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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
July 14, 1997 (July 1, 1997)
Suiza Foods Corporation
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
Delaware 340-28130 75-2559681
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(STATE OR OTHER (COMMISSION FILE (IRS EMPLOYER
JURISDICTION OF NUMBER) IDENTIFICATION NO.)
INCORPORATION)
3811 Turtle Creek Blvd., Suite 1300
Dallas, Texas 75219
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
Registrant's telephone number, including area code:
(214) 528-0939
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 1, 1997, Suiza Foods Corporation (the "Registrant" or the
"Company"), through a wholly-owned acquisition subsidiary, completed the
acquisition of substantially all of the assets of Dairy Fresh L.P., a Delaware
limited partnership ("Dairy Fresh"), for approximately $104.5 million in cash
(subject to adjustment and excluding transaction costs), plus the assumption of
certain current liabilities. Dairy Fresh is a manufacturer of fresh milk and
ice cream products based in Winston-Salem, North Carolina. During its fiscal
year ended December 31, 1996, Dairy Fresh reported net sales of approximately
$117 million. The Company will use the acquired assets to continue operating
the business previously operated by Dairy Fresh. The Company financed the
acquisition with borrowings under its senior credit facility with a group of
banks led by First Union National Bank and First National Bank of Chicago.
ITEM 5. OTHER EVENTS.
On June 20, 1997, the Company signed a definitive agreement to
purchase all the outstanding stock of three affiliated dairy manufacturing and
distribution companies, as well as an affiliated water bottling and distribution
company, and 16 affiliated plastic manufacturing companies headquartered in
Franklin, Massachusetts (collectively, the "Garelick Companies") for aggregate
consideration of approximately $301 million (subject to adjustment and excluding
transaction costs). The Garelick Companies are owned by Peter and Alan Bernon
and various trusts for the benefit of their children. The combined businesses
operated by the Garelick Companies reported net sales of approximately $363
million during the fiscal year ended September 30, 1996. The dairy operations
of the Garelick Companies are operated through Garelick Farms in Franklin,
Massachusetts, Fairdale Farms in Bennington, Vermont, and Grant's Dairy in
Bangor, Maine. The Garelick Companies also operate the Miscoe Springs water
bottling company in Mendon, Massachusetts and 16 plastic bottle manufacturing
operations located in Connecticut, Florida, Georgia, Illinois, Louisiana, Maine,
Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Texas and
Virginia. The Company expects to complete the acquisition of the Garelick
Companies on or about July 31, 1997, subject to regulatory approval and other
customary closing conditions.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESS ACQUIRED.
In accordance with paragraph (a)(4) of Item 7 of Form 8-K, the
historical financial statements required in connection with the Dairy Fresh
acquisition are not included in this initial report. The Company expects to
file the required historical financial statements for Dairy Fresh and the
Garelick Companies shortly following completion of the proposed acquisition of
the Garelick Companies. Historical financial statements required in connection
with the Dairy Fresh acquisition will be filed in any event within 60 days after
the date of this report.
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(b) PRO FORMA FINANCIAL INFORMATION
In accordance with paragraph (b)(2) of Item 7 of Form 8-K, the pro
forma financial information required in connection with the Dairy Fresh
acquisition are not included in this initial report. The Company expects to
file the required pro forma financial information for Dairy Fresh and the
Garelick Companies shortly following completion of the proposed acquisition of
the Garelick Companies. Pro forma financial information required in connection
with the Dairy Fresh acquisition will be filed in any event within 60 days after
the date of this report.
(c) EXHIBITS
2.1 Asset Purchase Agreement, dated as of June 11, 1997, by and among DF
Acquisition Corp., a Delaware corporation, Dairy Fresh L.P., a
Delaware limited partnership, and Suiza Foods Corporation, a Delaware
corporation.
99.1 Press Release issued by the Company at 7:36 a.m. EDT on June 23, 1997.
99.2 Press Release issued by the Company at 7:50 a.m. EDT on June 23, 1997.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: July 14, 1997 SUIZA FOODS CORPORATION
By: /s/ Tracy L. Noll
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Tracy L. Noll
VICE PRESIDENT AND CHIEF
FINANCIAL OFFICER
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INDEX TO EXHIBITS
Exhibit
Number Description
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2.1 Asset Purchase Agreement, dated as of June 11, 1997, by and among DF
Acquisition Corp., a Delaware corporation, Dairy Fresh L.P., a
Delaware limited partnership, and Suiza Foods Corporation, a Delaware
corporation.
99.1 Press Release issued by the Company at 7:36 a.m. EDT on June 23, 1997.
99.2 Press Release issued by the Company at 7:50 a.m. EDT on June 23, 1997.
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made and entered into
as of June 11, 1997, by and among DF Acquisition Corp., a Delaware
corporation and a wholly owned subsidiary of Suiza Foods Corporation (the
"Buyer"), Dairy Fresh L.P., a Delaware limited partnership (the "Company"),
and Suiza Foods Corporation, a Delaware corporation (the "Parent").
WHEREAS, the Company desires to sell substantially all of its assets to
Buyer, and Buyer desires to purchase such assets from the Company, on the
terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and agreements contained herein, the parties hereto agree as
follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE OF ASSETS. At the Closing (as defined in SECTION 1.6),
the Company agrees to sell, transfer, assign and deliver to Buyer the Assets
(as defined below), and Buyer agrees to purchase and take the Assets, on the
terms and subject to the conditions set forth in this Agreement. Subject to
the provisions of SECTION 1.2, the "ASSETS" mean all tangible and intangible
assets of the Company, including without limitation, all accounts receivable,
inventory, raw materials, equipment, real property, fixtures, furnishings,
leasehold rights, leasehold improvements, vehicles, prepaid assets, contract
rights, licenses, permits, customer, prospect and marketing lists, sales
data, records, computer software and software licenses, proprietary
information, intellectual property, trade secrets, trademarks and trade names
(including all rights to the name "Dairy Fresh"), copyrights, goodwill
associated with such intellectual property, material and manufacturing
specifications, drawings and designs owned by the Company or acquired by the
Company after the date hereof and prior to the Closing, in each case to the
extent existing at the Closing, and specifically including (without
limitation):
(a) all assets described in SCHEDULE 2.4(a), except for assets
used by the Company under leases or licenses disclosed or not required to
be disclosed pursuant to SECTION 2.19;
(b) all assets reflected on the Latest Balance Sheet (as defined
in SECTION 2.8) or acquired by the Company after the date thereof, except
those sold in the ordinary course of business after the date thereof; and
(c) the Registered Intellectual Property (as defined in SECTION
2.21).
1.2 EXCLUDED ASSETS. Notwithstanding the provisions of SECTION 1.1,
the Assets will exclude the following (the "Excluded Assets"):
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(a) cash and cash equivalents held by the Company at the Closing;
(b) the Company's rights under any Permits (as defined in SECTION
2.14) or Material Agreements (as defined in SECTION 2.19) that are
specifically identified in SCHEDULE 2.14 or 2.19 as being excluded from
the Assets;
(c) the specific assets identified in SCHEDULE 1.2; and
(d) the Company's rights under this Agreement and the other
agreements, certificates and instruments to be executed by the Company in
connection with or pursuant to this Agreement.
1.3 ASSUMED LIABILITIES. Subject to the terms and conditions of this
Agreement, at the Closing Buyer shall assume and thereafter pay, perform and
discharge when due the following liabilities of the Company as and to the
extent existing at the Closing (the "Assumed Liabilities"):
(a) trade payables and accrued expenses of the type set forth in
the Latest Balance Sheet incurred by the Company prior to the Closing in
the ordinary course of business, consistent with past practice and not in
breach of this Agreement; and
(b) liabilities to be performed after the Closing under (i) the
Material Agreements identified in SCHEDULE 2.19 (excluding any agreements
that SCHEDULE 2.19 indicates are excluded from the Assets); (ii) other
agreements entered into by the Company in the ordinary course of business
that are not included within the definition of Material Agreements set
forth in SECTION 2.19; (iii) the Permits identified in SCHEDULE 2.14
(excluding any Permits that SCHEDULE 2.14 indicates are excluded from the
Assets); and (iv) the Assumed Plans (as defined in SECTION 4.10); but
excluding (in each case) any liabilities arising under an agreement,
Permit or Assumed Plan that result from any violation, breach or default
(or event that with notice or lapse of time would constitute a breach or
default) by the Company thereunder.
It is understood and agreed that Buyer will not assume any direct or
indirect debts, obligations or liabilities of the Company of any nature,
whether absolute, accrued, contingent, liquidated or otherwise, and whether
due or to become due, asserted or unasserted, known or unknown (collectively,
"Liabilities"), except for the Assumed Liabilities.
1.4 CONSIDERATION. As consideration in full for the acquisition of
the Assets from the Company, Buyer will assume the Assumed Liabilities and
pay the Company an aggregate of $102,625,000, as adjusted pursuant to SECTION
1.5 (the "Purchase Price"). The Purchase Price will be payable at the
Closing by wire transfer of immediately available funds (to an account
specified in writing by the Company to Buyer at least two days prior to the
Closing).
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1.5 WORKING CAPITAL ADJUSTMENT.
(a) "Working Capital" means (i) the value of the Company's current
assets included within the Assets (excluding any Excluded Assets) minus
(ii) the value of the Company's current liabilities included within the
Assumed Liabilities, each calculated as of the Closing in accordance with
generally accepted accounting principles applied in a manner consistent
with the Company's Audited Financial Statements (as hereinafter defined).
(b) "Average Working Capital" means $392,584.
(c) At least three Business Days before the Closing, the Company
will prepare and deliver to Buyer an estimated calculation and statement
of the Working Capital (the "Estimated Statement") based upon the books
and records of the Company as of the time such books and records are
closed on the day preceding the day of delivery of the Estimated
Statement. The Company will prepare the Estimated Statement in good
faith, and it will be subject to Buyer's review and written approval. If
the estimated Working Capital set forth on the Estimated Statement (the
"Estimated Working Capital") exceeds the Average Working Capital, then the
Purchase Price will be increased by the amount of such excess. If the
Estimated Working Capital is less than the Average Working Capital, then
the Purchase Price will be reduced by the amount of such deficiency.
