EXHIBIT (e)(1)
ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT (this "Agreement") made as of January 30,
1997, by and between XXXXXXXX'X FOODS, INC., a Virginia corporation (hereinafter
referred to as "Seller"), THE SMITHFIELD HAM & PRODUCTS COMPANY, INCORPORATED, a
Virginia corporation (hereinafter referred to as "Buyer"), THE SMITHFIELD
COMPANIES, INC., a Virginia corporation (hereinafter referred to as "Company"),
XXXXXX MULES, individually (hereinafter referred to as "Mules"), and XXXXX
XXXXXX, individually (hereinafter referred to as "Xxxxxx").
R E C I T A L S:
WHEREAS, Seller desires to sell certain of its assets used in the
manufacturing division of Seller's business for the production and sale of the
Products set forth on the attached Exhibit A which is incorporated in and made a
part of this Agreement (the "Products");
WHEREAS, Buyer desires to purchase said assets used in Seller's
manufacturing division for the production and sale of the Products (the
"Business") as more fully set forth in this Agreement;
WHEREAS, Seller desires to acquire and Company desires to sell certain
common stock of Seller as an integral part of the transactions provided for in
this Agreement; and
WHEREAS, Mules and Xxxxxx are entering into this Agreement for the sole
purpose of contractually obligating themselves to the execution and delivery of
the Non-Competition Agreements described herein, which said Non-Competition
Agreements are an integral part of the transaction provided for in this
Agreement.
NOW, THEREFORE, in consideration of the mutual representations,
warranties, covenants and agreements, and upon the terms, and subject to the
conditions hereinafter set forth, the parties hereby agree as follows:
ARTICLE I. PURCHASE OF ASSETS
1.1 Purchase and Sale. Seller shall sell, convey, transfer, assign and
deliver to Buyer, and Buyer shall purchase and accept from Seller, at the
Closing (as that term is defined in Section 4.1), all of Seller's right, title
and interest in and to the assets listed on Schedule 1.1A (the assets being
purchased hereunder from Seller are hereinafter sometimes collectively referred
to as the "Purchased Assets"); free and clear of any and all options, pledges,
mortgages, security interests, liens, charges, burdens and other encumbrances
whatsoever. The Purchased Assets shall not include cash and cashequivalents,
prepaid expenses (except sales and marketing prepaid expenses), notes
receivable, accounts receivable, rent receivable, and all other assets,
properties, rights, claims and contracts set forth on Schedule 1.1B (hereinafter
and hereinabove referred to as the "Excluded Assets").
ARTICLE II. PURCHASE PRICE
2.1 Cash Purchase Price. The purchase price for the Purchased Assets
shall be (a) $625,000 (the "Base Price"); (b) plus the value, as of the Closing
Date, valued at the lower of cost or current market as of the Closing Date, of
all good and useable raw materials and packaging inventories, and all saleable
finished goods inventories of Products.
2.2 Non-Assumption and Assumption of Certain Obligations. (a) Buyer
shall not be obligated to hire any of Seller's employees and shall not assume
and shall not be liable for the payment, performance or discharge of any debts,
contracts, agreements, liabilities, obligations, commitments, restrictions,
disabilities or duties, whether direct or indirect, fixed, contingent or
otherwise, of Sellers, except that Buyer shall assume the vendor and customer
purchase orders, contract packaging agreements, and private label agreements
related to the Purchased Assets, entered into by Seller prior to the Closing
Date in the ordinary course of Business, provided such vendor and customer
purchase orders, contract packaging agreements, and private label agreements are
set forth on Schedule 2.2 or have been entered into between the execution hereof
and the Closing Date and have been approved by Buyer, in writing, prior to the
Closing Date. Schedule 2.2 shall be updated on the Closing Date to show each
vendor and customer purchase order that Buyer will assume at Closing.
2.3 Allocation of Purchase Price. (a) The Base Price for the Assets
shall be allocated among the Purchased Assets as follows:
A. Machinery and Equipment, Furniture and
Labels (Paragraphs A, C and D on
Schedule 1.1A excluding raw materials,
packaging inventories and finished goods) $ 323,000
B. Contracts, Customers Lists, Recipes
and Formulas, and Prepaid Expenses
(Paragraphs B and E on Schedule 1.1A) $ 290,000
D. Non-compete Seller $ 10,000
E. Non-compete Mules $ 1,000
F. Non-compete Xxxxxx $ 1,000
ARTICLE III. PAYMENT OF PURCHASE PRICE
3.1 Cash Payable at Closing. At the Closing, Buyer shall deliver to
Seller a cashier's check or wire transfer of immediately available funds for an
amount equal to the Base Purchase Price (except for that portion thereof
allocated in Section 2.3 to the Mules and Xxxxxx Non-Competition Agreements,
which said portion shall be paid to them) plus the value of the inventory taken
and determined pursuant to Section 3.2.
3.2 Physical Inventory. At 5:00 P.M. on February 24, 1997, Seller shall
cease/terminate the manufacture and processing of the Products. An inventory
shall be taken on February 25 - 27, 1997, of all good
and useable raw materials and packaging materials (excluding labels) of the
Business and of all saleable finished goods and products of the Business. The
good and useable raw materials and packaging inventories of the Business shall
be valued at the cost paid by Seller for same, and the saleable finished goods
so inventoried shall be valued at Seller's manufacturing division listed
wholesale price as shown on Schedule 3.2 less twenty-five percent (25%).
For purposes of this Section 3.2, good and useable raw materials and
packaging materials shall include only those raw materials that are in
quantities reasonably required for the conduct of the Business and sufficiently
fresh for use in the production of the Products by Buyer following the Closing
Date and saleable finished goods shall include only those goods that are of
sufficient quality and freshness for sale to Seller by Buyer following the
Closing Date under the terms of the Product Supply Agreement attached hereto as
Exhibit B.
ARTICLE IV. DATE AND PLACE OF CLOSING
4.1 Date and Place of Closing. Subject to satisfaction or waiver of the
conditions to the obligations of the parties, the purchase and sale of the
Purchased Assets pursuant to this Agreement shall be consummated at a closing
(the "Closing") to be held in the offices of McGuire, Woods, Battle & Xxxxxx in
Norfolk, Virginia or such other place as mutually agreed on by the parties, at
10:00 A.M. on February 28, 1997, or such other date as the parties may mutually
agree upon (the "Closing Date"). Title to the Purchased Assets shall pass from
Seller to Buyer at the Closing.
ARTICLE V. CLOSING
5.1 Seller's Performance. At the Closing, concurrently with performance
by Buyer of its obligations to be performed at the Closing:
5.1.1 Conveyances. (a) Seller shall execute and deliver to Buyer, in
form and substance acceptable to Buyer, (i) warranty bills of sale conveying to
Buyer all tangible personal property and other tangible assets owned by it and
included among the Purchased Assets, (ii) assignments of Seller's claims, rights
and benefits, to and under the vendor and customer purchase orders, contract
packaging agreements, and private label agreements to be assumed by Buyer
pursuant to Section 2.2, and all transferable licenses, permits, certificates,
manufacturer equipment warranties, and authorizations pertaining to the
Purchased Assets.
(b) Seller shall execute and deliver to Buyer all other conveyances,
bills of sale, assignments, endorsements and instruments of transfer as shall be
necessary or appropriate to carry out the intent of this Agreement, and as shall
be sufficient to vest in Buyer title to all of the Purchased Assets and all
right, title and interest of Sellers thereto. If requested by Buyer, such
documents shall be in a form suitable for recording.
5.1.2 Records. Seller shall deliver to Buyer all customer lists, sales
contracts, contract packaging agreements, private label agreements, sales lists,
licenses, and business files and records, formulas, recipes, seasoning recipes,
processing procedures, research and development records, advertising materials
and labels relating to the Products, including without limitation the contracts
set forth on Schedule 2.2 hereof (hereinafter sometimes collectively referred to
as the "Records").
