing Date or in the
Inventory, (ii) Environmental, Health and Safety Liabilities for which
indemnification is provided under Section 10.3 and (iii) except as is
specifically assumed by Buyer under Section 10, any liability to
employees of Seller under any contract, collective bargaining
agreement, benefit plan or other agreement or Legal Requirement and any
liability of Seller under any contract specifically excluded from the
definition of Assigned Contracts.
Best Efforts means the efforts that a prudent Person desirous of
achieving a result would use in similar circumstances to ensure that such result
is achieved as expeditiously and as reasonably possible; provided, however, that
an obligation to use Best Efforts under this Agreement does not require the
Person subject to that obligation to take actions that would result in a
materially adverse change in the benefits to such Person of this Agreement and
the Contemplated Transactions.
Breach. A "Breach" of a representation, warranty, covenant, obligation,
or other provision of this Agreement or any instrument delivered pursuant to
this Agreement will be deemed to have occurred if there is or has been any
inaccuracy in or breach of, or any failure to perform or comply with, such
representation, warranty, covenant, obligation, or other provision.
Business means the canned vegetable business of Seller, as currently
conducted and proposed to be conducted at its Leicester, New York plant and
through its LeRoy, New York distribution center, and specifically including any
raw product, work in process or finished goods inventory attributable to the
canned vegetable business at Seller's Oakfield, New York plant, but specifically
excluding (i) Seller's sauerkraut and glass beet business, (ii) Seller's canned
carrot and canned asparagus business in Michigan, and (iii) all activities
associated with items (i) and (ii).
Business Information and Records means all correspondence, files,
documents, records and information (in any form or medium) of Seller pertaining
to the Assets of the Business being sold.
Buyer means Seneca Foods Corporation, a New York corporation.
Closing has the meaning set forth in Section 2.3.
Closing Date means the date and time as of which the Closing actually
takes place.
Confidentiality Agreement means the confidentiality agreement, dated
October 25, 1996, executed by Buyer for the benefit of Seller.
Consent means any approval, consent, ratification, waiver, or other
authorization (including any Governmental Authorization).
Contemplated Transactions means all of the transactions contemplated by
this Agreement, including:
(a) the sale of the Assets by Seller to Buyer;
(b) the performance by Buyer and Seller of their respective covenants
and obligations under this Agreement; and
(c) Buyer's acquisition and ownership of the Assets.
Contract means any express agreement, contract, obligation, promise, or
undertaking (whether written or oral) that is legally binding.
Damages has the meaning set forth in Section 10.2.
Disclosure Memorandum means the Disclosure Memorandum delivered by
Seller to Buyer concurrently with the execution and delivery of this Agreement.
Encumbrance means any charge, claim, community property interest,
easement, equitable interest, lien, option, pledge, security interest, right of
first refusal, or restriction of any kind, including any restriction on use,
voting, transfer, receipt of income, or exercise of any other attribute of
ownership.
Environment means soil, land surface or subsurface strata, surface
waters (including navigable waters, ocean waters, streams, ponds, drainage
basins, and wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any other
environmental medium or natural resource.
Environmental, Health, and Safety Liabilities means any cost, damages,
expense, liability, obligation, or other responsibility arising from or under
Environmental Law or Occupational Safety and Health Law and consisting of or
relating to:
(a) fines, penalties, judgments, awards, settlements, legal or
administrative proceedings, damages, losses, claims, demands and
response, investigative, remedial, or inspection costs and expenses
arising under Environmental Law or Occupational Safety and Health Law;
(b) financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action, including
any investigation, cleanup, removal, containment, or other remediation
or response actions ("Cleanup") required by applicable Environmental
Law or Occupational Safety and Health Law (whether or not such Cleanup
has been required or requested by any Governmental Body or any other
Person) and for any natural resource damages; or
(c) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety and
Health Law.
The terms "removal," "remedial," and "response action," include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. ss. 9601 et seq., as amended
("CERCLA").
Environmental Law means any Legal Requirement or Governmental
Authorization that requires or relates to:
(a) advising appropriate authorities, employees, and the public of
intended or actual releases of Hazardous Materials, violations of
discharge limits, or other prohibitions and of the commencements of
activities, such as resource extraction or construction, that could
have significant impact on the Environment;
(b) preventing or reducing to acceptable levels the release of
Hazardous Materials into the Environment;
(c) reducing the quantities, preventing the release, or minimizing the
hazardous characteristics of wastes that are generated;
(d) protecting natural resources, species, or ecological amenities;
(e) reducing to acceptable levels the risks inherent in the
transportation of Hazardous Materials, or other potentially harmful
substances;
(f) cleaning up Hazardous Materials that have been released, preventing
the threat of release, or paying the costs of such clean up or
prevention; or
(g) making responsible parties pay private parties, or groups of them,
for damages done to the Environment, or permitting self-appointed
representatives of the public interest to recover for injuries done to
public assets.
Equipment means all rights of Seller in any machinery, equipment, spare
parts, change parts, vehicles, furniture, fixtures, tools, and supplies owned,
leased or otherwise possessed by Seller which are used in the Business, and any
manuals, product literature, and manufacturer's warranties and representations
that relate to the foregoing; Equipment shall not include any spare parts,
change parts, or supplies which are Excluded Assets.
ERISA means the Employee Retirement Income Security Act of 1974 or any
successor law, and regulations and rules issued pursuant to that Act or any
successor law.
Excluded Assets means the following assets of Seller as of the close of
business on the Closing Date:
(a) all bank accounts and cash and cash equivalent items on hand or on
deposit other than Prepaid Items;
(b) all accounts receivables of the Seller pertaining to the Business;
(c) the sauerkraut and glass beet businesses in New York, and the
canned carrot and canned asparagus business in Michigan, and all other
businesses of Seller other than the Business and all assets relating
thereto, including specifically the Greenwood, Silver Floss, and other
trademarks of the businesses not used in the Business;
(d) computer equipment, including hardware, software, and related items
used in the LeRoy distribution center except as listed on Schedule B.
Schedule B items will be transferred to Seneca.
(e) rights to or claims for refunds, overpayments or rebates of Taxes
pertaining to the Business for periods ending on or prior to the
Closing Date.
(f) all Governmental Authorizations to the extent they are not
assignable or transferable.
(g) such spare parts, change parts and supplies as Buyer shall reject
after a reasonable opportunity to review the inventories of these
classes of assets for their asset value.
(h) obsolete inventory items, including without limitation obsolete
labels. Facilities means all real property, including structures, fixtures, and
improvements located thereon or attached thereto, in Seller's Leicester, New
York plant located at Route 36, Leicester, New York; and in Seller's LeRoy, New
York distribution center located at Lent Avenue, LeRoy, New York.
GAAP means generally accepted accounting principles, applied on a basis
consistent with the basis on which the Financial Statements referred to in
Section 3.5 were prepared.
Governmental Authorization means any approval, consent, license,
permit, waiver, or other authorization issued, granted, given, or otherwise made
available by or under the authority of any Governmental Body or pursuant to any
Legal Requirement.
Governmental Body means any court, governmental authority or other
regulatory or administrative agency or commission, domestic or foreign.
Hazardous Activity means the distribution, generation, handling,
importing, management, manufacturing, processing, production, refinement,
Release, storage, transfer, transportation, treatment, or use of Hazardous
Materials in, on, under, or from the Facilities or any part thereof into the
Environment.
Hazardous Materials means any waste or other substance that is listed,
defined, designated, or classified as, or otherwise determined to be, hazardous,
radioactive, harmful or toxic or a pollutant or a contaminant under or pursuant
to any Environmental Law or Occupational Safety and Health Law, including any
admixture or solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor and asbestos or
asbestos-containing materials.
HSR Act means the Hart-Scott-Rodino Antitrust Improvements Act of 1976
or any successor law, and regulations and rules issued pursuant to that Act or
any successor law.
Intellectual Property Rights means all rights of Seller in and to the
trademark "Blue Boy", "Blue Label", Monroe", "Ritter", "Orchard Farm", and
"Golden Butter Beans" (except as currently used by Seller relating to products
which are not part of the Business), and all rights of Seller in and to any
other patents, trademarks, trade names, service marks, copyrights, know-how,
trade secrets, confidential information, customer lists, technical information,
data, process technology, plans, drawings, blue prints, and other proprietary
intellectual property rights, used by Seller in the Business pertaining to the
Assets to be sold.
Inventory means all inventories of Seller used in the Business,
including raw materials, work-in-process, finished goods, component parts,
returned goods, stores and supplies, labeling and packaging items, shipping
containers and other materials, and subject to Section 2.11, third party
manufacturers' warranties applicable to the inventories.
IRC means the Internal Revenue Code of 1986 or any successor law, and
regulations issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
IRS means the United States Internal Revenue Service or any successor
agency and, to the extent relevant, the United States Department of the
Treasury.
Legal Requirement means any existing or prior federal, state, local,
municipal, foreign, international, multinational, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty.
Occupational Safety and Health Law means any Legal Requirement designed
to provide safe and healthful working conditions and to reduce occupational
safety and health hazards.
Order means any award, decision, injunction, judgment, order, ruling,
subpoena, or verdict entered, issued, made, or rendered by any court,
administrative agency, or other Governmental Body or by any arbitrator.
Permitted Encumbrances means (a) security interests securing Assumed
Liabilities, (b) liens for current taxes not yet due, and (c) minor
Encumbrances, if any, which, individually and in the aggregate, are not
substantial in amount, do not materially detract from the value or impair the
use of the property subject thereto, or materially impair the Business.
Permitted Title Exceptions means the following: (a) non-delinquent
liens for taxes or special assessments; (b) utility, access and other easements
and rights-of-way, restrictions and exceptions, other than those referred to in
(c) below, that counsel rendering a title opinion, a title insurer, or an
independent engineer certifies will not materially interfere with the present or
intended specific improvements or uses of the Facilities and provided that
structures and other improvements at the Facilities are not located on the
easements; and (c) restrictions, easements and encumbrances, if any, set forth
in the materials previously delivered by Seller to Buyer.
Person means any individual, corporation (including any non-profit
corporation), general or limited partnership, limited liability company, joint
venture, estate, trust, association, organization, labor union, or other entity
or Governmental Body.