(d) As promptly as practicable, but in any event within 60 days
after the Closing, the Company will cause to be prepared and delivered to
Buyer a balance sheet for the Company as of the Closing (the "Closing
Balance Sheet"), which will be audited by McGladrey & Pullen, LLP ("M&P"),
certified public accountants, and certified by such firm to have been
prepared in accordance with generally accepted accounting principles
applied in a manner consistent with that used to prepare the Audited
Financial Statements. The Closing Balance Sheet will be accompanied by a
statement (the "Statement of Working Capital") prepared by such
accountants and setting forth the Working Capital, which will be
calculated by reference to the Closing Balance Sheet.
(e) Subject to paragraph (f) below, within fifteen days after
delivery of the Closing Balance Sheet and the Statement of Working
Capital, (i) the Company will pay to Buyer the amount, if any, by which
the Estimated Working Capital exceeds the Working Capital, or (ii) Buyer
will pay to the Company the amount, if any, by which the Working Capital
exceeds the Estimated Working Capital. Payments, if any, by the Company
or Buyer pursuant to this paragraph will be made by wire transfer of
immediately available funds. The parties will treat any payment made
pursuant to this paragraph as an adjustment to the Purchase Price.
(f) Buyer's certified public accountants, Deloitte & Touche LLP
("D&T"), will be permitted to review the Closing Balance Sheet and
Statement of Working Capital and M&P's workpapers related thereto during
the preparation thereof and during the 15 day period following delivery of
the Closing Balance Sheet and Statement of Working
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Capital to Buyer. If Buyer disagrees in good faith with the Closing
Balance Sheet or the Statement of Working Capital, then Buyer will
notify the Company in writing (the "Notice of Disagreement") of such
disagreement within 15 days after delivery of the Closing Balance Sheet
and the Statement of Working Capital. The Notice of Disagreement will
set forth in reasonable detail the basis for the disagreement.
Thereafter, the Company and Buyer will attempt in good faith to resolve
and finally determine the Closing Balance Sheet and the Statement of
Working Capital. If the Company and Buyer are unable to resolve the
disagreement within 15 days after delivery of the Notice of
Disagreement, then the Company and Buyer will select a mutually
acceptable, nationally recognized independent accounting firm that does
not then have a relationship with any of the parties hereto or any of
their Affiliates (the "Independent Accountant") to resolve the disputed
items and make a determination with respect thereto. Such determination
will be made, and written notice thereof given to the Company and Buyer,
within 30 days after such selection. The determination by the
Independent Accountant will be final, binding and conclusive upon the
parties hereto. The scope of such firm's engagement (which will not be
an audit) will be limited to the resolution of the items contained in
the Notice of Disagreement, and the recalculation, if any, of the
Closing Balance Sheet and the Statement of Working Capital in light of
such resolution. The fees and expenses of M&P and D&T in connection
with the preparation and review of the Closing Balance Sheet and the
Statement of Working Capital will be borne by the Company and Buyer,
respectively. If an Independent Accountant is engaged pursuant to this
paragraph, the fees and expenses of the Independent Accountant will be
borne equally by the Company and Buyer. Within ten days after delivery
of a notice of determination by the Independent Accountant as described
above, any payment required by paragraph (e) above will be made, based
on such determination. Any portion of the Purchase Price adjustment not
in dispute will be paid when due in accordance with paragraph (e) above.
1.6 CLOSING. The Closing of the transactions contemplated by this
Agreement (the "Closing") will take place at 10:00 a.m. local time at the
offices of Rogers & Wells, 200 Park Avenue, New York, New York 10166 (or such
other place as the parties may agree) as soon as practicable (but not later
than five Business Days) after the satisfaction or waiver of the conditions
set forth in ARTICLE V.
1.7 CLOSING DELIVERIES. At the Closing,
(a) Buyer will pay the cash portion of the Purchase Price
specified in SECTION 1.4 to the Company;
(b) the Company and Buyer will execute and deliver to each other
an Assignment and Assumption Agreement with respect to the Assumed
Liabilities, substantially in the form of EXHIBIT A;
(c) the Company will execute and deliver to Buyer a Bill of Sale
conveying the Assets to Buyer, substantially in the form of EXHIBIT B;
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(d) the Company will execute and deliver to Buyer a special
warranty deed conveying the real estate included within the Assets,
substantially in the form of EXHIBIT C;
(e) the Company will execute and deliver to Buyer an Assignment of
Trademarks conveying all trademarks, trade names and service marks
included within the Assets, substantially in the form of EXHIBIT D;
(f) the Company will endorse and deliver to Buyer any certificates
of title necessary to effect or record the transfer of any vehicles or
other Assets for which ownership is evidenced by a certificate of title;
and
(g) the Company will deliver to Buyer or otherwise make available
the originals or copies of all of the Company's books, records, ledgers,
disks, proprietary information and other data and all other written or
electronic depositories of information included in the Assets.
1.8 FURTHER ASSURANCES. At or after the Closing, and without further
consideration, the Company will execute and deliver to Buyer such further
instruments of conveyance and transfer as Buyer may reasonably request in
order more effectively to convey and transfer the Assets to Buyer and to put
Buyer in operational control of the business of the Company, or for aiding,
assisting, collecting and reducing to possession any of the Assets and
exercising rights with respect thereto.
1.9 ALLOCATION OF PURCHASE PRICE. The Purchase Price will be
allocated among the Assets based on their relative fair market values as of
the Closing, as agreed in writing by Buyer and the Company as promptly as
practicable after the Closing; PROVIDED, however, that Buyer and the Company
hereby agree that for this purpose the fair market value of each asset that
includes an unrealized receivable (as such term is defined in Section 751(c)
of the Internal Revenue Code of 1986, as amended (the "Code")) and each item
of inventory does not exceed its adjusted federal income tax basis
immediately before the Closing. Such Purchase Price allocation will be made
consistent with Section 1060 of the Code. The Buyer and the Company (i) will
execute and file all tax returns and prepare all financial statements,
returns and other instruments in a manner consistent with the allocation
determined pursuant to this SECTION 1.9, (ii) will not take any position
before any governmental agency or in any judicial proceeding that is
inconsistent with such allocation, and (iii) will cooperate with each other
in a timely filing consistent with such allocation of Forms 8594 with the
Internal Revenue Service.
1.10 NONASSIGNABLE CONTRACTS OR AUTHORIZATIONS. To the extent that
assignment hereunder by the Company to Buyer of any agreement or Permit is
not permitted or is not permitted without the consent of any third party,
this Agreement will not be deemed to constitute an undertaking to assign the
same if such consent is not given or if such an undertaking otherwise would
constitute a breach of or cause a loss of benefits thereunder. The Company
will use commercially reasonable efforts to obtain any and all such third
party consents; PROVIDED, however, that the Company will not be required to
pay or incur any cost or expense to obtain any third party consent that the
Company is not otherwise required to pay or incur in accordance with the
terms of
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the applicable agreement or Permit. If any such third party consent is not
obtained before the Closing, the Company will cooperate with Buyer, at
Buyer's expense, in any reasonable arrangement designed to provide to Buyer
after the Closing the benefits under the applicable agreement or Permit.
This paragraph does not affect the parties' rights to indemnification in
respect of any breach of a representation or warranty hereunder.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Buyer as follows:
2.1 ORGANIZATION. The Company is a limited partnership duly
organized, validly existing and in good standing under the laws of Delaware
and has full limited partnership power to own its properties and to conduct
its business as presently conducted. The Company is duly authorized,
qualified or licensed to do business and is in good standing in each state or
other jurisdiction in which its assets are located or in which its business
or operations as presently conducted make such qualification necessary,
except for such failures to be so authorized, qualified, licensed or in good
standing as could not reasonably be expected to have a material adverse
effect on the Assets or the results of operations of the Company (a "Material
Adverse Effect").
2.2 AUTHORITY. The Company has all requisite limited partnership
power and authority to execute, deliver and perform under this Agreement and
the other agreements, certificates and instruments to be executed by the
Company in connection with or pursuant to this Agreement (collectively, the
"Company Documents"). The execution, delivery and performance by the Company
of each Company Document to which it is a party have been duly authorized by
all necessary limited partnership or corporate action, as the case may be, on
the part of the Company, its general partners, and (if applicable) its
general partner's general partner. This Agreement has been, and at the
Closing the other Company Documents will be, duly executed and delivered by
the Company. This Agreement is, and, upon execution and delivery by the
Company at the Closing, each of the other Company Documents will be, a legal,
valid and binding agreement of the Company, enforceable against the Company
in accordance with their respective terms.
2.3 FORMATION DOCUMENTS. The Company has made available to Buyer
true, correct and complete copies of the Company's certificate of limited
partnership and agreement of limited partnership.
2.4 TITLE TO ASSETS.
(a) Set forth in SCHEDULE 2.4(a) is a complete list (including the
street address, where applicable) of (i) all real property owned by the
Company; (ii) all real property leased by the Company; (iii) each vehicle
owned or leased by the Company as of the date of this Agreement; and (iv)
each other material item of tangible personal property owned by the
Company (in the form maintained by the Company) as of the date indicated.
All assets used by the Company pursuant to leases or licenses disclosed in
SCHEDULE 2.19 or not required to be disclosed in such schedule are
referred to as the "Leased Assets."
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(b) The Company has good title to all of the Assets (other than
the Leased Assets, as to which the Company has valid licenses or leasehold
interests) and owns all of such Assets (including such licenses or
leasehold interests) free and clear of any liens, security interests or
encumbrances (collectively, "Liens"), other than (i) statutory Liens
securing taxes and other obligations that are not yet due and payable or
which are being contested in good faith and in respect of which adequate
reserves have been established by the Company; (ii) minor imperfections of
title and encumbrances that do not materially detract from or interfere
with the present use or value of such properties; and (iii) Liens
described in SCHEDULE 2.4(b). The execution and delivery of the Company
Documents by the Company at the Closing will convey to and vest in Buyer
good title to the Assets (or valid licenses or leasehold interests in the
case of the Leased Assets), free and clear of any Liens except (A) Liens
described in clauses (i) and (ii) of the preceding sentence and (B) Liens
identified in SCHEDULE 2.4(b) that are not identified in such schedule as
being retained or satisfied by the Company at or prior to the Closing.
(c) The real property owned or leased by the Company (the "Real
Property") is zoned for a classification that permits the continued use
of the Real Property in the manner currently used by the Company.
