1
EXHIBIT 10.4
CAPITAL CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS CAPITAL CONTRIBUTION, ASSIGNMENT AND ASSUMPTION AGREEMENT (this
"Agreement") is entered into as of the 4th day of September, 1997, by and
between Mid-America Dairymen, Inc., a Kansas cooperative marketing association
("Transferor"), and Southern Foods Group, L.P., a Delaware limited partnership
(the "Partnership"). Defined terms used but not defined in this Agreement
shall have the meaning ascribed thereto in the Second Amended and Restated
Agreement of Limited Partnership of the Partnership dated as of September 3,
1997.
WHEREAS, Transferor wishes to contribute to the Partnership, as a
capital contribution (the "Meadow Gold Dairies Contribution"), certain assets
acquired and held by Transferor as more fully described on Exhibit "A" hereto
(the "Assets"), relating to the dairy business of Xxxxxx/Meadow Gold Dairies
Holdings, Inc. ("Holdings") and its subsidiaries (other than the assets of
Xxxxxx/Meadow Gold Dairies, Inc. and Xxxxxx/Meadow Gold Dairies Investments,
Inc.) (the "Business"), subject to the assumption by the Partnership of all
liabilities and obligations of Transferor associated therewith, in exchange for
the issuance to Transferor of Series B 10% Payment-in-Kind Preferred Limited
Partner Interests (the "Series B Preferred Interests"); and
WHEREAS, the parties agree that the Transferor's contribution to the
capital of the Partnership is being made in exchange for the issuance of Series
B Preferred Interests in the original stated amount of $90,000,000; and
WHEREAS, Transferor and the Partnership wish to execute and deliver
this instrument for the purpose of (i) transferring to and vesting in the
Partnership all of Transferor's right, title and interest in and to the
Business and all of the Assets generally, (ii) confirming the assignment by
Transferor and the assumption by the Partnership of the liabilities associated
with the Business and the Assets, and (iii) documenting the issuance of Series
B Preferred Interests in exchange for the transfer of the Assets and the
assumption of the liabilities associated therewith;
NOW, THEREFORE, the parties hereto agree as follows:
1. Assignment of Assets.
(a) Transferor does hereby convey, transfer, assign, set
over to and vest in the Partnership, its successors and assigns forever
as of 3:00 p.m. on September 4, 1997 (the "Effective Time"), all of
Transferor's right, title and interest, legal or equitable, in, to and
under the Assets.
(b) The contribution of the Assets by Transferor to the
Partnership is intended to constitute a contribution of property by
Transferor to the Partnership in exchange for an interest in the
Partnership in accordance with the provisions of Section 721 of the
Internal
1
2
Revenue Code of 1986, as amended. To the extent that any contract,
agreement, instrument, arrangement, lease, sublease, permit, license,
certificate, chose in action, indenture, purchase order, and other
commitment, oral or written, transferred to the Partnership pursuant
to the foregoing provisions of this Section 1 (the "Contracts") shall
be unassignable, this Agreement shall not constitute an assignment
thereof and to the extent that the assignment of any such Contract
shall require the consent of another party thereto or any governmental
agency, this Agreement shall not constitute an assignment of the same,
unless or until such consent is obtained, if an attempted assignment
without such consent of such other party or governmental agency would
constitute a breach thereof, or a violation of law or regulations
thereunder or in any material way affect the rights of Transferor
thereunder. If such consent is not obtained where an attempted
assignment without consent would be ineffective or would affect
Transferor's rights thereunder so that the Partnership would not in
its reasonable judgment receive all such rights, Transferor shall
cooperate with the Partnership in any reasonable arrangement designed
to provide for the Partnership, and its successors and assigns, the
benefits under any such Contract which is not assigned hereby without
such arrangement causing a breach or violation thereof.
Notwithstanding the preceding, this Agreement constitutes (i) an
assignment as between Transferor and the Partnership of all of
Transferor's right, title and interest in and to all Contracts and
(ii) the consent of Transferor to substitute the Partnership in the
place of Transferor on all such Contracts. In addition, in the event
Transferor is unable to secure a novation of any Contract as of the
date hereof, Transferor hereby sells, assigns, transfers and delivers
to the Partnership all of Transferor's benefits under any agreements
constituting the Contracts including, but not limited to, all payments
due Transferor under such agreements after the date hereof.
