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):
December 22, 1997
Specialty Foods Corporation
(Exact name of registrant as specified in its charter)
State of Delaware 75-2488181
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
520 Lake Cook Road, Suite 550, Deerfield, IL 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (847) 405-5300
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
DESCRIPTION OF SALE AND RELATED FINANCING TRANSACTIONS
On December 5, 1997, pursuant to a Stock Purchase Agreement dated as of
November 7, 1997, Specialty Foods Corporation (the "Company"), a wholly
owned subsidiary of Specialty Foods Acquisition Corporation, sold all of
the issued and outstanding shares of Stella Holdings, Inc., a wholly-owned
subsidiary of the Company ("Stella") engaged in the production and sale of
specialty and Italian cheeses, to Saputo Group Inc. and its wholly-owned
subsidiary, Saputo Acquisition, Inc. (together, "Buyer"), for an aggregate
cash purchase price of approximately $405,000,000.
Prior to completing the sale of Stella, the Company was required to obtain
consents to the transaction under the terms of its Term Loan and Revolving
Credit Facilities and Accounts Receivable Securitization Facility
(collectively, the "Senior Facilities"). Set forth below is a brief
description of the terms of each of these consents.
The Company obtained the consent of its Term Loan and Revolving Credit
lenders in the form of the Fifth Amendment to the Term Loan and Revolving
Credit Agreements. Pursuant to the Fifth Amendment, the lenders
temporarily waived certain prepayment and commitment reduction requirements
set forth in the Term Loan and Revolving Credit Agreements. These
temporary waivers are effective from the date of the Stella sale (December
5, 1997) to March 31, 1998 (the "Waiver Period"). As part of this
amendment, the Company has established a cash collateral account in an
amount equal to one hundred percent of the Term Loan obligations
($173,750,000) and letter of credit obligations under its Revolving Credit
Agreement ($6,341,000). Additionally, the Company has agreed to reduce the
outstanding borrowings under the Revolving Credit Agreement to zero and has
agreed not to request any borrowings during the Waiver Period.
The Company and its wholly-owned subsidiary Specialty Foods Finance
Corporation ("SFFC") obtained the necessary consents from the control
parties for the Accounts Receivable Securitization Facility to terminate
Stella as a seller under the Facility. Additionally, the Company and
SFFC agreed with the control parties to: (a) provide an optional
termination of the Accounts Receivable Securitization Facility as of
March 31, 1998; (b) terminate the 1997-1 Variable Funding Certificate,
which provided the Company additional accounts receivable funding
capacity beyond the $95 million previously available; and (c) reduce
the amount of the Accounts Receivable Securitization Facility from
$95 million to approximately $50 million.
The Company is currently reviewing its options related to the repayment or
refinancing of amounts outstanding under the Senior Facilities. The
Company currently expects to complete any such refinancing transactions not
later than March 31, 1998. The Company plans to use proceeds from the
Stella sale to repay any amounts outstanding under the Senior Facilities
which it has not refinanced by March 31, 1998. At this time, the Company
does not plan to utilize any of the proceeds from the sale of Stella to
make an offer to repurchase any of its 11 1/8% Senior Notes, 10 1/4% Senior
Notes or 11 1/4% Senior Subordinated Notes. Given the preliminary nature
of the Company's refinancing efforts, there can be no assurances that the
Company will succeed in its efforts to refinance all or a portion of the
amounts outstanding under the Senior Facilities.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial statements of business acquired.
Not applicable.
(b) Pro Forma financial information.
Pro forma financial information reflecting the disposition of the
Company's cheese operations, as described above in Item 2.
(c) Exhibits
10.82* Stock Purchase Agreement dated as of November 7, 1997 by and
among Specialty Foods Corporation (Seller), Saputo Group
Inc. (Parent) and its wholly-owned subsidiary Saputo
Acquisition, Inc. (together, Buyer).
10.83* Fifth Amendment, Consent and Waiver to the Term Loan and
Revolving Credit Agreements dated as of December 3, 1997
among the Company, certain of its subsidiaries, certain
lenders and The Chase Manhattan Bank, as Administrative
Agent.
10.84* Amendment No. 4 to the Amended and Restated Receivables Sale
Agreement among Specialty Foods Finance Corporation
("SFFC"), the Company, as master servicer and its wholly-
owned subsidiaries named therein.
10.85* Amendment No. 4 to the SFC Master Trust Pooling Agreement
among SFFC, the Company, as master servicer, and The Chase
Manhattan Bank, as trustee.
SPECIALTY FOODS CORPORATION
Introduction to Pro Forma Condensed Consolidated Financial Information
As described in Item 2, on December 5, 1997, the Company completed the sale
of Stella Holdings, Inc.
The following unaudited pro forma financial statements reflect the impact
of the transaction on the historical statements of operations for the year
ended December 31, 1996 and the nine-month period ended September 30,
1997, as well as the balance sheet as of September 30, 1997. For purposes
of reporting pro forma results of operations, it is assumed the business
was sold on January 1, 1996. For purposes of reporting the pro forma
balance sheet, it is assumed the business was sold on September 30, 1997.
Although the Company is considering both debt reductions and acquisitions
with the proceeds from the Stella sale, the only use of Stella sale
proceeds reflected in the pro forma financial statements is the elimination
of revolver borrowings. The pro forma financial information is not
intended to reflect the results of operations or financial position of the
Company which actually would have resulted had the sale occurred on the
assumed dates.
The pro forma financial information should be read in conjunction with the
accompanying notes which follow and the historical financial statements of
the Company included in its Annual Report on Form 10-K for the year ended
December 31, 1996 and its Quarterly Report on Form 10-Q for the quarter
ended September 30, 1997.
SPECIALTY FOODS CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the year ended December 31, 1996
(In thousands, except per share data)
(Unaudited)
Historical Pro Forma SFC
SFC(1) Adjustments(2) Pro Forma(4)
----------- -------------- ------------
Net sales $ 1,622,270 $ (770,917) $ 851,353
Cost of sales 1,184,232 (681,772) 502,460
--------- -------- --------
Gross profit 438,038 (89,145) 348,893
Operating expenses:
Selling, general and
administrative expenses 382,024 (73,332) 308,692
Amortization of intangibles 12,886 (5,331) 7,555
Restructuring charges 28,300 (18,600) 9,700
Goodwill write-down 355,664 (152,360) 203,304
--------- -------- --------
Total operating expenses 778,874 (249,623) 529,251
Operating loss (340,836) 160,478 (180,358)
Other:
Interest expense 94,810 (8,553)(3) 86,257
Other(income) expense, net (2,939) 12,764 9,825
--------- -------- --------
Loss before income taxes (432,707) 156,267 (276,440)
Provision for income taxes 1,201 (234) 967
--------- -------- --------
Loss from continuing
operations $ (433,908) $ 156,501 $ (277,407)
========= ======== ========
See accompanying notes to pro forma financial statements.
SPECIALTY FOODS CORPORATION
Pro Forma Condensed Consolidated Statement of Operations
For the nine-months ended September 30, 1997
(In thousands, except per share data)
(Unaudited)
Historical Pro Forma SFC
SFC Adjustments(2) Pro Forma(4)
----------- -------------- ------------
Net sales $1,168,910 $ (526,264) $ 642,646
Cost of sales 829,359 (453,733) 375,626
--------- -------- --------
Gross profit 339,551 (72,531) 267,020
Operating expenses:
Selling, general and
administrative expenses 290,068 (50,339) 239,729
Amortization of intangibles 1,765 (729) 1,036
-------- -------- --------
Total operating expenses 291,833 (51,068) 240,765
Operating income 47,718 (21,463) 26,255
Other:
Interest expense 69,300 (4,336)(3) 64,964
Other expense, net 8,308 (2,825) 5,483
-------- -------- --------
Loss before income taxes (29,890) (14,302) (44,192)
Provision for income taxes 707 (70) 637
-------- -------- --------
Loss from continuing
operations $ (30,597) $ (14,232) $ (44,829)
======== ======== ========
See accompanying notes to pro forma financial statements.
SPECIALTY FOODS CORPORATION
Pro Forma Condensed Consolidated Balance Sheets
September 30, 1997
(In thousands)
(Unaudited)
SFC Pro Forma SFC
Assets Historical Adjustments(6) Pro Forma
---------- -------------- ---------
Current assets:
Cash - unrestricted $ 1,179 $ 87,524(7) $ 88,703
Cash - restricted (6) - 180,889 180,889
Accounts receivable, net 36,651 (22,161) 14,490
Inventories 125,698 (83,807) 41,891
Other current assets 11,750 (146) 11,604
-------- -------- --------
Total current assets 175,278 162,299 337,577
Property, plant and equipment, net 280,076 (107,869) 172,207
Intangible assets, net 23,574 (3,769) 19,805
Other noncurrent assets 32,237 (676) 31,561
-------- -------- --------
Total assets $ 511,165 $ 49,985 $ 561,150
======== ======== ========
Liabilities and Stockholder's Equity
Current liabilities:
Current maturities of
long-term debt $ 3,377 $ (533) $ 2,844
Accounts payable 107,912 (40,651) 67,261
Accrued expenses 75,776 (10,257) 65,519
-------- -------- --------
Total current liabilities 187,065 (51,441) 135,624
Long-term debt 812,874 (58,095)(8) 754,779
Due to Specialty Foods
Acquisition Corporation 7,688 - 7,688
Other noncurrent liabilities 37,248 (3,474) 33,774
-------- -------- --------
Total liabilities 1,044,875 (113,010) 931,865
Stockholder's equity (533,710) 162,995(9) (370,715)
-------- -------- --------
Total liabilities and
stockholder's equity $ 511,165 $ 49,985 $ 561,150
======== ======== ========
See accompanying notes to pro forma financial statements.
SPECIALTY FOODS CORPORATION
Notes to Pro Forma Financial Statements
(In thousands)
(1) Excludes historical financial data related to a restaurant and
institutional bakery discontinued in 1997.
(2) The pro forma statements of operations assume the divestiture took
place on January 1, 1996. Adjustments relate solely to the elimination
of the divested business except as noted for the elimination of certain
interest expense. Although the Company is considering both debt
reductions and acquisitions with the proceeds from the Stella sale, the
only use of Stella sale proceeds assumed in the pro forma Statement of
Operations is the repayment of borrowings under the Company's Revolving
Credit Facility and the reduction of the related interest expense.
Actual application of Stella proceeds will likely vary.
(3) Eliminates interest expense related to: (a) Stella debt assumed by
buyer; and (b) borrowings under the Revolving Credit Facility, which
have been repaid. Pursuant to guidance provided by the staff of the
Securities and Exchange Commission, no interest income is assumed on
post closing cash balances.
(4) Pro forma operating results exclude the gain on the divestiture of
Stella.
(5) Restricted cash relates to cash collateralizing all obligations under
the Company's Term Loan Facility ($174,000) and letters of credit issued
pursuant to the Company's Revolving Credit Facility ($6,889) as if the
sale had occurred on September 30, 1997.
(6) The pro forma adjustments assume that the divestiture took place on
September 30, 1997. The adjustments reflect the receipt of proceeds and
the elimination of assets transferred to and liabilities assumed by the
buyer, except as otherwise noted.
(7) Represents sales price net of expenses and obligations paid at closing
as follows: Selling price ($405,000), repurchase of off-balance sheet
accounts receivable from the Accounts Receivable Securitization Facility
($47,138), lease repurchase ($22,289), paydown of amounts outstanding
under the Company's Revolving Credit Facility ($55,400), other costs and
transaction fees ($11,760), and restricted cash (see footnote 6 above).
(8) Includes repayment of outstanding borrowings under the Company's
Revolving Credit Facility ($55,400).
(9) Represents the gain on sale as if the sale had occurred on September
30, 1997.
SIGNATURE
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.
SPECIALTY FOODS CORPORATION
(Registrant)
By: /s/ Robert L. Fishbune
Robert L. Fishbune
Vice President and Chief
Financial Officer
Date: December 22, 1997
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of November 7, 1997
(the Agreement), among Saputo Group Inc., a Canadian
corporation (the Parent), Saputo Acquisition, Inc. a
Delaware corporation (the Buyer), and Specialty Foods
Corporation, a Delaware corporation (the Seller), for the
purchase and sale of all of the issued and outstanding
shares of capital stock of Stella Holdings, Inc., a Delaware
corporation (Stella Holdings), which in turn owns, directly
or indirectly, all of the issued and outstanding capital
stock of the companies listed on Appendix A (the Stella
Companies). Stella Holdings, together with the Stella
Companies, is sometimes referred to herein as the Company.
The Seller is the beneficial and record owner of all of
the issued and outstanding shares of common stock, par value
$.01 per share (the Common Stock), of Stella Holdings. The
shares of Common Stock purchased pursuant to Article 1 of
this Agreement are sometimes referred to herein as the
Shares.
The Parent is the beneficial and record holder of all
of the issued and outstanding shares of capital stock of the
Buyer.
The Seller desires to sell to the Buyer and the Buyer
desires to acquire from the Seller the Shares, upon the
terms and subject to the conditions set forth in this
Agreement. Terms used herein without definition have the
meanings ascribed to them in Section 11.1.1.
Accordingly, in consideration of the foregoing and the
respective representations, warranties, covenants and
agreements herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby
acknowledged, the parties agree as follows:
ARTICLE 1
TERMS OF THE TRANSACTION
1.1 Sale and Purchase of Shares. The Seller shall, on
the Closing Date, sell, transfer and assign to the Buyer all
of the Shares by delivering to the Buyer, against payment
therefor as provided in Section 1.2, certificates
representing all of the Shares, duly endorsed in blank or
with duly executed stock powers attached.
1.2 Purchase Price and Payment
(a) Subject to adjustment in accordance with
Section 1.3, the aggregate purchase price for the Shares and
for the Seller's execution and delivery of the Non-Compete
Agreement (the Purchase Price) shall be an amount equal to
Four Hundred and Five Million Dollars ($405,000,000), (i)
increased dollar for dollar by the amount, if any, by which
Working Capital set forth on the Preliminary Closing
Statement exceeds Working Capital as reflected in the
Interim Balance Sheet, or decreased dollar for dollar by the
amount, if any, by which Working Capital set forth on the
Preliminary Closing Statement is less than Working Capital
as reflected in the Interim Balance Sheet and (ii) decreased
by the Accounts Receivable Purchase Price paid to Specialty
Foods Finance Corporation (SFFC) at the Accounts Receivable
Closing under Section 1.03(a) of the Accounts Receivable
Purchase Agreement.
(b) At Closing, the Buyer shall pay, and the
Parent shall cause the Buyer to pay, the Purchase Price by
payment to the Seller in cash by wire transfer of
immediately available funds to an account or accounts
designated by the Seller in a written notice delivered to
the Buyer.
(c) A statement of the estimated Working Capital
that will exist at Closing (the Preliminary Closing
Statement) shall be prepared by the Seller and furnished to
the Buyer three (3) days prior to the Closing Date and shall
include a calculation of the Purchase Price. The
Preliminary Closing Statement shall be prepared by the
Seller in good faith and on a basis consistent with the
Interim Balance Sheet. The Seller and the Buyer agree that
KPMG Peat Marwick will issue an agreed-upon procedures
report with respect to the observation and valuation of the
inventory and each of the Buyer and the Seller may have a
representative present at such observation.
1.3 Purchase Price Adjustment.
(a) The Seller, the Buyer and the Parent agree
that the Purchase Price shall be adjusted following the
Closing (the Post-Closing Adjustment) as follows:
(i) the Purchase Price shall be (x) increased
dollar for dollar by the amount, if any, by which Working
Capital set forth on the Closing Statement exceeds Working
Capital set forth on the Preliminary Closing Statement, or
(y) decreased dollar for dollar by the amount, if any, by
which Working Capital set forth on the Closing Statement is
less than Working Capital set forth on the Preliminary
Closing Statement; and
(ii) the Purchase Price shall be (x) increased
dollar for dollar by the amount, if any, by which the
Accounts Receivable Purchase Price for the Purchased
Accounts Receivable is decreased after the Closing pursuant
to Section 1.03(b) of the Accounts Receivable Purchase
Agreement, or (y) decreased dollar for dollar by the amount,
if any, by which the Accounts Receivable Purchase Price for
the Purchased Accounts Receivable is increased after the
Closing pursuant to Section 1.03(b) of the Accounts
Receivable Purchase Agreement.
(b) A statement of the Working Capital on the
Closing Date (the Closing Statement) shall be prepared by
the Seller and furnished to the Buyer within sixty (60) days
after the Closing and shall include a calculation of the
amount of the Post-Closing Adjustment, if any, required
pursuant to the provisions of Section 1.3(a) (the Post-
Closing Adjustment Calculation). The Closing Statement
shall be prepared by the Seller in good faith and on a basis
consistent with the Interim Balance Sheet. During the
preparation of the Closing Statement, and the period of any
dispute within the contemplation of this Section 1.3, the
Buyer shall: (i) provide the Seller and the Seller's
authorized representatives with full access during normal
business hours to the books, records (including workpapers,
schedules, memoranda and other documents), facilities and
employees of the Company, (ii) provide the Seller as
promptly as practicable after the Closing Date (but in no
event later than twenty (20) days after the Closing Date)
with normal month-end closing financial information for the
Company for the period ending on the day prior to the
Closing Date and (iii) cooperate fully with the Seller and
the Seller's authorized representatives, including the
provision on a timely basis of all information necessary or
useful in preparing the Closing Statement.
(c) The Buyer and its independent accountants,
Deloitte & Touche, shall have the right to review the books
and records and supporting work papers of the Seller for the
purpose of verifying the Closing Statement and the Post-
Closing Adjustment Calculation. The Buyer shall have a
period of thirty (30) days after receipt of the Closing
Statement and the Post-Closing Adjustment Calculation to
present in writing to the Seller any objections thereto,
setting forth the specific item on the Closing Statement to
which each such objection relates and the specific basis for
each such objection. The Closing Statement and the Post-
Closing Adjustment Calculation shall be deemed to be
acceptable to the Buyer, and shall become final and binding
on the parties, except to the extent that the Buyer shall
have made a specific written objection thereto within such
thirty (30) day period. If the Buyer shall raise any such
objection within such thirty (30) day period, then the
Seller and the Buyer shall attempt in good faith to resolve
any dispute concerning the item(s) subject to such
objection. Upon failure to resolve any such dispute within
thirty (30) days after the date on which such objection is
delivered, at the request of either party, the same shall be
submitted to Coopers & Lybrand, certified public
accountants, or, if such firm declines to act in such
capacity or at the time of such dispute has a significant
ongoing relationship with either the Seller or the Buyer, to
such other nationally recognized firm of independent public
accountants, then having no significant ongoing relationship
with the Seller or the Buyer, as shall be mutually
acceptable to the Seller and the Buyer; provided, however,
that if the Seller and the Buyer shall fail to agree on
mutually acceptable independent public accountants within
ten (10) days after Coopers & Lybrand has declined to act in
such capacity, then such dispute shall be resolved by a
nationally recognized firm of independent public accountants
designated by the American Arbitration Association.
(Coopers & Lybrand, or such other accounting firm, as the
case may be, is herein referred to as the Independent
Accounting Firm). The Independent Accounting Firm shall be
instructed to use its best efforts to render a decision as
to all items in dispute within thirty (30) days of
submission, and the parties agree to cooperate with each
other and each other's authorized representatives and with
the Independent Accounting Firm in order that any and all
items in dispute shall be resolved as soon as practicable.
The determination of the Independent Accounting Firm
concerning any item in dispute shall be final and binding on
the parties without further right of appeal. The fees and
expenses of the Independent Accounting Firm incurred in the
resolution of such dispute shall be borne by the parties in
proportion to their relative success, as determined by the
Independent Accounting Firm, in connection with the final
disposition of the disputed items. Within ten (10) days
after the Post-Closing Adjustment is finally determined as
hereinabove provided, the Buyer, in the case of an
adjustment increasing the Purchase Price, or the Seller, in
the case of an adjustment decreasing the Purchase Price,
shall pay to the other the amount of the required Post-
Closing Adjustment in accordance with Section 1.3(d);
provided, however, that if the Buyer shall have timely
objected to the Post-Closing Adjustment Calculation in
accordance with this Section 1.3(c), then pending resolution
of the items subject to dispute, the Buyer or Seller, as the
case may be, will, within five (5) days after the delivery
by the Buyer of its written objection, pay to the other
party the amount of any Post-Closing Adjustment to the
extent of any amounts which are not subject to dispute.
(d) All adjustments or payments due under this
Section 1.3, whether or not contested, shall be paid by
certified or official bank check or by wire transfer of
immediately available funds and shall bear interest from the
Closing Date through the date of payment at a rate per annum
equal to the prime commercial lending rate of The Chase
Manhattan Bank, New York, in effect at the time of such
payment.
ARTICLE 2
CLOSING
2.1 Closing; Closing Date. The closing of the
transactions contemplated hereby (the Closing) shall take
place in New York City at the offices of Paul, Weiss,
Rifkind, Wharton & Garrison, 1285 Avenue of the Americas,
New York, New York 10019, as soon as practicable but in no
event later than 10:00 a.m. New York City time on the third
business day after the date on which each of the conditions
set forth in Article 8 and Article 9 have been satisfied or
waived by the party entitled to waive the same, or at such
other place, at such other time or on such other date as the
Buyer and the Seller may mutually agree. The date on which
the Closing actually occurs is hereinafter referred to as
the Closing Date.
2.2 Procedures at Closing. At the Closing, the
parties shall take the following steps (provided, however,
that upon their completion all such steps shall be deemed to
have occurred simultaneously):
(a) The Seller shall deliver to the Buyer the
documents referred to in Article 8.
(b) The Buyer shall deliver to the Seller the
documents referred to in Article 9.
(c) The Seller shall deliver to the Buyer
certificates in valid form evidencing the Shares, duly
endorsed in blank or accompanied by duly executed stock
powers.
(d) The Buyer shall pay the Purchase Price to the
Seller.
(e) The Buyer and the Seller shall execute and
deliver a cross-receipt acknowledging receipt from the
other, respectively, of the Shares and the Purchase Price.
(f) The closing under the Accounts Receivable
Purchase Agreement shall take place.
ARTICLE3
REPRESENTATIONS AND WARRANTIES
OF THE SELLER
The Seller represents and warrants to the Buyer as
follows:
3.1 Title to the Shares. As of the Closing Date, the
Seller shall own the Shares beneficially and of record, free
and clear of any Lien, and, upon delivery of and payment for
the Shares at the Closing as herein provided, the Seller
will convey such Shares to the Buyer pursuant to Article 1,
free and clear of any Lien.