Permanent certificates of occupancy have been issued for the
improvements on the Real Property permitting the existing use of such
improvements. To the knowledge of the Company, there are no proceedings
pending or threatened that would alter the current zoning classification
of the Real Property or alter any applicable laws, statutes,
regulations, codes, conditions or restrictions related to zoning or land
use that would adversely affect the existing use of the Real Property in
the Company's business. The Company has not received any written notice
that remains outstanding from any insurance company of any defects or
inadequacies in the Real Property or the improvements thereon that
would, if not corrected, result in the termination of existing insurance
coverage or a material increase in the present cost thereof. The
Company has not received any written notice that remains outstanding
providing for or threatening the discontinuation of necessary utilities
to the Real Property. The Company is not a "foreign person" as that
term is defined in Section 1445 of the Internal Revenue Code of 1986, as
amended, and applicable regulations.
2.5 SUFFICIENCY OF ASSETS. The Assets (including the leasehold
interests in the Leased Assets) constitute all assets used by the Company in
the conduct of its business, except for the Excluded Assets. The tangible
personal property included in the Assets and the Leased Assets that are used
in the conduct of the Company's business are in good condition and repair,
ordinary wear and tear excepted, for property of comparable type, age and
usage.
2.6 NO VIOLATION. Except as described in SCHEDULE 2.6, neither the
execution or delivery of the Company Documents nor the consummation of the
transactions contemplated thereby, including without limitation the sale of
the Assets to Buyer, will conflict with or result in the breach of any term
or provision of, or violate or constitute a default under, or result in the
creation of any Lien on the Assets pursuant to, or relieve any third party of
any obligation to the Company under or give any third party the right to
terminate or accelerate any obligation under, (i) the Company's
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certificate of limited partnership or partnership agreement, (ii) any
Material Agreement or Permit, or (iii) any order, law or regulation by which
the Company or any of the Assets is in any way bound or obligated.
2.7 GOVERNMENTAL CONSENTS. Except as required in connection with the
Hart Scott Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), and except as set forth in SCHEDULE 2.7, and excluding the recordation
of conveyancing documents, no consent, approval, order or authorization of,
or registration, qualification, designation, declaration or filing with, any
governmental agency, authority, commission, board or other body
(collectively, a "Governmental Body") is required on the part of the Company
in connection with the transfer of any Permits or other Assets to Buyer or
any of the other transactions contemplated by this Agreement.
2.8 FINANCIAL STATEMENTS.
(a) Attached as SCHEDULE 2.8(a) are true and complete copies of
the following financial statements (collectively, the "Financial
Statements"): (i) the unaudited balance sheet of the Company (the
"Latest Balance Sheet") as of April 30, 1997 (the "Latest Balance Sheet
Date") and the related unaudited statements of operations and cash flow
for the four months then ended, and (ii) the audited balance sheets of
the Company as of December 31, 1996 and 1995 and the related audited
statements of operations and cash flow for the years then ended (the
"Audited Financial Statements"). The Financial Statements present fairly
in all material respects the financial condition of the Company at the
dates specified and the results of its operations for the periods
specified and have been prepared in accordance with generally accepted
accounting principles, consistently applied, subject in the case of the
unaudited statements to the absence of footnote disclosure and other
presentation items and to changes resulting from normal period-end
adjustments for recurring accruals, which will not be material in the
aggregate. The Financial Statements have been prepared from the books
and records of the Company, which accurately and fairly reflect in all
material respects the transactions of, acquisitions and dispositions of
assets by, and incurrence of known liabilities by the Company.
(b) The Company has no Liabilities of a type required by
generally accepted accounting principles to be set forth on a balance
sheet except for (i) Liabilities reflected on the Latest Balance Sheet,
(ii) current liabilities incurred in the ordinary course of business and
consistent with past practice after the Latest Balance Sheet Date, (iii)
liabilities of the type included within the Assumed Liabilities pursuant
to SECTION 1.3(b), and (iv) Liabilities described in SCHEDULE 2.8(b).
(c) All inventories and raw materials reflected in the Latest
Balance Sheet or acquired since the Latest Balance Sheet Date are of
good and merchantable quality and are salable in the ordinary course of
business (in the case of inventory held for sale) or currently usable
(in the case of other inventory and raw materials).
(d) All accounts receivable reflected in the Latest Balance Sheet
or included in the Assets arose in the ordinary course of business.
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2.9 SUBSIDIARIES AND INVESTMENTS. The Company does not own any direct or
indirect equity or debt interest in any other Person, including without
limitation any interest in a corporation, partnership or joint venture, and is
not obligated or committed to acquire any such interest.
2.10 ABSENCE OF MATERIAL ADVERSE CHANGE. Since the Latest Balance Sheet
Date, except as specifically contemplated by this Agreement and except as
described in SCHEDULE 2.10, there has not been: (a) any material adverse change
in the condition (financial or otherwise), results of operations, business,
assets or Liabilities of the Company; (b) any payment or transfer of assets to
or for the benefit of any partner of the Company, other than compensation and
expense reimbursements paid in the ordinary course of business or in connection
with the transactions contemplated hereby, consistent with past practice, and
other than cash distributions to partners; (c) any material breach or material
default (or event that with notice or lapse of time would constitute a material
breach or material default) or termination under any Material Agreement, other
than expirations or terminations occurring in the ordinary course of business
the effect of which is not material to the Company; (d) any theft, condemnation
or eminent domain proceeding, or any material damage, destruction or casualty
loss affecting any of the Company's assets, whether or not covered by insurance;
(e) any sale, assignment or transfer of any assets of the Company, except in the
ordinary course of business and consistent with past practices and other than
cash distributions to partners; (f) any waiver by the Company of any material
rights related to the Company's business, operations or assets; (g) any other
material transaction, agreement or commitment entered into by the Company or
affecting the Company's business, operations or assets, except in the ordinary
course of business and consistent with past practices and other than cash
distributions to partners; or (h) any agreement to do or resulting in any of the
foregoing.
2.11 TAXES. All federal, state, local and other tax returns (including
without limitation income, property, sales, use, franchise, withholding, social
security and unemployment tax returns) required to be filed by the Company have
been filed and all such returns were complete and correct in all respects. All
taxes required to be paid by the Company with respect to the periods covered by
any such returns have been timely paid, other than taxes being disputed in good
faith for which adequate reserves are provided in the Latest Balance Sheet (as
adjusted for the passage of time in accordance with past practice). No tax
deficiency has been proposed or assessed against the Company by written notice
to the Company, and the Company has not executed any waiver of any statute of
limitations on the assessment or collection of any tax. No tax audit, action,
suit, proceeding, investigation or claim has been raised by written notice to
the Company (and is currently pending) by any taxing authority in connection
with any of the Company's tax returns or reports. The Company has withheld or
collected from each payment made to each of its employees all taxes required to
be withheld or collected therefrom and has paid the same as required to the
proper tax receiving officers or authorized depositaries.
2.12 LITIGATION. Except as described in SCHEDULE 2.12, there are
currently no pending or, to the knowledge of the Company, threatened lawsuits,
administrative proceedings, or formal or informal complaints or investigations
by any individual, corporation, partnership, Governmental Body or other entity
(collectively, a "Person") against or relating to the Company or, to the
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knowledge of the Company, any of its partners, employees or agents (in their
capacity as such), or to which any of the Assets are subject. The Company is
not subject to or bound by any currently existing judgment, order, writ,
injunction or decree.
2.13 COMPLIANCE WITH LAWS. Except as described in SCHEDULE 2.13, the
Company is currently complying with and has at all times complied with each
applicable statute, law, ordinance, decree, order, rule or regulation of any
Governmental Body, excluding any Environmental Law (as hereinafter defined), but
including without limitation all federal, state and local laws relating to
zoning and land use, occupational health and safety, product quality and safety
and employment and labor matters. The Company has not recalled any of its
products during the last five years.
2.14 PERMITS. The Company owns or possesses from each appropriate
Governmental Body all right, title and interest in and to all permits, licenses,
authorizations, approvals, quality certifications, franchises or rights
(collectively, "Permits") issued by any Governmental Body necessary to conduct
its business. Each of such Permits is described in SCHEDULE 2.14 and, except as
otherwise indicated in SCHEDULE 2.14, is included within the Assets. No loss or
expiration of any Permit is pending or, to the knowledge of the Company,
threatened, other than expiration in accordance with the terms thereof of
Permits that may be renewed in the ordinary course of business without lapsing.
2.15 ENVIRONMENTAL MATTERS.
(a) Except as described in SCHEDULE 2.15: (i) the Company has
conducted its business in compliance with all applicable Environmental
Laws, including without limitation by having all Permits required under any
Environmental Laws for the operation of its business; (ii) none of the Real
Property contains any Hazardous Substance in amounts exceeding the levels
permitted by applicable Environmental Laws; (iii) the Company has not
received any written notices, demand letters or requests for information
from any Governmental Body or other Person indicating that the Company may
be in violation of, or liable under, any Environmental Law; (iv) no written
reports have been filed, or are required to be filed, by the Company
concerning the release of any Hazardous Substance or the threatened or
actual violation of any Environmental Law; (v) no Hazardous Substance has
been disposed of, released or transported in violation of any applicable
Environmental Law to or from the Real Property, or as a result of any
activity of the Company, that would give rise to liability under any
Environmental Law; (vi) there have been no environmental investigations,
studies, audits, tests, reviews or other analyses regarding compliance or
noncompliance with any Environmental Law conducted by or on behalf of the
Company, or which are in the possession of the Company, relating to the
activities of the Company or any of the Real Property that have not been
delivered to Buyer prior to the date hereof; (vii) there are no underground
storage tanks on, in or under any of the Real Property, and no underground
storage tanks have been closed or removed from any of the Real Property in
a manner that would give rise to liability under any Environmental Law;
(viii) there is no asbestos present in any of the Real Property the
condition or existence of which currently requires remediation under
applicable Environmental Law, and no asbestos has been removed from any of
the
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Real Property; and (ix) neither the Company nor any of the Assets are
subject to any Liabilities or expenditures relating to any suit,
settlement, court order, administrative order, regulatory requirement,
judgment or claim asserted or arising under any Environmental Law.
(b) As used herein, "Environmental Law" means any existing federal,
state or local law, statute, ordinance, rule, regulation, Permit, order,
judgment or decree relating to (i) the protection of the environment or
(ii) the use, storage, generation, transportation, processing, production,
release or disposal of Hazardous Substances.