2. Assumption of Liabilities. The Partnership, for itself, its
successors and assigns, does hereby assume the transfer to it of, and agrees to
perform according to their terms and comply with, all of the liabilities,
claims, duties, costs, expenses, indebtedness and obligations, known and
unknown, whether absolute, accrued, contingent or otherwise, of every kind and
description, to the extent relating to, associated with or arising out of the
Assets or the Business or the conduct thereof as of the Effective Time (the
"Liabilities"), including, without limitation, the following:
(a) all liabilities, obligations and indebtedness under
the terms of that certain $250,000,000 Credit Agreement dated as of
September 4, 1997 between Transferor and The Chase Manhattan Bank, as
administrative agent and the lenders named therein, providing for Term
Loans in an aggregate principal amount of $190 million and a Revolving
Credit Facility in an aggregate principal amount of up to $60 million
(the "Credit Agreement") and the related mortgages, deeds of trust,
security agreements, financing statements, and other collateral
documents provided for in the Credit Agreement;
(b) all liabilities and obligations under or in
connection with the Assets;
(c) all liabilities and obligations under or in
connection with unfulfilled purchase orders or sales commitments of
the Business existing as of the Effective Time;
2
3
(d) all liabilities and obligations under or in
connection with the returns of products sold as part of the Business
as of the Effective Time;
(e) All liabilities of the Business under the terms of
that certain Compliance Agreement in Lieu of Debarment dated October
18, 1996, among Xxxxxx, Inc., Xxxxxx/Meadow Gold Dairies, Inc. and the
Food and Consumer Service of the United States Department of
Agriculture; and
(f) all liabilities and obligations relating to
litigation identified in Schedule L-1.
Notwithstanding the foregoing, the Liabilities shall not include any
liabilities and obligations of Transferor or its subsidiaries or affiliates
that are not related to the Assets or the Business. Liabilities that are
non-recourse according to their terms or that are non-recourse to the
Transferor remain non-recourse against the Partnership.
Notwithstanding anything contained in this Agreement to the contrary,
the Partnership acknowledges and agrees that its assumption of the liabilities,
obligations and indebtedness of Transferor under the terms of the Credit
Agreement and the collateral documents provided for therein shall be absolute
and unconditional whether or not the Credit Agreement or any collateral
documents provided for therein are legal, valid and binding obligations of
Transferor. The Partnership's liability under the Credit Agreement is solely
against the assets of the Partnership, and no Partner shall have any personal
liability for the payment of indebtedness owed under the Credit Agreement.
3. Other Agreements Evidencing the Meadow Gold Dairies
Contribution. Transferor and the Partnership acknowledge that certain other
documents between them, specifically those listed on Exhibit "B" to this
Agreement (the "Other Documents"), also transfer assets or liabilities relating
to the Business and are a part of the Meadow Gold Dairies Contribution.
4. Series B Preferred Interests. At the time the assignment of
the Assets to the Partnership becomes effective pursuant to the provisions
hereof, Transferor shall receive NINETY MILLION DOLLARS ($90,000,000) in stated
amount of Series B Preferred Interests in the Partnership, and in recognition
thereof, Transferor's Capital Account with respect to the Series B Preferred
Interests shall be credited with the sum of NINETY MILLION DOLLARS
($90,000,000).