Prepaid Items means all prepaid expenses relating to the Assets and
Assumed Liabilities, including spare parts, prepaid Taxes (except prepaid
federal, state or local income taxes or franchise taxes, if any) and all
advances, credits and security, utility and other deposits, but excluding any
pre-paid manufacturing expense of the Business.
Proceeding means any action, arbitration, hearing, litigation, or suit
(whether civil, criminal, administrative, investigative, or informal) commenced,
brought, conducted, or heard by or before, or otherwise involving, any
Governmental Body or arbitrator.
Related Person means: (a) with respect to a particular individual, each
other member of such individual's Family and any Person that is directly or
indirectly controlled by such individual or one or more members of such
individual's Family; and (b) with respect to a specified Person other than an
individual, any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common control with
such specified Person and each Person that serves as a director, officer,
partner, executor, or trustee of such specified Person (or in a similar
capacity). For purposes of this definition, the "Family" of an individual
includes (a) the individual, (b) any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including any
such relative by adoption) of the individual, and (c) any other natural person
who resides with such individual.
Release means any spilling, leaking, emitting, discharging, depositing,
escaping, leaching, dumping, or other releasing into the Environment, whether
intentional or unintentional.
Representative means with respect to a particular Person, any director,
officer, employee, agent, consultant, advisor, or other representative of such
Person, including legal counsel, accountants, and financial advisors.
Retained Liabilities has the meaning set forth in Section 2.4.
Scheduled Closing Date has the meaning set forth in Section 2.3.
Seller means Curtice Burns Foods, Inc., a New York corporation.
Tax means any tax (including any income tax, capital gains tax,
value-added tax, sales tax, property tax, gift tax, or estate tax), levy,
assessment, tariff, duty (including any customs duty), deficiency, or other fee,
and any related charge or amount (including any fine, penalty, interest, or
addition to tax), imposed, assessed, or collected by or under the authority of
any Governmental Body.
Tax Return means any return (including any information return), report,
statement, schedule, notice, form, or other document required to be filed with
or submitted to, any Governmental Body in connection with the determination,
assessment, collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance with any Legal
Requirement relating to any Tax.
Threatened. A claim, Proceeding, dispute, action, or other matter will
be deemed to have been "Threatened" if any written or oral demand or statement
has been made or any written notice has been given that would lead a prudent
Person to conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise pursued in the
future.
Transferred Employees has the meaning set forth in Section 2.10.
ARTICLE 2 - SALE AND TRANSFER OF ASSETS; CLOSING
2.1 Assets. Subject to the terms and conditions of this Agreement, at
the Closing, Seller will sell, transfer, convey and assign to Buyer, and Buyer
will purchase from Seller, all of the Assets, but not the Excluded Assets. Buyer
agrees that Seller may assign its right to purchase all or a portion of the
Inventory to Al Rajhi Banking and Investment Corp., as assignee. Seller will
transfer good title to the Assets to Buyer, and, if applicable, Buyer's
permitted assignee, free and clear of all Encumbrances, except for Permitted
Title Exceptions and Permitted Encumbrances.
2.2 Purchase Price. The purchase price (the "Purchase Price") for the
Assets will be the net book value of the Assets less the book value of the
Assumed Liabilities, estimated as set forth in Section 2.7 and adjusted after
the Closing in accordance with Section 2.8; provided, however, that any
Inventory which is obsolete with a market value lower than its net book value,
shall be sold at its market value and provided further that if Buyer and Seller
cannot agree to the market value of such obsolete inventory, such obsolete
Inventory shall be an Excluded Asset.
2.3 Closing. The purchase and sale provided for in this Agreement (the
"Closing") shall take place at the offices of Harris Beach & Wilcox, LLP, The
Granite Building, 130 East Main Street, Rochester, New York 14604, at 10:00 a.m.
(local time) on the later of (a) May 5, 1997 or (b) the date that is two
business days following the termination of the applicable waiting period under
the HSR Act ("Scheduled Closing Date")
2.4 Liabilities Assumed and Retained. On the Closing Date, Seller shall
assign to Buyer, and Buyer shall assume and agree to perform and discharge in
accordance with their respective terms, the Assumed Liabilities. Except for the
Assumed Liabilities, Buyer shall not assume any liabilities, obligations or
undertakings of Seller of any nature whatsoever, whether fixed or contingent,
known or unknown. Seller shall be responsible for all of the liabilities,
obligations and undertakings of Seller not specifically assumed by Buyer (the
"Retained Liabilities") and Seller agrees to pay, perform or discharge the
Retained Liabilities in accordance with their respective terms.
2.5 Seller's Closing Obligations. At the Closing, Seller will
deliver to Buyer:
2.5.1 Deeds, bills of sale, assignments, and other instruments
of transfer and conveyance for the Assets satisfactory in form and substance to
counsel to Buyer.
2.5.2 A certificate executed by an executive officer of Seller
representing and warranting to Buyer that except as otherwise stated in such
certificate, each of Seller's representations and warranties in this Agreement
was accurate in all material respects as of the date of this Agreement and is
accurate in all material respects as of the Closing Date as if made on the
Closing Date (giving full effect to any supplements to the Disclosure Memorandum
that were delivered by Seller to Buyer prior to the Closing Date in accordance
with Section 5.5). Simultaneously with such deliveries, Seller shall take all
additional steps as may be reasonably necessary to put Buyer in possession and
operating control of the Assets and the Business.
2.6 Buyer's Closing Obligations. At the Closing, Buyer will
deliver to Seller:
2.6.1 The Purchase Price, as estimated by Seller based on the
most recent information available three business days prior to the Closing Date
(the "Estimated Purchase Price"), by wire transfer of immediately available
funds to such account as Seller shall designate in writing.
2.6.2 An instrument of assumption with respect to the Assumed
Liabilities and the Assigned Contracts in form and substance reasonably
satisfactory to counsel to Seller.
2.6.3 A certificate executed by an executive officer of Buyer
to the effect that, except as otherwise stated in such certificate, each of
Buyer's representations and warranties in this Agreement was accurate in all
material respects as of the date of this Agreement and is accurate in all
material respects as of the Closing Date as if made on the Closing Date.
2.7 Estimated Purchase Price. The Estimated Purchase Price shall mean
the estimated net book value as of the Closing Date of the Assets less the
estimated book value of the Assumed Liabilities determined based on the most
recent information available three business days prior to the Closing Date.
2.8 Adjustment Procedure
2.8.1 Seller will prepare as of the Closing Date a capital
employed schedule ("Closing Schedule") pertaining to the Assets of the Business
to be sold, and the Assumed Liabilities, including a computation of the
Adjustment Amount. Seller will deliver the Closing Schedule to Buyer within
thirty days after the Closing. If within fifteen days following delivery of the
Closing Schedule, Buyer has not given Seller notice of its objection to the
Closing Schedule (such notice must contain a statement of the basis of Buyer's
objection), then the net book value of the Assets, the book value of the Assumed
Liabilities, and the Adjustment Amount reflected in the Closing Schedule will be
used in adjusting the Estimated Purchase Price in accordance with this Section
2.8. If Buyer gives such notice of objection, and the parties are unable to
resolve such objection within thirty (30) days after receipt by Seller of such
objection, then the parties shall submit the dispute to a Big-Six public
accounting firm mutually acceptable to and independent from Buyer and Seller
(the "Accountant") for resolution. If issues in dispute are submitted to the
Accountant for resolution, (i) each party will furnish to the Accountant such
work papers and other documents and information relating to the disputed issues
as the Accountant may request and are available to that party (or its
independent public accountants), and will be afforded the opportunity to present
to the Accountant any material relating to the determination and to discuss the
determination with the Accountant; (ii) the determination by the Accountant, as
set forth in a notice delivered to both parties by the Accountant, will be
binding and conclusive on the parties; and (iii) Buyer and Seller will each bear
50% of the fees of the Accountant for such determination.
2.8.2 The Adjustment Amount shall be the difference between
(i) the net book value determined pursuant to Section 2.8.1. and (ii) the net
book value of the Assets determined for purposes of the Estimated Purchase Price
pursuant to Section 2.7. The Estimated Purchase Price shall be adjusted by the
Adjustment Amount and payment of the Adjustment Amount shall be made in
accordance with Section 2.8.3.
2.8.3 On or before the tenth business day following the final
determination of the Adjustment Amount, if the Adjustment Amount is a positive
number, Buyer will pay the difference to Seller, and if the Adjustment Amount is
a negative number, Seller will pay the difference to Buyer. All payments will be
made together with interest at 7.5% per annum beginning on the Closing Date and
ending on the date of payment. Payments must be made in immediately available
funds. Payments to Buyer or Seller shall be made by wire transfer to such bank
account as such party will specify.
2.8.4 Buyer and Seller agree that the party which receives
credit for any sale to a third-party shall be responsible for any liability for
rebates, bill back allowances, reclamation claims, pricing claims, promotional
and pricing audit claims which a customer deducts with respect to that sale. For
any such deductions which occur on or before June 30, 2000, the parties agree to
reconcile the amount of such liabilities and the sales to which such liabilities
pertain. The party charged with such liability shall remit to the other party
the amount of such liability promptly after such liability is determined by the
parties. Buyer agrees to continue through June 30, 1997 any annual sales program
of Seller in place as of the Closing Date.
2.9 Intentionally Omitted.
2.10 Employee Matters. At Closing, Buyer shall offer employment to all
nonseasonal full-time employees of Seller in the Business who are actively at
work or on vacation ("Transferred Employees") as of the Closing Date, but
excluding those employees specifically listed in Section 2.10 of the Disclosure
Memorandum. As to nonseasonal full-time employees in the Business who are not
actively at work on the Closing Date, Buyer shall make offers of employment to
such employees on their return to work from leave status (or as otherwise
required under any collective bargaining agreement assumed by Buyer) in which
event such employees who accept employment shall also become Transferred
Employees. It is the intent of the parties that such employees who are not
actively at work on the Closing Date shall remain the responsibility of Seller
until their actual return to work from leave status and hire by the Buyer. Upon
the Closing Date, Seller shall provide Buyer with a list of the employees who
are not actively at work with a description of the reason for each employee's
leave of absence (e.g. workers compensation claim, disability, etc.) and an
estimate, if available, of the date each employee is anticipated to be able to
return to work from leave status.