5.1.3 Certificates and Opinions. Seller shall execute and deliver to
Buyer the certificates referred to in Sections 10.3 and 10.4 and deliver to
Buyer the opinions of counsel referred to in Section 10.8.
5.1.4 Supply Agreement. Execute and deliver the Product Supply
Agreement between Seller and Buyer, the form of which is attached hereto as
Exhibit B (the "Supply Agreement").
5.1.5 License Agreement. Execute and deliver the License Agreement
between Seller and Buyer, the form of which is attached hereto as Exhibit C (the
"License Agreement").
5.1.6 Non-Competition Agreement. Execute and deliver the
Non-Competition Agreement between Seller and Buyer, the form of which is
attached hereto as Exhibit D (the "Non-Competition Agreement").
5.1.7 Other Actions. Seller shall take all such other steps as may be
necessary or appropriate to put Buyer in actual and complete ownership and
possession of the Purchased Assets.
5.1.8 Stock Purchase. Seller shall deliver to Company the cashier's
check or wire transfer referred to in Section 9.2. for the purchase by Seller of
all of the shares of the common stock of Seller owned by Company on the Closing
Date, up to but not exceeding 16,500 shares.
5.2 Buyer's Performance. At the Closing, concurrently with the
performance by Seller of its obligations to be performed at the Closing:
5.2.1 Purchase Price. Buyer shall deliver to Seller the cashier's check
or wire transfer specified in Section 3.1.
5.2.2 Supply Agreement. Buyer shall execute and deliver to Seller the
Supply Agreement.
5.2.3 Assumption Agreement. Buyer shall execute and deliver to Seller
an agreement to assume the vendor and customer purchase orders, contract
packaging agreements, and private label agreements, Buyer has agreed to assume
pursuant to Section 2.2. The form of the Assumption Agreement is attached hereto
as Exhibit E.
5.2.4 Certificates and Opinions. Buyer shall execute and deliver to
Seller the certificates referred to in Sections 11.3 and 11.4 and deliver the
opinions of counsel referred to in Section 11.6.
5.2.5 License Agreement. Buyer shall execute and deliver to Seller the
License Agreement.
5.2.6 Non-Competition Agreement. Buyer shall execute and deliver to
Seller the Non-Competition Agreement.
5.3 Company's Performance. At the Closing, concurrently with the
performance by Seller of its obligations to be performed at the Closing:
5.3.1 Transfer of Stock. Company shall endorse and deliver to Seller
all of the shares of the common stock of Seller and owned by Company on the
Closing Date, up to but not exceeding 16,500 shares.
5.4 Further Action by Parties. In addition to the foregoing, the
parties agree as follows:
5.4.1 Further Action by Seller. At any time and from time to time, at
or after the Closing, upon request of Buyer, Seller shall do, execute,
acknowledge and deliver or shall cause to be done, executed, acknowledged and
delivered, all such further acts, assignments, transfers, conveyances, powers of
attorney and assurances as may reasonably be required in order to vest in and
confirm to Buyer full and complete title to and, possession of, and the right to
use and enjoy, the Purchased Assets.
5.4.2 Further Action by Buyer. At any time and from time to time, at or
after the Closing, upon request of Seller, Buyer shall do, execute, acknowledge
and deliver or shall cause to be done, executed, acknowledged and delivered all
such further acts and assurances as may reasonably be required to complete the
assumption by Buyer of its obligations assumed by Buyer pursuant to this
Agreement including without limitation the Assumption Agreement.
ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller represents and warrants to Buyer that:
6.1 Due Organization and Qualification. Seller is a corporation duly
organized, validly existing, qualified to do business, and in good standing
under the laws of the State of Virginia.
6.2 Corporate Power and Authority. The Board of Directors of Seller
have duly approved this Agreement and the transactions contemplated hereby. The
execution and delivery of this Agreement and the performance by Seller of its
obligations hereunder have been duly authorized by all requisite corporate
action, and no further action or approval is required in order to permit Seller
to consummate the transactions contemplated by this Agreement. Seller has full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby. The making and performance of this
Agreement and the consummation of the transactions contemplated hereby in
accordance with the terms hereof will not (a) conflict with the Certificate or
Articles of Incorporation or the Bylaws of Seller, (b) result in any breach or
termination of, or constitute a default under, or constitute an event that with
notice or lapse of time, or both, would become a default under, or result in the
creation of any Encumbrance upon any of the Purchased Assets, or create any
rights of termination, cancellation, or acceleration in any person under any
vendor or customer purchase order assumed by Buyer hereunder, or violate any
order, writ, injunction or decree by which any of the Purchased Assets, or the
Business may be bound or affected or under which any of the Purchased Assets, or
the Business receive benefits, (c) result in the loss or adverse modification of
any material license, permit or other authorization granted to or otherwise held
by Seller and related to the Purchased Assets, or the Business, (d) violate any
provision of any law, ordinance, regulation, rule, requirement or order to which
Seller, the Purchased Assets, or the Business, are subject, except for
violations that, in the aggregate, would not have a material adverse affect upon
the business, operations, condition (financial or otherwise), results of
operations, value or prospects of the Purchased Assets, or the Business, (a
"Material Adverse Effect").
6.3 Title. Seller has and upon conveyance, transfer and assignment of
the Purchased Assets to Buyer by Seller at the Closing, Buyer will acquire and
hold, good and marketable title in fee simple to all of the Purchased Assets, in
each case, free and clear of any and all options, rights, pledges, mortgages,
security interests, liens, charges, burdens, servitudes and other encumbrances
whatsoever (herein sometimes collectively referred to as "Encumbrances").
Neither Seller, any affiliate or subsidiary of Seller owns or holds under lease
any assets of any kind, character or description that are utilized in a material
way to the Business or the Purchased Assets, except as set forth on Schedule
6.3.
6.4 Inventories. The Inventories consist of current items of a quality
and quantity that are usable or marketable in the ordinary course of the
Business, and items not so usable or marketable in the Business have been
written down in value to estimated net realizable market values. Since January
1, 1997, the Inventories have been maintained at a level consistent with the
operation of the Business in its normal course, and no change has occurred in
such Inventories that materially adversely affects or will materially adversely
affect their usability or salability. Orders for inventory items have not been
given for amounts materially in excess of the amounts necessary to maintain the
Inventories of Seller for the Business at normal levels based on past practice.
Notwithstanding the foregoing, Buyer acknowledges and agrees that, from
the date of the execution of this Agreement until Closing, Seller intends only
with
Smithfield's permission to be rendered on a weekly basis, to reduce Inventories
below its historically normal levels based on past practice. Seller agrees to
keep Buyer informed of its running estimate as to the expected levels of the
Inventories at Closing. In addition, Seller will cooperate with and assist Buyer
during the pre-Closing period to prepare for Buyer's production of the Products
as soon as practicable after Closing, provided that such assistance shall not
require additional out-of-pocket expenses. In the event that Closing does not
occur, (i) Buyer agrees that it will promptly return to Seller and keep
confidential all formulas, recipes, and materials provided by Seller and (ii)
Seller agrees to purchase all Products that Buyer may have produced provided
said Product is of reasonable quality and was produced according to the formulas
and recipes provided to Buyer by Seller, the price for same to be calculated in
accordance with the valuation method of Xxxxxxxx'x compensible product items
under the provisions of Section 3.2.
6.5 Physical Properties. Schedule 6.5 sets forth an accurate and
complete listing of all tangible personal property and other tangible assets
owned or leased by Seller and used in the Business, other than Inventory and
other than raw materials and other similar assets used or consumed in the
ordinary course of business between the date hereof and the Closing Date. All
equipment and machinery included among the Purchased Assets are sold "as is"
except that Seller warrants that the equipment and machinery is in good
operating condition and repair and sufficient to operate the Business as
presently conducted and are not deemed unsafe or unsanitary. Seller enjoys
peaceful possession of the Purchased Assets.