(c) As used herein, "Hazardous Substance" means any substance
presently listed, defined, designated or classified as hazardous, toxic or
radioactive under any Environmental Law. Hazardous Substance includes any
substance to which exposure is regulated by any Governmental Body or any
Environmental Law, including without limitation any toxic waste, pollutant,
contaminant, hazardous substance, toxic substance, hazardous waste, special
waste or petroleum or any product or by-product thereof, radon, radioactive
material, asbestos or asbestos containing material, urea formaldehyde, lead
or polychlorinated biphenyls.
2.16 EMPLOYEE MATTERS. Set forth on SCHEDULE 2.16 is a complete list of
all current employees of the Company as of the date of this Agreement, including
date of employment, current title and compensation, and date and amount of last
increase in compensation and indicating any employees on disability or other
permitted leaves of absence. The Company has no collective bargaining, union or
labor agreements, contracts or other arrangements with any group of employees,
labor union or employee representative. The Company does not know of any
organization effort currently being made or threatened by or on behalf of any
labor union with respect to employees of the Company. The Company has not
experienced, and the Company does not know of any basis for any strike or
material work stoppage or slow down.
2.17 EMPLOYEE BENEFIT PLANS.
(a) Set forth in SCHEDULE 2.17 is a complete list of all "employee
benefit plans," as defined in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), all plans or policies
providing for fringe benefits (including without limitation vacation, paid
holidays, personal leave, employee discounts, educational benefits or
similar programs), and all other bonus, incentive, compensation,
profit-sharing, equity, severance, retirement, health, life, disability,
group insurance, employment, fringe benefit and other similar plans,
agreements, policies or understandings (whether written or oral, qualified
or nonqualified, currently effective or terminated), and any trust, escrow
or other agreement related thereto, which (i) is maintained or contributed
to by the Company, or with respect to which the Company has or may have any
liability, or (ii) provides benefits, or describes policies or procedures
applicable, to any officer, employee or former employee or dependents
thereof, regardless of whether funded (the "Employee Plans"). The Company
has made available to Buyer accurate and complete copies of the documents,
records and other materials related
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thereto reasonably requested by Buyer in writing. Except as described in
SCHEDULE 2.17, no written or oral representations have been made to any
employee, officer, former officer or former employee of the Company
promising or guaranteeing any employer payment or funding for the
continuation of medical, dental, life or disability coverage for any period
of time beyond the end of the current plan year (except to the extent of
coverage required under Code Section 4980B). Except as described in
SCHEDULE 2.17, the consummation of the transactions contemplated by this
Agreement will not accelerate the time of payment or vesting, or increase
the amount of compensation due to any employee, officer, former officer or
former employee of the Company. "ERISA Affiliate" means the Company and
each Person that is or has been treated as a single employer or controlled
group member with the Company pursuant to Section 414 of the Code or
Section 4001 of ERISA.
(b) With respect to each "employee benefit plan" (as defined in
ERISA) that is not a "multiemployer plan" or a "multiple employer plan" (as
such terms are defined in Sections 3(37)(A) and 3(40)(A) of ERISA
(multiemployer plans and multiple employer plans are hereinafter referred
to as "Multiemployer Plans")) and that is maintained or contributed to,
currently or in the past, by the Company or any ERISA Affiliate, or with
respect to which the Company or any ERISA Affiliate has liability (the
"Controlled Group Plans"):
(i) there is no Controlled Group Plan that is a "defined
benefit plan" (as defined in Section 3(35) of ERISA);
(ii) each Controlled Group Plan could be terminated as of
the date of the Closing with no liability to Buyer, the Company or
any ERISA Affiliate, other than payment of benefits in the ordinary
course of business; and
(iii) each Controlled Group Plan has been operated in
compliance with ERISA, applicable tax qualification requirements and
all other applicable laws.
(c) There are no Multiemployer Plans maintained by the Company or
any ERISA Affiliate, nor has the Company or any ERISA Affiliate ever
contributed or been required to contribute to any such Plan.
(d) Neither the Company, any ERISA Affiliate or any plan fiduciary
of any Employee Plan has engaged in any transaction in violation of Section
406(a) or (b) of ERISA or any "prohibited transaction" (as defined in Code
Section 4975(c)(1)) that would subject the Company to any taxes, penalties
or other Liabilities resulting from such transaction.
(e) To the knowledge of the Company, none of the Employee Plans is
being audited or investigated by any Governmental Body.
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2.18 OWNERSHIP OF THE COMPANY. SCHEDULE 2.18 describes all ownership
interests in the Company and indicates the owner of each such interest. Except
as described in SCHEDULE 2.18, there are no outstanding options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
obligating the Company or any other Person to issue or sell any ownership
interests in the Company.
2.19 MATERIAL AGREEMENTS.
(a) SCHEDULE 2.19 lists each agreement (whether written or oral and
including all amendments thereto) to which the Company is a party or a
beneficiary or by which the Company or any of the Assets is bound that is
material to the Company or the Assets (collectively, the "Material
Agreements"), including without limitation the following: (i) agreements
pursuant to which the Company sells or distributes any products (other than
Purchase Orders and Short Term Agreements, as defined below); (ii) real
estate leases; (iii) agreements evidencing, securing or otherwise relating
to any indebtedness for borrowed money for which the Company is liable;
(iv) capital or operating leases or conditional sales agreements relating
to vehicles, equipment or other Assets (other than Short Term Agreements);
(v) agreements pursuant to which the Company is entitled or obligated to
acquire any assets from a third party (other than Purchase Orders and Short
Term Agreements); (vi) insurance policies; (vii) employment, consulting,
noncompetition, separation, collective bargaining, union or labor
agreements; (viii) agreements with or for the benefit of any partner or
employee of the Company or, to the knowledge of the Company, any Affiliate
or immediate family member thereof; (ix) agreements under which the Company
is obligated to indemnify, or entitled to indemnification from, any third
party, excluding any agreement that requires indemnification solely for a
breach of such agreement; and (x) any other agreement (other than a
Purchase Order) pursuant to which the Company is required to make or
entitled to receive aggregate payments or other value in excess of
$100,000. SCHEDULE 2.19 identifies any Material Agreements that will be
retained by the Company following the Closing or terminated at or prior to
the Closing and therefore constitute Excluded Assets. For purposes of this
Agreement, (A) "Purchase Order" means a purchase order issued and accepted
in the ordinary course of business that sets forth terms applicable to a
specified purchase or sale of goods or services and does not impose
obligations on either party that relate to any transaction other than such
purchase or sale, and (B) "Short Term Agreement" means an agreement entered
into in the ordinary course of business that is terminable by the Company
on 60 days or less notice and involves aggregate consideration of less than
$20,000.
(b) The Company has delivered to Buyer a copy of each written
Material Agreement and a written summary of each oral Material Agreement.
Except as described in SCHEDULE 2.19, (i) each Material Agreement is in
full force and effect and is valid, binding and enforceable in accordance
with its terms as to the Company and, to the knowledge of the Company, as
to each other party thereto; (ii) there exists no material breach or
material default (or event that with notice or lapse of time would
constitute a material breach or material default) on the part of the
Company or, to the knowledge of the Company, on the
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part of any other party under any Material Agreement; (iii) the Company
has received no written notice of termination or default under any
Material Agreement; and (iv) as of the date of this Agreement, no party
to an agreement under which the Company acquired a substantial portion of
its assets has asserted any claim for indemnification under such agreement.
2.20 CUSTOMERS. Since January 1, 1997, Food Lion has not threatened to,
or notified the Company of any intention to, terminate or materially alter its
relationship with the Company, and there has been no material dispute with Food
Lion.
2.21 INTELLECTUAL PROPERTY RIGHTS. Set forth in SCHEDULE 2.21 is a
complete list of all registered patents, trademarks, service marks, trade names
and copyrights, and applications for and licenses (to or from the Company) with
respect to any of the foregoing (collectively, "Registered Intellectual
Property"), owned by the Company or with respect to which the Company has any
rights. The Company has the right to use all Registered Intellectual Property
and other computer software and software licenses, intellectual property,
proprietary information, trade secrets, trademarks, trade names, copyrights,
material and manufacturing specifications, drawings and designs (collectively,
"Intellectual Property") used by the Company or necessary in connection with the
operation of the Company's business, without infringing on or otherwise acting
adversely to the rights or claimed rights of any Person. Except as described in
SCHEDULE 2.21, the Company is not obligated to pay any royalty or other
consideration exceeding $20,000 per item of Intellectual Property to any Person
in connection with the use of any such Intellectual Property. To the knowledge
of the Company, no other Person is infringing the rights of the Company in any
of its Intellectual Property.
2.22 COMPETING INTERESTS. Except as described in SCHEDULE 2.22, neither
the Company nor, to the knowledge of the Company, any partner or management
level employee of the Company or any Affiliate or immediate family member of any
of the foregoing owns, directly or indirectly, an interest in any Person that is
a competitor, customer or supplier of the Company or that otherwise has material
business dealings with the Company, other than ownership of less than 5% of
publicly traded securities of such Person.
2.23 NO MISREPRESENTATIONS. The representations, warranties and
statements made by the Company in or pursuant to this Agreement are true,
complete and correct in all material respects and do not contain any untrue
statement of a material fact or omit to state any material fact necessary to
make any such representation, warranty or statement, under the circumstances in
which it is made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER AND PARENT
Buyer and Parent jointly and severally represent and warrant to the Company
as follows:
3.1 ORGANIZATION. Each of Buyer and Parent is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
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3.2 AUTHORITY. Buyer and Parent have all requisite power and authority
to execute, deliver and perform under this Agreement and the other agreements,
certificates and instruments to be executed by Buyer or Parent in connection
with or pursuant to this Agreement (collectively, the "Buyer Documents"). The
execution, delivery and performance by Buyer and Parent of each Buyer Document
have been duly authorized by all necessary action, corporate or otherwise, on
the part of Buyer and Parent, to the extent each is a party thereto. This
Agreement has been, and at the Closing the other Buyer Documents will be, duly
executed and delivered by Buyer and Parent, to the extent each is a party
thereto. This Agreement is, and, upon execution and delivery by Buyer and
Parent at the Closing, each of the other Buyer Documents will be, a legal, valid
and binding agreement of Buyer and Parent, enforceable against Buyer and Parent
in accordance with their respective terms, to the extent each is a party
thereto.