2.10.1 Non-Union Transferred Employees. For non-union
transferred Employees, all terms, including benefits, of each offer to
Transferred Employees shall be on terms set by Buyer; provided, however, that
(i) for the purpose of termination benefits provided under Buyer's termination
plan(s), the Transferred Employees' combined period of service with Buyer and
Seller shall be taken into account, (ii) for eligibility and vesting purposes
only under any pension plan(s) of Buyer, the Transferred Employees' service with
Seller shall be taken into account, and (iii) for eligibility purposes under any
health insurance or health benefit plans, or in any vacation program or other
benefit plan of Buyer providing a waiting period, the Transferred Employees'
service with Seller shall be taken into account. Non-Union Transferred Employees
rate of accrual of vacation pay under Buyer's vacation policy or program shall
not be at a rate lower than the Transferred Employee's accrual rate with Seller
as of the Closing Date. The eligibility for and coverage of the non-union
Transferred Employees in any health insurance or health benefit plan of Buyer
shall be determined without regard to any pre-existing condition provisions of
Buyer's plans unless such conditions were precluded from coverage under the
Seller's plans as of the Closing Date. Nothing in this Agreement shall
constitute a guarantee that any Transferred Employee shall be entitled to remain
in the employment of Buyer for any specified period of time. Nothing in this
Agreement shall prohibit Buyer from changing the terms of employment of any
Transferred Employee following the Closing Date. Seller shall be responsible and
liable, and Buyer shall not be responsible and liable, for all obligations to
any Transferred Employee who is offered employment by Buyer but refuses to
accept such employment, including, without limitation, compliance (if required)
with the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"). Buyer shall refrain from engaging in any plant closing, mass layoff,
or employment loss within the meaning of the Worker's Adjustment and Retraining
Notification Act of 1988, as amended ("WARN Act") for a period of ninety (90)
days after the Closing Date unless the Buyer has fully complied with the WARN
Act. Seller shall be responsible for compliance with the WARN Act for any such
plant closing, mass layoff, or employment loss which occurs on or before the
Closing Date.
2.11 Consent of Third Parties. This Agreement shall not constitute an
agreement to assign any interest in any Contract or Governmental Authorization
or any claim, right or benefit arising thereunder or resulting therefrom, if an
assignment or agreement to assign without the Consent of a third party would
constitute a breach or a violation thereof or affect adversely the rights of
Buyer or Seller thereunder. If a Consent of a third party that is required in
order to assign any such interest is not obtained prior to the Closing Date, or
if an attempted assignment would be ineffective or would adversely affect the
ability of Seller to convey its interest to Buyer, Seller will cooperate with
Buyer in any lawful and reasonable arrangement to provide that Buyer shall
receive the interest of Seller in the benefits under any such Contract or
Governmental Authorization, including performance by Seller as agent except
where prohibited by law; and any transfer or assignment to Buyer or by Seller of
any interest under any such Contract or Governmental Authorization that requires
the Consent of a third party shall be made subject to such Consent being
obtained. This Section 2.11 shall not constitute a waiver under Section 7.3.
2.12 Payment of Taxes. Buyer shall pay all Taxes (other than federal,
state or local income taxes, real property transfer taxes, or franchise taxes)
that arise as a result of the sale of the Assets by Seller to Buyer under this
Agreement.
2.13 Proration of Taxes, Rents and Utilities. All ad valorem real and
personal property taxes and charges on any of the Assets, all rents payable with
respect to the Assets, and all charges for water, gas, electricity, sewer,
drainage or other utility services relating to the Business will be prorated as
of the Closing Date (net of any Prepaid Items and accrued expenses included on
the Closing Schedule).
2.14 Silgan Agreement. The Silgan Agreement shall apply to the extent
specified in this Section 2.14 to the Business being transferred by Seller to
Buyer; provided, however, that beginning on the first anniversary of the Closing
Date and continuing through the termination of such Silgan Agreement, the Seller
shall be responsible for the excess, if any, of the cost of containers used in
the Business under such Silgan Agreement over the cost at which Buyer can
produce the containers used in the Business, such excess to be paid by Seller
either (a) directly to Silgan Containers Corporation if Buyer makes payments for
such containers to Seller or (b) to Buyer if Buyer makes payments for such
containers directly to Silgan Containers Corporation.
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer as follows, except as set forth
in the Disclosure Memorandum:
3.1 Organization and Good Standing. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
New York, with all requisite corporate power to conduct the Business, to own or
use the Assets, and to perform all its obligations under Applicable Contracts.
Seller is not required to be qualified to do business as a foreign corporation
in any other state or jurisdiction in which the failure to be so qualified
(individually or in the aggregate) is likely to have a material adverse effect
on the Assets or the Business.
3.2 Authority. This Agreement constitutes the legal, valid, and binding
obligation of Seller, enforceable against Seller in accordance with its terms.
Seller has all requisite corporate power to execute and deliver this Agreement
and to perform its obligations under this Agreement. The execution and delivery
of this Agreement and the consummation and performance of the Contemplated
Transactions have been duly authorized by all necessary corporate action on the
part of Seller.
3.3 No Conflict. Neither the execution and delivery of this
Agreement by Seller nor the consummation or performance of any of the
Contemplated Transactions by Seller will, directly or indirectly (with or
without notice or lapse of time):
3.3.1 Contravene, conflict with, or result in a violation of
(a) any provision of the organizational documents of Seller, or (b) any
resolution adopted by the board of directors or the stockholders of Seller;
3.3.2 Contravene, conflict with, or result in a violation of,
or give any Governmental Body or other Person the right to exercise any remedy
or obtain any relief under, any Legal Requirement or any Order to which Seller
or any of the Assets is subject;
3.3.3 Contravene, conflict with, or result in a violation of
any of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate, or modify, any Governmental
Authorization that is held by Seller or that otherwise relates to the Business
or any of the Assets.
3.3.4 Contravene, conflict with, or result in a violation or
breach of any provision of, or give any Person the right to declare a default or
exercise any remedy under, or to accelerate the maturity or performance of, or
to cancel, terminate, or modify, any Assigned Contract; or
3.3.5 Result in the imposition or creation of any
Encumbrance upon or with respect to any of the Assets.
3.4 Consents. Except as set forth in Section 3.4 of the Disclosure
Memorandum, Seller is not required to give any notice to or obtain any Consent
from any Person in connection with the execution and delivery of this Agreement
or the consummation or performance of any of the Contemplated Transactions.
3.5 Financial Statements. Seller has delivered to Buyer a capital
employed schedule for the Business as of the end of its fiscal year ending in
June 1996 and as of the end of its fiscal month ending in December 1996, and the
related profit and loss statements pertaining to the Business for the periods
ending as of the same dates (the "Financial Statements"), as well as various
interim financial information and schedules pertaining to the Business. Such
Financial Statements fairly present the financial condition and the results of
operations, and cash flow of the Business as of the respective dates of and for
the periods referred to in such financial statements, all in accordance with
GAAP.
3.6 Title to Properties; Encumbrances. Seller has delivered or made
available to Buyer copies of the deeds and other instruments (as recorded) by
which Seller acquired the Facilities and copies of all title insurance policies,
opinions, abstracts, and surveys in the possession of Seller and relating to the
Facilities. Seller owns (with good and marketable title in the case of the
Facilities, subject only to Permitted Title Exceptions) all the Assets. The
Facilities are free and clear of all Encumbrances and are not subject to any
rights of way, building use restrictions, exceptions, variances, reservations or
limitations of any nature, except Permitted Title Exceptions. In the case of
Assets other than the Facilities, the Assets are owned free and clear of all
Encumbrances, except Permitted Encumbrances.
3.7 Condition and Sufficiency of Assets. The Facilities and material
pieces of Equipment are in adequate condition for the uses to which they are
being put, and are not in need of maintenance or repairs, except for ordinary,
routine maintenance and repairs. The Assets are sufficient for the continued
conduct of the Business in the same manner as it has been conducted for the
period of two years prior to Closing. The Assets may be operated "as is" and are
in compliance with Legal Requirements applicable to the Assets and the Business.
3.8 Inventory. All Inventory consists of a quality and quantity usable
or salable in the ordinary course of business, except for obsolete items and
items of below-standard quality, all of which have been written off or written
down to net realizable value in the Closing Schedule or on the accounting
records of Seller as of the Closing Date, as the case may be. All Inventory not
written off has been priced at the lower of last cost or market on a first in,
first out basis. The quantities of each item of Inventory (whether raw
materials, work-in-process, or finished goods) are not excessive, but are
reasonable in the present circumstances of Seller. All Inventory is in
compliance with all Legal Requirements pertaining to it, including without
limitation all laws and regulations relating to the wholesomeness of food for
human consumption.
3.9 No Undisclosed Liabilities. To Sellers' knowledge, Seller has no
liabilities or obligations of any nature (whether known or unknown and whether
absolute, accrued, contingent, or otherwise) that are of the type required to be
reflected as liabilities on a balance sheet prepared in accordance with GAAP or
described in the notes thereto, except for liabilities or obligations reflected
or reserved against in the Financial Statements or Closing Schedule, and
liabilities incurred in the ordinary course of business since the respective
dates thereof.
3.10 Taxes. Seller has timely filed all Tax Returns that are or were
required to be filed by it pursuant to applicable Legal Requirements, except for
possible noncompliance that will not, individually or in the aggregate, have a
material adverse effect on the Assets or the Business. All Tax Returns filed by
Seller are true, correct, and complete in all material respects.
3.11 No Material Adverse Change. Since the date of the Financial
Statements, there has not been any material adverse change in the Assets or the
Business.
3.12 Benefit Plans. Section 3.12 of the Disclosure Memorandum
contains a true, correct and complete list of all of the following to which
Seller is a party or by which Seller is bound pertaining to the Transferred
Employees:
3.12.1 Contracts with officers and employees, copies of which
have been supplied to the Buyer.
3.12.2 Collective bargaining agreements, union contracts,
labor agreements, conciliation agreements or contracts with any labor union or
other representative of Transferred Employees, copies of which have been
supplied to the Buyer.
3.12.3 Pension, profit-sharing, bonus, commission, retirement,
stock option, other employee benefit or welfare plans or other similar plans or
arrangements.