3.2 Authority; Non-Contravention. The Seller has full
legal right, power and authority required to enter into,
execute and deliver this Agreement and each and every
agreement and instrument contemplated hereby to which the
Seller is or will be a party and to perform fully the
Seller's obligations hereunder and thereunder. The
execution and delivery of this Agreement by the Seller and
the consummation by the Seller of the transactions
contemplated hereby have been duly authorized by all
corporate action on the part of the Seller. This Agreement
has been duly executed and delivered by the Seller and
(assuming due execution and delivery hereof by the other
parties hereto) this Agreement will be the valid and binding
obligation of the Seller enforceable against the Seller in
accordance with its terms. Neither the execution and
delivery by the Seller of this Agreement nor the
consummation of the transactions contemplated hereby and the
performance by the Seller of this Agreement in accordance
with its terms and conditions will: (a) conflict with or
result in any breach of any provision of the certificate of
incorporation or by-laws of the Seller; (b) if the Consents
(as defined below) set forth on Schedule 3.2 are obtained,
violate any law, statute, rule or regulation (collectively,
Legal Requirements) or order, judgment, writ, injunction,
determination, award or decree (collectively, Orders) of any
foreign, federal, state, municipal or other court or
governmental department, commission, board, bureau, agency
or instrumentality (each, a Governmental Entity) applicable
to the Seller or to the Shares; (c) require the Seller to
obtain any consent, approval, authorization or action of, or
make any filing with or give any notice to, any Governmental
Entity or any other person (collectively, Consents), except
for filings and other applicable requirements under the Hart-
Scott-Rodino Antitrust Improvements Act of 1976, as amended
(the HSR Act), and other Consents set forth on Schedule 3.2;
(d) if the Consents set forth on Schedule 3.2 are obtained,
violate, conflict with or result in the breach of any of the
terms and conditions of, result in a modification of the
effect of, otherwise cause the termination of or give any
other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both
constitute) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, agreement or other instrument or
obligation to which the Seller is a party or by or to which
the Seller is or the Shares may be bound or subject; or (e)
if the Consents set forth on Schedule 3.2 are obtained,
result in the creation of any Lien on the Shares.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE SELLER
AS TO THE COMPANY
The Seller represents and warrants to the Buyer as
follows:
4.1 Corporate Organization. Stella Holdings and each
of the Stella Companies is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction in which it is organized and has all requisite
power and authority to own, lease and operate its properties
and to carry on its business as now being conducted. Stella
Holdings and each of the Stella Companies is duly qualified
or licensed to do business and in good standing in each
jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good
standing that, individually or in the aggregate, would not
result in a Material Adverse Effect on the Company. The
Seller has previously delivered or made available to the
Parent or the Buyer correct and complete copies of the
certificate of incorporation (the Charter) and by-laws (the
By-Laws), each as currently in effect, of Stella Holdings
and each of the Stella Companies.
4.2 Capitalization. Stella Holdings is authorized to
issue ten thousand (10,000) shares of capital stock,
consisting of four thousand (4,000) shares of voting Common
Stock, four thousand (4,000) shares of non-voting Common
Stock and two thousand (2,000) shares of preferred stock.
As of the date hereof, one hundred (100) shares of voting
Common Stock are issued and outstanding, and no shares of
stock of any other class are outstanding. All issued and
outstanding shares of Common Stock have been duly authorized
and are validly issued, fully paid and non-assessable. All
of the outstanding shares of capital stock of each of the
Stella Companies are owned, directly or indirectly, by
Stella Holdings. All of the outstanding shares of capital
stock of each of the Stella Companies have been duly
authorized and are validly issued, fully paid and non-
assessable and are free and clear of all Liens, except for
the pledge of such shares pursuant to the Security
Documents, which pledge shall be released on or before the
Closing Date. Except for the pledge described above, none
of Stella Holdings or the Stella Companies has any
outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange
rights, or other contracts or commitments that would require
Stella Holdings or any of the Stella Companies to issue,
sell, or otherwise cause to become outstanding any shares of
the capital stock or other securities of Stella Holdings or
any of the Stella Companies.
4.3 Subsidiaries. Except for the Stella Companies,
Stella Holdings neither owns stock in, nor controls,
directly or indirectly, any other person.
4.4 Non-Contravention.
(a) Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will (i) conflict with or result in any
breach of any provision of the Charter or By-laws of Stella
Holdings or any of the Stella Companies; or (ii) if the
Consents set forth on Schedule 4.4 are obtained, violate any
Legal Requirement or Orders, in each case applicable to
Stella Holdings or any of the Stella Companies.
(b) Neither the execution and delivery of this
Agreement nor the consummation of the transactions
contemplated hereby will, except as would not, individually
or in the aggregate, have a Material Adverse Effect on the
Company: (i) require Stella Holdings or any of the Stella
Companies to obtain any Consents of any foreign, federal,
state, municipal or other Governmental Entity or any other
person, except for filings and other applicable requirements
under the HSR Act and other Consents set forth on Schedule
4.4; (ii) if the Consents set forth on Schedule 4.4 are
obtained, violate, conflict with or result in the breach of
any of the terms and conditions of, result in a modification
of the effect of or otherwise cause the termination of or
give any other contracting party the right to terminate, or
constitute (or with notice or lapse of time or both
constitute) a default (or give rise to any right of
termination, cancellation or acceleration) under, any of the
terms, conditions or provisions of any Material Contract to
which Stella Holdings or any of the Stella Companies is a
party or by or to which Stella Holdings or any of the Stella
Companies is or may be bound or subject; or (iii) create any
Lien on any of the assets or other properties of Stella
Holdings or any of the Stella Companies.
4.5 Financial Statements. The Parent or the Buyer has
been furnished with a copy of the consolidated unaudited
balance sheets of Stella Holdings and its consolidated
subsidiaries as of December 31, 1996 and 1995 and the
related statements of income for the years ended December
31, 1996 and 1995 (collectively, the Financial Statements).
The Financial Statements have been prepared in accordance
with generally accepted accounting principles (GAAP) and
present fairly, in all material respects, the financial
position of Stella Holdings and its consolidated
subsidiaries at December 31, 1996 and 1995 and the results
of operations for the years then ended, except as noted in
the footnotes thereto and except that they do not contain
the footnotes that may be required by GAAP. The Parent or
the Buyer has also been furnished with the unaudited balance
sheet of Stella Holdings and its consolidated subsidiaries
as of July 26, 1997 (the Interim Balance Sheet) and the
related statement of income. Such interim financial
statements present fairly, in all material respects, the
financial position of Stella Holdings and its consolidated
subsidiaries as at such date and the results of operations
of Stella Holdings and its consolidated subsidiaries for the
seven (7) months then ended, in each case in accordance with
GAAP (subject to the Company s normal year-end adjustments),
except (i) for the elimination of all Intercompany Accounts,
(ii) as noted in the footnotes thereto and (iii) that they
do not contain the footnotes that may be required by GAAP.
(July 26, 1997 is sometimes herein referred to as the
Interim Balance Sheet Date.) Except as set forth on
Schedule 4.5, each of the Purchased Accounts Receivable (as
defined in the Accounts Receivable Purchase Agreement) and
each accounts receivable on the books of Stella Holdings or
any of the Stella Companies is due and payable in full
within 120 days from its date of accrual.
4.6 Title to Property. Stella Holdings and each of
the Stella Companies have good and valid title to or a valid
and binding leasehold interest in the property and assets
reflected on the Interim Balance Sheet (other than (x)
inventory disposed of, or subject to purchase or sales
orders, in the ordinary course of business since the Interim
Balance Sheet Date, (y) obsolete assets and other assets no
longer used in the business of the Company with an aggregate
sales price not exceeding Five Hundred Thousand Dollars
($500,000) or (z) accounts receivable sold pursuant to the
Accounts Receivable Facility) free and clear of all Liens,
except: (i) as set forth on Schedule 4.6; (ii) any Liens
disclosed in the Financial Statements; (iii) liens for
taxes, assessments and other governmental charges not yet
due and payable or due but not delinquent or being contested
in good faith by appropriate proceedings and for which
reserves have been provided to the extent required by GAAP;
(iv) mechanics', workmen's, repairmen's, warehousemen's,
carriers' or other like liens arising or incurred in the
ordinary course of business, consistent with past practice,
and equipment leases with third parties entered into the
ordinary course of business consistent with past practice,
and, in each case, not materially affecting the use thereof;
and (v) Liens which, individually or in the aggregate, would
not have a Material Adverse Effect on the Company (all items
included in (i) through (v) are referred to collectively
herein as the Permitted Liens). The representations and
warranties set forth in this Section 4.6 shall not apply to
the Intellectual Property and Real Property.
4.7 Compliance with Laws; Licenses and Permits.
Except as set forth on Schedule 4.7:
(a) Stella Holdings and each of the Stella
Companies are in compliance with all Legal Requirements or
Orders of any Governmental Entity applicable to the business
of the Company, except where the failure to comply, together
with all other failures to comply, would not have a Material
Adverse Effect on the Company;
(b) no notice (the reason for which has not been
corrected) has been served upon Stella Holdings or any of
the Stella Companies since January 1, 1994 by any
Governmental Entity of any violation of any Legal
Requirement or Order, which violation, together with all
other such violations, would have a Material Adverse Effect
on the Company; and
(c) Stella Holdings and each of the Stella
Companies have all licenses, permits, waivers,
authorizations or approvals of, and has made all required
registrations with, any Governmental Entity that are
material to the conduct of the business of the Company
(collectively, Material Permits). All Material Permits are
in full force and effect; and no proceeding is pending or,
to the knowledge of the Seller, threatened to revoke or
limit any Material Permit.
4.8 Litigation. Except as set forth on Schedule 4.8,
no claim, action, litigation, governmental investigation or
other proceeding is pending or, to the knowledge of the
Seller, threatened against or relating to Stella Holdings or
any of the Stella Companies, or their respective assets,
properties or businesses to restrain or prevent the
consummation of the transactions contemplated hereby or
which would, together with all other such claims,
litigations, governmental investigations or other
proceedings, have a Material Adverse Effect on the Company.
The Company is not subject to any Orders of any Governmental
Entity that, individually or in the aggregate, have a
Material Adverse Effect on the Company.
4.9 Absence of Certain Changes or Events.
(a) Since the Interim Balance Sheet Date, the
Company has conducted its business only in the ordinary
course and there has not been any condition, event or
occurrence that, individually or in the aggregate, has
resulted in, or is reasonably likely to result in, a
Material Adverse Effect on the Company (without regard,
however, to changes in conditions generally applicable to
the industry in which the Company is involved or general
economic conditions).
(b) Except as disclosed on Schedule 4.9, since
the Interim Balance Sheet Date, the Company has not:
(i) (x) created, incurred, assumed or guaranteed
any indebtedness of any officer or director of Stella
Holdings or any of the Stella Companies (other than
customary advances of travel expenses) or any other
indebtedness in an amount exceeding Two Hundred Fifty
Thousand Dollars ($250,000) in the aggregate to all persons
(other than guarantees to be eliminated prior to or at
Closing), or (y) become subject to any long-term liabilities
of a type required to be disclosed on a balance sheet
prepared in accordance with GAAP, except liabilities
incurred in the ordinary course of business and liabilities
under contracts entered into in the ordinary course of
business that, individually or in the aggregate are not
material to the Company;
(ii) subjected any of its assets to any Lien,
except Permitted Liens;
(iii) sold, assigned or transferred any amount
of assets, except (x) inventory disposed of, or subject to
purchase or sales orders, in the ordinary course of
business, (y) obsolete assets and other assets no longer
used in the business of the Company with an aggregate sale
price not exceeding Five Hundred Thousand Dollars ($500,000)
or (z) in the case of accounts receivable, pursuant to the
Accounts Receivable Facility;
(iv) suffered any material losses not covered by
insurance, forgiven or canceled any material claims or
waived any right of material value;
(v) increased the compensation, bonuses, or
benefits payable or to become payable by the Company to any
of its directors, officers or employees, except for
increases in the ordinary course of business consistent with
past practice not in excess of Four Hundred Thousand Dollars
($400,000) in the aggregate, or as required under any
Company Plan;
(vi) suffered any strike, work stoppage, work slow-
down, lock-out or labor dispute material to the Company;
(vii) changed in any material respects any of
the accounting principles followed by it or the methods of
applying such principles or failed to maintain its books of
account and records in the usual, regular and ordinary
manner; or
(viii) entered into any agreement or commitment
to do any of the foregoing.
(c) The assets and other properties reflected on
the Interim Balance Sheet not disposed of as permitted by
clause (iii)(x) or (y) above include all material assets and
properties necessary for the Company to conduct its business
as conducted prior to the Interim Balance Sheet Date.
4.10 Taxes. All returns and reports with respect to
Taxes (collectively, Tax Returns) required to be filed by or
with respect to Stella Holdings or any of the Stella
Companies through the date hereof have been timely filed and
all other Tax Returns required to be filed with respect to
taxable periods ending on or before the Closing by or with
respect to Stella Holdings or any of the Stella Companies,
shall be prepared and timely filed, in a manner consistent
with prior years, except in each case for such Tax Returns
the failure to timely file which, individually or in the
aggregate, would not reasonably be expected to result in a
Material Adverse Effect on the Company. All such Tax
Returns are (or in the case of Tax Returns to be prepared
following the date hereof, will be) true, correct and
complete in all material respects and accurately (or, in the
case of Tax Returns to be prepared following the date
hereof, will accurately) set forth all items to the extent
required to be reflected or included in such Tax Returns by
applicable federal, state, local or foreign laws,
regulations or rules. All Taxes shown to be due on such Tax
Returns have been timely paid, or (with respect to Taxes not
yet due and payable) shall be timely paid. Except as set
forth on Schedule 4.10, (i) no deficiencies for any federal,
foreign or state or local taxes have been proposed, asserted
or assessed against Stella Holdings or any of the Stella
Companies, nor, to the knowledge of Seller, have any such
deficiencies been proposed, asserted or assessed against any
person for whose Taxes Stella Holdings or any of the Stella
Companies would be liable either contractually or by
operation of law, (ii) none of Stella Holdings and the
Stella Companies is currently the subject of, or has
received written notice of intent to commence, an audit or
other examination with respect to Taxes and (iii) none of
Stella Holdings and the Stella Companies is party to a
closing agreement or similar agreement with respect to Taxes
or is required to take any amount into account following the
Closing by reason of Section 481 of the Code. There will be
no deferred intercompany gains, losses or items, within the
meaning of Treas. Reg. 1.1502-13, or any excess loss
accounts, within the meaning of Treas. Reg. 1.1502-19, that
will survive the Closing. The Seller has not and will not
make an election to reattribute losses under Treas. Reg.
1.1502-20 with respect to Stella Holdings or any of the
Stella Companies.
4.11 Environmental Matters.
(a) Except as set forth on Schedule 4.11 or
otherwise known to the Buyer, to the knowledge of the
Seller: (i) the Company is and has been in compliance with
all applicable Environmental Laws and all permits, orders,
conditions, standards, requirements and schedules required
by or imposed under any applicable Environmental Law; (ii)
there is no civil, criminal or administrative order, action,
suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending
or threatened against the Company alleging a violation by
the Company of any Environmental Law or the failure by the
Company to have any permit, certificate, license or
authorization required under any applicable Environmental
Law in connection with the conduct of its businesses; and
(iii) there is no civil, criminal or administrative order,
action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending
or threatened against the Company alleging the presence,
disposal or release of any Hazardous Material on, under or
from any Owned Real Property or Leased Real Property, any
real property the Company has owned, leased or occupied in
the past, or any facilities or other sites at which the
Company has arranged for the disposal or treatment of
Hazardous Materials; provided that no representation or
warranty is made in the foregoing clauses (i), (ii) and
(iii) with respect to matters that, individually or in the
aggregate, would not result in a Material Adverse Effect on
the Company.
(b) For purposes of this Agreement, Environmental
Law means any federal, state or local law, statute,
ordinance, rule or regulation; all judicial, administrative
and regulatory orders, judgments, decrees, permits and
authorizations and common law relating to: (i) the
protection, investigation, remediation or restoration of the
environment or natural resources; (ii) the handling, use,
storage, treatment, disposal, release or threatened release
of any Hazardous Material; or (iii) noise, odor, pollution,
contamination, land use, any injury or threat of injury to
persons or property.
(c) For purposes of this Agreement, Hazardous
Material means any substance, material or waste that is:
(i) listed, classified or regulated in any concentration
pursuant to any Environmental Law; (ii) any petroleum
hydrocarbon, asbestos-containing material, lead-containing
paint or plumbing or polychlorinated biphenyls; or (iii) any
other substance, material or waste which may be the subject
of regulatory action by any Governmental Entity pursuant to
any Environmental Law.
4.12 Contracts.
(a) Schedule 4.12(a) sets forth a list, as of the
date hereof, of all of the following contracts and
agreements to which the Company is a party, or by which any
of its properties or assets are bound or subject (the
Material Contracts):
(i) any purchase order, agreement or other
commitment obligating the Company to purchase or sell any
products or services which (x) is not terminable by the
Company without payment or penalty upon sixty (60) days' (or
less) notice and (y) provides for annual payments by the
Company aggregating Two Hundred Fifty Thousand Dollars
($250,000) or more;
(ii) any loan agreement, promissory note,
indenture or letter of credit that will continue to be in
effect after Closing, any contract or agreement for the
deferred purchase price of property (excluding normal trade
payables), or any instrument guaranteeing any indebtedness
that will remain in effect after the Closing where the
amount involved exceeds Two Hundred Fifty Thousand Dollars
($250,000);
(iii) any contract or agreement that will
remain in effect after the Closing by which the Company is
guaranteeing any obligations of any person (other than
Stella Holdings or one of the other Stella Companies), or
any person is guaranteeing any obligations of the Company;
(iv) any joint venture, partnership or other
arrangement involving a sharing of profits;
(v) any contract, agreement or license under
which the Company leases personal property (other than
Intellectual Property) which (x) is not terminable by the
Company without payment or penalty upon sixty (60) days' (or
less) notice by the Company and (y) provides for annual
payments by the Company aggregating more than Two Hundred
Fifty Thousand Dollars ($250,000);
(vi) any sales agency, brokerage or distribution
agreement which is not terminable by the Company without
payment or penalty upon sixty (60) days' (or less) notice;
(vii) any agreement which includes provisions
regarding minimum volumes or volume discounts which are not
accrued for on the Interim Balance Sheet;
(viii) any agreement pursuant to which a
rebate, discount, bonus, commission or other payment with
respect to the sale of any product of the Company will be
payable or required after the Closing which is not accrued
for on the Interim Balance Sheet; and
(ix) any consulting agreement or arrangement which
provides for annual payments by the Company aggregating Two
Hundred Fifty Thousand Dollars ($250,000) or more.
(b) Except as set forth on Schedule 4.12(b), to the
knowledge of the Seller: (i) all Material Contracts are in
full force and effect; (ii) the Company is not, and none of
the counterparties thereto is, in breach of any material
provision of any Material Contract; and (iii) no event has
occurred which, after the giving of notice or passage of
time or both, would constitute a default under any Material
Contract by the Company.
(c) With respect to the Letter Agreement
identified as Item 100 on Schedule 4.12(a), no payments (i)
are due thereunder and (ii) will become due thereunder on or
prior to the Closing Date. The Seller agrees prior to the
Closing Date to terminate such Letter Agreement and to pay
all amounts owing or which could become owing thereunder.
4.13 Business Relationships. Except as set forth on
Schedule 4.13, to the knowledge of the Seller, there exists
no actual termination or cancellation of, or threatened
termination or cancellation that is reasonably likely to
result in an actual termination or cancellation of, or any
adverse modification or change in, the business relationship
of the Company with any of its customers or suppliers which,
individually or in the aggregate, would result in a Material
Adverse Effect on the Company.
4.14 Employees.
(a) Schedule 4.14(a) sets forth a list, as of the
date hereof, of all of the following to which the Company is
a party or by which it is bound, whether written or
unwritten (the Company Plans):
(i) employment contracts with employees of Stella
Holdings or the Stella Companies;
(ii) collective bargaining agreements;
(iii) commission, incentive or bonus plans or
arrangements;
(iv) pension and retirement plans as defined in
Section 3(2) of the Employee Retirement Income Security Act
of 1974, as amended (ERISA), including multiemployer pension
plans as defined in ERISA Section 3(37), to which any
obligation to contribute exists under a collective
bargaining or similar agreement;
(v) profit-sharing plans;
(vi) non-qualified deferred compensation plans;
(vii) medical, dental, life or health
insurance plans, including multiemployer health and welfare
plans to which any obligation to contribute exists under a
collective bargaining or similar agreement;
(viii) stock purchase, stock option, phantom
stock or similar plans;
(ix) severance plans or policies;
(x) welfare benefit plans as defined in Section
3(1) of ERISA; and
(xi) all other material employee fringe benefits.
(b) Except as set forth on Schedule 4.14(b), the
Company has complied in all material respects with its
obligations related to, and is not in default under, any of
the Company Plans and each of the Company Plans has been
operated in compliance with its terms, the Code and ERISA in
all material respects.
4.15 Employee Benefit Plans.
(a) Except as set forth on Schedule 4.15(a): (i)
each Company Plan has been established and administered in
accordance with its terms, and in material compliance with
the applicable provisions of ERISA, the Internal Revenue
Code of 1986, as amended (the Code), and other applicable
laws, rules and regulations; (ii) each Company Plan which is
intended to be qualified within the meaning of Code section
401(a) is so qualified and has received a favorable
determination letter as to its qualification, and nothing
has occurred since the date thereof, whether by action or
failure to act, that could reasonably be expected to cause
the loss of such qualification; (iii) no event has occurred
and no condition exists that would subject the Company or
any of its officers, directors or employees, either directly
or by reason of its or their affiliation with any member of
the Company's Controlled Group (defined as any organization
which is a member of a controlled group of organizations
within the meaning of Code section 414(b), (c), (m) or (o)),
to any tax, fine, lien, penalty or other liability imposed
by ERISA, the Code or other applicable laws, rules and
regulations in connection with a Company Plan; (iv) for each
Company Plan with respect to which a Form 5500 has been
filed, no material change has occurred with respect to the
matters covered by the most recent Form 5500 since the date
thereof; and (v) to the knowledge of the Seller, no
prohibited transaction (as defined in ERISA section 406 and
Code section 4975) has occurred with respect to any Company
Plan.
(b) Other than multiemployer plans within the meaning of
section 4001(a)(3) of ERISA, no Company Plan is subject to
Title IV of ERISA.
(c) Except as set forth on Schedule 4.15(c), with
respect to any multiemployer plan (within the meaning of
ERISA section 4001(a)(3)) to which the Company or any member
of its Controlled Group has any liability or contributes (or
has at any time contributed or had an obligation to
contribute): (i) neither the Company nor any member of its
Controlled Group has incurred any withdrawal liability under
Title IV of ERISA or would be subject to such liability if,
as of the Closing Date, the Company or any member of its
Controlled Group were to engage in a complete withdrawal
(as defined in ERISA section 4203) or partial withdrawal
(as defined in ERISA section 4205) from any such
multiemployer plan; and (ii) no such multiemployer plan is
in reorganization or insolvent (as those terms are
defined in ERISA sections 4241 and 4245, respectively).
(d) Except as set forth on Schedule 4.15(d), all
material reports, returns and similar documents with respect
to the Company Plans required to be filed with any
government agency or distributed to any Company Plan
participant have been duly and timely filed or distributed.
(e) The Company has complied with the notice and
continuation coverage requirements of Section 4980B of the
Code and the regulations thereunder (COBRA) with respect to
each Company Plan that is a group health plan within the
meaning of Section 5000(b)(1) of the Code.
(f) Except as set forth on Schedule 4.15(f),
there are no pending investigations by any governmental
agency involving the Company Plans, no termination
proceedings involving the Company Plans, and no threatened
or pending claims (except for claims for benefits payable in
the normal operation of the Company Plans), suits or
proceedings against any Company Plans asserting any rights
or claims to benefits under any Company Plan which could
give rise to any material liability.
(g) Except as set forth on Schedule 4.15(g), no
payment which is or may be made by the Company, or from any
Company Plan, to any employee, former employee, officer,
director or agent, or former officer, director or agent of
the Company under the terms of any Company Plan, either
alone or in conjunction with any other payment, has been or
would likely be characterized as an excess parachute payment
under Section 280G of the Code.
(h) Except as set forth on Schedule 4.15(h), no
Company Plan provides or will provide any welfare benefits
to any current or future retiree of the Company, except as
required under COBRA.
(i) No payments are, or will become, due under
the Company's Amended and Restated Long-Term Incentive
Compensation Plan set forth on Schedule 4.14(a)(v) with
respect to the plan year ending December 31, 1997.
4.16 Intellectual Property.
(a) Schedule 4.16(a) sets forth a list, as
of the date hereof, of: (i) all United States and foreign
patent, trademark, service mark and copyright registrations
and applications which are material to the conduct of the
business of the Company; and (ii) all licenses granted to or
by the Company pursuant to written or oral agreements
pertaining to patents, patent applications, proprietary
technology, inventions, trademarks, service marks, trade
names and copyrights which are material to the conduct of
the business of the Company (collectively, Intellectual
Property).