6.6 Contracts. Schedule 6.6 sets forth a brief description of all
material contracts, consulting agreements, contract packaging agreements,
private label agreements, employment agreements, other agreements, leases,
arrangements and commitments (whether oral or written) to which Seller is a
party and by which any of the Purchased Assets, or the Business are affected or
are bound, except vendor and customer purchase orders, contract packaging
agreements, and private label agreements, in the ordinary course of business
consistent with past practice, assumed by Buyer under this Agreement and set
forth on Schedule 2.2.
6.7 Contract Defaults. To the best of Seller's knowledge, no other
party thereto is, in default in any material respect under any of the contracts,
agreements, leases, arrangements and commitments listed on Schedules 6.6 or the
contracts described in Section 2.2 to be assigned to and assumed by Buyer. To
the best of Seller's knowledge, (a) there has not occurred any event which, with
the lapse of time or giving of notice or both, would constitute such a material
default; (b) such contracts, agreements, leases, arrangements, and commitments
are legal, valid, and binding obligations of the respective parties thereto in
accordance with their terms and, except to the extent reflected in Schedules 6.6
have not been amended; and (c) no defenses, offsets, or counterclaims thereto
have been asserted, or to the best knowledge of Seller, may validly be made, by
any party thereto other than Seller.
6.8 Litigation. Schedule 6.8 sets forth all actions, suits,
proceedings, investigations, or grievances pending against Seller to the best
knowledge of Seller, threatened against Seller, and affecting the Purchased
Assets, or the Business, or involving products manufactured by Seller in its
manufacturing division, at law, in equity or in admiralty, before or by any
court or any federal, state, municipal or other governmental department,
commission, board,
bureau, agency or instrumentality, domestic or foreign (hereinafter sometimes
collectively referred to as "Agencies"). None of the actions, suits, proceedings
or investigations listed on Schedule 6.8, either (a) has resulted in, or would,
if adversely determined, result in, a Material Adverse Effect, or (b) has
affected, affects or would, if adversely determined, affect the right or ability
of Seller to carry on the Business substantially as now conducted. To Seller's
knowledge, Seller is neither subject to nor in default of any continuing court
or Agency order, writ, injunction or decree, applicable to the Purchased Assets
or the Business.
6.9 Compliance with Laws. Except as listed on Schedule 6.9 A., Seller,
to the best of its knowledge, (a) has complied with, is in compliance with, and
has no basis to believe it is not in compliance with, all federal, state,
county, and municipal laws, ordinances, regulations, rules, requirements and
orders applicable to the Purchased Assets or the Business to the operation of
the Business, the breach or violation of which could have a Material Adverse
Effect, (b) has filed with the proper authorities all statements and reports
required by all laws, ordinances, regulations, rules, licensing and other
requirements and orders to which the Purchased Assets or the Business, is
subject the failure to file which could have a Material Adverse Effect, and none
of such statements and reports contains untrue statements of material fact or
omits any statement of material fact necessary to make such statements and
reports not misleading, and (c) has obtained and maintained all licenses,
permits and governmental authorizations necessary for the present ownership and
use of the Purchased Assets and for the conduct of the Business in the manner in
which and in the jurisdictions and places where the Business is now conducted
the failure to have which could have a Material Adverse Effect. Seller has not
received written notice of any violation of, or any pending investigation under,
any of such laws, ordinances, regulations, rules, licensing and other
requirements and orders during the last three (3) years related to the Business.
Schedule 6.9B correctly lists all material licenses, permits, certificates,
approvals, memberships and authorizations, and all registrations and
applications pending before any agency or authority for the issuance of any
licenses, permits, certificates, approvals, memberships or authorizations or the
renewal thereof related to the Business. Seller has no franchises relating to
its Business, and none are presently required for the conduct thereof.
6.10 Attachments and Other Proceedings. There are no attachments,
executions, assignments for the benefit of creditors, receiverships,
conservatorships or voluntary or involuntary proceedings in bankruptcy or
pursuant to any debtor relief laws contemplated or filed by Seller or pending
against Seller.
6.11 Taxes. Seller has duly filed, or has duly obtained effective
extensions for filing, all U.S. federal, foreign, state, county, local and other
excise, franchise, property, payroll, income, profits, capital stock, sales and
use, and other tax returns which are required to be filed, and all such returns
are true and correct in all material respects. Seller has paid, collected or
withheld and remitted to the appropriate governmental agency all taxes which
have become due or have been assessed against it and all taxes, penalties and
interest which any taxing authority has proposed or asserted to be due and
owing. All tax liabilities to which the Purchased Assets have been subjected
have been discharged and there are no liens for taxes on the Purchased Assets
except for property taxes assessed but not yet payable or as described in
Schedule 6.11. Except as described in Schedule 6.11, there are no tax
deficiencies or claims presently being asserted, or, to the best of Seller's
knowledge, threatened, against Seller and Seller has no knowledge of any basis
for such claims or deficiencies.
Seller has not granted any extension to any taxing authority of the limitation
period during which any tax liability may be asserted.
6.12 Consents. Except as set forth on Schedule 6.12, no consent,
approval, authorization or order of any court, Agency or any other person is
required under any law, ordinance, regulation, rule, requirement, order, writ,
judgment, decree, contract, agreement, lease, commitment, charter or bylaw
applicable to or binding upon Seller in order to permit Seller to consummate the
transactions contemplated by this Agreement and to perform its obligations
hereunder and under the Supply Agreement, and the License Agreement.
6.13 Patents, Trademarks, Etc. Seller neither has contracted for, nor
has licenses or agreements to use any trade secrets, know-how, processes,
formulae, royalties, inventions, discoveries, improvements, proprietary or
technical information, proprietary rights, joint venture or joint operating
interests, copyrights, patents, tradenames, trademarks, service marks and
applications for copyright, patent, tradename, trademark and service xxxx
registration (hereinafter sometimes collectively referred to as "Intangible
Rights") for use at, or in connection with, the operation of the Business except
for its rights to the "Xxxxxxxx'x" trade name, and the Intangible Rights among
the Purchased Assets. None of the Purchased Assets or activities or operations
of the Business infringe or involve or have resulted within three years prior to
the date hereof in (a) the infringement of, or (b) any claim of infringement of,
any Intangible Right of any other person, firm or corporation; and no
proceedings have been instituted, are pending, or are threatened, that challenge
the rights of Seller in respect thereof. To the best knowledge of Seller, the
"Xxxxxxxx'x" tradename is not being infringed by the products, activities,
operations, patents, trade names, trademarks, service marks or copyrights of any
other person or persons and is not subject to any outstanding order, judgment,
decree, stipulation or agreement restricting the use thereof.
6.14 Product Warranties. No shipment or other delivery of Products made
or to be made by Seller on or prior to the Closing Date was or as of the Closing
Date will be, and no food or food ingredients in inventory on the Closing Date
will be as of the Closing Date: (i) adulterated or misbranded within the meaning
of the Federal Food, Drug and Cosmetic Act, as amended; (ii) an article which
may not under the provisions of ss.404 or ss.505 of such Act be introduced into
interstate commerce; or (iii) adulterated or misbranded within the meaning of
any pure food laws or ordinances of any state or city to which such articles are
shipped or to be shipped. All such Inventory will meet the Seller's reasonable
standards of quality and sanitation and all requirements of the laws and
regulations enforced by the United States Department of Agriculture. All
products processed as of the Closing Date shall be labeled in accordance with
the requirements of the National Labeling and Education Act.