3.3 NO VIOLATION. The execution, delivery and performance of the Buyer
Documents by Buyer and Parent, as applicable, will not conflict with or result
in the breach of any term or provision of, or violate or constitute a default
under any charter provision or bylaw or under any material agreement or
instrument or any order, law or regulation to which Buyer or Parent is a party
or by which Buyer or Parent is in any way bound or obligated.
3.4 GOVERNMENTAL CONSENTS. Except as required in connection with the HSR
Act, no consent, approval, order or authorization of, or registration,
qualification, designation, declaration or filing with, any Governmental Body is
required on the part of Buyer or Parent in connection with the transactions
contemplated by this Agreement.
3.5 SUFFICIENT FUNDS. Buyer has sufficient funds and/or funds available
under existing lines of credit to pay the Purchase Price in full as provided for
in SECTION 1.4 and to consummate the transactions contemplated hereby.
3.6 DISCLOSURE. Buyer does not have actual knowledge of any breach of or
inaccuracy in the representations and warranties of the Company contained in
ARTICLE II. For such purposes, Buyer's "actual knowledge" is limited to the
actual, conscious awareness of executive officers of Buyer and Parent who are
directly involved in the transactions contemplated by this Agreement, without
any duty to investigate. Buyer has provided to the Company true, correct and
complete copies of all environmental site assessment reports, surveys, studies
and analyses in the possession of Buyer or Parent or under their control with
respect to the Assets or the Real Property.
3.7 NO MISREPRESENTATIONS. The representations, warranties and
statements made by Buyer and Parent in or pursuant to this Agreement are true,
complete and correct in all material respects. None of such representations,
warranties or statements contains any untrue statement of a material fact or
omits to state any material fact necessary to make any such representation,
warranty or statement, under the circumstances in which it is made, not
misleading.
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ARTICLE IV
COVENANTS AND AGREEMENTS
4.1 CONDUCT OF BUSINESS. Prior to the Closing, unless Buyer otherwise
consents in writing, the Company will (a) operate in the ordinary course of
business and consistent with past practices and use commercially reasonable
efforts to preserve the goodwill of the Company and (except as described in
SCHEDULE 2.10) of its employees, customers, suppliers, Governmental Bodies and
others having business dealings with the Company; (b) except as specifically
contemplated by this Agreement and except as described in SCHEDULE 2.10, not
engage in any transaction outside the ordinary course of business, including
without limitation by making any capital expenditure in excess of $100,000 or
entering into any agreement of a type required to be disclosed pursuant to
SECTION 2.19; (c) not hire new employees or increase the compensation of any
existing employee, except in the ordinary course of business, consistent with
past practice; (d) use commercially reasonable efforts to maintain all insurance
policies and all Permits that are required for the Company to carry on its
business; (e) maintain books of account and records in the usual, regular and
ordinary manner and consistent with past practices; and (f) not knowingly take
any action that would result in a breach (as of the Closing) of the
representations and warranties set forth in SECTION 2.10.
4.2 ACCESS AND INFORMATION. The Company will permit Buyer and its
representatives to have reasonable access to the Company's employees, agents,
assets and properties and all relevant books, records and documents of or
relating to the business and assets of the Company during normal business hours
and will furnish to Buyer such information, financial records and other
documents relating to the Company and its operations and business as Buyer may
reasonably request. The Company will permit Buyer and its representatives
reasonable access to the Company's accountants, auditors and suppliers for
reasonable consultation or verification of any information obtained by Buyer and
will use commercially reasonable efforts to cause such Persons to cooperate
with Buyer and its representatives in such consultations and in verifying such
information. The Company will have the right to participate in any contact with
such Persons. The Company will also permit Buyer to meet on one occasion with
Food Lion (the "Food Lion Meeting") to discuss the Company's business
relationship with Food Lion; PROVIDED, however, that Buyer's questions will be
limited to the subject matters set forth in SCHEDULE 4.2 hereto and the Company
shall be present at such meeting.
4.3 INFORMATION FOR FILINGS. The Company, Buyer and Parent will furnish
each other with all information that is required for inclusion in any
application or filing made by such party or its Affiliates to any Governmental
Body in connection with the transactions contemplated by this Agreement.
4.4 FULFILLMENT OF CONDITIONS BY THE COMPANY. The Company agrees not to
knowingly take any action that would cause the conditions on the obligations of
the parties to effect the transactions contemplated hereby not to be fulfilled,
including without limitation by knowingly taking or knowingly causing to be
taken any action that would cause the representations and warranties made by the
Company herein not to be true and correct as of the Closing. The Company will
take all commercially reasonable steps within its power to cause to be fulfilled
the conditions
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precedent to Buyer's obligations to consummate the transactions contemplated
hereby that are dependent on the actions of the Company.
4.5 FULFILLMENT OF CONDITIONS BY BUYER. Buyer agrees not to knowingly
take any action that would cause the conditions on the obligations of the
parties to effect the transactions contemplated hereby not to be fulfilled,
including without limitation by knowingly taking or knowingly causing to be
taken any action that would cause the representations and warranties made by
Buyer herein not to be true and correct as of the Closing. Buyer will take all
commercially reasonable steps within its power to cause to be fulfilled the
conditions precedent to the obligations of the Company to consummate the
transactions contemplated hereby that are dependent on the actions of Buyer.
4.6 PUBLICITY. Buyer and the Company will cooperate with each other in
the development and distribution of all news releases and other public
disclosures relating to the transactions contemplated by this Agreement.
Neither Buyer or Parent on the one hand nor the Company on the other hand will
issue or make, or allow to have issued or made, any press release or public
announcement concerning the transactions contemplated by this Agreement without
the consent of the other party, except as required by law or stock exchange
requirements, but in any event only after giving the other party a reasonable
opportunity to comment on such release or announcement in advance, consistent
with such applicable legal and stock exchange requirements.
4.7 TRANSACTION COSTS. Buyer will pay (a) all transaction costs and
expenses (including legal, accounting and other professional fees) that it
incurs in connection with the negotiation, execution and performance of this
Agreement and the transactions contemplated hereby, including the filing fees
required for its filing under the HSR Act; and (b) all costs and expenses
associated with obtaining the owner's policy of title insurance and related
surveys referenced in SECTION 5.1(e) or any mortgagee policies of title
insurance. The Company will pay all transaction costs and expenses (including
legal, accounting and other professional fees) that it incurs in connection with
the negotiation, execution and performance of this Agreement and the
transactions contemplated hereby. Buyer and the Company will share equally any
transfer taxes (including sales, use and deed taxes) associated with the
transfer of the Assets from the Company to Buyer.
4.8 NONDISCLOSURE. The Company acknowledges and agrees that, except for
the Excluded Assets, all customer, prospect and marketing lists, sales data,
intellectual property, proprietary information, trade secrets and other
confidential information of the Company (collectively, "Confidential
Information") are valuable assets constituting part of the Assets and, following
the Closing, will be owned exclusively by Buyer. The Company agrees to, and
agrees to use reasonable efforts to cause its representatives to, treat the
Confidential Information, together with any other confidential information
furnished to it by Buyer, as confidential and not to make use of such
information for its own purposes or for the benefit of any other Person (other
than the Company prior to the Closing or Buyer after the Closing). The
foregoing confidentiality obligations will not apply to information that (a) is
at the time of receipt or thereafter becomes publicly known through no wrongful
act of the Company, (b) is received from a third party not
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under an obligation to keep such information confidential and without breach
of this Agreement or (c) is required to be disclosed pursuant to applicable
law or an order or decree of a Governmental Body.
4.9 NAME CHANGE. On the day of the Closing, the Company will file all
documents necessary to change the Company's name to a name bearing no similarity
to "Dairy Fresh, Inc."
4.10 EMPLOYEES; ASSUMED PLANS. Except with respect to the individuals
identified in SCHEDULE 5.1(g), Buyer will offer employment, effective as of the
Closing, to all employees of the Company (including employees on disability,
vacation or other permitted leaves of absence), on terms and conditions
substantially similar (or superior) overall to those described in SCHEDULES 2.16
and 2.17. Buyer will assume sponsorship of the employee benefit plans
identified in SCHEDULE 4.10 (the "Assumed Plans") and all related funding
arrangements and the liabilities associated therewith, and the Company will
assign to Buyer its rights thereunder. The Company acknowledges that, unless
otherwise expressly agreed between Buyer and a particular employee, any employee
to whom Buyer offers employment as of the Closing will be employed on an at-will
basis, and nothing in this Section is intended to guaranty employment to any
individual for any fixed period of employment.
4.11 ASSISTANCE WITH PERMITS. Prior to the Closing, the Company will use
commercially reasonable efforts to assist Buyer in obtaining any Permits that
Buyer will require in order to replace Permits held by the Company that are not
transferable to Buyer.
ARTICLE V
CLOSING CONDITIONS
5.1 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer under
this Agreement are subject to the satisfaction at or prior to the Closing of the
following conditions, but compliance with any such conditions may be waived by
Buyer in writing:
(a) All representations and warranties of the Company contained in
this Agreement shall be true and correct in all material respects at and as
of the Closing with the same effect as though such representations and
warranties were made at and as of the Closing (other than any
representation or warranty that is expressly made as of a specified date,
which shall be true and correct in all material respects as of such
specified date only).
(b) The Company shall have performed and complied in all material
respects with all the covenants and agreements required by this Agreement
to be performed or complied with by it at or prior to the Closing,
including without limitation the delivery of all items required to be
delivered by it pursuant to SECTION 1.7.
(c) The contractual and governmental consents, approvals, orders,
authorizations and notices described in SCHEDULE 5.1(c) shall have been
obtained or given, as applicable. Without limiting the generality of the
foregoing, all filings pursuant to the HSR Act shall have been made by
Buyer, the Company and their respective Affiliates and
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the required waiting period under the HSR Act shall have expired or been
terminated without any threat or commencement of antitrust proceedings
with respect to the transactions contemplated by this Agreement.
(d) Buyer shall have had the opportunity to discuss the Company's
business relationship with Food Lion in the Food Lion Meeting, and Buyer
shall have been satisfied with the substance of such discussions in its
sole discretion; provided that this condition will be deemed to have been
satisfied unless Buyer notifies the Company in writing within three
Business Days after the Food Lion Meeting that this condition has not been
satisfied.