(b) Except as set forth on Schedule 4.16(b):
(i) the Company owns and, to the Seller's
knowledge, has the exclusive right to use and the right to
bring actions for the infringement of, the Intellectual
Property, except to the extent that failure to possess such
Intellectual Property or such rights would not, individually
or in the aggregate, have a Material Adverse Effect on the
Company;
(ii) the operation of the businesses of Stella
Holdings or any of the Stella Companies does not, to the
knowledge of the Seller, infringe on the patents,
trademarks, service marks, copyrights, applications therefor
or other intellectual property rights of any other person;
and
(iii) no licenses, sub-licenses or agreements
pertaining to any of the Intellectual Property which is
material to the business of the Company have been granted by
Stella Holdings or any of the Stella Companies.
(c) Except as set forth on Schedule 4.16(c), the
Seller has no knowledge of any claim asserted by any person
that the operations of Stella Holdings or any of the Stella
Companies infringes any patent, trademark, service mark,
copyright, application therefor, or any other intellectual
property rights of any other person, except for such claims
that, individually or in the aggregate, would not result in
a Material Adverse Effect on the Company.
4.17 Labor Disputes. There are no strikes, work
stoppages, work slow-downs, lock-outs or labor disputes
against the Company pending or, to the knowledge of the
Seller, threatened, which would, individually or in the
aggregate, have a Material Adverse Effect on the Company.
Except as set forth on Schedule 4.8, neither Stella Holdings
nor any of the Stella Companies is the subject of any suit,
action or proceeding which is pending or, to the knowledge
of the Seller, threatened, asserting that Stella Holdings or
any of the Stella Companies has committed an unfair labor
practice (within the meaning of the National Labor Relations
Act or applicable state statutes) or seeking to compel
Stella Holdings or any of the Stella Companies to bargain
with any labor organization as to wages and conditions of
employment, in any such case or group of cases, that would
result in a Material Adverse Effect on the Company. Except
as set forth on Schedule 4.17, to the knowledge of the
Seller, as of the date hereof, there is no activity
involving any employees of Stella Holdings or any of the
Stella Companies seeking to certify a collective bargaining
unit or engaging in any other organizational activity.
4.18 Finders and Investment Bankers. Neither the
Seller or the Company nor any of their respective officers
or directors or affiliates has employed any investment
banker, business consultant, financial advisor, broker or
finder in connection with the transactions contemplated by
this Agreement, except for Donaldson, Lufkin & Jenrette
Securities Corporation (DLJ), or incurred any liability for
any investment banking, business consultancy, financial
advisory, brokerage or finders' fees or commissions in
connection with the transactions contemplated hereby, except
for fees payable to DLJ, all of which fees have been or will
be paid by the Seller.
4.19 Directors, Officers and Bank Accounts. Schedule
4.19 sets forth a list of all officers and directors of
Stella Holdings and each of the Stella Companies and a list
of all bank accounts, safe deposit boxes and lock boxes
maintained by Stella Holdings and each of the Stella
Companies which will be retained by Stella Holdings or any
of the Stella Companies after Closing.
4.20 Insurance. Schedule 4.20 sets forth a list and
summary description (including the name of the insurer,
coverage and expiration date), as of the date hereof, of all
policies of insurance relating to the Company's business
which are in force, including the amounts thereof,
maintained by the Seller or the Company in which Stella
Holdings or any of the Stella Companies is a named insured
or on which the Company is paying premiums (collectively,
the Insurance Policies). As of the date hereof, all of the
Insurance Policies are in effect and are consistent in all
material respects with insurance coverage levels maintained
by or for the Company since January 1, 1994.
4.21 Real Estate.
(a) Ownership of Premises. The Company is the
owner of fee title to the land described on Schedule 4.21(a)
and to all of the buildings, structures and other
improvements located thereon (collectively, the Owned Real
Property) free and clear of all Title Defects, except for
the matters listed on Schedule 4.21(a)-1 and encumbrances
that do not individually or in the aggregate: (i) interfere
in any material respect with, or materially increase the
cost of, the use, occupancy or operation of the applicable
parcel of Owned Real Property as currently used, occupied
and operated and as intended to be used, occupied and
operated, or (ii) materially reduce the fair market value of
the applicable parcel of Owned Real Property below the fair
market value such parcel would have had but for such
encumbrances (collectively, the Permitted Owned Real
Property Exceptions). The Owned Real Property constitutes
all of the real property owned by the Company on the date
hereof. As used in this Agreement, Title Defects shall mean
and include any mortgage, deed of trust, lien, pledge,
security interest, claim, lease, charge, option, right of
first refusal, easement, restrictive covenant, encroachment
or other survey defect, encumbrance or other restriction or
limitation.
(b) Leased Properties. Schedule 4.21(b) sets
forth a list, as of the date hereof, of all leases,
subleases, licenses and other agreements (collectively, the
Real Property Leases) under which the Company uses or
occupies or has the right to use or occupy, now or in the
future, any real property which is material to the business
of the Company (the land, buildings and other improvements
covered by the Real Property Leases being herein called the
Leased Real Property ). To the knowledge of the Seller, each
Real Property Lease is valid, binding and in full force and
effect, no termination event or condition or uncured default
on the part of Stella Holdings or any of the Stella
Companies or, to the knowledge of the Seller, on the part of
the lessor thereof, exists under any Real Property Lease,
and no event has occurred and no condition exists which,
with the giving of notice or the lapse of time or both,
would constitute such a default or termination event or
condition. All rent and other sums and charges payable by
Stella Holdings or any of the Stella Companies as tenant
under any of the Real Property Leases are current and no
notice of default or termination under any Real Property
Lease is outstanding.
(c) Entire Premises. All of the land, buildings,
structures and other improvements used by the Company in the
conduct of its business are included in the Owned Real
Property and the Leased Real Property. The Leased Real
Property and the Owned Real Property are hereinafter
collectively referred to as the Real Property.
(d) Condemnation. The Company has not received
notice of any pending, threatened or contemplated
condemnation proceeding affecting the Real Property or any
part thereof or of any sale or other disposition of the Real
Property or any part thereof in lieu of condemnation.
(e) Casualty. Since the Interim Balance Sheet
Date to the date hereof, no portion of the Real Property has
suffered any damage in excess of Two Hundred Thousand
Dollars ($200,000) by fire or other casualty which has not
heretofore been completely repaired and restored or the loss
of which is not covered by insurance. After the date hereof
and prior to Closing, no portion of the Real Property will
suffer any material damage by fire or other casualty which
will not be completely repaired and restored or the loss of
which will not be covered by insurance.
4.22 No Competitive Restrictions. Neither Stella
Holdings nor any of the Stella Companies is restricted under
any agreement or understanding from carrying out their
respective businesses as currently conducted.
4.23 No Other Representations and Warranties. Except
for the representations and warranties contained in Articles
3 and 4, the Seller makes no other express or implied
representations or warranties concerning the Shares or the
Company.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF PARENT AND BUYER
The Parent and the Buyer, jointly and severally,
represent and warrant to the Seller as follows:
5.1 Corporate Organization. Each of the Parent and
the Buyer is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of
its incorporation. The Parent has all requisite power and
authority to own, lease and operate its properties and to
carry on its business as now being conducted. The Parent
and the Buyer have previously delivered or made available to
the Seller correct and complete copies of their articles of
incorporation or certificate of incorporation, as the case
may be, and respective by-laws (the Constituent Documents),
as currently in effect.
5.2 Authority; Non-Contravention. Each of the Parent
and the Buyer has full legal right, power and authority
required to enter into, execute and deliver this Agreement
and each and every agreement and instrument contemplated
hereby to which it is or will be a party and to perform
fully its obligations hereunder and thereunder. The
execution and delivery of this Agreement by the Parent and
the Buyer and the consummation by the Parent and the Buyer
of the transactions contemplated hereby have been duly
authorized by all corporate action on the part of the Parent
and the Buyer, as the case may be. This Agreement has been
duly authorized, executed and delivered by the Parent and
the Buyer, and (assuming due execution and delivery hereof
by the other parties hereto) this Agreement will be the
valid and binding obligation of the Parent and the Buyer,
enforceable against the Parent and the Buyer in accordance
with its terms. Neither the execution, delivery and
performance by the Parent and the Buyer of this Agreement in
accordance with its terms and conditions nor the
consummation by the Parent and the Buyer of the transactions
contemplated hereby will: (a) conflict with or result in
any breach of any provision of the Constituent Documents;
(b) violate any Legal Requirements or Orders of any
Governmental Entity applicable to the Parent or the Buyer;
(c) require the Parent or the Buyer to obtain any Consents,
except for filings and other applicable requirements under
the HSR Act; or (d) violate, conflict with or result in the
breach of any of the terms and conditions of, result in a
modification of the effect of, otherwise cause the
termination of or give any other contracting party the right
to terminate, or constitute (or with notice or lapse of time
or both constitute) a default (or give rise to any right of
termination, cancellation or acceleration) under any of the
terms, conditions or provisions of any material note, bond,
mortgage, indenture, license, agreement or other instrument
or obligation to which the Parent or the Buyer is a party or
by or to which the Parent or the Buyer may be bound or
subject.
5.3 Investment Intent. The Buyer is purchasing the
Shares for its own account for investment and not with a
view to, or for sale in connection with, any distribution of
any of the Shares. The Parent and the Buyer acknowledge
that the sale of the Shares has not been registered under
the Securities Act of 1933, as amended, or any applicable
state securities laws and that such Shares may only be sold
or otherwise disposed of under an effective registration
statement under the Securities Act of 1933, as amended, or
under an exemption therefrom. Except for the Buyer's
pledging the Shares to its lenders providing financing for
its purchase of the Shares, the Parent and the Buyer have no
contract, undertaking, agreement or arrangement with any
person to sell, hypothecate, pledge, donate, or otherwise
transfer (with or without consideration) to any person any
of the Shares, and neither the Parent nor the Buyer has any
present plans or intention to enter into any such contract,
undertaking, agreement, or arrangement.
5.4 Pending Actions. There is no pending or, to the
knowledge of the Parent or the Buyer, threatened legal
proceeding before any Governmental Entity to restrain or
prevent the carrying out of the transactions contemplated by
this Agreement or which would be reasonably likely to have a
Material Adverse Effect on the Parent or the Buyer.
5.5 Finders and Investment Bankers. Neither the
Parent nor the Buyer has employed any investment banker,
business consultant, financial advisor, broker or finder in
connection with the transactions contemplated by this
Agreement, except for Schroder & Co. Inc. (Schroders), or
incurred any liability for any investment banking, business
consultancy, financial advisory, brokerage or finders' fees
or commissions in connection with the transactions
contemplated hereby, except for fees payable to Schroders,
all of which fees have been or will be paid by the Parent
and the Buyer.
5.6 Sources of Information. The Parent and the Buyer
acknowledge that they have conducted their own investigation
of the business and affairs of the Company. Each of the
Parent and the Buyer has been afforded the opportunity: (i)
to ask such questions as it has deemed necessary of, and to
receive answers from, representatives of the Company
concerning the Company; and (ii) to obtain such additional
information that the Company possesses or can acquire
without unreasonable effort or expense that is necessary to
verify the accuracy and completeness of the information
previously furnished to it by the Company. Nothing set
forth in this Section 5.6 shall limit any rights the Parent
or the Buyer may have as a result of a breach of any
representation, warranty or other provision of this
Agreement by the Seller.
5.7 Financial Capability. The Buyer has sufficient
funds on hand or fully-committed unconditional lines of
credit available, and on the Closing Date the Buyer will
have sufficient funds on hand, in each case to purchase the
Shares on the terms and conditions contemplated by this
Agreement and to consummate the transactions contemplated
hereby.
ARTICLE 6
COVENANTS
6.1 Conduct of Business of the Company.
(a) Affirmative Covenants. Except as
contemplated by this Agreement, as otherwise consented to in
advance in writing by the Buyer or as set forth on Schedule
6.1, during the period commencing on the date hereof and
ending upon the Closing, the Seller shall cause the Company
to:
(i) continue to conduct operations at all
locations at which the Company's operations are presently
conducted, in the ordinary course of business consistent
with past practice;
(ii) use reasonable commercial efforts to retain
its employees, maintain in full force and effect each of the
Material Contracts in accordance with its terms and preserve
present business relationships with customers, suppliers and
others having dealings with the Company;
(iii) maintain its inventory in commercially
saleable condition and its other material assets (including
all of the Real Property) in good repair, order and
condition (and if any of such material assets is destroyed
or damaged, promptly apply any insurance proceeds received
to the repair or replacement thereof);
(iv) comply in all material respects with all
Material Permits and use reasonable commercial efforts to
maintain in full force and effect each Material Permit;
(v) maintain its books, accounts and records
consistent with past practice and in accordance with the
principles used in the preparation of the Financial
Statements;
(vi) use reasonable commercial efforts to maintain
and protect the Intellectual Property;
(vii) maintain in effect (or replace with
reasonably equivalent substitutes) the Insurance Policies;
(viii) comply with all provisions of the Worker
Adjustment and Retraining Notification Act, as amended (29
U.S.C. 2101-2109) (the WARN Act), and regulations or
interpretive rules promulgated thereunder, including, but
not limited to, the providing of any notices required
thereunder, with respect to all employees of the Company;
(ix) accurately and properly prepare and file when
due all material Tax Returns of Stella Holdings and each of
the Stella Companies; and
(x) pay on or before the Closing Date or accrue
on the Closing Statement the aggregate amount of all of the
capital expenditures set forth on Schedule 6.1 in the
amounts set forth thereon.
(b) Negative Covenants. Without limiting the
generality of the foregoing, and except as otherwise
expressly provided in this Agreement, the Seller agrees that
prior to the Closing the Company will not (without the prior
written consent of the Buyer):
(i) amend its Charter or By-laws;
(ii) authorize for issuance, issue, sell, pledge,
deliver or agree or commit to issue, sell, pledge or deliver
(whether through the issuance or granting of any options,
warrants, calls, subscriptions, stock appreciation rights or
other rights or other agreements) any capital stock or any
other securities;
(iii) increase in any manner the compensation
payable or to become payable by Stella Holdings or any of
the Stella Companies to any of its respective directors,
officers or employees, other than as would not cause the
representation in Section 4.9(b)(v) to be inaccurate, or
enter into any employment or severance agreement with or
grant any severance or termination pay to any director,
officer or employee of Stella Holdings or any of the Stella
Companies other than as required under any Company Plan;
(iv) acquire any business or any corporation,
partnership, joint venture, association or other business
organization or division thereof or any material portion of
the assets of any such person;
(v) sell, assign, transfer, mortgage or otherwise
encumber or subject to or suffer the existence of any Lien
(other than Permitted Liens) or otherwise dispose of any of
its properties or assets, except as would not cause the
representation and warranty in Section 4.9(b)(iii) to be
inaccurate;
(vi) notwithstanding clause (v) above, sell,
assign or transfer any Owned Real Property or its leasehold
interest in (or grant any sublease with respect to) any
Leased Real Property, except as would not cause the
representation and warranty in Section 4.9(b)(iii) to be
inaccurate;
(vii) except with respect to indebtedness
incurred in the ordinary course of business in amounts and
with terms consistent with prior practice, incur any
indebtedness for borrowed money or guarantee any such
indebtedness of another person;
(viii) incur or suffer to exist any long-term
or other indebtedness for borrowed money not constituting
Current Liabilities other than as set forth on the Interim
Balance Sheet;
(ix) enter into any new Material Contract other
than a contract entered into in the ordinary course of
business, or make any material change in any existing
Material Contract, other than in the ordinary course of
business;
(x) waive or release any rights or claims that,
individually or in the aggregate, are material to the
Company;
(xi) terminate or amend any Company Plan or create
or adopt any new employee benefit plan which would be
required to be listed on Schedule 4.14;
(xii) merge or consolidate Stella Holdings or
any of the Stella Companies with any other person;
(xiii) make, revoke or attempt to revoke any
material election or consent pertaining to Stella Holdings
or any of the Stella Companies with respect to Taxes;
(xiv) except as set forth on Schedule 6.1,
cease operations and/or close any of the Company's plants or
facilities; or
(xv) agree or commit to do any of the foregoing.
6.2 Access and Information. Between the date of this
Agreement and the Closing, the Seller shall afford the
Parent and the Buyer and their authorized representatives
(including their accountants, financial advisors and legal
counsel) reasonable access during normal business hours and
upon reasonable prior notice to all of the properties,
personnel, books and records of the Company and shall
promptly deliver or make available to the Parent and the
Buyer information concerning the business, properties,
assets and personnel of the Company as the Parent and the
Buyer may from time to time reasonably request. The Parent
and the Buyer shall hold, and shall cause their authorized
representatives (including its accountants, financial
advisors and legal counsel) to hold, all Proprietary
Information (as defined in the Confidentiality Agreement
dated September 3, 1997 (the Confidentiality Agreement)) in
confidence in accordance with the terms of the
Confidentiality Agreement and, in the event of the
termination of this Agreement for any reason, the Parent and
the Buyer promptly shall return or destroy all Proprietary
Information in accordance with the terms of the
Confidentiality Agreement. The parties agree that upon the
Closing, the Confidentiality Agreement will automatically
terminate.
6.3 Reasonable Efforts; Additional Actions. Upon the
terms and subject to the conditions of this Agreement, each
of the parties hereto shall use all reasonable efforts to
take, or cause to be taken, all action, and to do or cause
to be done, and to assist and cooperate with the other
parties in doing, all things necessary, proper or advisable
to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, including:
(a) the Company using all reasonable efforts to obtain all
consents, amendments to or waivers under the terms of any of
the Company's borrowing or other material contractual
arrangements required by the transactions contemplated by
this Agreement, (b) each party effecting promptly all
necessary or appropriate registrations and filings with
Governmental Entities, including, without limitation,
filings and submissions pursuant to the HSR Act, (c)
defending any lawsuits or other legal proceedings, whether
judicial or administrative, challenging this Agreement or
the consummation of the transactions contemplated hereby,
(d) each party using all reasonable efforts to fulfill or
cause the fulfillment of the conditions to Closing set forth
in Articles 8 (other than the condition set forth in Section
8.1) and 9 (other than the condition set forth in Section
9.1) and (e) after the Closing, each party taking all
actions and executing and delivering to the other party such
documents and instruments as are reasonably necessary in
furtherance of the transactions contemplated hereby.
6.4 Indemnification of Brokerage. Each party hereto
agrees to indemnify and save the other harmless from any
claim or demand for commission or other compensation by any
broker, finder, agent or similar intermediary claiming to
have been employed by or on behalf of such first party or
any of its affiliates, and to bear the cost of legal
expenses incurred in defending any such claim or demand.
Claims for indemnification under this Section 6.4 will be
made in accordance with the provisions set forth in Section
10.2 but will not be subject to any of the limitations set
forth in Section 10.3.
6.5 Employee Matters.
(a) The Parent and the Buyer agree that for a
period of at least one (1) year after the Closing Date the
Buyer will provide all employees of the Company who continue
to be employed by the Buyer or the Company during such
period, to the fullest extent possible, with benefits which
are in the aggregate substantially equivalent to those
benefits provided to such employees by the Company
immediately prior to the Closing. In addition, the Parent
and the Buyer agree to give to the fullest extent possible
such employees service credit for all periods of employment
with the Seller or its affiliates (including the Company)
prior to the Closing Date for purposes of eligibility and
vesting (but not benefit accrual) under any plan adopted by
the Company or by the Buyer or the Parent or any affiliate
of the Buyer or the Parent to provide benefits to such
employees. Neither this Section 6.5(a) nor any other
provision in this Agreement shall limit the Company's right
to terminate the employment of any of its employees after
the Closing.
(b) From and after the Closing Date, the Parent
and the Buyer agree to comply with, and shall be solely
liable under, all provisions of the WARN Act, and
regulations or interpretative rules promulgated thereunder,
including, but not limited to, the providing of any notices
required thereunder, with respect to all employees of the
Company.
(c) The Parent agrees to cause the Buyer to pay
or cause the Buyer to cause the Company to pay, and the
Buyer agrees to pay or cause the Company to pay, to the
employees of the Company all amounts which become payable
under the terms of the commission, incentive and bonus plans
and arrangements set forth in Section (iii) of Schedule
4.14(a) (the Employee Payments) in accordance with the terms
of such plans and arrangements. The Parent, Buyer and the
Seller acknowledge and agree that the aggregate amount of
such Employee Payments equals Two Million Two Hundred and
Fifty Thousand Dollars ($2,250,000).
(d) The Seller, the Parent and the Buyer agree to
take all actions reasonably necessary to accomplish the
transactions contemplated by this Section 6.5.
(e) Except as provided in this Section 6.5,
nothing in this Agreement shall limit or restrict in any way
the rights of the Buyer to modify, amend, terminate or
establish employee benefit plans, programs, policies or
arrangements, in whole or in part, at any time after the
Closing Date.
6.6 Transfer Taxes. The Parent and the Buyer agree to
pay all sales taxes, documentary or other stamp taxes
arising out of or related to the transactions contemplated
by this Agreement.
6.7 Indemnification of Directors and Officers. Each
of the Parent and the Buyer agrees that all rights to
indemnification for acts or omissions occurring prior to the
Closing Date now existing in favor of the current or former
directors or officers of the Company as provided in its
Charter or By-laws shall survive the Closing Date and shall
continue in full force and effect in accordance with their
terms for a period of not less than seven (7) years from the
Closing Date. From and after the Closing, the Parent and
the Buyer, jointly and severally, will indemnify and hold
harmless each present and former director and officer of the
Company, determined as of the Closing Date, against any
costs or expenses (including reasonable attorneys' fees),
judgments, fines, losses, claims, damages or liabilities
incurred in connection with any claim, action, suit,
proceeding or investigation, whether civil, criminal,
administrative or investigative, arising out of or prior to
the Closing Date, whether asserted or claimed prior to, at
or after the Closing Date, to the fullest extent that the
Company would have been permitted under applicable law and
its Charter or By-Laws, to indemnify such person (and the
Parent or Buyer or both of them shall advance expenses as
incurred to the fullest extent permitted under applicable
law provided the person to whom expenses are advanced
provides an undertaking to repay such advances if it is
ultimately determined that such person is not entitled to
indemnification).
6.8 Elimination of Inter-Company and Affiliate
Accounts. Effective immediately prior to Closing, all
inter-company receivables, payables and loans (collectively,
Intercompany Accounts) then existing between Stella Holdings
and the Stella Companies, on the one hand, and the Seller
and any of the Seller's subsidiaries (other than Stella
Holdings or the Stella Companies), on the other hand, shall
be settled by way of a capital contribution in kind with
respect to a net intercompany amount due from Stella
Holdings or the Stella Companies to the Seller or any of the
Seller's subsidiaries (other than Stella Holdings or the
Stella Companies) or by way of a dividend in kind with
respect to a net intercompany amount due from the Seller or
any of the Seller's subsidiaries (other than Stella Holdings
or the Stella Companies) to Stella Holdings or the Stella
Companies. Any such settlement shall be accomplished in the
manner reasonably selected by the Seller. The Seller
represents and warrants that upon Closing there shall exist
no Intercompany Accounts between Stella Holdings and the
Stella Companies, on the one hand, and the Seller and any of
its subsidiaries (other than Stella Holdings and the Stella
Companies), on the other hand.
6.9 Cash Management. The Company participates in the
Seller's central cash management system and shall continue
to so participate in accordance with prior practice until
the Closing. Accordingly, nothing contained in this
Agreement shall prohibit the Company from distributing any
cash on hand from time to time to the Seller or any of its
affiliates.
6.10 Public Announcements. Except as may be required
by Legal Requirements, none of the parties hereto shall
issue a press release or public announcement or otherwise
make any disclosure concerning this Agreement or the
transactions contemplated hereby or the business and
financial affairs of the Company, without prior approval by
the other party hereto. If any public announcement is
required by Legal Requirements to be made by any party
hereto, prior to making such announcement such party will
deliver a draft of such announcement to the other party and
shall give the other party reasonable opportunity to comment
thereon.