5. Further Measures. Transferor, for itself, its successors and
assigns, hereby covenants that, from time to time after the delivery of this
instrument, at the Partnership's request and without further consideration,
Transferor will do, execute, acknowledge and deliver, or will cause to be done,
executed, acknowledged and delivered, all and every such further acts,
conveyances, transfers, assignments, powers of attorney and assurances as the
Partnership reasonably may require more effectively to convey, transfer to and
vest in the Partnership, and to put the Partnership in possession of, any of
the Assets. Without in any way limiting the generality of the covenants
provided for in the immediately preceding sentence, Transferor hereby agrees to
promptly transfer and convey to the defined benefit plan established by the
Partnership for the employees of the Business, all assets if
3
4
any, received by Transferor from Xxxxxx, Inc. relating to employees of the
Business who were participants in the Xxxxxx Employees' Retirement Income Plan
and shall request that the trustees of the Xxxxxx Retirement Savings Plan, the
Xxxxxx Union Savings Plan and the Xxxxxx Associate Savings Plan (collectively,
"the Savings Plans") to transfer to the trustees of the defined contribution
plan established by the Partnership for the employees of the Business the
following amount: (a) the full account balances of all employees of the
Business, whose account balances shall be accredited with appropriate earnings
and contributions if any, attributable to the period ending on the close of
business on the day immediately preceding the date hereof, plus (b) earnings on
such account balances attributable to the period from the date hereof to the
Transfer Date (as defined in that certain Stock Purchase and Merger Agreement
dated as of May 22, 1997, among Transferor, Xxxxxx/Meadow Gold Dairies
Holdings, Inc., and BDH Two and Xxxxxx, Inc.), reduced by (c) any benefit or
with withdrawal payments in respect of the employees of the Business prior to
the Transfer Date. The Partnership, for itself, its successors and assigns,
hereby covenants that, from time to time after the delivery of this instrument,
at Transferor's request and without further consideration, the Partnership will
do, execute, acknowledge and deliver, or will cause to be done, executed,
acknowledged, and delivered, all and every such further acts, conveyances,
transfers, assignments, powers of attorney and assurances as Transferor
reasonably may require more effectively to convey, transfer to and vest in the
Partnership the Assets.
6. Warranties. Transferor and the Partnership each represents
and warrants to the other that the execution, delivery and performance of this
Agreement by it has been duly authorized by all necessary corporate or
partnership action on its part and that this Agreement has been duly executed
and delivered by it and constitutes the valid and binding agreement of it in
accordance with its terms. ALL SALES, TRANSFERS, CONVEYANCES, ASSIGNMENTS AND
DELIVERIES MADE OR TO BE MADE HEREUNDER WILL BE MADE WITHOUT REPRESENTATION OR
WARRANTY (EXCEPT AS SET FORTH IN THIS PARAGRAPH 6) OF ANY KIND (INCLUDING,
WITHOUT LIMITATION, ANY REPRESENTATION OR WARRANTY OF TITLE). ALL ASSETS,
RIGHTS AND BUSINESS SOLD, TRANSFERRED, CONVEYED, ASSIGNED AND DELIVERED
HEREUNDER ARE SOLD, TRANSFERRED, CONVEYED, ASSIGNED AND DELIVERED "AS IS,"AND
TRANSFEROR AND THE PARTNERSHIP EACH EXPRESSLY DISCLAIMS ANY WARRANTIES OF
CONDITION, MERCHANTABILITY OR FITNESS FOR A PARTICULAR USE OR PURPOSE. This
Agreement is made, however, with full rights of substitution and subrogation of
the Partnership in, to and under all covenants, warranties and other rights of
indemnification by others heretofore given or made with respect to any of the
Assets, subject to Paragraph 1(b). Each party hereto hereby waives compliance
with the bulk sales law or any similar law in any applicable jurisdiction in
respect of the transactions contemplated by this Agreement.
7. Sales Taxes and Recording Fees. The parties agree that the
Partnership shall pay all sales, use and similar taxes arising out of the
sales, transfers, conveyances, assignments and deliveries made or to be made
hereunder, and shall pay all documentary, filing and recording fees required in
connection therewith.
4
5
8. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which,
together, shall constitute one and the same instrument.
9. Severability. If any provision of this Agreement or the
application of such provision shall be held by a court of competent
jurisdiction to be unenforceable, the remaining provisions of this Agreement
shall remain in full force and effect.
10. Captions. The captions herein are for convenience only and
shall not be considered a part of this Agreement for any purpose, including,
without limitation, the construction or interpretation of any provision hereof.
11. GOVERNING LAW. THIS AGREEMENT SHALL BE CONTROLLED, CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS APPLICABLE TO
AGREEMENTS MADE AND TO BE PERFORMED IN THAT STATE, WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES.
IN WITNESS WHEREOF, each of the parties has caused this instrument to
be signed on its behalf by a duly authorized officer as of the date first
written above.
MID-AMERICA DAIRYMEN, INC.
By: /s/ XXXXXX X. XXX
----------------------------------
Its: CFO
------------------------------
SOUTHERN FOODS GROUP, L.P.