3.12.4 All arbitration, grievance dispositions, and other
dispositions of employment-related conflicts with respect to the employee of the
Business, occurring since December 31, 1991. In addition, copies of published
employment policies have been made available to the Buyer for review. Buyer has
been advised by Seller of all employment policies or practices of the Seller
which may be binding upon the Seller as a successor employer of the Seller and
copies of any such employment policies or practices which are in writing are set
forth in Section 3.12.4 of the Disclosure Memorandum.
3.13 ERISA Compliance. Except as set forth in Section 3.13 of the
Disclosure Memorandum.
3.13.1 No employee benefit plan maintained by Seller in which
any of the Transferred Employees participate is a "multi employer plan" as
defined in Section 3(37)(a) of ERISA.
3.13.2 (a) Since December 31, 1991, Seller has not terminated
any plan that is an "employee pension benefit plan" as described in Section 3(2)
of ERISA, and no condition presently exists that could result in such
termination under Section 4042 of ERISA.
(b) No "reportable event" (as defined in Section
4043 of ERISA) has occurred with respect to an employee pension benefit plan
maintained by Seller for which notice to the Pension Benefit Guaranty
Corporation is required pursuant to regulations under Section 4043 of ERISA.
(c) Seller has not engaged in any "prohibited
transaction" as defined in Section 406 of ERISA that is not exempt under Section
407 and 408 of ERISA.
(d) No employee, officer or director of Seller
or any person for whom Seller is directly or indirectly responsible, whether
by way of indemnity or otherwise, has engaged in a prohibited transaction that
is not exempt under Section 405 or 408 of ERISA.
(e) Seller has complied in all material respects
with the reporting and disclosure requirements of Part I of ERISA.
(f) There is no accumulated funding deficiency
as defined in Section 412 of the Code with respect to any employee benefit plan
maintained by Seller.
(g) Each employee benefit plan of Seller which
is an employee pension benefit plan (as such term is defined in ERISA Section
3(2)) intended to qualify under the Code has received a favorable determination
letter as to its qualification under the Code and nothing has occurred, whether
by action or failure to act, which would cause the loss of such qualification.
(h) All employee liabilities for employees of
Seller arising under each employee benefit plan for which any employees of
Seller participate have been accounted for in a manner satisfying the
requirements of FAS 87, 88, 106 and 112.
(i) There are no actions, suits or claims
(other than routine claims for benefits in the ordinary course) pending, or to
Seller's best knowledge, threatened with respect to any employee benefit plan
of Seller, and to Seller's best knowledge, there are no facts which could give
rise to any such actions, suits or claims (other than routine claims for
benefits in the ordinary course).
(j) No event has occurred and no condition
exists that would subject Seller or Buyer to any Tax under Chapter 43 of the
Code or to a fine under ERISA Section 502(c) with respect to any employee
benefit plan of Seller.
(k) All contributions and insurance premiums
under any employee benefit plans of Seller required to have been paid as of
the Closing Date have been, and all contributions and premiums required to
be paid by Seller as of the Closing Date under any other employee benefit plans
in which employees of Seller participate have been paid.
(l) The execution and delivery of this Agreement
by Seller, and the consummation of the transactions contemplated hereunder, will
not result in any obligation or liability (with respect to accrued benefits or
otherwise) under any employee benefit plan of Seller to any employee or former
employee of Seller.
(m) For each employee benefit plan of Seller
which is an employee welfare benefit plan (within the meaning of ERISA
Section 3(1)) (a "Welfare Plan"), the following is true:
(i).....each such Welfare Plan intended to meet the requirements for
tax-favored treatment under Subchapter B of Chapter 1 of the Code meets such
requirements.
(ii)....there is no VEBA maintained with
respect to any such Welfare Plan;
(iii)...there is no disqualified benefit (as
such term is defined in Code Section 4976(b)) which would subject Seller to Tax
under Code Section 4976(a);
(iv)....each such Welfare Plan which is a
group health plan (as such term is defined in Code Section 5000(b)(1))
complies and has complied with the applicable requirements of Code Section
4980B and the applicable provisions of the Social Security Act; and
(v).....each such Welfare Plan (including
any such plan covering former employees of the Seller) may be amended or
terminated by Seller on or at any time after the Closing Date.
(n) No asset of Seller is the subject of a lien
arising under Section 302(f) of ERISA or Section 412(n) of the Code.
3.14 Employee Relations........Section 3.14 of the Disclosure
Memorandum contains a list of each employee of Seller (who shall be a
Transferred Employee) and each such employee's years of service, salary and
grade. Since December 31, 1993, there has not been, there is not presently
pending or existing, and, to Seller's knowledge, there is not Threatened, (a)
any strike, slowdown, picketing, work stoppage, or employee grievance process,
(b) any Proceeding against Seller relating to the alleged violation of any Legal
Requirement pertaining to labor relations or employment matters, including any
charge or complaint filed by an employee or union with the National Labor
Relations Board, the Equal Employment Opportunity Commission, or any
Governmental Body or any pending grievance or arbitration proceeding or any
material workers' compensation claims that, if resolved adversely to Seller,
would have an adverse affect on the Assets or the Business; or (c) any
application for certification of a collective bargaining agent, or request for
recognition as a collective bargaining representative. Seller has complied with
all Legal Requirements relating to employment, equal employment opportunity,
nondiscrimination, rights of disabled persons, immigration, wages, hours,
benefits, collective bargaining, the payment of social security and similar
taxes, Occupational Safety and Health, and plant closing, except for possible
noncompliance that will not, individually or in the aggregate, have an adverse
effect on the Assets or the Business.
3.15 Compliance with Legal Requirements. Seller is in compliance with
each Legal Requirement that is applicable to it or to the conduct or operation
of the Business or the ownership or use of any of the Assets, except for
possible noncompliance that will not, individually or in the aggregate, have an
adverse effect on the Assets or the Business. Seller has not received, at any
time since December 31, 1993 any written notice from any Governmental Body or
any other Person regarding any violation of, or failure to comply with, any
Legal Requirement.
3.16 Governmental Authorizations. Seller has in effect all of the
Governmental Authorizations necessary to permit Seller to lawfully conduct and
operate the Business and to permit Seller to own and use the Assets in the
manner in which it currently owns and uses such Assets, except for Governmental
Authorizations the absence of which will not, individually or in the aggregate,
have a material adverse effect on the Assets or the Business. Seller is in
compliance with all of the terms and requirements of each such Governmental
Authorization, except for possible noncompliance that will not, individually or
in the aggregate, have a material adverse effect on the Assets or the Business.
Seller has not received, at any time since December 31, 1993, any written notice
or, to Seller's best knowledge, any other type of notice from any Governmental
Body or any other Person regarding (a) any violation of or failure to comply
with any term or requirement of any Governmental Authorization, or (b) any
actual or proposed revocation, withdrawal, suspension, cancellation, termination
of, or modification to any Governmental Authorization.
3.17 Legal Proceedings; Orders. There is no pending Proceeding that has
been commenced by or against Seller: (a) that if resolved adversely to Seller,
individually or in the aggregate, would have a material adverse affect on the
Assets or the Business; or (b) that challenges, or that may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To the knowledge of Seller, no such Proceeding has
been Threatened. There is no Order to which Seller or any of the Assets is
subject.
3.18 Absence of Certain Changes and Events. Since the date of the
Financial Statements, Seller has conducted the Business only in the ordinary
course of business and there has not been any:
3.18.1 Increase by Seller of any salaries or other future
compensation to any employee (except in the ordinary course of business) or
entry into any employment, severance, or similar Contract extending beyond the
Closing Date with any employee;
3.18.2 Adoption of, or increase in the payments to or benefits
under, any profit sharing, bonus, deferred compensation, savings, insurance,
pension, retirement, or other employee benefit plan for or with any employees of
Seller;
3.18.3 Damage to or destruction or loss of any Equipment or
Facility, whether or not covered by insurance, materially and adversely
affecting the Assets or the Business.
3.18.4 Termination of, or receipt of notice of termination
of any material Applicable Contract;
3.18.5 Sale (other than sales of Inventory in the ordinary
course of business), lease, or other disposition of any Asset that is material
to the Business or pledge, or imposition of any Encumbrance on any such Asset;
3.18.6 Cancellation or waiver of any claims or rights with a
material value to Seller;
3.18.7 Material change in the accounting methods used by
Seller; or
3.18.8 Contract by Seller to do any of the foregoing.
3.19 Identification of Contracts. Section 3.19 of the Disclosure
Memorandum contains a complete and accurate list, as of the date of this
Agreement, and Seller has made available to Buyer, true and complete copies, of:
3.19.1 Each Applicable Contract pertaining to the Business
that involves performance of services or delivery of goods or materials by
Seller of an amount or value in excess of $10,000;
3.19.2 Each Applicable Contract pertaining to the Business
that involves performance of services or delivery of goods or materials to
Seller of an amount or value in excess of $10,000;
3.19.3 Each Applicable Contract pertaining to the Business
that was not entered into in the ordinary course of business and that involves
expenditures or receipts of Seller in excess of $10,000;
3.19.4 Each lease, rental or occupancy agreement, license,
installment and conditional sale agreement, and other Applicable Contract
pertaining to the Business affecting the ownership of, leasing of, title to, use
of, or any leasehold or other interest in, any real or personal property (except
personal property leases and installment and conditional sales agreements having
a value per item or aggregate payments of less than $10,000 that have remaining
terms of less than one year or that are terminable without penalty on not more
than 90 days' notice);
3.19.5 Each joint venture, partnership, and other Applicable
Contract (however named) pertaining to the Business involving a sharing of
profits, losses, costs, or liabilities by Seller with any other Person;
3.19.6 Each Applicable Contract pertaining to the Business
containing covenants that in any way purport to restrict the business activity
of Seller or limit the freedom of Seller to engage in any line of business or to
compete with any Person;
3.19.7 Each Applicable Contract pertaining to the Business
providing for payments to or by any Person based on sales, purchases, or
profits, other than direct payments for goods;
3.19.8 Each Applicable Contract pertaining to the Business
for capital expenditures in excess of $25,000;
3.19.9 Each Applicable Contract which confers a material
benefit with respect to the Assets or Business or imposes a material limitation
on the use of the Assets or the conduct of Business.