6.11 Continuing Access to Records.
(a) For a period of not less than six (6) years
from the Closing Date, subject to the Confidentiality
Agreement: (i) each of the Parent and the Buyer agrees to
give the Seller reasonable cooperation, access, and staff
assistance, as reasonably necessary, during normal business
hours with respect to books and records and other financial
data delivered to the Buyer or the Parent hereunder or in
the possession of the Company for periods prior to Closing
relating to the Seller's prior ownership of the Company; and
(ii) the Seller agrees to give the Buyer reasonable
cooperation, access and staff assistance, as needed, during
normal business hours with respect to the Seller's books and
records and other financial data relating to the Company
that are retained by the Seller, as may be reasonably
necessary for the Buyer's ownership of the Company.
(b) After the Closing Date, the Parent, the Buyer
and the Seller shall each make available to the other, as
reasonably requested, all information, records or documents
relating to taxes of the Company for all taxable periods or
portions thereof ending on or before the Closing Date, and
shall preserve all such information, records and documents
until the expiration of any applicable statute of
limitations or extensions thereof.
6.12 Existing Insurance Coverage.
(a) From and after the Closing, the Seller shall
use reasonable efforts (which shall not require acceptance
of materially adverse changes in its existing insurance
policies or in any replacement insurance policies or other
materially adverse effects on the Seller), subject to the
terms of the Seller's Insurance Policies, to retain the
right to make claims and receive recoveries, subject to the
provisions of this Section 6.12, for the benefit of the
Company under such of the Insurance Policies of the Seller
which benefit the Company and which are not transferred to
the Buyer at Closing or retained by the Company. The Seller
further agrees to use its reasonable efforts to assist the
Company in its efforts to make any such claims and receive
any such recoveries. With respect to any actions, suits and
proceedings against, and any losses, liabilities, damages or
expenses of, the Company arising out of events or
circumstances which are covered by any such Insurance
Policies (each an Insured Liability), the Seller shall
promptly pay to the Buyer or the Company the proceeds of
such Insurance Policies in respect of any such Insured
Liability actually received by the Seller (it being
understood that any proceeds of such insurance policies
applied directly by the insurance carrier(s) to such Insured
Liability shall be deemed to be a payment made by the Seller
in respect of such Insured Liability). Subject to the right
of the Buyer to seek indemnification pursuant to the
provisions of Section 10.1: (i) the Parent, the Buyer and
the Company shall be fully liable, jointly and severally,
for all deductibles, retentions, exclusions and any portion
of retrospective premium adjustments attributable to such
Insured Liabilities as reasonably determined by the Seller
and the Seller's insurance carrier (after consultation with
the Buyer), and other amounts, losses and expenses to the
full extent not paid, for whatever reason, by such insurance
carrier(s) or not covered by such insurance policies, it
being understood that the Seller shall be under no
obligation to make any such payments or to advance any such
payments; and (ii) the Parent and the Buyer agree, jointly
and severally, to reimburse, indemnify and hold the Seller
and its affiliates harmless for out-of-pocket costs and
expenses (including, without limitation, any retroactive
premium adjustments and current or prospective premium
increases imposed on the Seller or any of its affiliates
resulting from Insured Liabilities, but not including normal
internal administrative expenses) incurred after the Closing
Date by the Seller to carry out any obligations pursuant to
this Section 6.12. The Buyer and the Seller shall mutually
agree on an acceptable arrangement for the submission of
claims for such Insured Liabilities to the appropriate
insurer.
(b) With respect to any master insurance policies
that apply to the Company and to other subsidiaries of the
Seller which the Seller is unable to separate at Closing,
the Parent and the Buyer, jointly and severally, shall be
liable and shall promptly pay to the Seller any and all
retroactive premium adjustments attributable to the
activities of the Company under such policies as reasonably
determined by the Seller and the Seller's insurance carrier
(after consultation with the Buyer).
(c) Nothing contained herein to the contrary
shall prohibit the Seller from managing its risk management
program, including, without limitation, the cancellation or
reduction of the amount or scope of insurance coverage with
respect to periods prior to or after the Closing, in a
manner consistent with its business judgment, as applied
solely to the continuing operations of the Seller and its
affiliates (other than the Company).
6.13 Surety Bonds, Letters of Credit and Guarantees.
Prior to Closing, each of the Parent and the Buyer shall
take all action necessary to permit the Seller and its
affiliates to be released from all surety bonds, letters of
credit, insurance obligations (including collateral
requirements), guarantees and other obligations listed on
Schedule 6.13 (collectively, the Surety Obligations),
including the assumption by the Parent, the Buyer or one or
more of their affiliates of the obligations of Seller and
its affiliates (other than the Company) under the Surety
Obligations.
6.14 Tax Matters.
(a)(i) The Seller shall have the obligation and
shall be responsible for the correct and timely filing of
all Tax Returns and payment of all Taxes payable by the
Company for all periods ending on or prior to the Closing
Date ( Pre-Closing Tax Periods ). Such Tax Returns shall be
consistent with Tax Returns filed on behalf of the Company
for prior periods, except as otherwise required by
applicable law.
(ii) The Seller shall indemnify and hold harmless
on an after-tax basis the Buyer and the Company against all
Taxes of the Company and any Tax Affiliates for all Pre-
Closing Tax Periods in excess of the amount provided
therefor on the Closing Statement as finally determined, or
otherwise attributable to the operations, transactions,
assets or income of the Company or any Tax Affiliates and
their predecessors for all periods or portions thereof
through and including the Closing (and, with respect to
Seller and any Tax Affiliates other than the Company,
following the Closing), including any Taxes attributable to
consummation of the transactions contemplated herein,
together with any expenses (including, without limitation,
settlement costs and any legal, accounting and other
expenses) incurred in connection with the contesting,
collection or assessment of such Taxes.
(iii) The Buyer shall have the obligation and shall
be responsible for the correct and timely filing of all Tax
Returns and payment of all Taxes payable by the Company for
any taxable period that incudes and ends after the Closing
Date (an Overlap Period). Such Tax Returns shall be
consistent with Tax Returns filed on behalf of the Company
for prior periods, except as otherwise required by
applicable law. The Buyer shall provide the Seller with a
draft of any such Tax Return at least fifteen (15) days
prior to the due date for the filing thereof, including a
calculation setting forth in reasonable detail the liability
of the Company for Taxes reflected on such Tax Returns that
would have resulted had the Overlap Period ended at the
Closing Date, including any Taxes that arise as a result of
the transactions contemplated herein (utilizing, if
applicable, the actual tax rate imposed on a particular
category of income or expenditure by the applicable taxing
jurisdiction) (the Taxes for such period, "Overlap Period
Taxes"). In the event the Seller has any objection to any
items set forth on any such draft Tax Return, and such
objection is communicated to Buyer within five (5) business
days of receiving the draft of such Tax Return, and if the
parties otherwise are unable to resolve the dispute, the
parties shall as soon as practicable engage a nationally
recognized accounting firm reasonably acceptable to both
parties, who shall decide upon the treatment of the item in
dispute, which decision shall be binding on the parties and
shall be reflected in such Tax Return. The cost of
retaining such accounting firm shall be borne by the non-
prevailing party. The Seller shall pay to the Buyer the
Overlap Period Taxes no later than five (5) days prior to
the date on which the Tax Returns for the Overlap Period are
required to be filed (without regard to any extensions);
provided, however, that the Seller shall not be required to
pay any such Overlap Period Taxes to the extent they have
been included in the Closing Statement, as finally
determined. Any amounts not paid pursuant to the preceding
sentence shall bear interest from the date due through the
date of payment at a rate per annum equal to the prime
commercial lending rate of the Chase Manhattan Bank, New
York, in effect at the time of such payment.
(iv) The Buyer shall have the obligation and shall
be responsible for the correct and timely filing of all Tax
Returns of the Company for all periods other than Pre-
Closing Tax Periods.
(b) From and after the date hereof, the Seller and its
Tax Affiliates shall not file or cause to be filed any
amended Tax Return with respect to the Company, and the
Seller and its Tax Affiliates shall not file a claim for
refund of Taxes paid by or on behalf of the Company, without
the consent of the Buyer, which consent shall not be
unreasonably withheld.
(c) After the Closing, the Seller, on the one
hand, and the Buyer and the Company, on the other hand, will
make available to the other, as reasonably requested, all
information, records or documents relating to liabilities
for Taxes for all periods prior to or including the Closing
and will preserve such information, records or documents
until the expiration of any applicable statute of
limitations or extensions thereof.
(d) Any and all tax sharing, tax indemnity, or
tax allocation agreements with respect to which the Company
was a party at any time prior to the Closing shall terminate
upon the Closing. No further amounts shall be payable by
the Company under such agreements following the Closing.
(e) Any refunds or credits of income taxes of the
Company, plus interest paid thereon, net of any liability
for Tax incurred by the Company in connection with the
receipt of such refund or credit, with respect to taxable
periods or portions thereof ending on or before the Closing
Date shall be for the account of the Seller. The Buyer
shall cause the Company promptly to forward to, or to
reimburse the Seller for, any such refunds or credits due
the Seller after receipt thereof, net of any liability for
Tax incurred by the Company in connection with the receipt
of such refund or credit. The Seller, the Buyer and the
Company shall each reasonably cooperate with the others as
requested in making such filings as may be necessary and
appropriate to seek any such refunds or credits.
(f) Each of the parties hereto agrees that it
will file all tax returns and make all tax and financial
reports consistent with Sections 1.2 and 1.3 unless
otherwise required by law.
6.15 Seller's Obligation to Forward Payments. The
Seller agrees, promptly upon receipt thereof, to forward to
the Company all payments received by the Seller after the
Closing but for the account of Stella Holdings or any of the
Stella Companies.
6.16 Termination of Other Acquisition Efforts. From
the date of this Agreement until the Closing or termination
of this Agreement in accordance with its terms, neither the
Seller nor any affiliate, officer, director, employee or
other representative or agent of the Seller or any of its
affiliates shall engage in any discussions or negotiations
with, or enter into any agreement or arrangement with, or
solicit any interest from (whether in person, by phone,
written communication, electronically or otherwise), any
person (including any person that has contacted the Seller
or any of its affiliates prior to the date hereof) other
than the Buyer and its affiliates, and their respective
officers, directors, employees, representatives and agents,
as necessary for purposes of consummating the transactions
contemplated by this Agreement, with respect to any proposal
(whether solicited or unsolicited or whether previously
made, currently in existence or arising in the future),
involving the acquisition of all or a material portion of
the Company by means of a merger, consolidation or other
business combination involving Stella Holdings or any of the
Stella Companies or acquisition of all or a material portion
of the assets or capital stock of Stella Holdings or any of
the Stella Companies (other than the accounts receivable of
Stella Foods, Inc. and Stella Foods East, Inc. to SFFC and
sales of inventory and other assets, in each case in the
ordinary course of business consistent with past practice).
The Seller agrees promptly to advise the Buyer in writing of
the terms of any inquiry or proposal that the Seller or any
affiliate, or any of their officers, directors, employees,
representatives or agents, may receive or become aware of
with respect to any of the above. The Seller, Stella
Holdings and each of the Stella Companies on or prior to the
date of this Agreement has terminated all discussions,
commitments and other dealings with any other person with
respect to any of the foregoing.
ARTICLE 7
TERMINATION OF AGREEMENT
7.1 This Agreement and the transactions contemplated
by this Agreement may be terminated or abandoned at any time
before the Closing Date:
(a) by mutual consent of the Seller and the
Buyer;
(b) by the Seller, if the Buyer or the Parent has
breached any material representation, warranty, covenant or
agreement contained in this Agreement which breach(es)
cannot reasonably be, or is not, cured by the Closing Date;
(c) by the Buyer and the Parent, if the Seller
has breached any representation, warranty, covenant or
agreement contained in this Agreement which, either alone or
together with other breaches, would have a Material Adverse
Effect upon the Company and which breach(es) cannot
reasonably be, or is not, cured by the Closing Date; or
(d) by the Seller if the Closing Date shall not
have occurred before December 24, 1997, for any reason other
than the failure of the Seller to perform its obligations
hereunder.
7.2 If this Agreement is terminated pursuant to
Section 7.1(a) or (d), neither party shall have any further
obligation to the other, except that the second sentence of
Section 6.2, Sections 6.4 and 6.10 and Article 11 shall
survive the termination of this Agreement.
ARTICLE 8
CONDITIONS PRECEDENT TO THE
OBLIGATION OF PARENT AND BUYER TO CLOSE
The obligation of the Parent and the Buyer to complete
the transactions contemplated by this Agreement is subject
to the fulfillment, on or prior to the Closing Date, of the
following conditions, any one or more of which may be waived
in writing by the Parent and the Buyer:
8.1 Representations. The representations and
warranties of the Seller contained in this Agreement that
are qualified by reference to materiality or Material
Adverse Effect shall be true on and as of the Closing Date
with the same force and effect as though made on and as of
the Closing Date, except to the extent such representations
and warranties are expressly made as of an earlier date, in
which case such representations and warranties shall be true
as of such earlier date. All other representations and
warranties of the Seller contained in this Agreement shall
be true in all material respects on and as of the Closing
Date with the same force and effect as though made on and as
of the Closing Date, except to the extent such
representations and warranties are expressly made as of an
earlier date, in which case such representations and
warranties shall be true in all material respects as of such
earlier date. The Parent and the Buyer shall have received
a certificate, dated the Closing Date and signed by a duly
authorized officer of the Seller reasonably acceptable to
the Parent and the Buyer, to the foregoing effect.
8.2 Covenants. The Seller shall have performed and
complied in all material respects with all covenants and
agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date. The
Parent and the Buyer shall have received a certificate,
dated the Closing Date and signed by a duly authorized
officer of the Seller reasonably acceptable to the Parent
and the Buyer, to the foregoing effect.
8.3 No Judgment or Order. There shall not be on the
Closing Date any Orders of any Governmental Entity or Legal
Requirements which would (a) prohibit the purchase of the
Shares or (b) prohibit the consummation of the transactions
contemplated by this Agreement.
8.4 Delivery of Shares. The Seller shall have
delivered to the Buyer certificates for the Shares, duly
endorsed in blank or with duly executed stock powers
attached.
8.5 HSR Act. The waiting period specified in the HSR
Act, including any accelerations or extensions thereof,
shall have expired.
8.6 Director and Officer Resignations. The Parent and
the Buyer shall have received evidence, reasonably
satisfactory to them in form and substance, of the
resignation or removal as of the Closing Date of the members
of the Board of Directors of Stella Holdings and each of the
Stella Companies and those officers of Stella Holdings and
each of the Stella Companies with an asterisk adjacent to
their name on Schedule 4.19.
8.7 Accounts Receivable Purchase Agreement and Non-
Compete Agreement. The Parent, the Buyer, the Seller and
SFFC shall have entered into the Accounts Receivable
Purchase Agreement and the transaction contemplated thereby
will have closed simultaneously with the closing of the
transactions contemplated by this Agreement. The Seller
shall have executed and delivered to the Buyer a Non-Compete
Agreement, in substantially the form attached hereto as
Exhibit B (the Non-Compete Agreement).
8.8 Equipment Leases. The Company shall have
terminated each of the equipment leases set forth on
Schedule 8.8 (the Pre-Closing Lease Transactions) and
repurchased the equipment subject to such Pre-Closing Lease
Transactions and shall own such equipment free and clear of
all Liens (other than Permitted Post-Closing Liens).
8.9 Release of Liens.
(a) The Liens on the assets of the Company under
the Security Documents shall have been released or shall be
released simultaneously with the Closing.
(b) The Liens on the assets of the Company, other
than Permitted Post-Closing Liens, shall have been released
or shall be released simultaneously with the Closing.
8.10 FIRPTA Certification. The Parent and the Buyer
shall have received from the Seller a certification of non-
foreign status described in U.S. Treasury Regulations
1.1445-2(b)(2), in form and substance reasonably
satisfactory to the Parent and the Buyer.
8.11 Required Consents. All Consents set forth on
Schedule 8.11 shall have been obtained and be in full force
and effect, and the Parent and the Buyer shall have been
furnished with evidence reasonably satisfactory to them that
such Consents have been granted and obtained.
8.12 Legal Opinions. The Parent and the Buyer shall
have received (x) the opinion of Robert Aiken, General
Counsel to the Seller, (y) the opinion of Paul, Weiss,
Rifkind, Wharton & Garrison, special counsel to the Seller,
and (z) the opinion of Foley & Lardner, counsel to the
Seller and the Company, collectively covering the matters
identified in the form of opinion attached hereto as Exhibit
C-1, each dated the Closing Date, addressed to the Parent
and the Buyer and reasonably satisfactory to the Parent and
the Buyer.
8.13 Additional Documents. The Parent and the Buyer
shall have received all instruments, certificates and other
documents as may be required to complete the transactions
contemplated hereby or as they may reasonably request.
ARTICLE 9
CONDITIONS PRECEDENT TO THE
OBLIGATION OF THE SELLER TO CLOSE
The obligation of the Seller to complete the
transactions contemplated by this Agreement is subject to
the fulfillment of the following conditions, any one or more
of which may be waived by the Seller in writing:
9.1 Representations. The representations and
warranties of the Parent and the Buyer contained in this
Agreement that are qualified by reference to materiality or
Material Adverse Effect shall be true on and as of the
Closing Date with the same force and effect as though made
on and as of the Closing Date, except to the extent such
representations and warranties are expressly made as of an
earlier date, in which case such representations and
warranties shall be true as of such earlier date. All other
representations and warranties of the Parent and the Buyer
contained in this Agreement shall be true in all material
respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date,
except to the extent such representations and warranties are
expressly made as of an earlier date, in which case such
representations and warranties shall be true in all material
respects as of such earlier date. The Seller shall have
received a certificate from each of the Parent and the
Buyer, dated the Closing Date and signed by a duly
authorized officer of the Buyer and the Parent, reasonably
acceptable to the Seller, to the foregoing effect.
9.2 Covenants. The Parent and the Buyer shall have
performed and complied in all material respects with all
covenants and agreements required by this Agreement to be
performed or complied with by the Parent and the Buyer, as
the case may be, on or prior to the Closing Date. The
Seller shall have received a certificate, dated the Closing
Date and signed by a duly authorized officer of the Buyer
and the Parent, reasonably acceptable to the Seller, to the
foregoing effect.
9.3 No Judgment or Order. There shall not be on the
Closing Date any Orders of any Governmental Entity or Legal
Requirements which would (a) prohibit the purchase of the
Shares or (b) prohibit the consummation of the transactions
contemplated by this Agreement.
9.4 HSR Act. The waiting period specified in the HSR
Act, including any accelerations or extensions thereof,
shall have expired.
9.5 Payment of Purchase Price. The Parent shall have
caused the Buyer to have paid, and the Buyer shall have
paid, in cash to the Seller, by wire transfer of immediately
available funds on the Closing Date, the amounts required to
be paid to the Seller pursuant to Section 1.2.
9.6 Accounts Receivable Purchase Agreement. The
Parent, Buyer, the Seller and SFFC shall have entered into
the Accounts Receivable Purchase Agreement and the
transaction contemplated thereby will have closed
simultaneously with the closing of the transactions
contemplated by this Agreement.
9.7 Required Consents. All Consents set forth on
Schedule 9.7 shall have been obtained and be in full force
and effect, and the Seller shall have been furnished with
evidence reasonably satisfactory to it that such Consents
have been granted and obtained.
9.8 Release Under Surety Obligations. The Seller and
its affiliates shall have been released from any and all of
their respective obligations under the Surety Obligations
and the Seller shall have received written instruments
reasonably satisfactory to the Seller executed by the
appropriate party under each Surety Obligation effectuating
the foregoing.
9.9 Release of Liens. The Liens on the assets of the
Company under the Security Documents shall have been
released or shall be released simultaneously with the
Closing.
9.10 Legal Opinions. The Seller shall have received
the opinion of (x) Stikeman, Elliott, special Canadian
counsel to the Parent, and (y) Gibson, Dunn & Crutcher
L.L.P., special United States counsel to the Parent and the
Buyer, collectively covering the matters identified in the
form of opinion attached hereto as Exhibit C-2, dated the
Closing Date, addressed to the Seller and reasonably
satisfactory to the Seller.
9.11 Additional Documents. The Seller shall have
received all instruments, certificates and other documents
as may be required to complete the transactions contemplated
hereby or as it may reasonably request.
ARTICLE 10
INDEMNIFICATION
10.1 Indemnification.
(a) Subject to the limitations contained in
Section 10.3 and Section 11.6, the Seller (and, if the
Closing shall fail to occur, the Company jointly and
severally with the Seller) agrees to indemnify, defend and
hold harmless the Parent, the Buyer and, after the Closing,
each of the Stella Companies (and their directors, officers,
employees, successors, assigns, agents and representatives)
from and against any and all losses, claims, damages,
liabilities and reasonable attorneys fees and other
expenses, including interest on out-of-pocket expenses from
the date incurred to the date paid if determined by a court
to be appropriate under the circumstances (Losses) incurred
or suffered by any of them: (i) based upon, arising out of
or otherwise in respect of any inaccuracy in or any breach
of any representation, warranty, covenant or agreement made
by the Seller in this Agreement or by SFFC in the Accounts
Receivable Purchase Agreement and (ii) all liability for
federal or state income taxes of any other member of the
affiliated group (within the meaning of Section 1504(a) of
the Code) of which the Seller is a member or any other
consolidated combined or unitary group of which the Company
was a member at any time through and including the Closing
Date pursuant to any provision of joint and several
liability including, without limitation, Treasury
Regulations 1.1502-6 and 1.1502-78, and any
corresponding provision of state law.
(b) The Parent and the Buyer agree, jointly and
severally, to indemnify, defend and hold harmless the Seller
(and its directors, officers, employees, successors,
assigns, agents and representatives) from and against any
and all Losses incurred or suffered by any of them based
upon, arising out of or otherwise in respect of any
inaccuracy in or any breach of any representation, warranty,
covenant or agreement of the Parent or the Buyer contained
in this Agreement or in the Accounts Receivable Purchase
Agreement or any liability of the Company arising from the
Company's operations after the Closing Date.
(c) In addition to the indemnity in Section
10(a), the Seller agrees to indemnify, defend and hold
harmless the Parent, the Buyer and, after the Closing, each
of the Stella Companies (and their directors, officers,
employees, successors and assigns), from and against any and
all Losses associated with the litigation matter listed as
Item 3 on Schedule 4.8. The Parent, the Buyer and the
Seller agree that the Seller shall have the exclusive right
to conduct, at its expense, the compromise, defense and
prosecution of such litigation with counsel of its choosing;
provided, however, that the Buyer may, at its expense,
participate in the defense of any claim for injunctive
relief in connection with such litigation. If the Seller
elects not to exercise its right under this Section 10.1(c)
to conduct such defense or prosecution, or fails to use
reasonable good faith efforts to defend such action, the
Parent and the Buyer may, at the Seller s expense (but only
to the extent that the Parent and the Buyer reasonably incur
such expenses), compromise, defend or prosecute such
litigation, but may not settle or compromise any such
litigation without the prior written consent of the Seller,
which consent shall not be unreasonably withheld. Any
compromise or settlement obtained by the Seller in respect
of such litigation shall include a complete release of the
Company from any liability attributable to such litigation.
Whether or not the Seller shall have assumed the
defense or prosecution of such litigation the Buyer shall
not, and shall ensure that the Company does not, admit any
liability with respect to, settle, compromise or discharge
such litigation without the Seller's prior written consent.
All of the parties hereto shall cooperate in the defense or
prosecution of any such litigation. Such cooperation shall
include the retention and (upon request) the provision to
the requesting party of records and information that are
reasonably relevant to such litigation, and making employees
available on a mutually convenient basis to provide
additional information and explanation of materials provided
hereunder.