(e) Buyer shall have received an irrevocable commitment for an
owner's policy of title insurance for the owned Real Property, in form and
substance reasonably satisfactory to Buyer and issued by the title
insurance company selected by Buyer, and Buyer shall have received (at its
expense) an ALTA survey with respect to the Real Property that is
reasonably satisfactory to Buyer and sufficient to allow the removal of any
survey exceptions from such title insurance policy. For such purposes,
Buyer acknowledges that the title exceptions described in SCHEDULE 5.1(e)
are satisfactory to Buyer.
(f) The Company shall have delivered to Buyer executed UCC-3
Termination Statements or other releases satisfactory to Buyer to evidence
the release of any Liens on the Assets other than (i) Liens described in
clauses (i) and (ii) of SECTION 2.4(b) and (ii) Liens identified in
SCHEDULE 2.4(b) that are not identified in such schedule as being retained
or satisfied by the Company at or prior to the Closing.
(g) Each of the Persons identified in SCHEDULE 5.1(g) shall have
executed and delivered to Buyer a noncompetition agreement, substantially
in the form of EXHIBIT E hereto.
(g) The Company shall have delivered to Buyer a closing
certificate, substantially in the form of EXHIBIT F hereto.
(h) The Company shall have delivered to Buyer a certificate of the
secretary of its ultimate general partner, substantially in the form of
EXHIBIT G hereto.
(i) The Company shall have delivered to Buyer a legal opinion of
the Company's counsel, substantially in the form of EXHIBIT H hereto.
5.2 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company under this Agreement are subject to the satisfaction at or prior to the
Closing of the following conditions, but compliance with any such conditions may
be waived by the Company in writing:
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(a) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing with the same effect as though such representations and
warranties were made at and as of the Closing.
(b) Buyer shall have performed and complied in all material
respects with the covenants and agreements required by this Agreement to be
performed or complied with by it at or prior to the Closing, including
without limitation the delivery of all items required to be delivered by
Buyer pursuant to SECTION 1.7.
(c) The contractual and governmental consents, approvals, orders,
authorizations and notices described in SCHEDULE 5.1(c) shall have been
obtained or given, as applicable. Without limiting the generality of the
foregoing, all filings pursuant to the HSR Act have been made by Buyer, the
Company and their respective Affiliates and the required waiting period
under the HSR Act has expired or been terminated without any threat or
commencement of antitrust proceedings with respect to the transactions
contemplated by this Agreement.
(d) Buyer shall have delivered to the Company a closing
certificate, substantially in the form of EXHIBIT I hereto.
(e) Buyer shall have delivered to the Company a certificate of the
secretary of Buyer, substantially in the form of EXHIBIT J hereto.
(f) Buyer shall have delivered to the Company a legal opinion of
Buyer's counsel, substantially in the form of EXHIBIT K hereto.
ARTICLE VI
INDEMNIFICATION
6.1 INDEMNIFICATION OF BUYER. The Company will indemnify and hold Buyer,
its Affiliates and their respective directors, officers, employees and agents
(collectively, the "Buyer Parties") harmless from any and all liabilities,
obligations, claims, contingencies, damages, costs and expenses, including all
court costs and reasonable attorneys' fees (collectively, "Losses"), that any
Buyer Party may suffer or incur as a result of or relating to:
(a) the breach of any representation, warranty, covenant or
agreement made by the Company in this Agreement or pursuant to the closing
certificate attached as EXHIBIT F hereto; or
(b) any Liability of the Company, known or unknown, other than the
Assumed Liabilities;
provided that (i) the Buyer Parties will not be entitled to indemnification
under paragraph (a) of this SECTION 6.1 unless the aggregate amount of all
Losses for which indemnification is sought by the Buyer Parties pursuant to such
paragraph exceeds $500,000, in which case the Buyer Parties will be
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entitled to indemnification only to the extent that such Losses exceed
$500,000; (ii) the Buyer Parties will not be entitled to indemnification
under this SECTION 6.1 in an aggregate amount exceeding (A) $5 million with
respect to all claims for indemnification for which Claim Notices (as defined
in SECTION 6.6) are delivered prior to the second anniversary of the Closing;
and (B) $2 million with respect to all claims for indemnification for which
Claim Notices are delivered after the second anniversary of the Closing and
before the fifth anniversary of the Closing; provided, however, that in no
event shall the Company's liability with respect to all claims for
indemnification referred to in subclauses (A) and (B) above exceed $5 million
in the aggregate; (iii) the Buyer Parties will not be entitled to any
indemnification under this SECTION 6.1 with respect to any claim for
indemnification for which a Claim Notice is not delivered prior to the fifth
anniversary of the Closing; (iv) neither the Buyer Parties nor any other
Person claiming through the Buyer Parties will be entitled to indemnification
under this SECTION 6.1 for any Loss to the extent that the Buyer Parties are
entitled to receive insurance proceeds in respect of such Loss; and (v) the
Buyer Parties will not be entitled to indemnification under this SECTION 6.1
for any Loss to the extent that an accrual for such Loss is included in the
calculation of Working Capital.
6.2 LIMITATION ON DISTRIBUTION OF CASH PROCEEDS. For a period from the
Closing until the fifth anniversary of the Closing, the Company agrees that it
will not distribute to any of its partners that portion of the total cash
proceeds received by the Company as part of the Purchase Price (the "Cash
Proceeds") which is equal to the Applicable Holdback Amount. Following the
Closing, the Company shall not conduct any business activity other than to
perform its obligations under this Agreement, to wind up its affairs or as
otherwise required by law. For purposes of this Agreement, "Applicable Holdback
Amount" means (a) with respect to the period from the Closing until the second
anniversary of the Closing an amount equal to: (i) $5,000,000, minus (ii) the
sum of the aggregate Applicable Cap Amounts (as defined below) for such period
of all partners of the Company, all direct or indirect partners or stockholders,
as applicable, of the partners of the Company and any other Person holding a
direct or indirect equity interest therein, who have executed and delivered to
Buyer prior to or at the Closing a guarantee substantially in the form attached
hereto as EXHIBIT L (a "Guarantee") and (b) with respect to the period after the
second anniversary of the Closing and until the fifth anniversary of the
Closing, an amount equal to (i) $2,000,000, minus (ii) the sum of the aggregate
Applicable Cap Amounts for such period for the Persons referred to in subclause
(a)(ii) above; PROVIDED, however, that in the event that the Applicable Holdback
Amount specified above is scheduled to expire and Buyer has given a Claim Notice
to the Company that has not been finally resolved on or before such scheduled
expiration date but that would otherwise be covered by such Applicable Holdback
Amount, then such Applicable Holdback Amount shall not so expire with respect to
such covered Claim Notice until such Claim Notice has been so resolved. For
purposes of this Agreement, "Applicable Cap Amount" means, with respect to any
partner of the Company, any direct or indirect partners or stockholders, as
applicable, of the partners of the Company and any other Person holding a direct
or indirect equity interest therein, the maximum aggregate liability of such
Person to Buyer stated in Section 2 of such Person's Guarantee for the
applicable period referred to above. At the Closing or promptly thereafter, the
Company will cooperate with Buyer to prepare a list indicating the Applicable
Cap Amount of each Person that has executed a Guarantee.
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6.3 SURVIVAL. The representations and warranties of the Company, Buyer
and Parent made in or pursuant to this Agreement and the closing certificates
attached as EXHIBIT F and EXHIBIT I to this Agreement (as applicable), and the
obligations of the parties hereunder to comply with any pre-closing covenants,
will survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby until the second anniversary of the
Closing; provided that (a) the representations and warranties set forth in
SECTIONS 2.4(b) (excluding the representations and warranties concerning title
to the owned Real Property), 2.11, 2.13, 2.15 and 2.17 will survive until the
fifth anniversary of the Closing; and (b) any representation or warranty the
violation of which is made the basis of a claim for indemnification pursuant to
SECTION 6.1 will survive until such claim is finally resolved if Buyer notifies
the Company of such claim in reasonable detail prior to the date on which such
representation or warranty would otherwise expire hereunder. No claim for
indemnification pursuant to SECTION 6.1 based on the breach or alleged breach of
a representation, warranty or pre-closing covenant may be asserted by a Buyer
Party after the date on which such representation, warranty or pre-closing
covenant expires hereunder.
6.4 SOLE REMEDY. Following the Closing, the indemnification provisions
set forth in this ARTICLE VI constitute the Buyer Parties' sole and exclusive
remedy against the Company in respect of the breach of any representation,
warranty, covenant or agreement made by the Company in this Agreement or
pursuant hereto or any allegation by a third party that, if true, would
constitute such a breach; provided that Buyer will be entitled to pursue
injunctive relief with respect to the Company's covenants and agreements in
SECTION 4.6, SECTION 4.8 and ARTICLE VII. In furtherance of the foregoing,
Buyer agrees on behalf of itself and all Buyer Parties that no partner of the
Company shall have any liability to a Buyer Party whatsoever unless such partner
shall have executed and delivered to Buyer a Guarantee, in which case the
liability of such partner shall be limited to the applicable Guaranty.
6.5 INDEMNIFICATION OF THE COMPANY. Buyer and Parent, jointly and
severally, will indemnify and hold the Company and its partners, and their
respective Affiliates and the directors, officers, employees and agents of any
of the foregoing (collectively, the "Company Parties") harmless from any and all
Losses that any Company Party may suffer or incur as a result of or relating to
(a) any of the Assumed Liabilities, or (b) any other liabilities or obligations
arising out of the operation of the Assets by Buyer following the Closing;
provided that the Company will not be entitled to indemnification for any Losses
for which Buyer is entitled to indemnification under SECTION 6.1.
6.6 NOTICE. Any party entitled to receive indemnification under this
ARTICLE VI (the "Indemnified Party") agrees to give prompt written notice (a
"Claim Notice") to the party or parties required to provide such indemnification
(the "Indemnifying Parties") upon the occurrence of any indemnifiable Loss or
the assertion of any claim or the commencement of any action or proceeding in
respect of which such a Loss may reasonably be expected to occur (such a claim,
action or proceeding being referred to as a "Claim"), but the Indemnified
Party's failure to give such notice will not affect the obligations of the
Indemnifying Party under this ARTICLE VI except to the extent that the
Indemnifying Party is prejudiced thereby. Such written notice will include a
reference to the event or events forming the basis of such Loss or Claim and the
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<PAGE>
amount involved, unless such amount is uncertain or contingent, in which event
the Indemnified Party will give a later written notice when the amount becomes
fixed.