6.15 Brokerage Commissions. There are no claims for, or rights to,
brokerage commissions or agent's or finder's fees resulting from any action
taken by Seller in connection with the transactions contemplated by this
Agreement.
6.16 Xxxx-Xxxxx-Xxxxxx. Neither Seller nor any "ultimate parent" of
Seller have sales or assets of $100,000,000.00 or more.
6.17 No Affiliates. Seller has no affiliates or affiliated business
entities that have a material effect on the Business or the Purchased Assets
except those set forth on Schedule 6.17.
6.18 Employee Benefit Plans; Employees. "Plan" means any employee
benefit plan as defined in Section 3(3) of ERISA. All Plans maintained by or
contributed to by Seller ("Employee Benefit Plans") fully comply with all
requirements of the Internal Revenue Code ("Code") and ERISA. All contributions
required to be made to any Plans for employees of Seller have been made on or
before their due dates, and all amounts properly accrued to date as liabilities
of the Seller that have not been made have been properly recorded on the books
of Seller. No Plan has applied for or obtained a waiver from the Internal
Revenue Service of any minimum funding requirement under Section 412 of the Code
which could have a Material Adverse Effect. Neither Seller nor any ERISA
Affiliate have terminated any employee pension benefit plan (within the meaning
of Section 3(2) of ERISA) subject to Title IV of ERISA (herein referred to as a
"Title IV Plan") under circumstances giving rise to, or that could give rise to
any actual or potential liability to the Pension Benefit Guaranty Corporation
("PBGC") or any other person which could have a Material Adverse Effect, (ii) no
event or condition exists which presents a risk of termination of any Title IV
Plan by the PBGC which could have a Material Adverse Effect, and (iii) there is
no actual or potential liability to the PBGC or any other person expected by the
Seller or any ERISA Affiliate to be incurred with respect to any Title IV Plan,
including, but not limited to, any liability for any accumulated funding
deficiency as defined in Section 302 of ERISA or for any minimum funding
contribution under Section 302 of ERISA which could have a Material Adverse
Effect. No lien imposed under Section 401(a)(29) or Section 412(n) of the Code,
Section 302(f) or Section 4068 of ERISA, or arising out of any action filed
under ERISA Section 4301(b), exists upon any Purchased Assets.
6.19 Full Disclosure. No representation or warranty of Seller made in
this Agreement, nor any written statement, schedule or certificate heretofore
furnished to Buyer by Seller pursuant hereto, or in connection with the
transactions contemplated hereby, contains, or will contain any untrue statement
of a material fact, or omits, or will omit to state a material fact necessary to
make the statement or facts contained herein or therein not misleading. Seller
has not withheld and will not withhold from Buyer knowledge of any events,
conditions or facts, of which Seller has knowledge, that could have a Material
Adverse Effect.
ARTICLE VII. REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER AND COMPANY
A. Buyer represents, warrants and covenants to Seller that:
7.1 Due Organization and Qualification. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State
Virginia. Buyer is qualified to do business and is in good standing in the State
of Virginia.
7.2 Corporate Power and Authority. The Board of Directors of Buyer has
duly approved this Agreement and the transactions contemplated hereby. The
execution and delivery of this Agreement and the performance by Buyer of its
obligations hereunder has been duly authorized by all requisite corporate
action, and no further action or approval is required in order to permit Buyer
to consummate the transactions contemplated by this Agreement. Buyer has full
power, authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby. The making and performance of this
Agreement and the consummation of the transactions contemplated hereby in
accordance with the terms hereof will not (a) conflict with the Articles of
Incorporation or the Bylaws of Buyer or (b) violate any provision of any law,
ordinance, regulation, rule, requirement, order, writ, judgment, decree,
contract, agreement, lease, arrangement or commitment to which Buyer is subject
or is a party that, individually or in the aggregate, would have a Material
Adverse Effect upon the ability of Buyer to perform its obligations hereunder
and under the Supply Agreement or the License Agreement.
7.3 Actions, Suits, Etc. There are no actions, suits, proceedings or
investigations pending, or to the knowledge of Buyer, threatened against or
affecting Buyer at law or in equity or before any federal, state, municipal or
other instrumentality in which it is sought to restrain or prohibit or obtain
damages in respect of the consummation of the purchase and sale of the Purchased
Assets or the other transactions contemplated hereby. Moreover, Buyer is, to the
best knowledge of Buyer, not in default with respect to any order, writ,
injunction or decree of any court, or Agency with respect to the consummation of
the purchase and sale of the Purchased Assets or the other transactions
contemplated hereby.
7.4 Consents. No consent, approval, authorization or order of any
court, Agency or any other person is required under any law, ordinance,
regulation, rule, requirement, order, writ, judgment, decree, contract,
agreement, lease, commitment, charter or bylaw applicable to or binding upon
Buyer in order to permit Buyer to consummate the transactions contemplated by
this Agreement and to perform its obligations hereunder and under the Supply
Agreement or the License Agreement.
7.5 Brokerage Commissions. There are no claims for, or rights to,
brokerage commissions or agent's or finder's fees resulting from any action
taken by Buyer in connection with the transactions contemplated by this
Agreement.
7.6 Xxxx-Xxxxx-Xxxxxx. Neither Buyer nor any "ultimate parent" of
Seller have sales or assets of $100,000,000.00 or more.
7.7 Sophisticated Purchaser. A. The transactions contemplated in this
Agreement are for the Buyer's own account for the purposes of operating the
Business as a going concern and not with a view towards resale or distribution.
The Buyer acknowledges that, in reliance on the foregoing, the transactions
contemplated hereby have not been registered under any federal or state
securities laws.
B. Company represents, warrants and covenants to Seller that the shares
of Xxxxxxxx'x Foods, Inc. to be sold to Seller pursuant to this Agreement are
free and clear of any Encumbrances and will be free and clear of any
Encumbrances at Closing.
ARTICLE VIII. COVENANTS OF SELLER
8.1 Negative Covenants Regarding Conduct of Business. Except as may be
otherwise expressly provided herein, from and after the date of this Agreement
and until the Closing Date, with respect to the Purchased Assets and the
Business, without the consent of Buyer, Seller covenants and agrees that it will
not in respect of the Business or the Purchased Assets:
8.1.1 Creation of Obligations. Incur any obligation or liability,
absolute or contingent, except current liabilities incurred, and obligations
under contracts entered into, in the ordinary course of business consistent with
past practice.
8.1.2 Encumbrances. Execute, grant, create or suffer any Encumbrance
upon the Purchased Assets.
8.1.3 Disposition of Assets. Effect any sale, transfer, Encumbrance or
other disposition of assets and properties that would otherwise be included in
the Purchased Assets, except for sales of Inventories in the ordinary course of
business, except for machinery, equipment, furniture and fixtures replaced with
items of equivalent or greater value, and except for supplies and other similar
assets used or consumed in the ordinary course of business.
8.1.4 Contracts, Licenses, Etc. Amend, modify, assign, transfer, grant
or terminate any contract, agreement, lease, arrangement or commitment listed in
Schedule 6.6. and Schedule 2.2.
8.1.5 Rights. Waive, modify or release any rights of material value to
the Business or the Purchased Assets.
8.1.6 Termination of Operations. Terminate, discontinue, close or
dispose of any part of the operations of the Business.
8.1.7 Other Transactions. Enter into any other transaction or series of
transactions that have a material effect on the Business or Purchased Assets
other than in the ordinary course of business.
8.2 Affirmative Covenants Regarding Conduct of Business. From and after
the date of this Agreement and until the Closing Date, Seller covenants and
agrees that it will:
8.2.1 Ordinary Course of Business. Carry on the operations of Business
only in the usual, regular and ordinary course consistent with good business
practices and with prior practices. 8.2.2 Maintenance of Relationships. Use its
best efforts to maintain and preserve the Business and to maintain its present
relationships with customers, suppliers and others having business dealings with
the Business.