10.2 Notice and Opportunity to Defend.
(a) Notice of Asserted Liability. Each person
making a claim under this Article 10 (an Indemnified Party)
shall, promptly after the receipt of notice of the
commencement of any action, investigation, claim or other
proceeding against such Indemnified Party in respect of
which indemnity may be sought from the indemnifying party
under this Article 10 (the Indemnifying Party), notify the
Indemnifying Party in writing of the commencement thereof.
The failure of any Indemnified Party to so notify the
Indemnifying Party of any such action shall not relieve the
Indemnifying Party from any liability which it may have to
such Indemnified Party (i) other than pursuant to this
Article 10 or (ii) under this Article 10 unless, and only to
the extent that the Indemnified Party is prejudiced by such
failure. In case any such action, claim or other proceeding
shall be brought against any Indemnified Party, and it shall
notify the Indemnifying Party of the commencement thereof,
the Indemnifying Party shall be entitled to assume the
defense thereof at its own expense, with counsel reasonably
satisfactory to such Indemnified Party; provided, however,
that any Indemnified Party may, at its own expense, retain
separate counsel to participate in such defense at its own
expense. Notwithstanding the foregoing, in any action,
claim or proceeding in which both the Indemnifying Party, on
the one hand, and the Indemnified Party, on the other hand,
are, or are reasonably likely to become, a party, such
Indemnified Party shall have the right to employ separate
counsel at the expense of the Indemnifying Party and to
control its own defense of such action, claim or proceeding
if, in the reasonable opinion of counsel to such Indemnified
Party, a conflict or potential conflict exist between the
Indemnifying Party, on the one hand, and such Indemnified
Party, on the other hand, that would make such separate
representation advisable; provided, however, that the
Indemnifying Party shall not be liable for the fees and
expenses of more than one counsel to all Indemnified
Parties. Each Indemnifying Party agrees that it will not,
without the prior written consent of the Indemnified Party,
settle, compromise or consent to the entry of any judgment
in any pending or threatened claim, action or proceeding
relating to the matters contemplated hereby (if any
Indemnified Party is a party thereto or has been actually
threatened to be made a party thereto) unless such
settlement, compromise or consent includes an unconditional
release of the Indemnified Party and each other Indemnified
Party from all liability arising or that may arise out of
such claim, action or proceeding. The Indemnifying Party
shall not be liable for any settlement of any claim, action
or proceeding effected against an Indemnified Party without
its written consent, which consent shall not be unreasonably
withheld. Except for claims based in whole or in part on
fraud or seeking in whole or in part injunctive relief or
specific performance, the rights accorded to an Indemnified
Party hereunder shall be the exclusive remedy of such party
for any Losses based upon, arising out of or otherwise in
respect of any inaccuracy or in breach of any
representation, warranty, covenant or agreement contained in
this Agreement, the Accounts Receivable Purchase Agreement
or in any documents delivered pursuant hereto or thereto.
10.3 Limitations on General Indemnifications. The
indemnification provided for in Section 10.1(a) shall be
subject to the following limitations:
(a) The Seller shall not be obligated to pay any
amounts for indemnification under Section 10.1(a) until the
aggregate amounts for indemnification under Section 10.1(a)
equal Five Million Dollars ($5,000,000) (the Basket Amount),
whereupon the Seller shall be obligated to pay in full all
such amounts for such indemnification in excess of the
Basket Amount.
(b) The Seller shall not be obligated to make any
payment for indemnification under Section 10.1(a) in excess
of Forty Five Million Dollars ($45,000,000) in the
aggregate.
(c) Sections 10.3(a) and (b) shall not apply to
claims (i) relating to the Seller's failure to pay any
amount due to the Buyer pursuant to Section 1.3, the third
sentence of Section 6.12(a) or Section 6.15, (ii) relating
to a breach of the last sentence of Section 4.5, Section
4.9(b)(i)(x), (b)(iii) or (b)(v), Section 4.10, Section
4.12(c), Section 4.15(i) or Section 4.18, or (iii) arising
under Section 6.1(a)(viii), (a)(ix) or (a)(x), Section
6.1(b)(iii), (b)(iv), (b)(v), (b)(vi), (b)(vii), (b)(viii),
(b)(ix), (b)(xi), (b)(xii), (b)(xiii) or (b)(xiv), Section
6.8, Section 6.14, Section 6.15 or Section 6.16.
(d) The amount of any Loss subject to
indemnification under Section 10.1(a) shall be determined
net of (i) any amounts recovered or recoverable by the
Parent, the Buyer or the Company under insurance policies
with respect to such Loss and (ii) the present value of any
tax savings actually realized by the Buyer or the Company
prior to the receipt of such indemnification payment, either
in the form of a refund of taxes previously paid or a
reduction in tax that otherwise would have become payable
(in each case net of the present value of the tax cost of
the receipt of the indemnification payment), and the present
value of any tax savings (net of the present value of the
tax cost of the receipt of the indemnification payment)
that, at the time of such indemnification payment is
required to be made, are reasonably certain to be realized
within the ten-year period following such receipt. For
purposes of this clause (ii), tax savings shall only be
taken into account to the extent they are not otherwise
required to be paid to the Seller and would not have arisen
but for the event giving rise to the indemnification
obligation, and the present value of tax savings and tax
costs shall be computed at the rate per annum equal to the
prime commercial lending rate of The Chase Manhattan Bank,
New York, in effect at the time of realization.
ARTICLE 11
MISCELLANEOUS
11.1 Certain Definitions.
11.1.1 As used in this Agreement, the following
terms have the following meanings unless the context
otherwise requires:
(a) Accounts Receivable Closing shall
have the meaning set forth in Section 1.04 of the Accounts
Receivable Purchase Agreement.
(b) Accounts Receivable Facility means
that certain accounts receivable securitization facility
pursuant to which certain subsidiaries of the Seller,
including certain of the Stella Companies, have transferred
their accounts receivable.
(c) Accounts Receivable Purchase
Agreement means that certain agreement in the form attached
hereto as Exhibit A.
(d) Accounts Receivable Purchase Price
shall have the meaning set forth in Section 1.03(a) of the
Accounts Receivable Purchase Agreement.
(e) Affiliate of a person shall mean
any person controlling, controlled by or under common
control with such person; provided that for purposes of this
Agreement, the term affiliate, with respect to the Seller,
shall not include any stockholder of Specialty Foods
Acquisition Corporation.
(f) Dollars and $ shall mean lawful
currency of the United States of America from time to time.
(g) Knowledge with respect to the
Seller, shall mean the actual knowledge of the officers and
directors of the Seller, after due inquiry of the plant
managers identified on Schedule 11.1(g)(i), and each of the
key employees of Stella Holdings and the Stella Companies
listed on Schedule 11.1(g)(ii).
(h) Liens means any liens, claims,
charges, encumbrances or security interests.
(i) Material Adverse Effect means (a) a
material adverse effect on the consummation of the
transactions contemplated by this Agreement or (b) with
respect to any person, a material adverse effect on the
business, financial condition or results of operations of
such person and its subsidiaries taken as a whole.
(j) Person shall mean and include an
individual, a partnership, a joint venture, a limited
liability company, a corporation, a trust, an unincorporated
organization, a government or any department or agency
thereof and any other entity.
(k) Permitted Post-Closing Liens shall
mean Permitted Liens other than those Liens denoted with an
asterisk or double asterisk on Schedule 4.6.
(l) Purchased Accounts Receivable shall
have the meaning set forth in Section 1.02(a) of the
Accounts Receivable Purchase Agreement.
(m) Security Documents shall mean (i)
that certain Term Loan Agreement, dated as of July 17, 1995,
by and among the Seller, certain financial institutions
party thereto and The Chase Manhattan Bank, as
administrative agent, as amended, (ii) that certain Amended
and Restated Revolving Credit Agreement, dated as of July
17, 1995, by and among the Seller, the Company, certain
other subsidiaries of the Seller, certain financial
institutions party thereto and The Chase Manhattan Bank, as
administrative agent, (iii) that certain Amended and
Restated Accounts Receivable Sale Agreement, dated as of
November 16, 1994, by and among SFFC, the Seller and certain
subsidiaries of the Seller (including the Company) and (iv)
the collateral documents and agreements entered into in
connection with the foregoing Term Loan Agreement, Revolving
Credit Agreement and Accounts Receivable Sale Agreement.
(n) Subsidiary with respect to any
person, shall mean any corporation 50% or more of the
outstanding voting power of which, or any partnership, joint
venture, limited liability company or other entity 50% or
more of the total equity interest of which, is directly or
indirectly owned by such person. For purposes of this
Agreement, all references to subsidiaries of a person
shall be deemed to mean subsidiary if such person has only
one subsidiary.
(o) Taxes means (i) all taxes imposed
of any nature, including, but not limited to federal, state,
local or foreign net income tax, alternative or add-on
minimum tax, profits or excess profits tax, franchise tax,
gross income, adjusted gross income or gross receipts tax,
employment related tax (including, but not limited to
employee withholding or employer payroll tax, FICA or FUTA),
real or personal property tax or ad valorem tax, sales or
use tax, excise tax, stamp tax or duty, any withholding or
back up withholding tax, value added tax, severance tax,
prohibited transaction tax, premiums tax, occupation tax,
together with any interest or any penalty, addition to tax
or additional amount imposed by any governmental authority
(domestic or foreign) responsible for the imposition of any
such tax; (ii) any liability for payment of amounts
described in clause (i) whether as a result of transferee
liability, of being a member of an affiliated, consolidated,
combined or unitary group for any period, or otherwise
through operation of law and (iii) any liability for the
payment of amounts described in clause (i) or (ii) as a
result of any tax sharing, tax indemnity or tax allocation
agreement or any other express or implied agreement to
indemnify any other person.
(p) Tax Affiliate means any member of a
consolidated, combined unitary, or other similar group for
federal, state or local income tax purposes that includes or
included Stella Holdings or any of the Stella Companies or
any predecessor thereof, but only with respect to any period
or portion thereof during which Stella Holdings or any of
the Stella Companies or any such predecessor was a member of
such group.
(q) Working Capital means the total
Current Assets of Stella Holdings and the Stella Companies,
on a consolidated basis, less total Current Liabilities of
Stella Holdings and the Stella Companies, on a consolidated
basis. Current Assets shall consist of (i) Cash and Cash
Equivalents, (ii) Accounts Receivable (including, without
limitation, such Accounts Receivable that have been conveyed
to SFFC by the Stella Companies pursuant to the Accounts
Receivable Facility), (iii) Inventories, (iv) Pre-Paid
Expenses and (v) Other Current Assets. Current Liabilities
shall (x) consist of (i) Current Maturities of Long-Term
Debt, (ii) Accounts Payable, (iii) Accrued Expenses and
Other Expenses and (iv) Accrued Restructuring Reserve and
(y) exclude Employee Payments. Items listed in the
definitions of Current Assets and Current Liabilities (other
than Employee Payments) have the meanings ascribed to such
items in the Interim Balance Sheet. On the Closing
Statement, Current Liabilities will include an accrual for
all of the capital expenditures as required pursuant to
Section 6.1(a)(x).
11.1.2 The following terms are defined in the
following Sections of this Agreement:
Term Section
Additional 1.2(a)
Consideration
Agreement Preamble
Basket Amount 10.3(a)
Buyer Preamble
By-laws 4.1
Charter 4.1
Closing 2.1
Closing Date 2.1
Closing Statement 1.3(b)
COBRA 4.15
Code 4.15
Common Stock Preamble
Company Preamble
Company Plans 4.14
Confidentiality 6.2
Agreement
Constituent Documents 5.1
Consents 3.2
Controlled Group 4.15
DLJ 4.18
Employee Payments 6.5(c)
Environmental Law 4.11
ERISA 4.14
Financial Statements 4.5
GAAP 4.5
Governmental Entity 3.2
Hazardous Material 4.11
HSR Act 3.2
Indemnified Party 10.2
Indemnifying Party 10.2
Term Section
Independent 1.3(c)
Accounting Firm
Insurance Policies 4.20
Insured Liability 6.12
Intellectual Property 4.16(a)
Intercompany Accounts 6.8
Interim Balance Sheet 4.5
Interim Balance Sheet 4.5
Date
Leased Real Property 4.21(b)
Legal Requirement 3.2
Losses 10.1
Material Contracts 4.12
Material Permits 4.7(c)
Non-Compete Agreement 8.7
Orders 3.2
Overlap Period 6.14
Overlap Period Taxes 6.14
Owned Real Property 4.21(a)
Permitted Liens 4.6
Permitted Owned Real 4.21(a)
Property Exceptions
Post-Closing 1.3(a)
Adjustment
Post-Closing 1.3(b)
Adjustment
Calculation
Term Section
Pre-Closing Lease 8.8
Transactions
Pre-Closing Tax 6.14
Period
Preliminary Closing 1.2(c)
Statement
Process Agent 11.13
Purchase Price 1.2(a)
Real Property 4.21(c)
Real Property Leases 4.21(b)
Schroders 5.5
Seller Preamble
SFFC 1.2(a)
Shares Preamble
Stella Companies Preamble
Stella Holdings Preamble
Surety Obligations 6.13
Tax Returns 4.10
Title Defects 4.21(a)
WARN Act 6.1(a)
11.2 Amendment and Modification. This Agreement may be
amended, modified or supplemented only by a written
agreement signed by each of the parties hereto at any time
prior to the Closing with respect to any of the terms
contained herein.
11.3 Waiver of Compliance; Consents. Any failure of
the Parent or the Buyer, on the one hand, or the Seller, on
the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived by the Parent or
the Buyer, or the Seller, respectively, only by a written
instrument signed by the party granting such waiver, but
such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not
operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement
requires or permits consent by or on behalf of any party
hereto, such consent shall be given in writing in a manner
consistent with the requirements for a waiver of compliance
as set forth in this Section 11.3.
11.4 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have
been duly given when delivered in person or by telecopier
(with a confirmed receipt thereof), on the third business
day after being sent by registered or certified mail
(postage prepaid, return receipt requested) and on the next
business day when sent by a nationally-recognized overnight
courier service which has guaranteed next day delivery, to
the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
(a) if to the Parent or the Buyer, to:
Saputo Group Inc.
6869 Metropolitan Boulevard East
St.-Leonard, Quebec
H1P 1X8, Canada
Attention: Camillo Lisio, Executive Vice President
Telecopier: (514) 328-3375
with copies to:
Gibson, Dunn & Crutcher, LLP
One Montgomery Street, 26th Floor
San Francisco, CA 94104
Attention: Kenneth R. Lamb, Esq.
Telecopier: (415) 986-5309
and
Stikeman, Elliott
40e etage
1155 Rene-Levesque Boulevard East
Montreal, Quebec, H3B 3VZ, Canada
Attention: Pierre Raymond
Telecopier: (514) 397-3222
(b) if to the Seller, to:
Specialty Foods Corporation
25 Tri-State International Office Center
Suite 250
Lincolnshire, Illinois 60069
Attention: General Counsel
Telecopier: (847) 267-3420
with a copy to:
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
Attention: Bruce A. Gutenplan, Esq.
Telecopier: (212) 757-3990
11.5 Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and permitted assigns, but neither this Agreement
nor any of the rights, interests or obligations hereunder
shall be assigned by any of the parties hereto without the
prior written consent of the other parties; provided,
however, that the Parent may without the Seller's consent
assign its rights (but not its obligations) under this
Agreement to any wholly-owned U.S. Subsidiary of the Parent.
11.6 Survival. All representations and warranties of
the Seller contained in this Agreement (other than those set
forth in Sections 4.10 and 4.11) and of the Seller and SFFC
contained in the Accounts Receivable Purchase Agreement
shall terminate and expire on the one (1) year anniversary
of the Closing Date. All representations and warranties of
the Seller contained in Section 4.10 of this Agreement shall
terminate and expire on the seventh (7th) anniversary of the
Closing Date. All representations and warranties of the
Seller contained in Section 4.11 of this Agreement shall
terminate and expire on the fifth (5th) anniversary of the
Closing Date. Notwithstanding the foregoing, if the Parent
or the Buyer (or any of its directors, officers, employees,
successors, assigns, agents and representatives) shall
notify the Seller of a claim for indemnification under
Section 10.3(a) on or before the last day of the survival
period applicable to such claim pursuant to this Section
11.6, the representations and warranties to which such claim
relates shall survive after the last day of the applicable
survival period for purposes of such claim.
11.7 Governing Law. This Agreement shall be governed
by the laws of the State of New York (other than its rules
of conflicts of law to the extent that the application of
the laws of another jurisdiction would be required thereby).
11.8 Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and
the same instrument.
11.9 Interpretation. The Article and Section headings
contained in this Agreement are solely for the purpose of
reference, are not part of the agreement of the parties and
shall not in any way affect the meaning or interpretation of
this Agreement. The inclusion of any item in any Schedule
to this Agreement shall not be deemed nor construed as an
admission or concession that such item is material or would
have a Material Adverse Effect on the Company.
11.10 Entire Agreement. This Agreement (including
the schedules, exhibits, documents or instruments referred
to herein), the Accounts Receivable Purchase Agreement and
the Confidentiality Agreement embody the entire agreement
and understanding of the parties hereto in respect of the
subject matter hereof and thereof and supersede all prior
agreements and understandings, both written and oral, among
the parties, or between any of them, with respect to the
subject matter hereof and thereof.
11.11 Expenses. The parties to this Agreement
shall, except as otherwise specifically provided herein,
bear their respective expenses incurred in connection with
the preparation, execution and performance of this Agreement
and the transactions contemplated hereby, including without
limitation, all fees and expenses of agents,
representatives, counsel and accountants.
11.12 No Third Party Beneficiaries. Other than as
set forth in Sections 6.7 and 10.1, this Agreement is not
intended to, and does not, create any rights or benefits of
any party other than the parties hereto.
11.13 Consent to Jurisdiction and Service of
Process. Any legal action, suit or proceeding arising out
of or relating to this Agreement or the transactions
contemplated hereby (including, without limitation, the
Accounts Receivable Purchase Agreement and the Non-Compete
Agreement) may be instituted in any federal court in the
Southern District of New York or any state court located in
New York County, New York, and each party agrees not to
assert, by way of motion, as a defense or otherwise, in any
such action, suit or proceeding, any claim that it is not
subject personally to the jurisdiction of such court, that
the action, suit or proceeding is brought in an inconvenient
forum, that the venue of the action, suit or proceeding is
improper or that this Agreement or the subject matter hereof
may not be enforced in or by such court. Each party further
irrevocably submits to the jurisdiction of such court in any
such action, suit or proceeding. The Parent and the Buyer
hereby appoint National Registered Agents, Inc. (the Process
Agent) at the Process Agent's offices at 105 Chambers
Street, New York, New York 10007, or its office at such
other address in the State of New York, as it hereafter
furnishes in writing to the Seller, as the Parent and the
Buyer's authorized agent to accept and acknowledge on their
behalf service of any and all process that may be served in
any such action, suit or proceeding. Nothing herein
contained shall be deemed to affect the right of any party
to serve process in any manner permitted by law or to
commence legal proceedings or otherwise proceed against any
other party in any other jurisdiction.
IN WITNESS WHEREOF, each of the Parent, the Buyer and
the Seller has caused this Agreement to be duly executed as
of the date first above written.
SAPUTO GROUP INC.
By:
Name:
Title:
SAPUTO ACQUISITION, INC.
By:
Name:
Title:
SPECIALTY FOODS CORPORATION
By:
Name:
Title:
Saputo Group Inc. irrevocably and unconditionally agrees to
cause Saputo Acquisition, Inc. to perform its obligations to
close on the purchase of the Shares under Article 1 hereof.
If Saputo Acquisition, Inc. shall fail to perform such
obligation, Saputo Group Inc. shall have the obligation in
its stead to close on the purchase of the Shares under
Article 1 hereof. In addition, Saputo Group Inc.
irrevocably and unconditionally guarantees all of the other
obligations of Saputo Acquisition, Inc. under this
Agreement.
SAPUTO GROUP INC.
By:
Name:
Title:
STOCK PURCHASE AGREEMENT
among
SAPUTO GROUP INC.
Parent
SAPUTO ACQUISITION, INC.
Buyer
and
SPECIALTY FOODS CORPORATION
Seller
Dated as of November 7, 1997
TABLE OF CONTENTS
Page
ARTICLE 1 TERMS OF THE TRANSACTION
1.1 Sale and Purchase of Shares
1.2 Purchase Price and Payment
1.3 Purchase Price Adjustment
ARTICLE 2 CLOSING
2.1 Closing; Closing Date
2.2 Procedures at Closing
ARTICLE 3 REPRESENTATIONS AND WARRANTIES
OF THE SELLER
3.1 Title to the Shares
3.2 Authority; Non-Contravention
ARTICLE 4 REPRESENTATIONS AND WARRANTIES
OF THE SELLER AS TO THE COMPANY
4.1 Corporate Organization.
4.2 Capitalization.
4.3 Subsidiaries.
4.4 Non-Contravention
4.5 Financial Statements
4.6 Title to Property
4.7 Compliance with Laws; Licenses and Permits.
4.8 Litigation.
4.9 Absence of Certain Changes or Events.
4.10 Taxes.
4.11 Environmental Matters.
4.12 Contracts
4.13 Business Relationships
4.14 Employees
4.15 Employee Benefit Plans
4.16 Intellectual Property.
4.17 Labor Disputes.
4.18 Finders and Investment Bankers.
4.19 Directors, Officers and Bank Accounts
4.20 Insurance
4.21 Real Estate
4.22 No Competitive Restrictions
4.23 No Other Representations and Warranties
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF
PARENT AND BUYER
5.1 Corporate Organization
5.2 Authority; Non-Contravention
5.3 Investment Intent
5.4 Pending Actions.
5.5 Finders and Investment Bankers
5.6 Sources of Information
5.7 Financial Capability.
ARTICLE 6 COVENANTS
6.1 Conduct of Business of the Company.
6.2 Access and Information.
6.3 Reasonable Efforts; Additional Actions.
6.4 Indemnification of Brokerage
6.5 Employee Matters
6.6 Transfer Taxes
6.7 Indemnification of Directors and Officers
6.8 Elimination of Inter-Company and Affiliate
Accounts.
6.9 Cash Management
6.10 Public Announcements
6.11 Continuing Access to Records
6.12 Existing Insurance Coverage
6.13 Surety Bonds, Letters of Credit and
Guarantees
6.14 Tax Matters.
6.15 Seller's Obligation to Forward Payments
6.16 Termination of Other Acquisition Efforts
ARTICLE 7 TERMINATION OF AGREEMENT
ARTICLE 8 CONDITIONS PRECEDENT TO THE OBLIGATION
OF PARENT AND BUYER TO CLOSE
8.1 Representations.
8.2 Covenants.
8.3 No Judgment or Order.
8.4 Delivery of Shares.
8.5 HSR Act.
8.6 Director and Officer Resignations
8.7 Accounts Receivable Purchase Agreement
and Non-Compete Agreement
8.8 Equipment Leases.
8.9 Release of Liens.
8.10 FIRPTA Certification
8.11 Required Consents
8.12 Legal Opinions
8.13 Additional Documents
ARTICLE 9 CONDITIONS PRECEDENT TO THEOBLIGATION OF
THE SELLER TO CLOSE
9.1 Representations.
9.2 Covenants
9.3 No Judgment or Order.
9.4 HSR Act.
9.5 Payment of Purchase Price
9.6 Accounts Receivable Purchase Agreement
9.7 Required Consents.
9.8 Release Under Surety Obligations.
9.9 Release of Liens.
9.10 Legal Opinions
9.11 Additional Documents
ARTICLE 10 INDEMNIFICATION
10.1 Indemnification.
10.2 Notice and Opportunity to Defend.
10.3 Limitations on General Indemnifications
ARTICLE 11 MISCELLANEOUS
11.1 Certain Definitions.
11.2 Amendment and Modification
11.3 Waiver of Compliance; Consents
11.4 Notices
11.5 Assignment
11.6 Survival
11.7 Governing Law
11.8 Counterparts
11.9 Interpretation
11.10 Entire Agreement
11.11 Expenses
11.12 No Third Party Beneficiaries
11.13 Consent to Jurisdiction and Service of
Process
APPENDIX A
Stella Companies
SCHEDULES
3.2 - Seller Non-Contravention
4.4 - Company Non-Contravention
4.5 - Certain Accounts Receivable
4.6 - Property
4.7 - Compliance with Laws
4.8 - Litigation
4.9 - Certain Changes
4.10 - Taxes
4.11 - Environmental Matters
4.12(a) - Material Contracts
4.12(b) - Contract Breaches or Defaults
4.13 - Business Relationships
4.14(a) - Employees
4.14(b) - Defaults under Company Plans
4.15(a) - Employee Benefit Plans
4.15(c) - Withdrawal Liability, Etc.