6.7 DEFENSE OF CLAIMS. The Indemnifying Party may elect to assume and
control the defense of any Claim, including the employment of counsel reasonably
satisfactory to the Indemnified Party and the payment of expenses related
thereto, if (a) the Indemnifying Party acknowledges its obligation to indemnify
the Indemnified Party for any Losses resulting from such Claim and provides
reasonable evidence to the Indemnified Party of its financial ability to satisfy
such obligation, and (b) the Claim does not seek to impose any material
liability or obligation on the Indemnified Party other than for money damages.
If such conditions are satisfied and the Indemnifying Party elects to assume and
control the defense of a Claim, then (i) the Indemnifying Party will not be
liable for any settlement of such Claim effected without its consent, which
consent will not be unreasonably withheld; (ii) the Indemnifying Party may
settle such Claim without the consent of the Indemnified Party; and (iii) the
Indemnified Party may employ separate counsel and participate in the defense
thereof, but the Indemnified Party will be responsible for the fees and expenses
of such counsel unless (A) the Indemnifying Party has failed to assume the
defense of such Claim or to employ counsel with respect thereto or (B) a
conflict of interest exists between the interests of the Indemnified Party and
the Indemnifying Party that requires representation by separate counsel, in
which case the fees and expenses of such separate counsel will be paid by the
Indemnifying Party. If such conditions are not satisfied, the Indemnified Party
may assume and control the defense of the Claim; provided that the Indemnified
Party may not settle any such Claim without the consent of the Indemnifying
Party, which consent will not be unreasonably withheld; and further provided
that the Indemnifying Party is given a reasonable opportunity to participate in
such defense (at the Indemnifying Party's expense).
6.8 ENVIRONMENTAL CLAIMS.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Company's obligation under SECTION 6.1 to indemnify the Buyer
Parties for Losses resulting from a breach or alleged breach of SECTION 2.15 or
from any Liability that arises or is alleged by a third party to arise out of
any Environmental Law or with respect to any Hazardous Substance (collectively,
an "Environmental Loss") shall be limited to Losses incurred as a result of (i)
claims initiated by a Governmental Body, or (ii) claims initiated by a third
party that is not an Affiliate of the Buyer Parties.
(b) To the extent any indemnifiable Environmental Loss arose from
an act or omission occurring in part prior to the Closing and such act or
omission is continued by Buyer subsequent to the Closing, such Loss will be
prorated between the Buyer Parties, on the one hand, and the Company, on the
other hand, on the basis of the relative length of time such act or omission
occurred before and after the Closing. The foregoing will not imply that an act
or omission that occurs solely prior to the Closing but that continues to cause
additional damage after the Closing will give rise to a shared liability (e.g.,
a leak from a tank that was removed prior to the Closing continues to cause
damages after the Closing).
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<PAGE>
(c) To the extent that any indemnifiable Environmental Loss relates
to a matter requiring remedial action, Buyer will confer with the Company prior
to commencement of and during such remedial action as to the reasonableness of
the type and expense of such remedial action, and the Company will not be liable
for any remediation costs to the extent that they are incurred to achieve a
standard of compliance that is greater than that required by applicable
Environmental Laws or by written instructions or demands from a Governmental
Body.
ARTICLE VII
NONCOMPETITION AGREEMENT
7.1 NONCOMPETITION. For a period of five years following the Closing,
the Company will not, directly or indirectly, on its own behalf or as an agent
of, or as a stockholder, partner or other investor in, any Person (other than
Buyer):
(a) engage in the business of manufacturing, processing,
distributing, marketing or selling processed milk or frozen desserts to
Food Lion stores which are supplied by any Food Lion warehouse located in
North Carolina or frozen desserts provided under private label to Food Lion
stores at any location in the United States (the "Business");
(b) directly or indirectly influence or attempt to influence Food
Lion stores located within the applicable territory described in SECTION
7.1(a) to purchase the applicable goods related to the Business in such
territory described in SECTION 7.1(a) from any Person other than Buyer; or
(c) employ, attempt to employ or solicit for employment in any
position related to the conduct of the Business in the Territory any
individual who is an employee of Buyer at such time or was an employee of
Buyer during the year prior to such time; provided that in either such case
such employee was an employee of the Company at the Closing;
provided that the foregoing will not apply to any investment in publicly traded
securities constituting less than 5% of the outstanding securities in such
class.
7.2 ENFORCEMENT.
(a) The Company acknowledges and agrees that its obligations under
this ARTICLE VII are a material inducement and condition to Buyer's
entering into this Agreement and performing its obligations hereunder and
that the restrictions and remedies contained in this ARTICLE VII are
reasonable as to time, geographic area and scope of activity and do not
impose a greater restraint than is necessary to protect the goodwill and
other legitimate business interests of Buyer.
(b) If the provisions of this ARTICLE VII are found by a court of
competent jurisdiction to contain unreasonable or unnecessary limitations
as to time, geographic area
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or scope of activity, then such court is hereby directed to reform such
provisions to the minimum extent necessary to cause the limitations
contained therein as to time, geographical area and scope of activity to
be reasonable and enforceable.
(c) The Company acknowledges and agrees that Buyer would be
irreparably harmed by any violation of its obligations under this ARTICLE
VII and that, in addition to all other rights or remedies available at law
or in equity, Buyer will be entitled to injunctive and other equitable
relief to prevent or enjoin any such violation.
ARTICLE VIII
MISCELLANEOUS
8.1 TERMINATION. This Agreement and the transactions contemplated hereby
may be terminated and abandoned (a) at any time prior to the Closing by mutual
written consent of Buyer and the Company; or (b) by either Buyer or the Company
if the Closing has not occurred on or prior to July 31, 1997; provided that
(i) Buyer may not terminate this Agreement if the Closing has not occurred
because of Buyer's or Parent's breach of any of their respective covenants or
agreements set forth herein, and (ii) the Company may not terminate this
Agreement if the Closing has not occurred because of the Company's breach of any
of its covenants or agreements set forth herein. If this Agreement is
terminated pursuant to this SECTION 8.1, this Agreement shall become null and
void and neither party shall have any further liability hereunder except that
(A) the provisions of SECTIONS 4.7, 8.3, 8.5, 8.8, 8.9 and 8.10 shall remain in
full force and effect and (B) each party hereto shall remain liable to each
other party hereto for any willful breach of this Agreement by such party prior
to such termination.
8.2 NOTICES. All notices that are required or may be given pursuant to
this Agreement must be in writing and delivered personally, by a recognized
courier service, by a recognized overnight delivery service, by telecopy or by
registered or certified mail, postage prepaid, to the parties at the following
addresses (or to the attention of such other person or such other address as any
party may provide to the other parties by notice in accordance with this SECTION
8.2):
if to Buyer: with copies to:
------------ ---------------
DF Acquisition Corp. Hughes & Luce, L.L.P.
c/o Suiza Foods Corporation 1717 Main Street
3811 Turtle Creek Boulevard, Suite 1300 Suite 2800
Dallas, Texas 75219 Dallas, Texas 75201
Attention: Gregg L. Engles Attention: William A. McCormack
Telecopy: (214) 529-9929 Telecopy: (214) 939-6100
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if to the Company: with copies to:
------------------ ---------------
Dairy Fresh, L.P. Rogers & Wells
c/o ZS Fund L.P. 200 Park Avenue
Suite 2600 New York, NY 10166
120 West 45th Street Attention: Steven Hobbs
New York, NY 10036 Telecopy: (212) 878-8375
Attention: Robert A. Horne
Telecopy: (212) 398-1808
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
8.3 ATTORNEYS' FEES AND COSTS. If attorneys' fees or other costs are
incurred to secure performance of any obligations hereunder, or to establish
damages for the breach thereof or to obtain any other appropriate relief,
whether by way of prosecution or defense, the prevailing party will be entitled
to recover reasonable attorneys' fees and costs incurred in connection
therewith.
8.4 FURTHER ASSURANCES. Each party agrees to execute any and all
documents and to perform such other acts as may be necessary or expedient to
further the purposes of this Agreement and the transactions contemplated hereby.
8.5 BROKERS. Buyer and the Company acknowledge that CIBC Wood Gundy
Securities Corp. ("CIBC") has acted as an intermediary in this transaction, and
Parent and Buyer, jointly and severally, agree to pay the fee payable to CIBC in
respect of such services. With the exception of such fee payable to CIBC, each
party to this Agreement represents to the other party that it has not incurred
and will not incur any liability for brokers' or finders' fees or agents'
commissions in connection with this Agreement or the transactions contemplated
hereby, and agrees that it will indemnify and hold harmless the other party
against any claim for brokerage and finders' fees or agents' commissions in
connection with the negotiation or consummation of the transactions contemplated
by this Agreement.
8.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts for the convenience of the parties hereto, all of which together
will constitute one and the same instrument.
8.7 ASSIGNMENT. Neither this Agreement nor any of the rights, interests
or obligations hereunder may be assigned or delegated by the Company, Buyer or
Parent without the prior written consent of the other parties and any purported
assignment or delegation in violation hereof shall be null and void; except that
Buyer may assign its rights and obligations under this Agreement to any direct
or indirect wholly-owned subsidiary of Parent (provided that Buyer shall remain
primarily liable hereunder). This Agreement is not intended to confer any
rights or benefits on any Person other than the parties hereto and, to the
extent provided in ARTICLE VI, the Buyer Parties and the Company Parties.
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8.8 ENTIRE AGREEMENT. This Agreement and the related documents contained
as Exhibits and Schedules hereto or expressly contemplated hereby contain the
entire understanding of the parties relating to the subject matter hereof and
supersede all prior written or oral and all contemporaneous oral agreements and
understandings relating to the subject matter hereof; provided that the letter
agreement, dated as of March 5, 1997, from the Company to Parent and CIBC shall
remain in effect in accordance with its terms until the Closing. This Agreement
may not be modified or amended except in writing signed by the party against
whom enforcement is sought. The Exhibits and Schedules to this Agreement are
hereby incorporated by reference into and made a part of this Agreement for all
purposes.