3.19.10 Each written warranty, guaranty, and or other similar
undertaking pertaining to the Business with respect to contractual performance
extended by Seller other than in the ordinary course of business; and
3.19.11 Each amendment, supplement, and modification (whether
oral or written) in respect of any of the foregoing.
3.20 No Contract Defaults. Each Contract identified or required to be
identified in the Disclosure Memorandum is in full force and effect and is valid
and enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and subject,
as to enforceability, to general principles of equity. Seller is in compliance
with all applicable terms and requirements of each Contract under which Seller
has or had any obligation or liability or by which Seller or any of the Assets
is or was bound, except for possible noncompliance that is not likely,
individually or in the aggregate, to have a material adverse effect on the
Assets or the Business. No event has occurred or circumstance exists that (with
or without notice or lapse of time) contravenes, conflicts with, or results in a
violation or breach of, or gives any Person other than Seller the right to
declare a default or exercise any remedy under, or to accelerate the maturity or
performance of, or to cancel, terminate, or modify, any Applicable Contract in a
manner that, individually or in the aggregate, would have a material adverse
effect on the Assets or the Business. Seller has not received from any other
Person, at any time since December 31, 1993, any notice regarding any violation
or breach of, or default under, any Contract. There are no ongoing
renegotiations of, attempts to renegotiate, or outstanding rights to renegotiate
any material amounts paid or payable to Seller under current or completed
Contracts with any Person.
3.21 Insurance.
3.21.1 All insurance policies to which Seller is a party or
that provide coverage to Seller pertaining to the Business: (a) are valid,
outstanding, and enforceable; (b) are issued by an insurer that is financially
sound and reputable; (c) taken together, provide adequate insurance coverage for
the Assets and the Business for all risks normally insured against by a Person
carrying on the same business as Seller; (d) are sufficient for compliance with
all Legal Requirements and Contracts to which Seller is a party or by which any
of them is bound; and (e) do not provide for any retrospective premium
adjustment or other experienced-based liability on the part of Seller.
3.21.2 Seller has not received (a) any refusal of coverage or
any notice that a defense will be afforded with reservation of rights, or (b)
any notice of cancellation or any other indication that any insurance policy is
no longer in full force or effect or will not be renewed or that the issuer of
any policy is not willing or able to perform its obligations thereunder.
3.21.3 Seller has paid all premiums due, and has otherwise
performed all of it obligations, under each policy pertaining to the Business to
which Seller is a party or that provides coverage to Seller.
3.22 Environmental Matters.
3.22.1 Seller is in compliance with, and is not in violation
of or liable under, any Environmental Law, except for possible noncompliance,
violations and liabilities that do not, individually or in the aggregate, have a
material adverse effect on the Assets or the Business. Since December 31, 1993,
Seller has not received any order or written notice from (a) any Governmental
Body or private citizen acting in the public interest, or (b) the prior owner or
operator of any Facilities, of any violation or failure to comply with any
Environmental Law, or of any obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
pertaining to the Business in which Seller has had an interest, or with respect
to any property or Facility at or to which Hazardous Materials were generated,
manufactured, refined, transferred, imported, used, or processed by Seller
pertaining to the Business..
3.22.2 There are no material Encumbrances resulting from any
Environmental, Health, and Safety Liabilities or arising under or pursuant to
any Environmental Law, with respect to or affecting any of the Facilities or any
other properties and assets (whether real, personal, or mixed) pertaining to the
Business in which Seller has or had an interest.
3.22.3 Since December 31, 1993, Seller has not received, any
citation, directive, inquiry, notice, Order, summons, warning, or other
communication from (a) any Governmental Body or (b) the owner of any real
property or other facility that relates to Hazardous Activity, Hazardous
Materials, or any alleged violation or failure to comply with any Environmental
Law, or of any alleged obligation to undertake or bear the cost of any
Environmental, Health, and Safety Liabilities with respect to any of the
Facilities or any other properties or assets (whether real, personal, or mixed)
pertaining to the Business in which Seller had an interest, or with respect to
any property or facility to which Hazardous Materials generated, manufactured,
refined, transferred, imported, used, or processed by Seller have been
transported, treated, stored, handled, transferred, disposed, recycled, or
received.
3.22.4 Seller does not have any Environmental, Health, and
Safety Liabilities that, individually or in the aggregate, will have a material
adverse effect on the Assets or the Business with respect to the Facilities or,
to the knowledge of Seller, with respect to any other properties and assets
(whether real, personal, or mixed) pertaining to the Business in which Seller
(or any predecessor), has or had an interest.
3.22.5 Neither Seller, nor to the knowledge of Seller, any
other Person, has conducted any Hazardous Activity with respect to the
Facilities or any other properties or assets (whether real, personal, or mixed)
pertaining to the Business in which Seller has or had an interest, except in a
manner that is either in compliance with applicable Environmental Laws or, if
not so complying, will not have a material adverse effect on the Assets or the
Business.
3.22.6 There has been no Release of any Hazardous Materials at
or from the Facilities that will have a material adverse effect on the Assets or
the Business.
3.22.7 Seller has delivered to Buyer true and complete copies
and results of any reports, studies, analyses, tests, or monitoring possessed or
initiated by Shareholders or Seller pertaining to Hazardous Materials or
Hazardous Activities in, on, or under the Facilities, or concerning compliance
by Seller pertaining to the Business. A list of the environmental due diligence
materials supplied by Seller to Buyer is set forth in Section 3.22.7 of the
Disclosure Memorandum.
3.23 Intellectual Property. Seller owns, or is validly licensed or
otherwise has the right to use, all Intellectual Property Rights that are
material to the conduct of the Business. No claims are pending or, to the
knowledge of Seller, Threatened that Seller is infringing or otherwise adversely
affecting the rights of any Person with regard to any patent, trademark, trade
name, service mark, copyrights, know-how, trade secret, confidential
information, customer list, technical information, data, process technology,
plans, drawings, blue prints, and other proprietary intellectual property rights
to Seller's knowledge, no Person is infringing the rights of Seller with respect
to any Intellectual Property Right. All Intellectual Property Rights of Seller
which are used in, or pertain to, the Business are listed in Section 3.23 of the
Disclosure Memorandum.
3.24 Disclosure. No representation or warranty of Seller in this
Agreement and no statement in the Disclosure Memorandum omits to state a
material fact necessary to make the statements herein or therein, in light of
the circumstances in which they were made, not misleading. No notice given
pursuant to Section 5.5 will contain any untrue statement or omit to state a
material fact necessary to make the statements therein or in this Agreement, in
light of the circumstances in which they were made, not misleading.
3.25 Relationships with Related Persons. Except as disclosed in Section
3.25 of the Disclosure Memorandum, no Related Person of Seller has, or since
December 31, 1993 has had, any interest in any property (whether real, personal,
or mixed and whether tangible or intangible) used in or pertaining to the
Business.
3.26 Brokers or Finders. Seller has incurred no obligation or
liability, contingent or otherwise, for brokerage or finders' fees or agents'
commissions or other similar payment in connection with this Agreement.
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing, and in good standing under the laws of the State of
New York.
4.2 Authority. This Agreement constitutes the legal, valid, and binding
obligation of Buyer, enforceable against Buyer in accordance with its terms.
Upon the execution and delivery by Buyer of the Raw Product Supply Agreement,
Reciprocal Co-Pack Agreement, Glass Beet Co-Pack Agreement, and Warehouse and
Distribution Agreement ("Buyer's Closing Agreements"), Buyer's Closing
Agreements will constitute the legal, valid, and binding obligations of Buyer,
enforceable against Buyer in accordance with their terms. Buyer has all
requisite corporate power to execute and deliver this Agreement and Buyer's
Closing Agreements and to perform its obligations under this Agreement and
Buyer's Closing Agreements. The execution and delivery of this Agreement and
Buyer's Closing Agreements and the consummation and performance of the
Contemplated Transactions have been duly authorized by all necessary corporate
action on the part of Buyer.
4.3 No Conflict. Except as set forth in Exhibit B, neither the
execution and delivery of this Agreement by Buyer nor the consummation or
performance of any of the Contemplated Transactions by Buyer will give any
Person the right to prevent, delay, or otherwise interfere with any of the
Contemplated Transactions pursuant to:
4.3.1 Any provision of Buyer's organizational documents;
4.3.2 Any resolution adopted by the board of directors or
the stockholders of Buyer;
4.3.3 Any Legal Requirement or Order to which Buyer is
subject; or
4.3.4 Any Contract to which Buyer is a party or by which
Buyer may be bound.
4.4 Consents. Except as set forth in Exhibit C, Buyer is not and will
not be required to obtain any Consent from any Person in connection with the
execution and delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
4.5 Certain Proceedings. There is no pending Proceeding that has been
commenced against Buyer and that challenges, or may have the effect of
preventing, delaying, making illegal, or otherwise interfering with, any of the
Contemplated Transactions. To Buyer's knowledge, no such Proceeding has been
Threatened.
4.6 Brokers or Finders. Buyer has incurred no obligation or liability,
contingent or otherwise, for brokerage or finders' fees or agents' commissions
or other similar payment in connection with this Agreement and will indemnify
and hold Seller harmless from any such payment alleged to be due by or through
Buyer as a result of the action of Buyer or its officers or agents.
ARTICLE 5 - COVENANTS OF SELLER PRIOR TO CLOSING DATE
5.1 Access and Investigation. Between the date of this Agreement and
the Closing Date, Seller and its Representatives will (a) afford Buyer and its
Representatives and prospective lenders and their Representatives (collectively,
"Buyer's Advisors") full and free access to Seller's personnel, properties
(including subsurface testing), contracts, books and records, and other
documents and data, (b) furnish Buyer and Buyer's Advisors with copies of all
such contracts, books and records, and other existing documents and data as
Buyer may reasonably request, and (c) furnish Buyer and Buyer's Advisors with
such additional financial, operating, and other data and information as Buyer
may reasonably request.
5.2 Operation of the Business of Seller. Between the date of this
Agreement and the Closing Date, Seller will: (a) conduct the Business only in
the ordinary course of business; (b) use its Best Efforts to preserve intact the
current organization of Seller pertaining to the Business, keep available the
services of the current officers, employees, and agents of Seller in the
Business, and maintain the relations and good will with suppliers, customers,
landlords, creditors, employees, agents, and others having business
relationships with Seller pertaining to the Business; (c) confer with Buyer
concerning operational matters pertaining to the Business of a material nature;
and (d) otherwise report periodically to Buyer concerning the status of the
Business.