4.15(d) - Reports and Returns
4.15(f) - Investigations and Other
Proceedings
4.15(g) - Parachute Payments
4.15(h) - Welfare Benefits
4.16(a) - Intellectual Property
4.16(b) - Exclusive Right
4.16(c) - Infringements
4.17 - Labor Activity
4.19 - Directors, Officers and Bank Accounts
4.20 - Insurance
4.21(a) - Owned Real Property
4.21(a)-1 - Permitted Owned Real Property Exceptions
4.21(b) - Real Property Leases
6.1 - Conduct of Business of the Company
6.13 - Surety Obligations
8.8 - Equipment Leases
8.11 - Buyer Required Consents
9.7 - Seller Required Consents
11.1(g)(i) - Certain Employees I
11.1(g)(ii) - Certain Employees II
EXHIBIT A - Form of Accounts Receivable Purchase
Agreement
EXHIBIT B - Form of Non-Compete Agreement
EXHIBIT C-1 - Form of Opinion to Buyer and Parent
EXHIBIT C-2 - Form of Opinion to Seller
Appendix A
Stella Companies
Name
State of Incorporation
Stella Foods, Inc.
Delaware
Stella Cheese Company, Inc.
Delaware
BM Acquisitions, Inc.
Delaware
BC Acquisitions, Inc.
Delaware
Stella Foods East, Inc.
Delaware
Frigo Foods, Inc.
Wisconsin
Frigo Cheese Corporation
Wisconsin
Exhibit A
Form of Accounts Receivable Purchase Agreement
Exhibit B
Form of Non-Compete Agreement
Exhibit C-1
Form of Opinion to Parent and Buyer
Exhibit C-2
Form of Opinion to Seller
EXHIBIT A
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT dated
November__, 1997, by and between Specialty Foods Finance
Corporation, a Delaware corporation ("Seller"), Specialty
Foods Corporation, a Delaware corporation ("Specialty Foods
Corporation"), Saputo Group Inc., a Canadian corporation
("Parent") and Saputo Acquisition, Inc., a Delaware
corporation ("Buyer").
WHEREAS, pursuant to a Stock Purchase Agreement dated
as of November ____, 1997 (the "Purchase Agreement") between
Specialty Foods Corporation, Parent and Buyer, Specialty
Foods Corporation is selling, transferring, conveying and
delivering to Buyer all of the issued and outstanding
capital stock of Stella Holdings, Inc., a Delaware
corporation, and its subsidiaries, including Stella Foods,
Inc., a Delaware corporation ("Stella Foods") and Stella
Foods East, Inc., a Delaware corporation ("Stella East" and,
together with Stella Foods, the "Stella Entities");
WHEREAS, Stella Foods and Stella East have historically
each sold their accounts receivable relating to their
respective businesses to Seller pursuant to a series of
agreements;
WHEREAS, Seller has issued a series of term
certificates pursuant to the Series 1994-1 Supplement, dated
as of November 16, 1994 (the "Certificates"), by and among
Seller, Specialty Foods Corporation and The Chase Manhattan
Bank (formerly Chemical Bank), as trustee (the "Trustee"),
to the Pooling Agreement, as amended, dated as of November
16, 1994, by and among Seller, Specialty Foods Corporation
and the Trustee (the "Pooling Agreement");
WHEREAS, Seller has issued a certificate pursuant to
Series 1997-1 Supplement, dated as of January 31, 1997, by
and among Seller, Specialty Foods Corporation and the
Trustee, to the Pooling Agreement;
WHEREAS, Parent is the beneficial owner of all of the
issued and outstanding capital stock of Buyer; and
WHEREAS, subject to the terms and conditions set forth
herein, Buyer hereby purchases from Seller and Seller hereby
sells to Buyer the accounts receivable generated by the
Stella Entities which are on the books of Seller.
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF ACCOUNTS RECEIVABLE
Section 1.01 Defined Terms. Defined terms used in
this Agreement but not defined herein shall have the
meanings ascribed to them in the Purchase Agreement.
Section 1.02 Basic Transaction.
(a) Purchased Assets. Subject to the terms set
forth in this Agreement, Buyer hereby purchases from Seller,
and Seller hereby sells, conveys, assigns, transfers and
delivers to Buyer, good and marketable title to, free and
clear of all liens, pledges, encumbrances, claims, and
equities of any kind, all accounts receivable that were
generated by the Stella Entities and sold to Seller
including, without limitation, those listed on Attachment 1
attached hereto (the "Purchased Accounts Receivable").
Seller has, in good faith, prepared Attachment 1 from its
books and records using its best faith estimate of the
Purchased Accounts Receivable that exist as of the close of
business of the day immediately prior to the date hereof.
(b) Excluded Assets. Notwithstanding the
foregoing, the parties agree that all other assets of
Seller, including, without limitation, any accounts
receivable generated by any subsidiary of Specialty Foods
Corporation (other than the Stella Entities) and sold to
Seller, are expressly excluded from this purchase and sale
and are not included in the Purchased Accounts Receivable.
(c) Excluded Liabilities. Buyer does not hereby
assume and shall not be liable for any of the liabilities or
obligations of Seller.
(d) Commingled Accounts. Seller hereby agrees
promptly upon receipt to transfer, or cause to be promptly
transferred, to Buyer all amounts received by Seller or its
affiliates which represent proceeds of Purchased Accounts
Receivable. Such amounts shall be transferred by wire
transfer in immediately available funds, free of any and all
claims, liens and other encumbrances to an account
designated by Buyer.
Section 1.03 Consideration for the Purchased Accounts
Receivable.
(a) Aggregate Consideration. At the Accounts
Receivable Closing (as herein defined), Parent shall cause
Buyer to pay to Seller, and Buyer will pay to Seller
$________1, net of the SFFC Reserve (as defined below) (the
"Accounts Receivable Purchase Price") by wire transfer or
equivalent means, in immediately available funds to such
account as Seller shall direct. The Accounts Receivable
Purchase Price shall be adjusted to reflect adjustments in
the face amount of the Purchased Accounts Receivable as set
forth in Section 1.03(b) below. The "SFFC Reserve" shall be
equal to [0.59%] [(which SFFC Reserve shall be updated as of
the date upon which the Post-Closing Adjustment (as defined
below) is determined as set forth in Section 1.03(b) below)]
of the face amount of the Purchased Accounts Receivable.
(b) Adjustments to the Accounts Receivable
Purchase Price After Closing. The Accounts Receivable
Purchase Price shall be (i) increased dollar for dollar to
the extent the face amount of the Purchased Accounts
Receivable reflected on the Final Attachment 1 (as defined
below), exceeds the sum of (x) the Accounts Receivable
Purchase Price and (y) the SFFC Reserve, or (ii) decreased
dollar for dollar to the extent the face amount of the
Purchased Accounts Receivable reflected on the Final
Attachment 1, is less than the sum of (x) the Accounts
Receivable Purchase Price and (y) the SFFC Reserve (the
"Post-Closing Adjustment"). Any adjustments to the Accounts
Receivable Purchase Price made pursuant to this Section
1.03(b) shall, within five (5) business days after such
adjustment is agreed to by Buyer and Specialty Foods
Corporation or any remaining disputed items are ultimately
determined by the Neutral Auditors (as defined below), be
paid by wire transfer in immediately available funds to the
account specified by the party to whom such payment is owed.
Seller shall have no obligation or liability to Buyer or any
other party in connection with the Post-Closing Adjustment,
and any such obligation in connection with the Post-Closing
Adjustment will be solely that of Specialty Foods
Corporation.
(c) Procedures for Determination of Final
Attachment 1. As soon as practicable, but in no event later
than five (5) business days following the Accounts
Receivable Closing, Specialty Foods Corporation shall
prepare a draft of the Final Attachment 1 which shall
reflect the Purchased Accounts Receivable as of the close of
business on the day of the Accounts Receivable Closing.
Specialty Foods Corporation shall deliver a copy
of the draft Final Attachment 1 to Buyer promptly after it
has been prepared. After receipt of the draft Final
Attachment 1, Buyer shall have fifteen (15) business days to
review the draft Final Attachment 1. Buyer and its
authorized representatives shall have reasonable access to
all relevant books and records and employees of Seller to
the extent required to complete their review of the draft
Final Attachment 1. Unless Buyer delivers written notice to
Specialty Foods Corporation on or prior to the end of the
fifteenth business day after Buyer's receipt of the draft
Final Attachment 1 that Specialty Foods Corporation has
improperly recorded the face amount of any accounts
receivable included in the Purchased Accounts Receivable and
specifying in reasonable detail the characterization and
amount of all such disputed items and the basis therefor,
Buyer shall be deemed to have accepted and agreed to the
draft Final Attachment 1. If Buyer so notifies Specialty
Foods Corporation of its objection to the draft Final
Attachment 1, Buyer and Specialty Foods Corporation shall,
within 30 days following such notice (the "Resolution
Period"), attempt in good faith to resolve their differences
and any resolution by them as to any disputed amounts shall
be final, binding and conclusive.
If at the conclusion of the Resolution Period
there remain items in dispute, then all disputed items shall
be submitted to [__________], certified public accountants,
or, if such firm declines to act in such capacity or at the
time of such dispute has a significant ongoing relationship
with either Parent, Buyer, Specialty Foods Corporation or
the Seller, to such other nationally recognized firm of
independent public accountants then having no significant
ongoing relationship with either Parent, Buyer, Specialty
Foods Corporation or the Seller as shall be mutually
acceptable to the Buyer and Specialty Foods Corporation (the
"Neutral Auditors"), which Neutral Auditors shall be
selected by Buyer and Specialty Foods Corporation within ten
(10) days after the expiration of the Resolution Period.
The fees and expenses relating to the work to be performed
by the Neutral Auditors shall be borne by the parties in
proportion to their relative success, as determined by the
Neutral Auditors, in connection with the final disposition
of the disputed items. The Neutral Auditors shall act as an
arbitrator to determine, based solely on presentations by
Specialty Foods Corporation and Buyer, and not by
independent review, only those issues still in dispute. The
Neutral Auditors' determination shall be made within thirty
(30) days of their selection, shall be set forth in a
written statement delivered to Specialty Foods Corporation
and Buyer, and shall be final, binding and conclusive on all
parties hereto. The Term "Final Attachment 1," as
hereinafter used, shall mean the definitive Final
Attachment 1 agreed to by Buyer and Specialty Foods
Corporation in accordance with this Section 1.03(c) or the
definitive Final Attachment 1 resulting from the
determinations made by the Neutral Auditors in accordance
with this Section 1.03(c) (in addition to those items
theretofore agreed to by Specialty Foods Corporation and
Buyer).
Section 1.04 The Accounts Receivable Closing. The
closing of the purchase and sale of the Purchased Accounts
Receivable contemplated by this Agreement (the "Accounts
Receivable Closing") will take place on the date of this
Agreement concurrently with, and subject to the
contemporaneous occurrence of, the closing contemplated
under the Purchase Agreement.
Section 1.05 Procedures at the Accounts Receivable
Closing. At the Accounts Receivable Closing, the parties
shall take the following steps in the order listed below
(provided, however, that upon their completion all such
steps shall be deemed to have occurred simultaneously).
(a) Seller shall deliver to Buyer a bill of sale
(the "Bill of Sale") in form and substance reasonably
satisfactory to Buyer transferring title to the Purchased
Accounts Receivable.
(b) Parent will cause Buyer to deliver, and Buyer
shall deliver, to Seller the Accounts Receivable Purchase
Price.
(c) Buyer and Seller shall execute and deliver a
cross-receipt acknowledging receipt from the other of the
respective deliveries.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer as
follows:
Section 2.01 Corporate Organization and Power.
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation and has the corporate power and authority to
carry on its business as now being conducted and to own and
operate the properties and assets now owned and being
operated by it. Seller is qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which it
owns or leases properties or conducts any business so as to
require such qualification. Seller has full corporate power
and authority to execute, deliver and perform this Agreement
and the other agreements contemplated hereby.
Section 2.02 Authority; Authorizations; Consents.
The execution, delivery and performance by Seller of this
Agreement and the other agreements contemplated hereby have
been duly authorized. The performance of this Agreement and
the other agreements contemplated hereby constitutes valid
and binding obligations of Seller, enforceable in accordance
with their terms. Seller may execute, deliver and perform
this Agreement without the necessity of obtaining any
consent, approval, authorization or waiver, giving any
notice, or making any filing or disclosure, except as set
forth on Schedule 2.02 to this Agreement, which consents
listed on Schedule 2.02 have been obtained on or prior to
the date hereof.
Section 2.03 No Violation. The execution, delivery
and performance of this Agreement and the other agreements
contemplated hereby by Seller and the consummation of the
transactions contemplated hereby do not and will not (a)
conflict with or result in any breach of any of, (b)
constitute a default under, or (c) result in a violation of
(i) the articles of incorporation or bylaws of Seller, (ii)
any indenture, mortgage or other agreement by which Seller
is bound or to which any of the Purchased Accounts
Receivable are subject, or (iii) any law, statute, rule,
regulation, judgment or decree to which Seller is subject.
Section 2.04 Title. Seller hereby conveys to Buyer
good and marketable title to, free and clear of all liens,
encumbrances, pledges and equities of any kind
(collectively, "Liens"), the Purchased Accounts Receivable.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
SPECIALTY FOODS CORPORATION
Specialty Foods Corporation hereby represents and
warrants to Buyer as follows:
Section 3.01 Corporate Organization and Power.
Specialty Foods Corporation is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has the corporate
power and authority to carry on its business as now being
conducted and to own and operate the properties and assets
now owned and being operated by it. Specialty Foods
Corporation is qualified as a foreign corporation for the
transaction of business and is in good standing under the
laws of each jurisdiction in which Specialty Foods
Corporation owns or leases properties or conducts any
business so as to require such qualification. Specialty
Foods Corporation has full corporate power and authority to
execute, deliver and perform this Agreement and the other
agreements contemplated hereby.
Section 3.02 Authority; Authorization; Consents. The
execution, delivery and performance by Specialty Foods
Corporation of this Agreement and the other agreements
contemplated hereby have been duly and validly authorized by
Specialty Foods Corporation. The performance of this
Agreement and the other agreements contemplated hereby
constitutes the legal, valid and binding obligations of
Specialty Foods Corporation, enforceable against Specialty
Foods Corporation in accordance with their terms. Specialty
Foods Corporation may execute, deliver and perform this
Agreement without the necessity of obtaining any consent,
approval, authorization or waiver, giving any notice, or
making any filing or disclosure, except as set forth on
Schedule 3.02 of this Agreement, which consents listed on
Schedule 3.02 have been obtained on or prior to the date
hereof.
Section 3.03 No Violation. The execution, delivery
and performance of this Agreement and the other agreements
contemplated hereby and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or
result in any breach of any of, (b) constitute a default
under, or (c) result in a violation of (i) the articles of
incorporation or by-laws of Specialty Foods Corporation,
(ii) any indenture, mortgage or agreement by which Specialty
Foods Corporation is bound or to which any of the Purchased
Accounts Receivable are subject, or (iii) any law, statute,
rule, regulation, judgment or decree to which Specialty
Foods Corporation is subject, nor will such execution,
delivery or performance result in a lien upon any of the
assets of Specialty Foods Corporation.
Section 3.04 Title. Seller has conveyed to Buyer
good and marketable title to, free and clear of all Liens,
the Purchased Accounts Receivables.
Section 3.05 Final Attachment 1. Final Attachment 1
sets forth all of the accounts receivable existing as of the
close of business on the date of the Accounts Receivable
Closing that have been generated by the Stella Entities.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Parent and Buyer, jointly and severally, hereby
represent and warrant to Seller and Specialty Foods
Corporation:
Section 4.01 Corporate Organization and Power. Each
of Parent and Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the
jurisdiction of its incorporation with full corporate power
and authority to execute, deliver and perform this Agreement
and the other agreements contemplated hereby.
Section 4.02 Authorization; Consents. The execution,
delivery and performance by each of Parent and Buyer of this
Agreement and the other agreements contemplated hereby have
been duly authorized. The performance of this Agreement and
the other agreements contemplated hereby constitutes a valid
and binding obligation of each of Parent and Buyer,
enforceable in accordance with its terms. Each of Parent
and Buyer may execute, deliver and perform this Agreement
without the necessity of obtaining any consent, approval,
authorization or waiver, giving any notice, or making any
filing or disclosure, except as set forth on Schedule 4.02
of this Agreement, which consents listed on Schedule 4.02
have been obtained on or prior to the date hereof.
Section 4.03 No Violation. The execution, delivery
and performance of this Agreement and the other agreements
contemplated hereby by each of Parent and Buyer and the
consummation of the transactions contemplated hereby do not
and will not (a) conflict with or result in any breach of,
(b) constitute a default under, or (c) result in a violation
of (i) such parties' articles of incorporation or by-laws,
(ii) any indenture, mortgage or agreement by which either
party is bound or affected, or (iii) any law, statute, rule,
regulation, judgment or decree to which either party is
subject.
ARTICLE 5
CONDITIONS TO CLOSING
Section 5.01 Conditions to Obligations The
obligations of the parties to consummate the transactions
contemplated by this Agreement are subject to the execution
of the Purchase Agreement by the parties thereto and the
closing of the transactions contemplated thereby.
ARTICLE 6
MISCELLANEOUS
Section 6.01 Amendment and Waiver.
(a) This Agreement may be amended, or any
provision of this Agreement may be waived, provided that any
such amendment and waiver will be binding upon Seller and
Specialty Foods Corporation only if set forth in a writing
executed by Seller and Specialty Foods Corporation, and any
such amendment or waiver will be binding upon Parent and
Buyer only if set forth in a writing executed by Parent and
Buyer, provided that such amendment or waiver shall be
effective only if Moody's Investors Service, Inc.
("Moody's") has provided written confirmation stating that
such amendment or waiver will not result in a reduction or
withdrawal of the rating of the Certificates.
(b) No course of dealing between or among any
persons having any interest in this Agreement will be deemed
effective to modify, amend, or discharge any part of this
Agreement or any rights or obligations of any person under
or by reason of this Agreement.
Section 6.02 Notices. Except as otherwise expressly
set forth in this Agreement, all notices, demands and other
communications to be given or delivered under or by reason
of the provisions of this Agreement will be in writing and
will be deemed to have been given when delivered personally
or (i) if sent by a nationally recognized overnight delivery
service for guaranteed next day delivery, the next day, or
(ii) if sent by telecopy, telefax or other electronic
transmission service the day when sent, provided a
confirmation copy is also sent no later than the next
business day by first-class mail (return receipt requested
and first-class postage prepaid), or (iii) if sent by
certified mail or registered mail (return receipt requested
and first-class postage prepaid) three (3) business days
after mailing. Notices, demands and communications to
Seller, Specialty Foods Corporation, Parent or Buyer will,
unless another address is specified in writing, be sent to
the address indicated below.
Notices to Seller and
Specialty Foods Corporation:
Specialty Foods Corporation
25 Tri-State International
Office Center
Suite 250
Lincolnshire, IL 60069
Attn.: General Counsel
Fax: 847-267-3420
Notices to Parent or Buyer:
______________________
______________________
______________________
Attn.: ________________
Fax: _________________
or to such address as any party shall specify by written
notice so given.
Section 6.03 Assignment. This Agreement and all of
the provisions hereof will be binding upon and inure to the
benefit of the parties hereto and their respective
successors and permitted assigns, except that neither this
Agreement nor any of the rights, interests or obligations
hereunder may be assigned (i) by any party hereto without
the prior written consent of the other parties hereto, and
(ii) by Seller or Specialty Foods Corporation, without
written confirmation from Moody's stating that such
assignment will not result in a reduction or withdrawal of
the rating of the Certificates; provided, however, that
Buyer may assign its rights (but not its obligations) under
this Agreement to any wholly-owned U.S. subsidiary of Parent
or Buyer without the consent of Seller or Speciality Foods
Corporation.
Section 6.04 Severability. Whenever possible, each
provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such
provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of
this Agreement.
Section 6.05 Captions. The captions used in this
Agreement are for convenience of reference only and do not
constitute a part of this Agreement and will not be deemed
to limit, characterize or in any way affect any provision of
this Agreement, and all provisions of this Agreement will be
enforced and construed as if no caption had been used in
this Agreement.
Section 6.06 Complete Agreement; Rights of
Enforcement. This Agreement, the Purchase Agreement and the
documents referred to herein contain the complete agreement
between the parties with respect to the subject matter
hereof and supersede any prior understandings, agreements or
representations by or between the parties, written or oral,
which may have related to the subject matter hereof in any
way. Each of Parent's and Buyer's sole rights of
enforcement and remedies for a breach by Seller or Specialty
Foods Corporation of any representation, warranty, covenant
or agreement set forth in this Agreement resulting in
damages shall be the enforcement by Buyer against Specialty
Foods Corporation under this Agreement or the Purchase
Agreement. Neither Parent nor Buyer shall have any right
whatsoever to bring a claim against Seller under either this
Agreement or the Purchase Agreement. Each of Parent and
Buyer hereby covenants and agrees that it will not institute
against, or join any other person in instituting against,
the Seller any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings
under any federal or state bankruptcy or similar law.
Section 6.07 Survival. The representations and
warranties of Seller and Specialty Foods set forth in this
Agreement shall terminate and expire on the one (1) year
anniversary of the Closing Date.
Section 6.08 Governing Law. THE SUBSTANTIVE LAW (AND
NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK WILL
GOVERN ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT AND THE PERFORMANCE OF
THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first above written.
SPECIALTY FOODS SPECIALTY FOODS FINANCE
CORPORATION CORPORATION
By: By:
Name: Name:
Title:
Title: SAPUTO ACQUISITION, INC.
SAPUTO GROUP INC.
By:
By: Name:
Name:
Title:
Title:
Saputo Group Inc. irrevocably and unconditionally
agrees to cause Saputo Acquisition, Inc. to perform its
obligations to pay the Accounts Receivable Purchase Price
under Section 1.03(a) hereof. If Saputo Acquisition, Inc.
shall fail to perform such obligation, Saputo Group Inc.
shall have the obligation in its stead to pay the Accounts
Receivable Purchase Price under Section 1.03(a) hereof. In
addition, Saputo Group Inc. irrevocably and unconditionally
guarantees all of the other obligations of Saputo
Acquisition, Inc. under this Agreement
SAPUTO GROUP INC.
By:
Name:
Title:
Attachment 1
Face Amount of Purchased $____________
Accounts Receivable:
SFFC Reserve (__% x $____________
$__________):
Accounts Receivable Purchase $____________
Price:
Schedule 2.02
Schedule 3.02
Schedule 4.02
Final Attachment 1
_______________________________
1This amount will reflect the face amount of the Purchased
Accounts Receivable set forth on Attachment 1.