8.2.3 Maintenance of the Purchased Assets. Maintain the Purchased
Assets in good operating repair and condition and maintain the level of
Inventories in accordance with past practices., except as otherwise provided in
this Agreement.
8.2.4 Payment of Obligations in Ordinary Course. Pay and discharge all
costs and expenses of carrying on the operations of the Business and of
maintaining and operating the Purchased Assets as they become due and pay and
discharge any such costs and expenses that at the date hereof are past due,
unless contested in good faith.
8.2.5 Representations and Warranties. Use its best efforts to prevent
the occurrence of any change or event that would prevent any of the
representations and warranties of Seller contained herein from being true in all
material respects at and as of the Closing Date with the same effect as though
such representations and warranties (in the exact language contained in this
Agreement with appropriate modification of tense in the case of representations
and warranties relating to statements of fact as of specific dates) had been
made at and as of the Closing Date.
8.2.6 Maintenance of Records. Maintain its books, accounts, and records
relating to the Business and the Purchased Assets in the usual, regular and
customary manner on a basis consistently applied.
8.2.7 Access to and Updating of Information. During reasonable business
hours, afford to the officers, attorneys, accountants, and other authorized
representatives of Buyer, free and full access to the Purchased Assets and the
Business, in order that Buyer may have full opportunity to make a reasonable
investigation with respect to the Purchased Assets, the Business, the contracts,
leases, arrangements and commitments listed in Schedule 6.6 hereto, the books
and records of the Business and their operations, including, without limitation,
fixed asset records, sales records relating to the customers of the Business,
purchase records, and inventory records. Seller will furnish to Buyer all such
further information concerning the Purchased Assets and the Business as Buyer
may reasonably request. Seller will update by amendment or supplement each of
the Schedules referred to herein and any other disclosures made in writing to
Buyer forthwith upon any material change in the information set forth in said
Schedules or other disclosure, and Seller represents and warrants that such
Schedules and such written disclosures, as so amended or supplemented, shall be
true, correct and complete in all material respects as of the date or dates of
such amendments or supplements; provided, however, that the inclusion of any
information in any such amendment or supplement, not included in the original
Schedule at or prior to the date of this Agreement, shall not limit or impair
any rights that Buyer might otherwise have respecting the representations or
warranties of Seller contained in this Agreement.
ARTICLE IX. AGREEMENTS OF SELLER AND BUYER
9.1 Delivery of Purchased Assets. Buyer shall supervise and assist and
Seller shall, at Seller's cost, have the Purchased Assets ready for shipment on
its docks in Portsmouth, Virginia, on the Closing Date. Seller shall cooperate
with Buyer in the orderly transfer of the Purchased Assets from Seller's
facility in Portsmouth, Virginia, to Buyer's facility in Smithfield, Virginia.
Buyer shall bear the cost of shipment from Seller's dock to its facilities in
Smithfield, Virginia. For purposes of this Section 9.1, "ready for shipment"
shall mean secured on skids and ready for shipment in a commercially reasonable
manner.
9.2 Sale of Stock. Company owns 16,500 shares of the common stock of
Seller. On the Closing Date, Company shall sell and Seller shall purchase so
much of said 16,500 shares of Xxxxxxxx'x Foods, Inc. stock owned by Company on
the Closing Date (but not to exceed 16,500 shares) for $4.25 per share. At the
Closing, Seller shall deliver to Company a cashier's check or wire transfer of
immediately available funds for the purchase price for said stock and Company
shall in exchange therefore deliver the shares of stock to Seller. Company
reserves and shall have the right to sell any or all of such stock to another
person or entity before the Closing Date.
9.3 Public Disclosures. Seller and Buyer shall cooperate with each
other and give each other advance notice in respect of any public announcements
or disclosures pertaining to the transaction described herein. Buyer shall draft
the form of public announcement or disclosure pertaining to this transaction
which shall be approved by Seller prior to release. Notwithstanding the
foregoing, nothing in the Section will preclude either party from making any
disclosures required by law or regulation or necessary and proper in conjunction
with the compliance with all applicable federal and state securities laws and
the filing of any tax return or other document required to be filed with any
federal, state, or local governmental body, authority, or agency.
9.4 Promotion/Damaged Goods Allowances. In the event that customers of
the Business xxxx Buyer or make deductions against Buyer's otherwise valid
invoices for promotional pricing allowances or damaged goods applicable to sales
of Products produced or sold by Seller, which said xxxx-backs or deductions
shall be the liability of Seller, Buyer will promptly forward such xxxx to
Seller and Seller will, in turn, promptly pay all such bills or compensate Buyer
for any xxxx-back or deduction made by such customer and Seller shall resolve
directly any dispute over such xxxx-back or deduction directly with its
customer.
9.5 Return of Inventories and Damaged Goods. From and after the Closing
Date, Buyer shall settle in good faith any claims for returns or damaged goods
relating to Products shipped prior to the Closing Date and made by customers of
the Business on or after the Closing Date. Seller shall reimburse Buyer for all
costs incurred by Buyer as a result of such returned Products. Buyer's costs
shall include the invoice price for any Products shipped to a customer in place
and stead of the returned Product, plus any reasonable and customary
transportation and handling costs incurred by Buyer.
9.6 Consumer Claims and Complaints. The parties shall assure that their
respective Consumer Affairs Departments cooperate and assist each other to
assure the expeditious handling of customer claims and complaints. All customer
claims and complaints made with respect to Products sold by Seller prior to the
Closing Date or Products acquired by Buyer from Seller at the Closing shall be
the responsibility of the Seller.
9.7 Due Diligence Investigation. Buyer may, prior to the Closing Date,
make or cause to be made such investigation of the Business and properties of
the Business and of its financial and legal condition as Buyer deems necessary
or advisable. Seller will permit Buyer and its authorized agents or
representatives, including its independent accountants, to have full access to
the properties, books, and records of the Business at reasonable hours to review
information and documentation relative to the properties, books, contracts,
commitments, and other records of the Business and Assets. If for any reason the
transactions contemplated by this Agreement are not consummated, Buyer and its
representatives will promptly return to Seller all materials and documents
provided by Seller and all copies thereof, and will hold in confidence all
confidential information obtained from Seller, its officers, agents,
representatives, or employees; provided, however, that information which (i) was
in the public domain or (ii) was, in fact, known to Buyer prior to disclosure by
Seller or its respective officers, agents, representatives or employees, or
(iii) becomes known to Buyer from or through a third party not under an
obligation of non-disclosure to Seller shall not be deemed to be confidential
information.
ARTICLE X. CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer under this Agreement are subject to the
satisfaction, or the written waiver thereof by Buyer, of the following
conditions on or prior to the Closing Date:
10.1 Representations and Warranties of Seller. All of the
representations and warranties of Seller contained in this Agreement shall have
been true and correct when made, and shall be true and correct in all material
respects on and as of the Closing Date, except to the extent that changes shall
have been approved in writing by Buyer.
10.2 Covenants of Seller. All of the covenants and agreements herein on
the part of Seller to be complied with or performed on or before the Closing
Date, shall have been fully complied with and performed.
10.3 Seller's Certificates. There shall be delivered to Buyer a
certificate dated as of the Closing Date and signed by Seller to the effect set
forth in Sections 10.1 and 10.2 as they relate to Seller, which certificate
shall have the effect of a representation and warranty made by Seller on and as
of the Closing Date.