5.3 Negative Covenant. Except as otherwise expressly permitted by this
Agreement, between the date of this Agreement and the Closing Date, Seller will
not, without the prior consent of Buyer (which may not be unreasonably
withheld), take any affirmative action, or fail to take any reasonable action
within its control, as a result of which any of the changes or events listed in
Section 3.18 is likely to occur.
5.4 Required Approvals. Seller will make all filings required by Legal
Requirements to be made by them in order to consummate the Contemplated
Transactions (including all filings under the HSR Act). Between the date of this
Agreement and the Closing Date, Seller will (a) cooperate with Buyer with
respect to all filings that Buyer elects to make or is required by Legal
Requirements to make in connection with the Contemplated Transactions, and (b)
cooperate with Buyer in obtaining all consents identified in Exhibit C
(including taking all actions reasonably requested by Buyer to cause early
termination of any applicable waiting period under the HSR Act).
5.5 Notification. Between the date of this Agreement and the Closing
Date, Seller will promptly notify Buyer in writing if Seller becomes aware of
any fact or condition that causes or constitutes a Breach of any of Seller's
representations and warranties as of the date of this Agreement, or if Seller
becomes aware of the occurrence after the date of this Agreement of any fact or
condition that would (except as expressly contemplated by this Agreement) cause
or constitute a Breach of any such representation or warranty had such
representation or warranty been made as of the time of occurrence or discovery
of such fact or condition. Should any such facts or conditions require any
changes in the Disclosure Memorandum if the Disclosure Memorandum were dated the
Closing Date, Seller will deliver to Buyer prior to the Closing a supplement to
the Disclosure Memorandum specifying such changes. During the same period,
Seller will promptly notify Buyer of the occurrence of any Breach of any
covenant of Seller in this Article 5 or of the occurrence of any event that may
make the satisfaction of the conditions in Article 7 impossible or unlikely.
5.6 No Negotiation. Until such time, if any, as this Agreement is
terminated pursuant to Article 9, Seller will not, and will cause each of their
Representatives not to, directly or indirectly solicit, initiate, or encourage
any inquiries or proposals from, discuss or negotiate with, provide any
non-public information to, or consider the merits of any unsolicited inquiries
or proposals from, any Person (other than Buyer) relating to any transaction
involving the sale of the Business or Assets (other than in the ordinary course
of business) of Seller, or any of the capital stock of Seller, or any merger,
consolidation, business combination, or similar transaction involving Seller.
5.7 Best Efforts. Seller will use its Best Efforts to cause the
conditions in Articles 7 and 8 to be satisfied on or before the Scheduled
Closing Date, and to cause the Closing to occur on the Scheduled Closing Date,
or as soon thereafter as reasonably practicable.
5.8 Survey and Title Reports. Seller shall provide to Buyer, at
Seller's expense, on or before April 25, 1997: an instrument survey of each
parcel constituting the Facilities, showing both the boundaries of such parcel,
and the location of all buildings, improvements and easements affecting the
Facilities, certified to Buyer and such other Persons as Buyer may reasonably
request; fully guaranteed tax, title and United States Court searches dated or
redated after the date of this Agreement; a title insurance commitment for each
parcel in the amount of the net book value on Seller's books of each parcel; and
UCC searches against Seller in the appropriate offices of New York State,
Livingston County, and Genesee County. Seller shall pay the title insurance
premium at Closing.
ARTICLE 6 - COVENANTS OF BUYER PRIOR TO CLOSING DATE
6.1 Approvals of Governmental Bodies. Buyer will, and will cause each
of its Related Persons to, make all filings required by Legal Requirements to be
made by them to consummate the Contemplated Transactions (including all filings
under the HSR Act). Between the date of this Agreement and the Closing Date,
Buyer will, and will cause each Related Person to (a) cooperate with Seller with
respect to all filings that Seller is required by Legal Requirements to make in
connection with the Contemplated Transactions, and (b) cooperate with Seller in
obtaining all Consents identified in the Disclosure Memorandum.
6.2 Best Efforts. Buyer will use its Best Efforts to cause the
conditions in Articles 7 and 8 to be satisfied on or before the Scheduled
Closing Date, and to cause the Closing to occur on the Scheduled Closing Date,
or as soon thereafter as reasonably practicable.
ARTICLE 7 - CONDITIONS TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase the Assets and to take the other actions
required to be taken by Buyer at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Buyer, in whole or in part):
7.1 Accuracy of Representations
7.1.1 All of Seller's representations and warranties in this
Agreement (considered collectively), and each of these representations and
warranties (considered individually), must have been accurate in all material
respects as of the date of this Agreement, and, except as contemplated or
permitted by this Agreement, must be accurate in all material respects as if
made on the Closing Date, without giving effect to any supplement to the
Disclosure Memorandum.
7.1.2 Each of Seller's representations and warranties that is
qualified as to materiality must have been accurate in all respects as of the
date of this Agreement, and, except as contemplated or permitted by this
Agreement, must be accurate in all respects as if made on the Closing Date,
without giving effect to any supplement to the Disclosure Memorandum.
7.2 Seller's Performance
7.2.1 All of the covenants and obligations that Seller is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been duly performed and
complied with in all material respects.
7.2.2 Each document required to be delivered pursuant to
Sections 2.5 and 2.11 must have been delivered.
7.3 Consents. Each of the Consents required to be obtained from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions (except
Consents the absence of which is not likely to have a material adverse effect on
the Assets, the Business or Buyer) must have been obtained and must be in full
force and effect.
7.4 Additional Documents. Each of the following documents must
have been delivered to Buyer:
7.4.1 An opinion of Harris Beach & Wilcox, LLP, dated the
Closing Date, in the form of Exhibit D.
7.4.2 Such other documents as Buyer may reasonably request for
the purpose of (a) enabling its counsel to provide the opinion referred to in
Section 8.4.1, (b) evidencing the accuracy of any of Seller's representations
and warranties, (c) evidencing the performance or the compliance by Seller with,
any covenant or obligation required to be performed or complied with by Seller,
(d) evidencing the satisfaction of any condition referred to in this Article 7,
or (e) otherwise facilitating the consummation or performance of any of the
Contemplated Transactions.
7.4.3 The Raw Product Supply Agreement, Reciprocal Co-Pack
Agreement, Glass Beet Co-Pack Agreement, and Warehouse and Distribution
Agreement.
7.5 Collective Bargaining Agreements. Buyer shall have entered
into arrangements satisfactory to it with the collective bargaining
representative of the bargaining unit Transferred Employees at the Leicester
Facility.
7.6 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Buyer, or against any Related Person
of Buyer, any Proceeding (a) involving any challenge to, or seeking damages or
other relief in connection with, any of the Contemplated Transactions, or (b)
that is likely to have the effect of preventing, delaying, making illegal, or
otherwise interfering with any of the Contemplated Transactions.
ARTICLE 8 - CONDITIONS TO SELLER'S OBLIGATION TO CLOSE
Seller's obligation to sell the Assets and to take the other actions
required to be taken by Seller at the Closing is subject to the satisfaction, at
or prior to the Closing, of each of the following conditions (any of which may
be waived by Seller, in whole or in part):
8.1 Accuracy of Representations. All of Buyer's representations and
warranties in this Agreement (considered collectively), and each of these
representations and warranties (considered individually), must have been
accurate in all material respects as of the date of this Agreement and, except
as contemplated or permitted by this Agreement, must be accurate in all material
respects as if made on the Closing Date.
8.2 Buyer's Performance
8.2.1 All of the covenants and obligations that Buyer is
required to perform or to comply with pursuant to this Agreement at or prior to
the Closing (considered collectively), and each of these covenants and
obligations (considered individually), must have been performed and complied
with in all material respects.
8.2.2 Buyer must have delivered each of the documents required
to be delivered by Buyer pursuant to Sections 2.6 and 2.11, and must have made
the cash payment(s) required to be made by Buyer pursuant to Section 2.6.1.
8.3 Consents. Each of the Consents required to be obtained from any
Person in connection with the execution and delivery of this Agreement or the
consummation or performance of any of the Contemplated Transactions (except
Consents the absence of which is not likely to have a material adverse effect on
Seller) must have been obtained and must be in full force and effect.
8.4 Additional Documents. Buyer must have caused the following
documents to be delivered to Seller:
8.4.1 An opinion of Jaeckle Fleischmann & Mugel, LLP, dated
the Closing Date, in the form of Exhibit E.
8.4.2 Such other documents as Seller may reasonably request
for the purpose of (a) enabling its counsel to provide the opinion referred to
in Section 7.4.1, (b) evidencing the accuracy of any representation or warranty
of Buyer, (c) evidencing the performance by Buyer of, or the compliance by Buyer
with, any covenant or obligation required to be performed or complied with by
Buyer, (d) evidencing the satisfaction of any condition referred to in this
Article 8, or (e) otherwise facilitating the consummation of any of the
Contemplated Transactions.
8.4.3 The Raw Product Supply Agreement, Reciprocal Co-Pack
Agreement, Glass Beet Co-Pack Agreement, and Warehouse and Distribution
Agreement.
8.5 No Proceedings. Since the date of this Agreement, there must not
have been commenced or Threatened against Seller any Proceeding (a) involving
any challenge to, or seeking damages or other relief in connection with, any of
the Contemplated Transactions, or (b) that is likely to have the effect of
preventing, delaying, making illegal, or otherwise interfering with any of the
Contemplated Transactions.
ARTICLE 9 - TERMINATION
9.1 Termination Events. This Agreement may, by notice given prior
to or at the Closing, be terminated:
9.1.1 By either Buyer or Seller if a material Breach of any
provision of this Agreement has been committed by the other party and such
Breach has not been waived;
9.1.2 By Buyer if any of the conditions in Article 7 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Buyer to comply with
its obligations under this Agreement) and Buyer has not waived such condition on
or before the Closing Date;
9.1.3 By Seller, if any of the conditions in Article 8 has not
been satisfied as of the Closing Date or if satisfaction of such a condition is
or becomes impossible (other than through the failure of Seller to comply with
its obligations under this Agreement) and Seller has not waived such condition
on or before the Closing Date;
9.1.4 By mutual consent of Buyer and Seller; or
9.1.5 By either Buyer or Seller if the Closing has not
occurred (other than through the failure of any party seeking to terminate this
Agreement to comply fully with its obligations under this Agreement) on or
before May 13, 1997 or such later date as the parties may agree upon in writing.