FIFTH AMENDMENT, CONSENT AND WAIVER, dated as of December 3, 1997
(this "Amendment"), to:
(a) the Term Loan Agreement, dated as of July 17,
1995, as amended (the "Term Loan Agreement" and, as amended
hereby and as from time to time further amended, supplemented or
otherwise modified, the "Term Loan Agreement"), among SPECIALTY
FOODS CORPORATION, a Delaware corporation (the "Term Loan
Borrower"), the several banks and other financial institutions
from time to time parties thereto (the "Term Loan Lenders"), and
THE CHASE MANHATTAN BANK, a New York banking corporation, as
administrative agent for the Term Loan Lenders (the
"Administrative Agent"); and
(b) the Revolving Credit Agreement dated as of August
16, 1993 and amended and restated as of July 17, 1995, as amended
(the "Revolving Credit Agreement" and, as amended hereby and as
from time to time further amended, supplemented or otherwise
modified, the "Revolving Credit Agreement"), among each of the
subsidiaries of SPECIALTY FOODS CORPORATION signatory thereto
(collectively, the "Revolving Credit Borrowers"), the several
banks and other financial institutions from time to time parties
thereto (collectively, the "Revolving Credit Lenders") and the
Administrative Agent.
W I T N E S S E T H :
WHEREAS, the Term Loan Borrower, the Revolving Credit
Borrowers, the Administrative Agent and the Lenders wish to amend
and waive certain terms of the Term Loan Agreement and the Fourth
Amendment (as defined in the Term Loan Agreement) in the manner
provided for herein; and
WHEREAS, the Term Loan Borrower and the Revolving
Credit Borrowers have requested the Administrative Agent and the
Lenders to consent to certain amendments, modifications and
supplements to the Receivables Purchase Documents as provided for
herein;
NOW THEREFORE, in consideration of the premises
contained herein, the parties hereto agree as follows:
SECTION I. Definitions.
1. Defined Terms. Unless otherwise defined in this
Amendment, terms which are defined in the Term Loan Agreement or
the Revolving Credit Agreement and used herein are so used as so
defined. Unless otherwise indicated, all Section, subsection and
Schedule references are to the Term Loan Agreement.
SECTION II. Amendments and Waivers under Term Loan Agreement.
1. Amendments to Subsection 1.1. Subsection 1.1 of
the Term Loan Agreement is hereby amended by adding thereto the
following definitions, each in its proper alphabetical order:
"Collateral Investment Account II": as defined in
Collateral Investment Agreement II."
"Collateral Investment Agreement II": a Collateral
Investment Agreement executed and delivered by the Term Loan
Borrower and the Administrative Agent in connection with the
Fifth Amendment, in substantially the form attached to the
Fifth Amendment as Exhibit E thereto, pursuant to which the
Term Loan Borrower shall (a) deposit on the date on which
the Term Loan Borrower and its Subsidiaries shall have (i)
received the Asset Sale Proceeds from the Stella Sale and
(ii) reduced the outstanding Revolving Credit Loans and
Swing Line Loans (but not the Revolving Credit Commitments)
to zero as required by Section III of the Fifth Amendment,
an amount equal to 100% of the sum of (x) the Term Loan
Obligations then outstanding and (y) the L/C Obligations
then outstanding in a collateral investment account
("Collateral Investment Account II") and (b) grant a
security interest in the cash and investments and
reinvestments from time to time in Collateral Investment
Account II to the Administrative Agent for the ratable
benefit of the Term Loan Lenders and the Revolving Credit
Lenders."
"Fifth Amendment": the Fifth Amendment, Consent
and Waiver, dated as of December 3, 1997, to this Agreement
and the Revolving Credit Agreement."
"Fifth Amendment Effective Date": as defined in
the Fifth Amendment."
2. Limited Waiver of Subsection 6.6(e). (a) The
Administrative Agent, the Term Loan Lenders and the Revolving
Credit Lenders hereby waive, only with respect to the proposed
sale of the Capital Stock of Stella Holdings, Inc. and its
subsidiaries as described in Schedule 2.2 to this Amendment (the
"Stella Sale") and not otherwise, the provisions of subsection
6.6(e) of the Term Loan Agreement, to the extent (and only to the
extent) any such sale would not be permitted under subsection
6.6(e)(ii) of the Term Loan Agreement. For the avoidance of
doubt, the Stella Sale shall, if consummated, be included in the
calculation of the "Applicable Asset Sale Percentages" for
purposes of the proviso to subsection 6.6(e)(ii) of the Term Loan
Agreement from and after the date thereof for purposes of
determining availability of the "40%" referred to therein for any
subsequent sale of all or substantially all of the assets or
Capital Stock of any Subsidiary (or any division or operating
unit or line of business thereof).
(b) The Administrative Agent, the Term Loan Lenders
and the Revolving Credit Lenders hereby waive, only with respect
to the sale by H & M Food Systems Company, Inc. of the items
listed on Exhibit A hereto (the "Meat Line") and not otherwise
and only to the extent that the book value of the Meat Line at
the time of sale does not exceed $200,000, compliance by the Term
Loan Borrower with subsection 6.6(e) of the Term Loan Agreement
(including the provision therein requiring that at least 80% of
the consideration received in connection with such sale be
received in cash or Cash Equivalents).
SECTION III. Temporary Waiver under Fourth Amendment.
1. The Administrative Agent, the Term Loan Lenders and
the Revolving Credit Lenders hereby waive, during the period
commencing on the Fifth Amendment Effective Date to but not
including March 31, 1998 but not thereafter (the "Waiver
Period"), compliance with the requirement of Section V(a) of the
Fourth Amendment that any prepayments and commitment reductions
required pursuant thereto be made within three Business Days
after the receipt of the related Asset Sale Proceeds, provided
that the Term Loan Borrower shall (i) on the date it receives
such Asset Sale Proceeds (A) execute and deliver Collateral
Investment Agreement II to the Administrative Agent and pursuant
thereto deposit in Collateral Investment Account II to the
Administrative Agent an amount equal to 100% of the sum of (x)
the Term Loan Obligations then outstanding and (y) the L/C
Obligations then outstanding and (B) reduce the then outstanding
principal amount of the Revolving Credit Loans and Swing Line
Loans (but not the Revolving Credit Commitments) to zero and (ii)
if and to the extent that any Revolving Credit Borrower requests
any Letter of Credit to be issued or increased, on the date of
such issuance or increase, deposit in Collateral Investment
Account II an amount equal to 100% of the amount of such new
Letter of Credit or such increase, as the case may be. At the
end of the Waiver Period the Borrower shall make all prepayments
and commitment reductions that would have been required before or
during such Waiver Period as required by Section V(a) of the
Fourth Amendment but for this Section III.1.
2. The Revolving Credit Borrowers hereby irrevocably
agree that they shall not request, and agree that the Revolving
Credit Lenders shall not extend, any Revolving Credit Loans or
Swing Line Loans during the Waiver Period.
3. Notwithstanding anything to the contrary contained
in the Term Loan Agreement, the Revolving Credit Agreement, the
Third Amendment, the Fourth Amendment or herein, any (i) release
of collateral from Collateral Investment Account II or (ii)
amendment, waiver or other modification of the provisions of
Section III.2 hereof shall not be effective without the approval
of the Supermajority Lenders.
4. The Term Loan Borrower hereby agrees that (a)
nothing in this Section III shall affect or postpone any
obligation it may have to prepay the Term Loans or to reduce the
Revolving Credit Commitments with any Asset Sale Proceeds as
required by Section V(b) of the Fourth Amendment (other than the
temporary waiver with respect to Asset Sale Proceeds from the
Stella Sale) and (b) notwithstanding anything to the contrary
contained in the Term Loan Agreement, the Third Amendment or the
Fourth Amendment, it shall not consummate any Acquisitions during
the Waiver Period in excess of $10,000,000 in the aggregate.
5. Notwithstanding anything to the contrary contained
in the Term Loan Agreement, the Third Amendment, the Fourth
Amendment or herein, any Asset Sale Proceeds remaining after the
Term Loan Borrower has complied with the requirements of this
Section III shall not be subject to the provisions of Section
IV(a)(ii) of the Third Amendment to the extent, but only to the
extent, that such Section IV(a)(ii) would require such Asset Sale
Proceeds to be deposited in the Collateral Investment Account.
6. Failure by the Term Loan Borrower to comply with
any of the provisions of this Section III shall constitute an
Event of Default under the Term Loan Agreement and the Revolving
Credit Agreement.
SECTION IV. Consent to Amendment of Receivables Purchase
Documents.
The Lenders hereby consent to the amendments,
modifications and supplements to the Receivables Purchase
Documents pursuant to each of:
(a) Amendment No. 4, substantially in the form of
Exhibit B hereto, to the Pooling Agreement, dated as of
November 16, 1994 (as amended, the "Pooling Agreement"),
among Specialty Foods Finance Corporation, a Delaware
corporation (the "Company"), Specialty Foods Corporation, a
Delaware corporation, as master servicer (the "Master
Servicer"), and The Chase Manhattan Bank, as trustee (in
such capacity, the "Trustee");
(b) Amendment No. 4, substantially in the form of
Exhibit C hereto, to the Amended and Restated Receivables
Sale Agreement, dated as of November 16, 1994 (as amended,
the "Receivables Sale Agreement"), among the Company, the
Master Servicer, each of the subsidiaries of the Master
Servicer from time to time party thereto (each a "Seller")
(collectively, the "Receivables Amendments");
(c) the Servicing Agreement, dated as of November 16,
1994 (as amended, the "Servicing Agreement"), among the
Company, the Master Servicer, each of the subsidiaries of
the Master Servicer from time to time party thereto (each a
"Servicer") and the Trustee (collectively with (a) and (b)
above, the "Receivables Amendments");
in connection with the Stella Sale, upon the execution and
delivery of the Receivables Amendments effecting such amendments,
modifications and supplements substantially in the form attached
hereto as Exhibits B and C, with the effect that the Receivables
Purchase Documents for all purposes of the Term Loan Agreement
and the Revolving Credit Agreement shall thereafter be deemed to
include such amendments, modifications and supplements.
SECTION V. Miscellaneous Provisions.
1. Consent to Amendment. Each Lender hereby consents
to the agreements, amendments, consents and waivers provided for
herein.
2. Conditions Precedent. This Amendment shall become
effective on and as of the date first written above (the "Fifth
Amendment Effective Date"), provided that each of the conditions
precedent set forth below shall have been waived by or fulfilled
to the satisfaction of the Administrative Agent on or prior to
such date:
(a) Amendment. The Administrative Agent shall have
received counterparts of this Amendment, duly executed by
the Term Loan Borrower, the Revolving Credit Borrowers and
the Administrative Agent, and consented to by the Required
Lenders.
(b) Amendment Documents. The Administrative Agent
shall have received each of the following (together with
this Amendment, the "Amendment Documents"):
(1) Consents to Security Documents and
Guarantees. A Consent, with a counterpart for each
Lender, substantially in the form attached hereto as
Exhibit D, from each party to any Security Document
acknowledging and consenting to the execution, delivery
and performance of this Amendment and the transactions
contemplated hereby, in each case, executed and
delivered by a duly authorized officer of such party;
and
(2) Collateral Investment Agreement II.
Collateral Investment Agreement II, substantially in
the form of Exhibit E to this Amendment, duly executed
and delivered by the Term Loan Borrower.
(c) Calculation Certificate. The Administrative Agent
shall have received the certificate of a Responsible Officer
(as described in the definition of Applicable Asset Sale
Percentage) setting forth in reasonable detail the
calculations and assumptions used in determining the
Applicable Asset Sale Percentage after giving effect to the
Stella Sale.
(d) Corporate Proceedings of the Borrowers. The
Administrative Agent shall have received a copy of the
resolutions, in form and substance reasonably satisfactory
to the Administrative Agent, of the Board of Directors of
(A) the Term Loan Borrower and (B) each of the Revolving
Credit Borrowers authorizing or confirming the execution,
delivery and performance of the Amendment Documents to which
it is a party certified by the Secretary or an Assistant
Secretary of such Term Loan Borrower or Revolving Credit
Borrower as of the Fifth Amendment Effective Date and each
such certificate shall state that the resolutions thereby
certified have not been amended, modified, revoked or
rescinded as of the date of such certificate.
(e) Stella Sale. The Administrative Agent shall have
received evidence satisfactory to it that the Stella Sale
has been consummated for a price yielding (i) aggregate cash
proceeds to the Borrower of approximately $405.0 million
(subject to customary adjustments) and (ii) Net Cash
Proceeds sufficient to (A) repay the aggregate then
outstanding principal amount of the Revolving Credit Loans
and (B) deposit in the Collateral Investment Account II an
amount equal to 100% of the sum of (x) the Term Loan
Obligations then outstanding and (y) the L/C Obligations
then outstanding.
(f) Amendment of Receivables Purchase Documents. The
Administrative Agent shall have received certified copies of
amendments to the Receivables Purchase Documents in
substantially the form attached hereto as Exhibits A and B
along with satisfactory evidence of the due authorization
and valid execution of the same.
(g) No Default or Event of Default. On and as of the
Fifth Amendment Effective Date and after giving effect to
this Amendment, no Default or Event of Default shall have
occurred and be continuing except to the extent and only to
the extent waived herein.
(h) Representations and Warranties. The
representations and warranties made by the (A) Term Loan
Borrower in the Term Loan Agreement and (B) the Revolving
Credit Borrowers in the Revolving Credit Agreement, after
giving effect to this Amendment and the transactions
contemplated hereby, shall be true and correct in all
material respects on and as of the Fifth Amendment Effective
Date as if made on such date, except where such
representations and warranties relate to an earlier date in
which case such representations and warranties shall be true
and correct in all material respects as of such earlier date
and except to the extent and only to the extent waived
herein; provided that all references to the Term Loan
Agreement and the Revolving Credit Agreement in such
representations and warranties shall be and are deemed to
mean this Amendment as well as the Term Loan Agreement and
Revolving Credit Agreement as amended hereby.
(i) Certificate. The Administrative Agent shall have
received a Certificate of a Responsible Officer of (i) the
Term Loan Borrower and (ii) each of the Revolving Credit
Borrowers certifying the matters referred to in paragraphs
(g) and (h) above.
(j) Other. The Administrative Agent shall have
received copies of opinions, certificates, or agreements as
shall reasonably be requested by the Administrative Agent or
the Required Lenders.
3. Covenant to Cancel Outstanding Letters of Credit.
As soon as practicable following the Stella Sale, the Term Loan
Borrower shall cause all outstanding Letters of Credit issued
pursuant to the Revolving Credit Agreement for which Stella
Holdings, Inc. or any of its Subsidiaries is account party to be
cancelled and the originals thereof, marked "Cancelled," to be
delivered to the Administrative Agent on behalf of the respective
Issuing Banks.
4. Continuing Effect; No Other Amendments; No Waiver.
Except as expressly amended hereby, all of the terms and
provisions of the Term Loan Agreement and the Revolving Credit
Agreement are and shall remain in full force and effect, and no
provision of such agreements is waived hereby except as and only
to the extent expressly set forth herein.
5. Expenses. The Term Loan Borrower and the Revolving
Credit Borrowers agree to reimburse the Administrative Agent for
all its reasonable costs and out-of-pocket expenses incurred in
connection with the preparation and delivery of this Amendment,
including, without limitation, the reasonable fees and
disbursements of counsel to such Administrative Agent.
6. Counterparts and Execution. (a) This Amendment may
be executed in any number of counterparts by the parties hereto,
each of which counterparts when so executed shall be an original,
but all counterparts taken together shall constitute one and the
same instrument.
(b) Any Lender which executes and delivers to the
Administrative Agent this Amendment (and, prior to the Fifth
Amendment Effective Date, does not withdraw its delivery thereof)
shall be treated as having executed and delivered this Fifth
Amendment as the holder of all Term Loans and Revolving Credit
Commitments held of record by it on the date of its delivery to
the Administrative Agent of this Amendment and held of record by
it thereafter and on or prior to the Fifth Amendment Effective
Date, and such execution and delivery shall be binding upon any
Assignee from it of any such Term Loans or Revolving Credit
Commitments.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
8. Release of Revolving Credit Borrower. Upon the
Fifth Amendment Effective Date, Stella Holdings, Inc. shall be
released as a Revolving Credit Borrower without any further
action being required.
* * *
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed and delivered by their respective duly
authorized officers as of the date first above written.
SPECIALTY FOODS CORPORATION,
as Term Loan Borrower
BY:
Name:
Title:
BELSEA HOLDINGS INC.,
as Revolving Credit Borrower
BY:
Name:
Title:
H & M FOOD SYSTEMS COMPANY, INC.,
as Revolving Credit Borrower
BY:
Name:
Title:
METZ HOLDINGS, INC., as Revolving
Credit Borrower
BY:
Name:
Title:
MOTHER'S CAKE AND COOKIE CO.,
as Revolving Credit Borrower
BY:
Name:
Title:
SFFB HOLDINGS, INC.,
as Revolving Credit Borrower
BY:
Name:
Title:
STELLA HOLDINGS, INC., formerly
known as Stella Foods, Inc., as
Revolving
Credit Borrower
BY:
Name:
Title:
TBP HOLDINGS, INC., as
Revolving Credit Borrower
BY:
Name:
Title:
CONSENTED TO:
THE CHASE MANHATTAN BANK, as
Administrative Agent and as a
Lender
BY:
Name:
Title:
ABN AMRO Bank N.V.
By: ABN AMRO North America, Inc.,
as agent
BY:
Name:
Title:
BY:
Name:
Title:
NATEXIS BANQUE BFCE
BY:
Name:
Title:
BY:
Name:
Title:
BANQUE PARIBAS
BY:
Name:
Title:
BY:
Name:
Title:
CREDIT AGRICOLE INDOSUEZ
(formerly known as Caisse Nationale
de Credit Agricole)
BY:
Name:
Title:
BY:
Name:
Title:
CIBC, INC.
BY:
Name:
Title:
COMPAGNIE FINANCIERE DE CIC ET DE
L'UNION EUROPEENNE
BY:
Name:
Title:
BY:
Name:
Title:
COOPERATIVE CENTRALE RAIFFISEN -
BOERENLEENBANK B.A., "RABOBANK
NEDERLAND", NEW YORK BRANCH
BY:
Name:
Title:
BY:
Name:
Title:
DLJ CAPITAL FUNDING, INC.
BY:
Name:
Title:
THE FIRST NATIONAL BANK OF BOSTON
BY:
Name:
Title:
GOLDMAN SACHS CREDIT PARTNERS, L.P.
BY:
Name:
Title:
MERRILL LYNCH DEBT STRATEGIES
PORTFOLIO
By: Merrill Lynch Asset Management,
L.P.,
as Investment Advisor
BY:
Name:
Title:
MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
BY:
Name:
Title:
MERRILL LYNCH PRIME RATE PORTFOLIO
By: Merrill Lynch Asset Management,
L.P.,
as Investment Advisor
BY:
Name:
Title:
MERRILL LYNCH SENIOR FLOATING RATE
FUND, INC.
BY:
Name:
Title:
PAMCO CAYMAN LTD.
BY:
Name:
Title:
PARIBAS CAPITAL FUNDING LLC
BY:
Name:
Title:
BY:
Name:
Title:
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Advisor
BY:
Name:
Title:
SENIOR HIGH INCOME PORTFOLIO, INC.
BY:
Name:
Title:
SOCIETE GENERALE, SOUTHWEST
AGENCY
BY:
Name:
Title:
VAN KAMPEN AMERICAN CAPITAL PRIME
RATE INCOME TRUST
BY:
Name:
Title:
WELLS FARGO BANK, N.A.
BY:
Name:
Title:
Schedule 2.2
Subsidiaries of Stella Holdings, Inc.
Stella Foods, Inc.
Stella Cheese Company, Inc.
BC Acquisitions, Inc.
BM Acquisitions, Inc.
Stella Foods East, Inc.
Frigo Foods, Inc.
Frigo Cheese Corporation
EXHIBIT E
TO
FIFTH AMENDMENT
[FORM OF COLLATERAL INVESTMENT AGREEMENT II]
COLLATERAL INVESTMENT AGREEMENT II dated as of December
__, 1997, between SPECIALTY FOODS CORPORATION, a Delaware
corporation (the "Term Loan Borrower"), and THE CHASE MANHATTAN
BANK, a New York banking corporation, as administrative agent
(the "Administrative Agent") for the Term Loan Lenders and the
Revolving Credit Lenders.
W I T N E S S E T H:
WHEREAS, the Term Loan Borrower, the Revolving Credit
Borrowers, the Administrative Agent, the Term Loan Lenders and
the Revolving Credit Lenders have entered into the Fifth
Amendment, Consent and Waiver, dated as of December 3, 1997 (the
"Fifth Amendment"), to:
(a) the Term Loan Agreement, dated as of July 17,
1995, (as amended and as the same may be further amended,
supplemented or otherwise modified from time to time, the
"Term Loan Agreement") among the Term Loan Borrower, the
several banks and other financial institutions from time to
time parties thereto (the "Term Loan Lenders"), and the
Administrative Agent; and
(b) the Revolving Credit Agreement dated as of
August 16, 1993 and amended and restated as of July 17,
1995, (as amended and as the same may be further amended,
supplemented or otherwise modified from time to time, the
"Revolving Credit Agreement"), among each of the
subsidiaries of Specialty Foods Corporation signatory
thereto (collectively, the "Revolving Credit Borrowers"),
the several banks and other financial institutions from time
to time parties thereto (collectively, the "Revolving Credit
Lenders") and the Administrative Agent.
WHEREAS, it is a condition precedent to the
effectiveness of the Fifth Amendment that the Term Loan Borrower
shall have executed and delivered to the Administrative Agent
this Agreement.
NOW, THEREFORE, in consideration of the premises and to
induce the Administrative Agent and the Lenders to enter into the
Fifth Amendment and to induce the Lenders to make their
respective Loans to the Term Loan Borrower, the Term Loan
Borrower hereby agrees with the Administrative Agent, for the
ratable benefit of the Term Loan Lenders and the Revolving Credit
Lenders, as follows:
I. Defined Terms. (a) Unless otherwise defined in
this Agreement, terms which are defined in the Term Loan
Agreement, the Revolving Credit Agreement and the Fifth Amendment
and used herein are so used as so defined. Unless otherwise
indicated, all Section, subsection and Schedule references are to
the Term Loan Agreement, as amended.
The following terms shall have the following
meanings:
"Agreement": this Collateral Investment Agreement II,
as the same may be amended, modified or otherwise supplemented
from time to time.
"Code": the Uniform Commercial Code from time to time
in effect in the State of New York.
"Collateral": the collective reference to the
Collateral Investments and the Collateral Investment Account.
"Collateral Investments ": the collective reference
to:
(i) all cash, instruments, securities and funds
deposited from time to time in the Collateral Investment
Account, including, any subaccounts or linked deposit
accounts);
(ii) all Permitted Investments of funds in the
Collateral Investment Account and all instruments and
securities evidencing such Permitted Investments; and
(iii) all interest, dividends, cash, instruments,
securities and other property received in respect of, or as
proceeds of, or in substitution or exchange for, any of the
foregoing.
"Collateral Investment Account II ": account no. 323-
517080 established at the office of The Chase Manhattan Bank at
270 Park Avenue, New York, New York 10017, designated "The Chase
Manhattan Bank?Specialty Foods Corporation Collateral Investment
Account II."
"Obligations ": the Term Loan Obligations and the
obligations of the Borrower under the Borrower Guarantee.
"Permitted Investments": all investments and
reinvestments in Cash Equivalents.
The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this
Agreement unless otherwise specified.
The meanings given to terms defined herein shall be
equally applicable to both the singular and plural forms of such
terms.
2. Grant of Security Interest2. As collateral
security for the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, the Term Loan Borrower hereby
grants to the Administrative Agent, for the ratable benefit of
the Term Loan Lenders and the Revolving Credit Lenders, a
security interest in the Collateral.
3. Maintenance of Collateral Investment Account3. The
Collateral Investment Account shall be maintained until the
Obligations have been paid and performed in full.