By: SFG Management Limited Liability
Company, General Partner
By: /s/ XXXX XXXXXXXX
------------------------------
Its: President
--------------------------
5
6
This Agreement is being executed by Xxxx Xxxxxxxx for the purpose of
consenting to the issuance of $90 million in stated amount of Series B 10%
Payment-in-Kind Preferred Limited Partner Interests in the Partnership to the
Transferor as a Preferred Limited Partner holding such Preferred Limited
Partner Interests.
/s/ XXXX XXXXXXXX
--------------------------------------------
Xxxx Xxxxxxxx, as a Common Limited Partner
6
7
EXHIBIT "A"
Assets
All of the assets, rights and property of every kind, character and
description, whether tangible or intangible, whether real, personal or mixed,
whether accrued or contingent, and wherever located, constituting part of,
principally utilized in or principally related to the Business as it shall
exist on the Effective Time, including the assets of the Business as reflected
on the July 26, 1997 Balance Sheet of Meadow Gold Dairies attached hereto (the
"Balance Sheet") and including, without limitation, the following:
(a) all cash and cash equivalents of the Business on hand and in
banks or other financial institutions as of the Effective Time
(including checks held in lock boxes or not yet cashed);
(b) notes and accounts receivable principally relating to the
Business;
(c) all raw materials, supplies, work-in process, finished goods
and other materials included in the inventory of the Business;
(d) all real property and buildings and improvements thereon
utilized in or relating to the Business, including, without
limitation, all real property and buildings and improvements
thereon listed or described in Schedule A-1 hereto;
(e) all real estate leases and leasehold improvements utilized in
or relating to the Business, including, without limitation, all
real estate leases and leasehold improvements listed or
described in Schedule X- 0 hereto;
(f) all machinery, equipment, vehicles, furniture and other
personal property utilized in or relating to the Business,
including, without limitation, all machinery, equipment,
vehicles, furniture and other personal property listed or
described in Schedule A-3 hereto;
(g) all personal property leases utilized in or relating to the
Business, including, without limitation, all personal property
leases described in Schedule A-4 hereto;
(h) all contracts, licenses, agreements or understandings utilized
in or relating to the Business, including, without limitation,
all contracts, agreements or understandings listed or described
in Schedule A-5 hereto;
(i) all of Transferor's rights, claims or causes of action against
third parties relating to the Assets or the Business arising
out of transactions occurring prior to the Effective Time;
Exhibit A - Page 1
8
(j) all United States and foreign trademarks, and trade names,
service marks, patents, know-how, copyrights and other similar
proprietary intellectual property rights (including any
registration or any of the foregoing or applications for
registration thereof ) in each case owned by or licensed to
Holdings and its subsidiaries (other than Xxxxxx/Meadow Gold
Dairies, Inc. and Xxxxxx/Meadow Gold Dairies Investments,
Inc.);
(k) all permits, licenses and other governmental authorizations
which pertain to the Business;
(l) all computer software and data used by the Business;
(m) all of the goodwill associated with the Business or the Assets;
and
(n) all books and records relating to the Assets or the Business,
whether in hard copy or computer format, used by the Business,
including without limitation, sales and promotional literature,
manuals, and data, sales and purchase correspondence, list of
present and former suppliers, list of present and former
customers, personnel and employee records, and any information
relating to taxes imposed on the Business or the Assets.
Notwithstanding the foregoing, the Assets shall not include any assets, rights
or properties that are not utilized in or related to the Business.
Exhibit A - Page 2
9
EXHIBIT "B"
Other Documents
1. Assignment and Assumption Agreement Relating to Stock Purchase and
Merger Agreement, dated September 4, 1997, between Mid-Am and the
Partnership.
2. Assignment and Assumption Agreement Relating to Master Customer
Services Agreement and Insurance Matters Agreement, dated as of the
Closing Date, between Mid-Am and the Partnership.
3. Sublease Agreement, dated as of the Closing Date, between Mid-Am and
the Partnership.
4. Telephone Equipment Sublease Agreement, dated as of the Closing Date,
between the Partnership and Mid-Am.
5. Trade Payables/Receivables Reconciliation Agreement between Xxxxxx
Foods Corporation and the Partnership.
Exhibit B - Page 1