9.2 Effect of Termination. Each party's right of termination under
Section 9.1 is in addition to any other rights it may have under this Agreement
or otherwise, and the exercise of a right of termination will not be an election
of remedies. If this Agreement is terminated pursuant to Section 9.1, all
further obligations of the parties under this Agreement will terminate, except
that the obligations in Section 11.1 and the Confidentiality Agreement will
survive; provided, however, that if this Agreement is terminated by a party
because of the willful Breach of the Agreement by the other party or because one
or more of the conditions to the terminating party's obligations under this
Agreement is not satisfied as a result of the other party's willful failure to
comply with its obligations under this Agreement, the terminating party's right
to pursue all legal remedies will survive such termination unimpaired.
ARTICLE 10 - INDEMNIFICATION; REMEDIES
10.1 Survival. All representations, warranties, covenants, and
obligations in this Agreement, the Disclosure Memorandum, the supplements to the
Disclosure Memorandum, and the certificate delivered pursuant to Section 2.5.2,
and any other agreement executed and delivered pursuant to this Agreement will
survive the Closing.
10.2 Indemnification and Payment of Damages by Seller. Seller will
indemnify and hold harmless Buyer and its Representatives, stockholders, and
Related Persons and their respective successors, assigns, personal
representatives, distributees and heirs (collectively, the "Indemnified
Persons") for, and will pay to the Indemnified Persons the amount of, any loss,
liability, claim, damage (including incidental and consequential damages), or
expense (including costs of investigation and defense and reasonable attorneys'
fees), whether or not involving a third-party claim (collectively "Damages"),
arising, directly or indirectly, from or in connection with:
10.2.1 Any Breach of any representation or warranty made by
Seller in this Agreement, the Disclosure Memorandum, the supplements to the
Disclosure Memorandum, or any certificate delivered by Seller pursuant to this
Agreement, other than any such Breach that is disclosed in a supplement to the
Disclosure Memorandum pursuant to Section 5.5 or in the certificate delivered
pursuant to Section 2.5.2;
10.2.2 Any Breach by Seller of any covenant or obligation of
Seller in this Agreement;
10.2.3 Any product shipped by, or any services provided by,
Seller prior to the Closing Date;
10.2.4 Any Retained Liability; or
10.2.5 Any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by any such Person with Seller (or any Person acting
on Seller's behalf) in connection with any of the Contemplated Transactions.
10.3 Indemnification and Payment of Damages: Environmental Matters. In
addition to the provisions of Section 10.2, Seller will indemnify and hold
harmless Buyer and the other Indemnified Persons for, and will pay to Buyer and
the other Indemnified Persons the amount of, any Damages (including costs of
cleanup, containment, or other remediation) arising, directly or indirectly,
from or in connection with any of the following:
10.3.1 Any Environmental, Health, and Safety Liabilities
arising out of or relating to: (a) (i) the ownership, operation, or condition at
any time on or prior to the Closing Date of the Facilities or any other
properties and assets (whether real, personal, or mixed and whether tangible or
intangible) pertaining to the Business in which Seller has or had an interest,
and/or (ii) any Hazardous Materials or other contaminants that were present on
the Facilities or such other properties and assets at any time on or prior to
the Closing Date; and/or (b) (i) any Hazardous Materials or other contaminants,
wherever located, that were generated, transported, stored, treated, Released,
or otherwise handled by Seller at any time on or prior to the Closing Date,
and/or (ii) any Hazardous Activities that were conducted by Seller at any time
on or prior to the Closing Date; or
10.3.2 Any bodily injury (including illness, disability, and
death, and regardless of when any such bodily injury occurred, was incurred, or
manifested itself), personal injury, property damage (including trespass,
nuisance, wrongful eviction, and deprivation of the use of real property), or
other damage of or to any Person, including any employee or former employee of
Seller, to the extent arising from any Hazardous Activity conducted with respect
to the Facilities or the operation of Seller prior to the Closing Date, and/or
from Hazardous Material that was (i) present on or before the Closing Date on or
at the Facilities (or present on any other property, if such Hazardous Material
emanated from any of the Facilities on or prior to the Closing Date) and/or (ii)
Released by Seller at any time on or prior to the Closing Date.
10.4 Indemnification and Payment of Damages by Buyer. Buyer will
indemnify and hold harmless Seller, and will pay to Seller the amount of any
Damages arising, directly or indirectly, from or in connection with (a) any
Breach of any representation or warranty made by Buyer in this Agreement or in
any certificate delivered by Buyer pursuant to this Agreement, (b) any Breach by
Buyer of any covenant or obligation of Buyer in this Agreement, or (c) any
Assumed Liability, or (d) any claim by any Person for brokerage or finder's fees
or commissions or similar payments based upon any agreement or understanding
alleged to have been made by such Person with Buyer (or any Person acting on its
behalf) in connection with any of the Contemplated Transactions.
10.5 Calculation of Damages. The rights of Indemnified Persons to
indemnification and payment under Sections 10.2 and 10.3 and the amount of any
Damages incurred by Indemnified Persons shall be reduced: (a) by the net amount
any Indemnified Person recovers (after deducting all attorneys' fees, expenses
and other costs of recovery) from any insurer or other third party liable for
such Damages; and (b) where the issue giving rise to any such Damages was
provided or reserved for in the Closing Schedule or gave rise to the payment of
a post-closing adjustment amount as described in Section 2.8, by the amount of
such reserve or payment. In calculating Damages pursuant to Section 10.2.1 with
respect to Breach of a representation or warranty of Seller that is qualified as
to materiality, such qualification shall be disregarded.
10.6 Time Limitations. If the Closing occurs, Seller will have no
liability (for indemnification under Section 10.2 or otherwise): (a) with
respect to any representation or warranty, or covenant or obligation to be
performed and complied with prior to the Closing Date, other than those in
Sections 3.6, 3.10, and 10.3 unless on or before July 1, 1998 Buyer notifies
Seller of a claim specifying the factual basis of that claim in reasonable
detail to the extent then known by Buyer; or (b) with respect to Section 3.10
unless on or before the date the applicable Tax statute of limitations expires,
Buyer notifies Seller of a claim specifying the factual basis of that claim in
reasonable detail to the extent then known by Buyer. A claim for indemnification
under Section 10.2 with respect to Section 3.6 or any covenant or obligation not
to be performed and complied with prior to the Closing Date, or a claim for
indemnification under Section 10.3, may be made at any time. If the Closing
occurs, Buyer will have no liability (for indemnification under Section 10.4 or
otherwise) with respect to any representation or warranty, or covenant or
obligation to be performed and complied with prior to the Closing Date, unless
on or before the date one year after the Closing Date, Seller notifies Buyer of
a claim specifying the factual basis of that claim in reasonable detail to the
extent then known by Seller.
10.7 Limitations on Amount of Liability of Seller.
10.7.1 Seller will have no liability (for indemnification or
otherwise) with respect to any individual matter or group of related matters
described in Section 10.2.1, Section 10.2.3, Section 10.3 or, to the extent
relating to any failure to perform or comply prior to the Closing Date, Section
10.2.2 unless the total of all Damages with respect to such individual matter or
group of related matters exceeds $5,000. If such threshold is exceeded with
respect to any individual matter or group of related matters, Seller shall have
liability for the full amount of Damages with respect to such individual matter
or group of related matters, subject to the limitations set forth in Sections
10.7.2 and 10.7.3.
10.7.2 Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 10.2.1, Section
10.2.3, Section 10.3 or, to the extent relating to any failure to perform or
comply prior to the Closing Date, Section 10.2.2 until the total of all Damages
with respect to such matters exceeds $250,000, and then only for the amount by
which such Damages exceed $250,000.
10.7.3 Seller will have no liability (for indemnification or
otherwise) with respect to the matters described in Section 10.2.1, Section
10.2.3, Section 10.3 or, to the extent relating to any failure to perform or
comply prior to the Closing Date, Section 10.2.2 to the extent the total of all
Damages covered by such Sections exceeds an amount equal to one hundred percent
of the Purchase Price.
10.8 Procedure for Indemnification - Third Party Claims
10.8.1 Promptly after receipt by an indemnified party under
Section 10.2, 10.3, or 10.4 of notice of the commencement of any Proceeding
against it, such indemnified party will, if a claim is to be made against an
indemnifying party under such Section, give notice to the indemnifying party of
the commencement of such claim, but the failure to notify the indemnifying party
will not relieve the indemnifying party of any liability that it may have to any
indemnified party, except to the extent that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
10.8.2 If any Proceeding referred to in Section 10.8.1 is
brought against an indemnified party and it gives notice to the indemnifying
party of the commencement of such Proceeding, the indemnifying party will be
entitled to participate in such Proceeding and, to the extent that it wishes, to
assume the defense of such Proceeding. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such
Proceeding, the indemnifying party will not, as long as it diligently conducts
such defense, be liable to the indemnified party under this Article 10 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the indemnified party in
connection with the defense of such Proceeding. If the indemnifying party
assumes the defense of a Proceeding, no compromise or settlement of such claims
may be effected by the indemnifying party without the indemnified party's
consent unless the sole relief provided is monetary damages that are paid in
full by the indemnifying party.
10.8.3 The indemnifying party will have no liability with
respect to any compromise or settlement of claims effected without its consent.
10.8.4 Seller hereby consents to the non-exclusive
jurisdiction of any court in which a Proceeding is brought against any
Indemnified Person for purposes of any claim that an Indemnified Person may have
under this Agreement with respect to such Proceeding or the matters alleged
therein, and agree that process may be served on Seller with respect to such a
claim anywhere in the world.
10.9 Procedure for Indemnification - Other Claims. A claim for
indemnification for any matter not involving a third-party claim may be asserted
by notice to the party from whom indemnification is sought.
10.10 Exclusive Remedy. The exclusive remedy available to a party
hereto in respect of the matters covered by Section 10.2, 10.3 or 10.4 hereof
shall be to proceed in the manner and subject to the limitations
contained in this Article 10.