The Collateral shall be subject to the exclusive
dominion and control of the Administrative Agent, which shall
hold the Collateral Investment and administer the Collateral
Investment Account subject to the terms and conditions of this
Agreement. The Term Loan Borrower shall have no right of
withdrawal from the Collateral Investment Account nor any other
right or power with respect to the Collateral, except as
expressly provided herein.
4. Deposit of Funds. Upon execution and delivery of
this Agreement, the Term Loan Borrower shall on any date after
the Fifth Amendment Effective Date on which amounts are
contemplated to be deposited in the Collateral Investment Account
under Section 3 of the Fifth Amendment, deposit such amounts in
the Collateral Investment Account. The Term Loan Borrowers and
the Administrative Agent agree that (i) the Collateral Investment
Account will constitute a "securities account" under Article 8 of
the Uniform Commercial Code as in effect in the State of New York
on the date hereof, (ii) each Collateral Investment constitutes a
"financial asset" as defined in Section 8-102 of the Uniform
Commercial Code as in effect in the State of New York on the date
hereof and (iii) the "securities intermediary's jurisdiction"
(within the meaning of Article 8) will be the State of New York.
5. Representation and Warranty. The Term Loan
Borrower represents and warrants to the Administrative Agent that
(i) this Agreement creates in favor of the Administrative Agent a
legal, valid and enforceable security interest in the Collateral
and (ii) when the financing statements in appropriate form are
filed in the offices specified on Schedule 1 hereto, the security
interest created pursuant to this Agreement constitutes a fully
perfected, legal, valid and enforceable first priority security
interest in the Collateral, subject to no other liens whatsoever,
except as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general
equitable principles (whether considered in a proceeding in
equity or at law) and an implied covenant of good faith and fair
dealing.
6. Covenants. The Term Loan Borrower covenants and
agrees with the Administrative Agent that:
The Term Loan Borrower will not sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with
respect to, the Collateral, except in connection with investments
and reinvestments in Permitted Investments or create, incur or
permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Collateral, or any
interest therein, except for the security interest created by
this Agreement.
The Term Loan Borrower will maintain the security
interest created by this Agreement as a first, perfected security
interest and defend the right, title and interest of the
Administrative Agent and the Lenders in and to the Collateral
against the claims and demands of all Persons whomsoever. At any
time and from time to time, upon the written request of the
Administrative Agent, and at the sole expense of the Term Loan
Borrower, the Term Loan Borrower will promptly and duly execute
and deliver such further instruments and documents and take such
further actions as the Administrative Agent reasonably may
request for the purposes of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein
granted, including, without limitation, of financing statements
under the Code.
7. Investment of Collateral Investments. Collected
funds on deposit in the Collateral Investment Account shall be
invested and reinvested by the Administrative Agent at the
direction of the Term Loan Borrower from time to time in
Permitted Investments. All investments shall be made in the name
of the Administrative Agent or a nominee of the Administrative
Agent and in a manner, determined by the Administrative Agent in
its sole discretion, that preserves the Administrative Agent's
perfected, first priority security interest in such investments.
The Administrative Agent shall have no obligation to
invest collected funds during the first night after their
collection, unless the funds are received before 1:00 p.m. New
York City time.
The Administrative Agent shall have no responsibility
to the Term Loan Borrower for any loss or liability arising in
respect of such investments of the Collateral Investments
(including, without limitation, as a result of the liquidation of
any thereof before maturity), except to the extent that such loss
or liability arises from the Administrative Agent's gross
negligence or willful misconduct.
The Term Loan Borrower will pay or reimburse the
Administrative Agent for any and all liabilities and reasonable
costs and expenses of the Administrative Agent incurred in
connection with this Agreement, the maintenance and operation of
the Collateral Investment Account and the investment of the
Collateral Investments, including, without limitation, any
investment, brokerage or placement commissions and fees incurred
by the Administrative Agent in connection with the investment or
reinvestment of Collateral Investment, and any investment charges
or other fees of The Chase Manhattan Bank in connection with
maintenance of the Collateral Investment Account.
8. Termination; Remedies. Upon the earlier to occur
of (i) March 31, 1998 and (ii) the occurrence of an Event of
Default, the Administrative Agent may, without notice of any
kind, except for notices required by law which may not be waived,
apply the Collateral, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or incidental
to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Administrative
Agent and the Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of counsel to the
Administrative Agent, to the payment in whole or in part of the
Obligations, in such order as is required by the Term Loan
Agreement and the Revolving Credit Agreement, or, absent such
requirement, as the Administrative Agent in its sole discretion
may elect, and only after such application and after the payment
by the Administrative Agent of any other amount required by any
provision of law, including, without limitation, Section
9-504(1)(c) of the Code, need the Administrative Agent account
for the surplus, if any, to the Term Loan Borrower. In addition
to the rights, powers and remedies granted to it under this
Agreement and in any other agreement securing, evidencing or
relating to the Obligations, the Administrative Agent shall have
all the rights, powers and remedies available at law, including,
without limitation, the rights and remedies of a secured party
under the Code. To the extent permitted by law, the Term Loan
Borrower waives presentment, demand, protest and all notices of
any kind and all claims, damages and demands it may acquire
against the Administrative Agent or any Lender arising out of the
exercise by them of any rights hereunder.
The Term Loan Borrower shall remain liable for any
deficiency if the proceeds of any sale or other disposition of
the Collateral are insufficient to pay the Obligations and the
fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.
9. Administrative Agent's Appointment as Attorney-in-
Fact. The Term Loan Borrower hereby irrevocably constitutes and
appoints the Administrative Agent and any officer or agent of the
Administrative Agent, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of the Term Loan Borrower and in
the name of the Term Loan Borrower or in the Administrative
Agent's own name, from time to time in the Administrative Agent's
discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all appropriate action and to execute
any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Agreement,
including, without limitation, any financing statements,
endorsements, assignments or other instruments of transfer. The
Administrative Agent agrees with the Term Loan Borrower that it
shall not exercise any rights or powers under this paragraph
prior to the earlier of (i) March 31, 1998 or (ii) the occurrence
of an Event of Default (it being agreed that any other Person
shall not be required to inquire as to the Administrative Agent's
compliance with its agreements in this sentence).
The Term Loan Borrower hereby ratifies all that said
attorneys shall lawfully do or cause to be done pursuant to the
power of attorney granted in this paragraph 9. All powers,
authorizations and agencies contained in this Agreement are
coupled with an interest and are irrevocable until this Agreement
is terminated and the security interests created hereby are
released.
10. Duty of Administrative Agent. The Administrative
Agent's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under
Section 9-207 of the Code or otherwise, shall be to comply with
the specific duties and responsibilities set forth herein. The
powers conferred on the Administrative Agent in this Agreement
are solely for the protection of the Administrative Agent's and
the Lenders' interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any
such powers. Neither the Administrative Agent nor any Lender nor
its or their directors, officers, employees or agents shall be
liable for any action lawfully taken or omitted to be taken by
any of them under or in connection with the Collateral or this
Agreement, except for its or their gross negligence or willful
misconduct.
11. Execution of Financing Statements. Pursuant to
Section 9-402 of the Code, the Term Loan Borrower authorizes the
Administrative Agent to file financing statements with respect to
the Collateral without the signature of the Term Loan Borrower in
such form and in such filing offices as the Administrative Agent
reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A
carbon, photographic or other reproduction of this Agreement
shall be sufficient as a financing statement for filing in any
jurisdiction.
12. Authority of Administrative Agent. The Term Loan
Borrower acknowledges that the rights and responsibilities of the
Administrative Agent under this Agreement with respect to any
action taken by the Administrative Agent or the exercise or non-
exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the
Administrative Agent and the Lenders, be governed by the Term
Loan Agreement and by such other agreements with respect thereto
as may exist from time to time among them, but, as between the
Administrative Agent and the Term Loan Borrower, the
Administrative Agent shall be conclusively presumed to be acting
as agent for the Lenders with full and valid authority so to act
or refrain from acting, and the Term Loan Borrower shall not be
under any obligation, or entitlement, to make any inquiry
respecting such authority.
13. Notices. All notices, requests and demands to or
upon the Administrative Agent or the Term Loan Borrower to be
effective shall be in writing (or by telex, fax or similar
electronic transfer confirmed in writing) and shall be deemed to
have been duly given or made when delivered by hand or if given
by mail, when deposited in the mails by certified mail, return
receipt requested, or if by telex, fax or similar electronic
transfer, when sent and receipt has been confirmed, addressed to
the Administrative Agent or the Term Loan Borrower at its address
or transmission number for notices provided in subsection 9.2 of
the Term Loan Agreement. The Administrative Agent and the Term
Loan Borrower may change their addresses and transmission numbers
for notices by notice in the manner provided in this paragraph.
14. Severability. Any provision of this Agreement
which is prohibited or unenforceable in any jurisdiction shall,
as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
15. Amendments in Writing; No Waiver; Cumulative
Remedies. None of the terms or provisions of this Agreement may
be waived, amended, supplemented or otherwise modified except by
a written instrument executed by the Term Loan Borrower and the
Administrative Agent, provided that any provision of this
Agreement may be waived by the Administrative Agent and the
Lenders in a letter or agreement executed by the Administrative
Agent or by telex or facsimile transmission from the
Administrative Agent.
Neither the Administrative Agent nor any Lender shall
by any act (except by a written instrument pursuant to this
paragraph 15 hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default or in any breach of
any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the Administrative
Agent or any Lender, any right, power or privilege hereunder
shall operate as a waiver thereof. No single or partial exercise
of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent
or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy
which the Administrative Agent or such Lender would otherwise
have on any future occasion.
The rights and remedies herein provided are cumulative,
may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.
16. Section Headings. The section headings used in
this Agreement are for convenience of reference only and are not
to affect the construction hereof or be taken into consideration
in the interpretation hereof.
17. Successors and Assigns. This Agreement shall be
binding upon the successors and assigns of the Term Loan Borrower
and shall inure to the benefit of the Administrative Agent and
the Lenders and their successors and assigns.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEWYORK.
* * *
IN WITNESS WHEREOF, the Term Loan Borrower and the
Administrative Agent have caused this Collateral Investment
Agreement to be duly executed and delivered as of the date first
above written.
THE CHASE MANHATTAN BANK, as
Administrative Agent
By:___________________________
Name:
Title:
SPECIALTY FOODS CORPORATION
By:___________________________
Name:
Title:
Schedule 1
to Collateral
Investment Agreement
UCC Filing Jurisdictions
Specialty Foods Corporation
Illinois, Secretary of State
New York, Secretary of State
New York, New York County
AMENDMENT NO. 4 TO THE
AMENDED AND RESTATED RECEIVABLES SALE AGREEMENT
Amendment, dated as of December 5, 1997 (this "Amendment") to the
Amended and Restated Receivables Sale Agreement, dated as of
November 16, 1994, as amended (the "Receivables Sale Agreement"),
by and among Specialty Foods Finance Corporation, a Delaware
corporation (the "Company"), Specialty Foods Corporation, a
Delaware corporation (the "Master Servicer") and its wholly owned
subsidiaries named therein (the "Sellers").
W I T N E S S E T H :
WHEREAS, the parties hereto wish to amend the Receivables Sale
Agreement in the manner provided for in this Amendment;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the
meanings ascribed to them in the Receivables Sale Agreement.
2. Amendment of the Receivables Sale Agreement. Article IX of
the Receivables Sale Agreement is hereby amended by adding the
following phrase to Section 9.14(b)(i) after the phrase "(i) each
of":
Stella Foods, Inc.
Stella Foods East, Inc.
3. Termination of Certain Sellers. The Company, pursuant to
Section 9.14(b) of the Receivables Sales Agreement, Amendment No.
4 to the Pooling Agreement, dated as of the date hereof
("Amendment No. 4 to the Pooling Agreement"), and Section 9.4(b)
of the Pooling Agreement, hereby terminates as of the Stella
Termination Date upon the payment of the Purchase Price (as both
terms are defined in Amendment No. 4 to the Pooling Agreement) to
the Trustee, all obligations of the entities listed in Exhibit 1
hereto (together, the "Stella Terminated Sellers") under the
Receivables Sale Agreement.
4. Conditions to Effectiveness. This Amendment shall become
effective upon receipt by the Trustee of:
(a) a counterpart hereof, duly executed and delivered by each of
the Company, the Master Servicer and the Stella Terminated
Sellers; and
(b) a consent to this Amendment, in the form of Annex A, from
Capital Markets Assurance Corporation, as the Enhancement
Provider and Control Party for each of the Term Certificates,
Series 1994-1.
5. Continuing Effect of the Receivables Sale Agreement. Except
as expressly amended, modified and supplemented hereby, the
provisions of the Receivables Sale Agreement are and shall remain
in full force and effect.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES THEREOF, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAW.
7. Counterparts. This Amendment may be executed in two or more
counterparts (and by different parties on separate counterparts),
each of which shall be an original, but all of which together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
duly executed by their respective officers as of the day and year
first above written.
SPECIALTY FOODS FINANCE CORPORATION
By: ________________________________
Name: ________________________________
Title: ________________________________
SPECIALTY FOODS CORPORATION, as Master Servicer
By: ________________________________
Name: ________________________________
Title: ________________________________
STELLA FOODS, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
STELLA FOODS EAST, INC.
By: ________________________________
Name: ________________________________
Title: ________________________________
Exhibit 1
STELLA TERMINATED SELLERS
Stella Foods, Inc.
Stella Foods East, Inc.
Annex A
[FORM OF CONSENT]
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Structured Finance Services (ABS)
Dear Sirs:
We refer to the Amendment, dated as of December 5, 1997 (the
"Amendment"), to the Amended and Restated Receivables Sale
Agreement, dated as of November 16, 1994, as amended (the
"Receivables Sale Agreement"), among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"), Specialty
Foods Corporation, a Delaware corporation, as master servicer
(the "Master Servicer"), and each of the subsidiaries of the
Master Servicer from time to time party thereto. We hereby
certify that we have been given or have duly waived adequate
notice of the Amendment pursuant to Section 10.1 of the Pooling
Agreement, dated as of November 16, 1994, as amended, among the
Company, the Master Servicer, and The Chase Manhattan Bank
(formerly known as Chemical Bank), as trustee.
We hereby consent to the execution and delivery of the Amendment
(substantially in the form attached hereto) by the Company, the
Master Servicer and the Sellers.
Sincerely,
CAPITAL MARKETS ASSURANCE CORPORATION
By: ________________________________
Name: ________________________________
Title: ________________________________
Dated: December ____, 1997
cc: Specialty Foods Finance Corporation
Specialty Foods Corporation
AMENDMENT NO. 4 TO POOLING AGREEMENT AND
AMENDMENT NO. 1 TO SERIES 1994-1 SUPPLEMENT
Amendment, dated as of December 5, 1997 (this "Amendment")
to each of:
(a) the SFC Master Trust Pooling Agreement (as amended and
in effect on the date hereof, the "Pooling Agreement"), dated as
of November 16, 1994, by and among Specialty Foods Finance
Corporation, a Delaware corporation (the "Company"), Specialty
Foods Corporation, a Delaware corporation, as master servicer
(the "Master Servicer"), and The Chase Manhattan Bank (formerly
known as Chemical Bank), as trustee (in such capacity, the
"Trustee"); and
(b) the Series 1994-1 Supplement (the "Series 1994-1
Supplement"), dated as of November 16, 1994, to the Pooling
Agreement among the Company, the Master Servicer and the Trustee.
W I T N E S S E T H :
WHEREAS, the Company has informed the Trustee that it
desires to sell those Receivables originated by the Stella
Terminated Sellers (as defined below);
WHEREAS, such sale would require a purchase of receivables
previously sold to the Trust by the Company;
WHEREAS, the Trustee has agreed to accept the Company's
offer to purchase such Receivables; and
WHEREAS, to effectuate the aforementioned transactions, the
parties hereto wish to amend the Pooling Agreement and the Series
1994-1 Supplement in the manner provided for in this Amendment.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Defined Terms. Capitalized terms not defined herein
shall have the meanings ascribed to them in the Pooling Agreement
as supplemented by the Series 1994-1 Supplement.
2. Amendment of the Pooling Agreement. The Pooling
Agreement is hereby amended as follows:
(a) Article X of the Pooling Agreement is hereby amended by
adding the following paragraph after Section 10.24:
"10.24 Termination of Certain Sellers. In accordance with
Section 2.8(g) hereof, as amended by Amendment No. 1 to the
Pooling Agreement, and the procedure set forth in Section 10.1
hereof, the Trustee acknowledges that as of the Stella
Termination Date (as defined herein), Stella Foods, Inc. and
Stella Foods East, Inc. (together, the "Stella Terminated
Sellers") will be terminated as Sellers pursuant to Section
9.14(b) of the Receivables Sale Agreement (as amended by
Amendment No. 4 thereto dated as of December 5, 1997) and as
Servicers under the Servicing Agreement.
On the Stella Termination Date upon the payment to the Trustee of
the Purchase Price (as defined below), the Trustee agrees to
sell, assign and convey to the Company (without recourse,
representation or warranty) all right, title and interest of the
Trust in the Receivables originated by the Stella Terminated
Sellers, all other Trust Assets related to such Receivables
originated by each Stella Terminated Seller, and all proceeds of
the foregoing. Upon receipt of the Purchase Price, the Trustee
shall deposit such funds in the Collection Account and shall
treat them as Collections for all purposes hereunder. At such
time, the Trustee shall also (i) notify First Bank Milwaukee, the
lockbox bank, of the termination of the Lockbox Account with
First Bank Milwaukee - Account No. 18233025666, which account
relates to Receivables generated solely by the Stella Termination
Sellers, (ii) execute a Master Bill of Sale and Assignment to the
Company for the Receivables of each Stella Terminated Seller and
(iii) sign and deliver to the Company for filing the necessary
UCC financing statements releasing the liens of the Trustee
against the Stella Terminated Sellers and any of their respective
properties.
In accordance with Section 2.8(g) hereof, the Company shall be
permitted to assign and convey such Receivables, and other Trust
Assets and proceeds related to such Receivables to (A) Saputo
Acquisition, Inc. and/or (B) any affiliate of Saputo Acquisition,
Inc. in exchange for the Purchase Price. For purposes of this
section the "Purchase Price" means with respect to each Stella
Terminated Seller an amount of immediately available funds equal
to the product of (x) the then aggregate outstanding Principal
Amount of Receivables of such Seller (which is understood to be
net of Charge-Offs) multiplied by (y) the most recent Discounted
Percentage with respect to the Receivables of such Stella
Terminated Seller as determined in accordance with Schedule 3 of
the Receivables Sale Agreement (the "Purchase Price").
(b) Article 1 of the Pooling Agreement is hereby further amended
to add the following definition after the definition of "Stella
East's":
"Stella Termination Date" shall mean December 5, 1997.
3. Amendment to the Series 1994-1 Supplement. The Series
1994-1 Supplement is hereby amended by deleting the reference to
"1.5" in the definition of "Ratings Multiple" in Section 1.1
thereof and inserting in lieu thereof the following: "2".
4. Conditions to Effectiveness. This Amendment shall
become effective upon receipt by the Trustee of:
(a) The Purchase Price;
(b) a counterpart hereof, duly executed and delivered
by each of the Company, the Master Servicer and the Trustee;
(c) a consent to this Amendment, in the form of
Annex A, from Capital Markets Assurance Corporation ("CapMAC"),
as the Enhancement Provider and the Control Party for the Term
Certificates, Series 1994-1;
(d) a secretary's certificate from each of the Company
and the Master Servicer certifying (i) board resolutions
authorizing the execution and delivery of this Amendment, (ii)
the incumbency of the natural persons authorized to execute and
deliver this Amendment, (iii) the charter and bylaws of the
Company or the Master Servicer, as the case may be, being correct
and in full force and effect and (iv) copies of "good standing"
certificates issued by the Secretary of State of the State of
Delaware, certifying that each of the Company and the Master
Servicer, as the case may be, is in good standing and has paid
all taxes due to the State of Delaware, and including as annexes
thereto the certificate of incorporation of the Company or the
Master Servicer, as the case may be;
(e) an officer's certificate of a Responsible Officer
of the Company certifying that this Amendment shall not adversely
affect in any material respect the interests of the Series 1994-1
Term Certificateholders;
(f) an opinion of counsel of Paul, Weiss, Rifkind,
Wharton & Garrison, counsel to the Company and the Master
Servicer, opining as to (i) this Amendment being authorized
pursuant to the Pooling Agreement and the Series 1994-1
Supplement and (ii) all conditions precedent to the execution,
delivery and performance of this Amendment being satisfied in
full;
(g) written confirmation from each of Standard &
Poor's Corporation and Moody's Investors Service Inc. stating
that the execution and delivery of this Amendment will not result
in a reduction or withdrawal of any current rating of the Term
Certificates;
(h) written confirmation from CapMAC that it has received (1) an
irrevocable Optional Termination Notice executed by the Company
in accordance with Section 2.5(b)(i) of the Series 1994-1
Supplement declaring that the Revolving Period shall terminate on
March 31, 1998 and (2) an amendment to the Surety Fee Letter (as
defined in the Insurance Agreement) executed by the Company in
form and substance satisfactory to CapMAC, as issuer;
(i) evidence that the VFC Certificates (as defined in the Series
1997-1 Supplement, dated as of January 31, 1997, to the Pooling
Agreement) have been cancelled and the Commitments (as defined
therein) terminated, with the consent of the Purchaser (as
defined therein);
(j) a pro forma Settlement Statement as of the Stella
Termination Date after giving effect to the transactions
contemplated to occur on such date;
(k) a request from the Company under Section 2.5(a)(ii) of the
Series 1994-1 Supplement to reduce the Invested Amount of the
Term Certificates on the next Distribution Date to $50,000,000;
and
(l) the documents referred to in paragraph 4 of Amendment No. 4,
dated as of December 5, 1997, to the Receivables Sales Agreement.
5. Continuing Effect of the Pooling Agreement. Except as
expressly amended, modified and supplemented hereby, the
provisions of the Pooling Agreement and the Series 1994-1
Supplement are and shall remain in full force and effect.
6. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS INTERNAL OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES THEREOF, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL
BE DETERMINED IN ACCORDANCE WITH SUCH LAW.
7. Counterparts. This Amendment may be executed in two or
more counterparts (and by different parties on separate
counterparts), each of which shall be an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Amendment
to be duly executed by their respective officers as of the day
and year first above written.
SPECIALTY FOODS FINANCE CORPORATION
By:
Name:
Title:
SPECIALTY FOODS CORPORATION, as Master Servicer
By:
Name:
Title:
THE CHASE MANHATTAN BANK, as Trustee
By:
Name:
Title:
Annex A
[FORM OF CONSENT]
Consent of Capital Markets Assurance Corporation
The Chase Manhattan Bank,
as Trustee
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Structured Finance Services (ABS)
Dear Sirs:
We refer to the Amendment, dated as of December 5, 1997 (the
Amendment), to the Pooling Agreement, dated as of November 16,
1994, as amended (the Pooling Agreement), by and among Specialty
Foods Finance Corporation, a Delaware corporation (the Company),
Specialty Foods Corporation, a Delaware corporation, as master
servicer (the Master Servicer), and The Chase Manhattan Bank
(formerly known as Chemical Bank), as trustee (in such capacity,
the Trustee), and the Series 1994-1 Supplement. We hereby
certify that we have been given or have duly waived adequate
notice of the Amendment pursuant to Section 10.1 of the Pooling
Agreement and Section 8.5 of the Series 1994-1 Supplement, dated
as of November 16, 1994, to the Pooling Agreement by and among
the Company, the Master Servicer and the Trustee.
We hereby consent to the execution and delivery of the
Amendment (substantially in the form attached hereto) by the
Company, the Master Servicer and the Trustee on our behalf.
Sincerely,
CAPITAL MARKETS ASSURANCE CORPORATION
By:
Name:
Title:
Dated: December ____, 1997
cc: Specialty Foods Finance Corporation
Specialty Foods Corporation