8.9 GOVERNING LAW. This Agreement will be governed by and construed and
interpreted in accordance with the substantive laws of the State of New York,
without giving effect to any conflicts of law rule or principle that might
require the application of the laws of another jurisdiction.
8.10 ARBITRATION. Except as expressly otherwise provided for in this
Agreement, upon notice by any party to the others, any dispute, claim, question
or difference which arises under this Agreement shall be finally settled by
arbitration in accordance with the Commercial Arbitration Rules of the American
Arbitration Association and in accordance with the following:
(a) the arbitration tribunal shall consist of one arbitrator
appointed by mutual agreement of the parties, or in the event of failure to
agree within ten Business Days of the notice referred to above, each of the
Company and Buyer shall designate a third Person which is not an Affiliate
of either of them within 25 days of the notice referred to above who
together shall select a third person in which event the arbitration
tribunal shall consist of three arbitrators. If either party shall fail to
designate a Person within such 25 day period, then the Person selected by
the other Party shall act as one arbitrator and the arbitration tribunal
shall consist of one arbitrator. The arbitrator or arbitrators, as the
case may be, shall be qualified by education and training to pass upon the
particular matter to be decided;
(b) the arbitrator shall be instructed that time is of the essence
in proceeding with his determination of any dispute, claim, question or
difference and, in any event, the arbitration award must be rendered within
30 days of the submission of such dispute to arbitration;
(c) the arbitration shall take place in Atlanta, Georgia;
(d) the arbitration award shall be given in writing and shall be
final and binding on the Parties, not subject to any appeal, and shall deal
with the question of costs of arbitration and all matters related thereto;
and
(e) judgment upon the award rendered may be entered in any court
having jurisdiction, or application may be made to such court for a
judicial recognition of the award or an order of enforcement thereof, as
the case may be.
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8.11 CERTAIN DEFINITIONS. For purposes of this Agreement, the following
terms have the meanings indicated:
(a) The "Affiliate" of a Person is defined in the manner applicable
to the term "affiliate" in Rule 144(a)(1) under the Securities Act of 1933,
as amended.
(b) "Business Day" means any weekday (Monday through Friday) on
which banks in New York, New York and Dallas, Texas are open for business.
(c) The "knowledge of the Company" means the knowledge of Barney
Meredith, Roy Hinson and Robert Horne after making reasonable inquiry of
those employees and agents of the Company responsible for the matter at
issue.
8.12 COOPERATION. Following the Closing, each party will afford to the
other party, its counsel and its accountants, during normal business hours,
reasonable access to the books, records and other data of the Company or
relating to the Assets, the Excluded Assets, the Assumed Liabilities or other
liabilities of the Company in its possession with respect to periods prior to
the Closing and the right to make copies and extracts therefrom, to the extent
that such access may be reasonably required by the requesting party (a) to
facilitate the investigation, litigation and final disposition of any claims
which may have been or may be made against any party or its Affiliate and (b)
for any other reasonable business purpose.
28
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
DF ACQUISITION CORP.
By: /s/ Hector M. Nevares
----------------------------------
Hector M. Nevares,
Vice Chairman
DAIRY FRESH L.P.
By: ZS Dairy Fresh L.P., its general partner
By: ZS Dairy, Inc., general partner of
ZS Dairy Fresh L.P.
By: /s/ Robert A. Horne
-----------------------------
Robert A. Horne,
Vice President
SUIZA FOODS CORPORATION
By: /s/ Hector M. Nevares
----------------------------------
Hector M. Nevares,
Vice Chairman
29
<PAGE>
EXHIBITS
- --------
A Assignment and Assumption Agreement
B Bill of Sale
C Real Estate Deed
D Assignment of Trademarks
E Noncompetition Agreement
F Closing Certificate of the Company
G Secretary's Certificate of the Company
H Opinion of Company Counsel
I Closing Certificate of Buyer
J Secretary's Certificate of Buyer
K Opinion of Buyer's Counsel
L Guaranty
SCHEDULES
- ---------
1.2 Excluded Assets
2.4(a) Assets
2.4(b) Liens
2.6 Contractual Consents
2.7 Governmental Consents
2.8(a) Financial Statements
2.8(b) Undisclosed Liabilities
2.10 Changes since Latest Balance Sheet
2.12 Litigation
2.13 Compliance with Laws
2.14 Permits
2.15 Environmental Matters
2.16 Employees
2.17 Employee Benefit Plans
2.18 Ownership of the Company
2.19 Material Agreements
2.21 Intellectual Property
2.22 Competing Interests
4.2 Food Lion Subject Areas
4.10 Assumed Plans
5.1(c) Required Third Party Consents
5.1(e) Title Exceptions
5.1(g) Noncompetition Agreements
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SUIZA FOODS ANNOUNCES ACQUISITION OF DAIRY AND PLASTIC COMPANIES PR NEWSWIRE
JUNE 23, 1997 7:36 AM EDT
DALLAS, June 23 /PRNewswire/ --Suiza Foods Corporation (NYSE: SZA)
announced today that it has signed a definitive agreement to purchase
the stock of three dairy manufacturing companies and 16 affiliated
plastic manufacturing companies headquartered in Franklin,
Massachusetts. The combined businesses had annual sales of approximately
$370 million in their most recent fiscal years. The acquired operations
include: Garelick Farms in Franklin, Massachusetts; Fairdale Farms in
Bennington, Vermont; and Grant's Dairy in Bangor, Maine. They also
include the Miscoe Springs water bottling company in Mendon,
Massachusetts and 16 plastic bottle manufacturing operations located in
Connecticut, Florida, Georgia, Illinois, Louisiana, Maine,
Massachusetts, New Jersey, North Carolina, Ohio, Pennsylvania, Texas and
Virginia. Suiza expects to complete the acquisition within 60 days
pending regulatory approval.
In a separate announcement today Suiza Foods reported that it signed a
definitive agreement to acquire Dairy Fresh of Winston-Salem, North
Carolina. The combined purchase price of the two transactions is
expected to be approximately $400 million in cash and stock, subject to
certain post closing adjustments. Financing for these transactions will
be provided under a recently expanded $700 million senior lending
facility underwritten by First Union National Bank and The First National
Bank of Chicago.
Gregg L. Engles, Suiza's Chairman and Chief Executive Officer,
commented: "The acquisition of Garelick Farms is an exciting opportunity
and an important step forward in our growth strategy. Garelick is the
premier fluid dairy processor in the region, and will provide us an
important base in New England from which to grow in the dairy category.
Garelick's strong brands and its high quality products, workforce and
facilities will become important assets for Suiza Foods. In addition to
the dairy operations, we receive the added benefit of acquiring
a vibrant, very successful and rapidly growing plastic container
manufacturing operation that will provide us with a number of synergies
and additional growth opportunities. We anticipate the acquisition will
be immediately accretive to earnings and, along with adding new
businesses and markets, will complement our existing operations by
improving efficiency and profitability. We expect Garelick Farms' fine
management team and outstanding workforce to stay on and become an
important part of the Suiza family."
Alan Bernon, Garelick Farms President, stated: "Joining Suiza offers
Garelick Farms and its employees an excellent opportunity to join the team
of one of the strongest, fastest growing dairy operators in the country.
Suiza shares our goal of providing our customers with the highest
quality products and efficient service and providing our employees with
a dynamic, growing and secure workplace environment." Peter Bernon,
Garelick Farms Chairman, added: "We have built a strong, multi-faceted
company and have had a significant amount of success in growing it fairly
quickly. By joining forces with Suiza Foods, we can continue to expand
our business with the strength and reputation of one of the finest dairy
companies in the country. Alan and I are going to continue managing this
company under the same family name and by the same quality standards which
have been the hallmark of the Garelick brand for 66 years."
Suiza Foods is a Dallas-based consolidator of distribution oriented food
businesses. Its principal holdings are in the dairy processing and
packaged ice industries and include Suiza Dairy and the Garrido Coffee
Company in Puerto Rico, Velda Farms Dairy in Florida, Swiss Dairy in
California, Model Dairy in Nevada, and Reddy Ice, the largest packaged
ice company in the United States.
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<PAGE>
SUIZA FOODS ANNOUNCES DAIRY FRESH ACQUISITION PR NEWSLETTER
JUNE 23, 1997 7:50 AM EDT
DALLAS, June 23/PRNewswire/ -- Suiza Foods Corporation (NYSE: SZA) announced
today that it has signed a definitive agreement to purchase the assets of
Dairy Fresh L.P., a processor of milk and ice cream based in Winston-Salem,
North Carolina. Terms of the transaction were not disclosed. Dairy Fresh
reported sales of approximately $125 million in its 1996 fiscal year. Suiza
expects to complete the acquisition by July 1, 1997.
In a separate announcement today Suiza Foods reported that it signed a
definitive agreement to acquire Garelick Farms of Franklin, Massachusetts.
The combined purchase price of the two transactions is expected to be
approximately $400 million in cash and stock, subject to certain post closing
adjustments. Financing for these transactions will be provided under a
recently expanded $700 million senior lending facility underwritten by First
Union National Bank and The First National Bank of Chicago.
Gregg L. Engles, Suiza's Chairman and Chief Executive Officer, commented:
"The Dairy Fresh acquisition will provide us an entry into the rapidly
growing Carolinas with a large, highly efficient, regional operator. The
company fits firmly into our strategy of acquiring strong regional dairies.
We anticipate the acquisition will be immediately accretive to earnings and
provide a solid base onto which we can build with add-on acquisitions."
Barney Meredith, Dairy Fresh President, added: "The acquisition by Suiza is an
excellent opportunity for Dairy Fresh and its employees to become part of a
strong, rapidly growing dairy company with a commitment to the highest
product quality, customer service and efficiency. Suiza will keep all of our
management and employees and is committed to growth at Dairy Fresh."
Suiza Foods is a Dallas-based consolidator of distribution oriented food
businesses. Its principal holdings are in the dairy processing and packaged
ice industries and include Suiza Dairy and the Garrido Coffee Company in
Puerto Rico, Velda Farms Dairy in Florida, Swiss Dairy in California, Model
Dairy in Nevada, and Reddy Ice, the largest packaged ice company in the
United States. Diary Fresh L.P. is a partnership organized by ZS Fund L.P. of
New York.
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