ARTICLE 11 - GENERAL PROVISIONS
11.1 Expenses. Except as otherwise expressly provided in this
Agreement, each party to this Agreement will bear its respective expenses
incurred in connection with the preparation, execution, and performance of this
Agreement and the Contemplated Transactions, including all fees and expenses of
agents, representatives, counsel, and accountants. Buyer will pay the HSR Act
filing fee and the cost of recording all instruments of transfer and conveyance.
In the event of termination of this Agreement, the obligation of each party to
pay its own expenses will be subject to any rights of such party arising from a
willful breach of this Agreement by another party.
11.2 Bulk Sales Laws. Buyer waives compliance by Seller with any
bulk sales law which may be applicable to the Contemplated Transactions.
11.3 Books and Records. Buyer shall preserve all of Seller's Business
Information and Records for the lesser of (a) six years after the Closing Date
and (b) such period as Buyer would ordinarily preserve such records pursuant to
its records retention policy then in effect. During such period Buyer shall make
the such records available for examination (or for the making of copes or
extracts), for any lawful purpose, by Seller and its Representatives at
reasonable times so not to interfere with Buyer's business. In the event that
prior to the end of six years after the Closing Date, Buyer decides to destroy
any such records pursuant to its records retention policy then in effect, Buyer
shall give Seller at least sixty days' notice of such decision during which time
Seller may request and Buyer shall transfer to Seller or such all such records
to be destroyed. If no such request is received by Buyer, Buyer may destroy such
records about which notice has been given to Seller.
11.4 Public Announcements. Any public announcement or similar publicity
with respect to this Agreement or the Contemplated Transactions will be issued,
if at all, at such time and in such manner as Buyer and Seller agree. Buyer and
Seller will consult with each other concerning the means by which the employees,
customers, and suppliers of the Business and others having dealings with Seller
pertaining to the Business will be informed of the Contemplated Transactions.
11.5 Notices. All notices, consents, waivers, and other communications
under this Agreement must be in writing and will be deemed to have been duly
given when (a) delivered by hand (with written confirmation of receipt), (b)
sent by telecopier (with written confirmation of receipt), provided that a copy
is mailed by registered mail, return receipt requested, or (c) when received by
the addressee, if sent by a nationally recognized overnight delivery service
(receipt requested), in each case to the appropriate addresses and telecopier
numbers set forth below (or to such other addresses and telecopier numbers as a
party may designate by notice to the other parties):
<PAGE>
Seller: Curtice Burns Foods,Inc.
........90 Linden Place
........Rochester, New York 14625
........ATTN: Dennis M. Mullen
........Facsimile (716) 383-1606
with a copy to: Harris Beach & Wilcox, LLP
........130 East Main Street
........Rochester, New York 14604
........Attention: Thomas M. Hampson, Esq.
........Facsimile No.: (716) 232-6925
Buyer: Seneca Foods Corporation
........1162 Pittsford-Victor Road
........Pittsford, New York 14534
........Attention: Kraig H. Kayser
........Facsimile No.: (716) 385-4249
with a copy to: Jaeckle Fleischmann & Mugel, LLP
........Fleet Bank Building
........Twelve Fountain Plaza
........Buffalo, New York 14202-2292
........Attention: William I. Schapiro, Esq.
........Facsimile No.: 716-856-0432
11.6 Jurisdiction; Service of Process. Any action or proceeding seeking
to enforce any provision of, or based on any right arising out of, this
Agreement may be brought against any of the parties in the courts of the State
of New York, County of Monroe, or, if it has or can acquire jurisdiction, in the
United States District Court for the Western District of New York, and each of
the parties consents to the jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding and waives any objection to
venue laid therein. Process in any action or proceeding referred to in the
preceding sentence may be served on any party anywhere in the world.
11.7 Further Assurances. The parties agree (a) to furnish upon request
to each other such further information, (b) to execute and deliver to each other
such other documents, and (c) to do such other acts and things, all as the other
party may reasonably request for the purpose of carrying out the intent of this
Agreement and the documents referred to in this Agreement.
11.8 Waiver. The rights and remedies of the parties to this Agreement
are cumulative and not alternative. Neither the failure nor any delay by any
party in exercising any right, power, or privilege under this Agreement or the
documents referred to in this Agreement will operate as a waiver of such right,
power, or privilege, and no single or partial exercise of any such right, power,
or privilege will preclude any other or further exercise of such right, power,
or privilege or the exercise of any other right, power, or privilege. To the
maximum extent permitted by applicable law, (a) no claim or right arising out of
this Agreement or the documents referred to in this Agreement can be discharged
by one party, in whole or in part, by a waiver or renunciation of the claim or
right unless in writing signed by the other party; (b) no waiver that may be
given by a party will be applicable except in the specific instance for which it
is given; and (c) no notice to or demand on one party will be deemed to be a
waiver of any obligation of such party or of the right of the party giving such
notice or demand to take further action without notice or demand as provided in
this Agreement or the documents referred to in this Agreement.
11.9 Entire Agreement and Modification. This Agreement supersedes all
prior agreements between the parties with respect to its subject matter and
constitutes (along with the Confidentiality Agreement and other documents
referred to in this Agreement) a complete and exclusive statement of the terms
of the agreement between the parties with respect to its subject matter. This
Agreement may not be amended except by a written agreement executed by the party
to be charged with the amendment.
11.10 Disclosure Memorandum. The disclosures in the Disclosure
Memorandum, and those in any Supplement thereto, must identify the Section(s) of
the Agreement to which they relate and shall apply to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement, except to the
extent that the relevance to such other representation or warranty is manifest
on the face of the Disclosure Memorandum or Supplement. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the Disclosure Memorandum (other than an exception expressly set forth as such
in the Disclosure Memorandum with respect to a specifically identified
representation or warranty), the statements in the body of this Agreement will
control.
11.11 Assignments, Successors, and No Third-Party Rights. No party may
assign any of its rights or obligations under this Agreement without the prior
consent of the other parties. Any purported assignment in violation of this
Section shall be void and ineffective. Subject to the preceding sentence, this
Agreement will apply to, be binding in all respects upon, and inure to the
benefit of the successors and permitted assigns of the parties. Nothing
expressed or referred to in this Agreement will be construed to give any Person
other than the parties to this Agreement any legal or equitable right, remedy,
or claim under or with respect to this Agreement or any provision of this
Agreement. This Agreement and all of its provisions and conditions are for the
sole and exclusive benefit of the parties to this Agreement and their successors
and assigns.
11.12 Severability. If any provision of this Agreement is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Agreement will remain in full force and effect. Any provision of this
Agreement held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
11.13 Section Headings, Construction. The headings of Sections in this
Agreement are provided for convenience only and will not affect its construction
or interpretation. All references to "Section" or "Sections" refer to the
corresponding Section or Sections of this Agreement. All words used in this
Agreement will be construed to be of such gender or number as the circumstances
require. Unless otherwise expressly provided, the word "including" does not
limit the preceding words or terms.
11.14 Time of Essence. With regard to all dates and time periods set
forth or referred to in this Agreement, time is of the essence.
11.15 Governing Law. This Agreement will be governed by the laws of
the State of New York without regard to conflicts of laws principles.
11.16 Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original copy of this
Agreement and all of which, when taken together, will be deemed to constitute
one and the same agreement.
11.17 Non-solicitation. The parties recognize that Buyer has paid
substantial consideration for the Assets and the related Business and has made
and expects to make other commitments in reliance upon its continuation of the
Business, the value of which will be substantially diminished if Seller were to
compete with Buyer with respect to the Business. In consideration of the
Purchase Price and of other commitments by Buyer, Seller agrees as follows:
(i) For a period of 10 years after the Closing Date,
Seller will not directly or indirectly, through any
Representative, solicit any employee of Buyer or who
is a Transferred Employee for the purpose of causing
that employee to terminate employment with Buyer and
to become employed by Seller or any of Seller's
Affiliates.
(ii) A violation by Seller of the provisions of this
Section 11.17 will cause irreparable harm to Seller,
for which money damages alone will be inadequate.
Seller therefore agrees that any court having
jurisdiction may enter a preliminary or permanent
restraining order or injunction against Seller in the
event of actual or threatened breach of any of the
provisions of this Section. Any such relief shall not
preclude Buyer from seeking any other relief at law
or equity with respect to any such claim.
<PAGE>
(iii) If any provision of this Section is deemed to be in
violation of any law or public policy, the remainder
of this Section shall remain in full force and effect
and shall continue to be binding upon Seller. If any
term of this Section is deemed by any court to be
unenforceable, the parties agree that the court shall
substitute a reasonable, judicially enforceable
limitation in place of the invalid provision in order
to serve the intent of the parties as expressed
herein.
11.18 Modifications for Inventory Assignment. In the event that Buyer
has assigned its right to purchase all or part of the Inventory as permitted by
Section 2.1, this Agreement shall be deemed modified as may be appropriate to
permit Seller's delivery of the applicable Inventory to Buyer's assignee and
payment by Buyer's assignee for that Inventory and to reflect the provisions of
any sale agreement between Seller and Buyer's assignee which would have the
effect of modifying this Agreement. All representations, warranties, covenants
and indemnifications by Seller with respect to any items of Inventory which are
purchased by Buyer's assignee and which are subsequently purchased by Buyer
shall be enforceable by Buyer against Seller to the same extent as if Buyer had
purchased those items from Seller on Closing, and Buyer may assert all the
remedies which it would have had if Buyer had so purchased those items of
Inventory on Closing.
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first written above.
........ SENECA FOODS CORPORATION
By:/s/Philip G. Paras
Title: Vice President - Finance
CURTICE BURNS FOODS, INC.
By:/s/Earl Powers____
Title: Chief Financial Officer
<PAGE>
40
SCHEDULES
A. Insurance Policies Included in Assigned Contracts
B. Computer Equipment Included in Assets to be Purchased by Seneca
EXHIBITS
A. Allocation of Purchase Price
B. Conflicts of Buyer
C. Consents Obtained by Buyer
D. Form of Opinion of Harris Beach & Wilcox, LLP
E. Form of Opinion of Jaeckle Fleischmann & Mugel, LLP
<PAGE>
41
SCHEDULE A
Insurance Policies Included As Assigned Contracts
None
<PAGE>
42
SCHEDULE B
Computer Equipment Included in Assets
Attached list dated 4/9/97