10.4 Certificates of Authorities; Corporate Documents. Seller shall
have furnished to Buyer (a) a certificate of the State Corporation Commission
dated as of a date not more than twenty days prior to the Closing Date,
attesting to the organization and good standing of Seller, (b) copies, certified
by the Secretary or an Assistant Secretary of Seller as of the Closing Date, of
Seller's Certificate of Incorporation and all amendments thereto and Bylaws as
amended and in effect at the Closing Date, (c) a copy, certified by the
Secretary or Assistant Secretary of Seller, of resolutions duly adopted by the
Board of Directors of Seller duly authorizing this Agreement, the Supply
Agreement, and the transactions contemplated hereby.
10.5 No Material Adverse Changes. There shall not have occurred any
change in the Business, or the Purchased Assets that could have a Material
Adverse Effect, and Seller shall not have suffered any loss (whether or not
insured) by reason of physical damage caused by fire, earthquake, flood, wind,
accident or other calamity, or by reason of any taking by eminent domain or
condemnation, which could have a Material Adverse Effect.
10.6 Litigation. At the Closing Date, there shall not be pending or
threatened any litigation in any court or any proceeding before any Agency (a)
in which it is sought to restrain or prohibit or obtain damages in respect of
the consummation of the purchase and sale of the Purchased Assets or the other
transactions contemplated hereby, (b) that could, if adversely determined,
result in a Material Adverse Effect, (c) that could, if adversely determined,
affect the right or ability to carry on the Business as now conducted, or (d) as
a result of which, in the reasonable judgment of Buyer, Buyer could be deprived
of the material benefits of its ownership of the Purchased Assets.
10.7 Satisfactory to Buyer's Counsel. All actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto, and all other related matters shall have been satisfactory to Edmunds &
Xxxxxxxx (A Professional Corporation), counsel for Buyer.
10.8 Opinion of Seller's Counsel. Buyer shall have received an opinion
of McGuire, Woods, Battle, and Xxxxxx, counsel for Seller,
dated the Closing Date, to the effect that: (a) Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Virginia and is qualified to carry on its business and is in good standing under
the laws of the State of Virginia, (b) Seller has full power, authority and
legal right to enter into this Agreement and the Supply Agreement to which it is
a party and to consummate the transactions contemplated hereby and thereby; (c)
all corporate actions required to be taken by Seller to approve this Agreement,
the Supply Agreement, the License Agreement, and the Non-Competition Agreement
(Exhibit D), to which it is a party, and the transactions contemplated hereby
and thereby and to authorize execution and delivery of this Agreement, the
Supply Agreement, the License Agreement, and the Non-Competition Agreement
(Exhibit D), to which it is a party and the performance by Seller of its
obligations hereunder and thereunder, have been duly and properly taken, and no
further action or approval is required in order to permit Seller to consummate
the transactions contemplated by this Agreement, the Supply Agreement, the
License Agreement, and the Non-Competition Agreement (Exhibit D) to which it is
a party; (d) this Agreement, the Supply Agreement, the License Agreement, and
the Non-Competition Agreement (Exhibit D) have been duly executed and delivered
by Seller and constitute legal, valid and binding obligations of Seller
enforceable in accordance with their terms (subject to the availability of the
discretionary remedy of specific performance and, as to enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium and similar
laws from time to time in effect but excluding any presently pending proceedings
and the exercise by a court of its general powers of equity); (e) the
instruments of transfer of the Purchased Assets from Seller to Buyer have been
duly authorized, executed and delivered, and are legal, valid and binding
instruments enforceable in accordance with their terms (subject to the
availability of the discretionary remedy of specific performance and, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect but excluding any
presently pending proceedings and the exercise by a court of its general powers
of equity); (f) the execution and delivery of this Agreement, the Supply
Agreement, the License Agreement, and the Non-Competition Agreement (Exhibit D)
by Seller and the performance by Seller of its obligations thereunder do not
constitute a violation of or a default under its certificate or articles of
incorporation or bylaws; and (g) such counsel has no knowledge of any action,
suit, proceeding or investigation that would be required by the terms of Section
6.8 to be listed in Schedule 6.8 that is not listed in Schedule 6.8.
10.9 Supply Agreement. Seller shall have executed and delivered to
Buyer the Supply Agreement.
10.10 Non-Competition Agreements. Seller shall have executed and
delivered to Buyer the Non-Competition Agreement and each of Xxxxxx Mules and
Xxxxx Xxxxxx shall have executed and delivered to Buyer a NonCompetition
Agreement in the form attached hereto as Exhibits D-1 and D-2.
10.11 License Agreement. Seller shall have executed and delivered to
Buyer the License Agreement.
10.12 Customer and Supplier Accounts. Buyer shall not have reasonable
cause to believe that any of the top five (5) customers of Seller (in terms of
sales for the Seller's last previous fiscal year) or any of the top five (5)
suppliers of raw material (in terms of sales for the Seller's last previous
fiscal year) to Seller intends to cease doing business with the Business
following the Closing.
10.13 Release of Encumbrances. All Encumbrances on the Purchased Assets
(other than any imposed or permitted by lenders to Buyer) shall have been
released.
10.14 Due Diligence Investigation. The results of any due diligence
investigations by Buyer of the Business and the Purchased Assets shall be
satisfactory to Buyer in its reasonable discretion.
ARTICLE XI. CONDITIONS TO OBLIGATIONS OF SELLER
The obligations of Seller under this Agreement are subject to the
satisfaction, or the written waiver thereof by Seller, of the following
conditions on or prior to the Closing Date:
11.1 Representations and Warranties of Buyer. All of the
representations and warranties of Buyer contained in this Agreement shall have
been true and correct when made, and shall be true and correct in all material
respects on and as of the Closing Date, except to the extent that changes shall
have been approved in writing by Seller.
11.2 Covenants of Buyer. All of the covenants and agreements herein on
the part of the Buyer to be complied with or performed on or before the Closing
Date shall have been fully complied with and performed.
11.3 Buyer's Certificates. There shall be delivered to Seller a
certificate dated as of the Closing Date and signed by the President of Buyer to
the effect set forth in Sections 11.1 and 11.2 as they relate to Buyer, which
certificate shall have the effect of a representation and warranty made by Buyer
on and as of the Closing Date.
11.4 Certificates of Authorities. Buyer shall have furnished to Seller
(a) a certificate of the State Corporation Commission dated as of not more than
twenty days prior to the Closing Date, attesting to the organization and good
standing of Buyer, (b) copies, certified by the Secretary or an Assistant
Secretary of Buyer as of the Closing Date, of Buyer's Certificate of
Incorporation and all amendments thereto and Bylaws as amended and in effect at
the Closing Date, and (c) a copy, certified by the Secretary or an Assistant
Secretary of Buyer, of resolutions duly adopted by the Board of Directors of
Buyer duly authorizing this Agreement, the Supply Agreement and the transactions
contemplated hereby and thereby.
11.5 Injunctions. At the Closing Date, there shall not be in effect any
injunctions or restraining orders restraining or prohibiting the consummation of
the purchase and sale of the Purchased Assets or the other transactions
contemplated hereby.
11.6 Satisfactory to Seller's Counsel. All actions, proceedings,
instruments and documents required to carry out this Agreement or incidental
thereto and all other related legal matters shall have been satisfactory to
McGuire, Woods, Battle & Xxxxxx.
11.7 Opinion of Counsel to Buyer. Seller shall have received an opinion
from Edmunds & Xxxxxxxx (A Professional Corporation), counsel for Buyer, dated
the Closing Date, to the effect that (a) Buyer is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Virginia; (b) Buyer has full power, authority and legal right to
enter into this Agreement, the Supply Agreement, the License Agreement and the
NonCompetition Agreement (Exhibit D), and to consummate the transactions
contemplated hereby and thereby; (c) the execution and delivery of this
Agreement, the Supply Agreement, the License Agreement, and the Non-Competition
Agreement (Exhibit D), and the performance by Buyer of its obligations hereunder
and thereunder, have been duly authorized by all requisite corporate action, and
no further action or approval is required in order to permit Buyer to consummate
the transactions contemplated by this Agreement, the Supply Agreement, the
License Agreement, and the Non-Competition Agreement (Exhibit D); and (d) this
Agreement, the Supply Agreement, the License Agreement, and the Non-Competition
Agreement (Exhibit D) have been duly executed by Buyer, this Agreement, the
Supply Agreement, the License Agreement, and the NonCompetition Agreement
(Exhibit D) constitute valid and binding obligations of Buyer, enforceable in
accordance with their terms (subject to the availability of the discretionary
remedy of specific performance and, as to the enforcement of remedies, to
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
from time to time in effect but excluding any presently pending proceedings and
the exercise by a court of its general powers of equity); and (e) the execution
and delivery of this Agreement, the Supply Agreement, the License Agreement, and
the Non-Competition Agreement (Exhibit D) by Buyer and the performance by Buyer
of its obligations thereunder do not constitute a violation of or a default
under their respective certificates or articles of incorporation or bylaws, or
any writs, orders, judgments or decrees by which either of them are bound and of
which counsel has actual knowledge.
11.8 Supply Agreement. Buyer shall have executed and delivered to
Seller the Supply Agreement.
11.9 License Agreement. Buyer shall have executed and delivered to
Seller the License Agreement.
11.10 Non-Competition Agreement. Buyer shall have executed and
delivered to Seller the Non-Competition Agreement.
11.11 Assumption Agreement. Buyer shall have executed and delivered to
Seller the Assumption Agreement.
ARTICLE XII. INDEMNIFICATION
12.1 Buyer's Losses. Seller agrees to indemnify Buyer and save and hold
it harmless from, against and in respect of any and all damages (including,
without limitation, amounts paid in settlement with Seller's consent), losses,
obligations, liabilities, liens, deficiencies, costs and expenses, including,
without limitation, reasonable attorney's fees and costs incurred to comply with
injunctions and other court and Agency orders, and other costs and expenses
incident to any suit, action, investigation, claim or proceeding or to establish
Buyer's right to indemnification hereunder (herein referred to collectively as
the "Buyer's Losses") suffered, sustained, incurred or required to be paid by
Buyer by reason of (a) the failure by Seller to comply with applicable laws
relating to bulk transfers, including, without limitation, the provisions of the
Uniform Commercial Code of the State of Virginia; (b) any representation or
warranty made by Seller in or pursuant to this Agreement being untrue or
incorrect in any respect; (c) any failure by Seller to observe or perform its
covenants and agreements set forth in this Agreement; (d) any liability for
product warranties or defective products arising from sales of finished goods
manufactured and sold by
Seller prior to the Closing Date; (e) any failure by Seller to perform its
obligations in connection with any of its Employee Benefit Plans as defined in
Section 3(3) of ERISA; or (f) any failure by Seller to satisfy and discharge any
other debt, contract, agreement, liability, obligation, commitment, restriction,
disability or duty, whether direct or indirect, fixed, contingent or otherwise,
not expressly assumed by Buyer pursuant to this Agreement.
12.2 Sellers' Losses. Buyer agrees to indemnify Seller and save and
hold it harmless from, against, for and in respect of any and all damages
(including, without limitation, amounts paid in settlement with Buyer's
consent), losses, obligations, liabilities, claims, deficiencies, costs and
expenses, including, without limitation, reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders, and other
costs and expenses incident to any suit, action, investigation, claim or
proceeding or to establish Seller's right to indemnification hereunder (herein
referred to collectively as "Seller's Losses") suffered, sustained, incurred or
required to be paid by Seller by reason of (a) any representation or warranty
made by Buyer in or pursuant to this Agreement being untrue or incorrect in any
respect, (b) any failure by Buyer to observe or perform its covenants and
agreements set forth in this Agreement, (c) any liability for product warranties
or defective products arising from sales of finished goods manufactured or sold
by Buyer after the Closing Date, or (d) any failure by Buyer to satisfy and
discharge any liability or obligation expressly assumed by Buyer pursuant to
this Agreement.
12.3 Notice of Loss; Indemnified Party's Negligence. Notwithstanding
anything herein contained, the Indemnifying Party (as hereinafter defined in
Section 12.4) shall not have any liability under the indemnity provisions of
this Agreement with respect to a particular matter unless a notice setting forth
in reasonable detail the breach that is asserted has been given to the
Indemnifying Party and, in addition, if such matter arises out of a suit,
action, investigation or proceeding, such notice is given promptly after the
Indemnified Party (as hereinafter defined in Section 12.4) shall have been given
notice of the commencement of the suit, action, investigation or proceeding.
Notwithstanding the preceding sentence, failure of the Indemnified Party to give
notice hereunder shall not release the Indemnifying Party from its obligations
under this Article XII, except to the extent the Indemnified Party is actually
prejudiced by such failure to give notice. With respect to Buyer's Losses (as
defined below), Seller shall be the Indemnifying Party and Buyer shall be the
Indemnified Party. With respect to Seller's Losses, Buyer shall be the
Indemnifying Party and Seller shall be the Indemnified Party. An Indemnified
Party's failure to investigate or lack of due diligence occurring for any reason
whatsoever, shall not (a) constitute a defense to any action or proceeding
brought by the Indemnified Party to enforce his or its rights under this Article
XII, (b) excuse performance by the Indemnifying Party of its obligations under
this Article XII, or (c) entitle the Indemnifying Party to any right of setoff
or counterclaim against amounts owed under this Article XII.
12.4 Right to Defend. Upon receipt of notice of any suit, action,
investigation, claim or proceeding for which indemnification might be claimed by
an Indemnified Party, the Indemnifying Party shall be entitled promptly to
defend, contest or otherwise protect against any such suit, action,
investigation, claim or proceeding at its own cost and expense. The Indemnified
Party shall have the right, but not the obligation, to participate at its own
expense in a defense thereof by counsel of its own choosing, but the
Indemnifying Party shall be entitled to control the defense unless the
Indemnified Party has
relieved the Indemnifying Party from liability with respect to the particular
matter or the Indemnifying Party fails to assume the defense of the matter. If
the Indemnifying Party fails to defend, contest or otherwise protect in a timely
manner against any such suit, action, investigation, claim or proceeding, the
Indemnified Party shall have the right, but not the obligation, to defend,
contest or otherwise protect against the same, and make any compromise or
settlement thereof and recover the entire cost thereof from the Indemnifying
Party including reasonable attorneys' fees, disbursements and all amounts paid
as a result of such suit, action, investigation, claim or proceeding or the
compromise or settlement thereof. However, if the Indemnifying Party undertakes
the defense of such matters, the Indemnified Party shall not, so long as the
Indemnifying Party does not abandon the defense thereof, be entitled to recover
from the Indemnifying Party any legal or other expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof other than the
reasonable costs of investigation undertaken by the Indemnified Party with the
prior written consent of the Indemnifying Party.
12.5 Cooperation. Seller and Buyer, and each of their affiliates,
successors and assigns shall cooperate with each other in the defense of any
suit, action, investigation, proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their books and records
and employees relating to such suit, action, investigation, proceeding or claim
and shall furnish each other all such further information that they have the
right and power to furnish as may reasonably be necessary to defend such suit,
action, investigation, proceeding or claim.
ARTICLE XIII. TERMINATION
13.1 Termination. This Agreement may be terminated and abandoned at any
time prior to or on the Closing Date:
13.1.1 Mutual Consent. By the mutual consent in writing of Buyer and
Seller.
13.1.2 By Buyer. By Buyer in writing if any of the conditions to the
obligations of Buyer contained herein shall not have been satisfied or, if
unsatisfied, waived as of the Closing Date.
13.1.3 By Seller. By Seller in writing if any of the conditions to the
obligations of Seller herein contained shall not have been satisfied or, if
unsatisfied, waived as of the Closing Date.
13.1.4 Closing Delayed. By Buyer or Seller in writing if the Closing
shall not have occurred by March 15, 1997.
13.2 No Further Force or Effect. In the event of termination and
abandonment of this Agreement pursuant to the provisions of Section 12.1, this
Agreement shall be of no further force or effect, except for Sections 13.1 and
13.2 and the post-termination provisions of Section 9.7, which shall not be
affected by termination of this Agreement.
ARTICLE XIV. MISCELLANEOUS
14.1 Expenses. Except for the parties agreement to share equally the
attorneys' fees and costs associated with the preparation of the initial draft
of this Agreement, the initial draft of the Supply Agreement, the
initial draft of the License Agreement and the initial draft of the
Non-Competition Agreement (which fee and cost shall not exceed a total of
$10,000) or as otherwise expressly provided herein, Seller and Buyer, shall each
pay its own expenses in connection with the preparation of this Agreement, and
the consummation of the transactions contemplated hereby, including, without
limitation, fees of its own counsel, auditors and other experts, whether or not
such transactions be consummated.
14.2 Notices. All notices, requests or other communications hereunder
shall be in writing, addressed to Seller or Buyer, at the following addresses:
(i) If to Xxxxxxxx'x Foods, Inc.:
Xx. Xxxxxx Mules, Chairman
Xxxxxxxx'x Foods, Inc.
P. O. Box 7229
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
with copy to:
Xxxxxxx X. Xxxxxxx, Esquire
McGuire, Woods, Battle and Xxxxxx, L.L.P.
Xxxxx Xxxxx Xxxxxx - Xxxxx 0000
000 Xxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000-0000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
(ii) If to Buyer:
Xx. Xxxxx X. Xxxxxx, III, President
The Smithfield Ham & Products Co., Inc.
P. O. Xxx 000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
with copy to
Xxxxxxx X. Xxxxxxx, III, Esquire
Edmunds & Xxxxxxxx, P.C.
000 Xxxx Xxxxxx (24504)
P. O. Box 958 (24505)
Lynchburg, VA
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
The address of either party may be changed by giving notice in writing at any
time to the other party. Any notice to be given under this Agreement shall be
deemed duly given if (i) delivered personally, (ii) sent by telecopy and
acknowledged by recipient, (iii) delivered by overnight express, or (iv) sent by
United States registered or certified mail, postage prepaid. Any notice that is
delivered personally, or sent by telecopy or overnight express in the manner
provided herein shall be deemed to have been duly given to the party to whom it
is directed upon actual receipt (and, in the case of telecopy acknowledgment) by
such party. Any notice that is addressed and mailed in the manner provided
herein shall be conclusively presumed to have been given to the party to which
it is addressed at the close of business, local time of the recipient, on the
third day after it is so placed in the mail.
14.3 Entire Agreement; Modification and Waiver. This Agreement sets
forth all of the promises, covenants, agreements, conditions and understandings
between the parties hereto and supersedes all prior and contemporaneous
agreements and understandings, inducements or conditions, expressed or implied,
oral or written. This Agreement may be amended, modified, superseded or
cancelled and any of the terms, covenants, representations, warranties or
conditions hereof or any breach thereof may be waived only in writing signed by
Sellers and Buyer, or in the case of a waiver, by the party waiving compliance.
No waiver by
any party of any condition, or the breach of any term, covenant, representation
or warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances, shall be construed as a further or continuing waiver of
any such condition or breach or a waiver of any other condition or of the breach
of any other term, covenant, representation or warranty set forth in this
Agreement.
14.4 Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Virginia.
14.5 Captions. The captions of the various Articles and Sections are
for convenience of reference only and shall not affect the interpretation of the
provisions hereof.
14.6 Successors and Assigns. This Agreement, and the rights and
obligations hereunder of Buyer, may be assigned by Buyer to an "Affiliate" of
The Smithfield Companies, Inc. or Buyer, provided, however, any agreements,
waivers, or consents made or given by Buyer hereunder shall be binding upon any
such assignee and any such assignee shall assume the obligations of Buyer
hereunder. No such assignment shall relieve the assignor of its obligations
hereunder. For purposes of this Section, the term "Affiliate" shall mean any
corporation, partnership, association, trust or other legal entity in which The
Smithfield Companies, Inc. or Buyer has a direct or indirect majority equity
interest. Except as set forth above, this Agreement may not be assigned by any
party except with the prior written consent of the other parties. This
Agreement, and all of the terms, covenants and representations, or warranties
and conditions hereof, shall be binding upon, and inure to the benefit and be
enforceable by, the parties hereto and their successors and assigns. Nothing in
this Agreement, express or implied, is intended to confer or shall confer upon
any person other than the parties hereto, their successors and permitted assigns
any rights or remedies under or by reason of this Agreement.
14.7 Survival. All covenants and agreements set forth in this
Agreement, or any agreement furnished pursuant hereto, shall survive the Closing
and any investigation made by or in behalf of any party hereto. All
representations and warranties set forth in this Agreement, or any schedule or
document furnished pursuant hereto, shall survive the Closing and any
investigation made by or in behalf of any party hereto for a period of one year
from the Closing Date; provided, however, that the representations and
warranties in the first sentence of Section 6.3 shall survive indefinitely,
Section 6.12 shall survive until the statutes of limitations applicable to the
matters covered by such Section have expired, running from the Closing Date.
14.8 Schedules and Certificates. All statements contained in any
disclosure schedule, certificate or other instrument delivered by or on behalf
of the parties hereto, or in connection with the transactions contemplated
hereby, are an integral part of this Agreement, and shall be deemed
representations and warranties hereunder.
14.9 Facts "Known" to a Corporation. Whenever a representation or
warranty is made herein as being "to the best of knowledge," "to the knowledge
of," or "known" to a party, it is understood and agreed that an individual will
be deemed to have "knowledge" of a particular fact or other matter if: (a) such
individual is actually aware of such fact or other matter; or (b) a prudent
individual could be expected to discover or otherwise become aware of such
fact or other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other matter. A party,
person, or entity (other than an individual) will be deemed to have "knowledge"
of a particular fact or other matter if any individual who is serving, or who
has at any time served, as a director, officer, partner, executor, or trustee of
such party, person, or entity (or in any similar capacity) has, or at any time
had, knowledge of such fact or other matter.
14.10 Severability. If any provision or provisions of this Agreement or
any portion of any provision hereof, shall be deemed invalid or unenforceable
pursuant to a final determination of any court of competent jurisdiction or as a
result of future legislative action, such determination or action shall be
construed so as not to affect the validity or enforceability hereof and shall
not affect the validity or effect of any other portion hereof.
14.11 Bulk Transfer Laws. Buyer acknowledges that Seller will not
comply with the provisions of any bulk transfer laws of any jurisdiction in
connection with the transactions contemplated by this Agreement.
IN WITNESS WHEREOF, the parties have duly caused this Agreement to be
executed as of the day and year first above written.
XXXXXXXX'X FOODS, INC.
By: Xxxxxx X. Xxxxxx
(signature)
President
ATTEST:
Xxxxxx X. Xxxxxxxxx, Xx.
(signature)
THE SMITHFIELD HAM & PRODUCTS
COMPANY, INCORPORATED
By: Xxxxx X. Xxxxxx, III
(Signature)
President
ATTEST:
Xxxxxxx X. Xxxxxx
(signature)
THE SMITHFIELD COMPANIES, INC.
By: Xxxxxxx X. Xxxxxx
(signature)
President
ATTEST:
Xxxxx X. Xxxxxx, III
(signature)
Xxxxxx Mules
(signature)
Xxxxx Xxxxxx
(signature)
