EXHIBIT 10.80
[Execution Copy]
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STOCK PURCHASE AGREEMENT
THIS AGREEMENT is entered into as of this 26th day of
November, 1996 by and between SPECIALTY FOODS CORPORATION, a
Delaware corporation ("Seller"), and B COMPANIES ACQUISITION
CORP., a Delaware corporation ("Buyer").
Seller owns all of the issued and outstanding capital stock
of BGH HOLDINGS, INC., a Delaware corporation ("BGH Holdings"),
which in turn owns all of the issued and outstanding capital
stock of B&G-DSD HOLDINGS, INC., a Delaware corporation ("B&G-
DSD"), which owns all of the issued and outstanding capital stock
of (i) XXXXX & XXXXXXXXXXXX, INC., a Delaware corporation ("B&G")
and (ii) B&G FOODS, INC., a Delaware corporation ("B&G Foods").
B&G Foods in turn owns all of the issued and outstanding capital
stock of ROSELAND MANUFACTURING, INC., a Delaware corporation
("Roseland"). B&G-DSD, B&G, B&G Foods and Roseland are
collectively referred to as the "B&G COMPANIES".
Seller owns all of the issued and outstanding capital stock
of BRH HOLDINGS, INC., a Delaware corporation ("BRH Holdings"),
which in turn owns all of the issued and outstanding capital
stock of XXXXX & XXXXXX, INC., a Delaware corporation ("B&R" and,
together with the B&G Companies, the "Companies").
Subject to the terms and conditions set forth herein, Buyer
desires to purchase from Seller and Seller desires to sell to
Buyer all of such shares of BGH Holdings and of BRH Holdings.
The parties hereto agree as follows:
ARTICLE 1
PURCHASE AND SALE OF STOCK
Section 1.01 Definitions. As used herein, the terms set
forth below shall have the following meanings:
"Accounts Receivable Facility" means that certain
accounts receivable securitization facility pursuant to which
certain subsidiaries of Seller, including certain of the
Companies, have transferred their accounts receivable.
"Accounts Receivable Purchase Agreement" means that
certain agreement attached hereto as Exhibit A.
"Adjusted Closing Date Balance Sheet" has the meaning
set forth in Section 1.03(e).
"Affiliate" of a Person means any Person which,
directly or indirectly, controls, is controlled by, or is under
common control with, such Person; provided, that for purposes of
this Agreement, the term Affiliate, with respect to Seller, shall
not include any stockholder of Specialty Foods Acquisition
Corporation ("SFAC").
"Aggregate Environmental Threshold" has the meaning set
forth in Section 4.26(g).
"Bank" has the meaning set forth in Section 5.06.
"Basket" has the meaning set forth in Section 7.02(a).
"BRS" has the meaning set forth in Section 5.06.
"Business Day" means a day that is not a Saturday,
Sunday or other day on which banking institutions in New York,
New York are not required to be open.
"Cash Contribution" has the meaning set forth in
Section 5.06.
"Closing" has the meaning set forth in Section 1.04.
"Closing Date" means the specific date on which the
Closing shall be held as provided in Section 1.04.
"Closing Date Balance Sheet" has the meaning set forth
in Section 1.03(d).
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment Letter" has the meaning set forth in
Section 5.06.
"Environmental Matters" means, any matter arising out
of, relating to or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials and any matters relating to
emissions, discharges, or releases of Hazardous Materials.
"Environmental Laws" means all federal, state and local
laws dealing with Environmental Matters, including, without
limitation, the Comprehensive Environmental Response Compensation
and Liability Act ("CERCLA"), 42 U.S.C. Section 9601 et. seq.,
the Emergency Planning and Community Right to Know Act of 1986,
42 U.S.C. Section 11001 et. seq., the Resource Conservation and
Recovery Act, 42 U.S.C. Section 690 et. seq., the Toxic
Substances Control Act, 15 U.S.C. Section 2601 et. seq., the
Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C.
Section 136 et. seq., and the Clean Air Act, 42 U.S.C., Section
7401 et. seq.
"Environmental Threshold" has the meaning set forth in
Section 4.26(g).
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA Affiliate" shall mean each of the Companies and
any other entity, including BGH Holdings and BRH Holdings, that
at any time since January 1, 1990, is or has been, together with
such Company, BGH Holdings or BRH Holdings, treated as a single
employer under Section 414(b), 414(c) or 414(m) of the Code.
"Estimated Net Assets Statement" has the meaning set
forth in Section 1.03(b).
"Excluded Liability Amount" shall mean the sum of:
(i) the full amount of accounts payable on
the books of BGH Holdings, BRH Holdings
and the Companies on the Latest Balance
Sheet Date or the Closing Date, as the
case may be, which, as of such date as
determined in a manner consistent with
the manner in which the Companies have
historically received, recorded and aged
their accounts payable, are recorded as
being in excess of one (1) week past due
from the date payment was due in the
ordinary course of business to the third
party vendor (without taking into
account early payment dates because of
any discounts, allowances, rebates or
other inducements for early payment), it
being agreed that all amounts due and
owing to Xxxxx Illinois pursuant to the
letter agreement dated May 7, 1996 with
the Companies are not listed as "past
due" and shall, therefore, be treated as
not being "past due" for purposes of
this adjustment (it being further agreed
that as of the Latest Balance Sheet
Date, the amount calculated under this
clause (i) is $4,093,076); plus
(ii) the sum of (a) the full amount that will
be due and owing on the Latest Balance
Sheet Date or the Closing Date, as the
case may be, to Eagle Rock Avenue
Associates, including the present value
of interest that will accrue thereon
through April 18, 1999 (discounted to
the Closing Date at a 10% per annum
discount rate) and (b) an amount equal
to the present value of $19,645 per
month for each month through April 18,
1999 (discounted to the Closing Date at
a 10% per annum discount rate), in each
case on account of the Notes that have
or will be delivered to landlord
pursuant to paragraph 4 of Section 1 of
the Memorandum of Agreement relating to
the lease by the Companies of the
Roseland facility (identified as Item 5
on Schedule 4.16) (it being further
agreed that as of the Latest Balance
Sheet Date, the amount calculated under
this clause (ii) is $1,043,212); plus
(iii) the current and non-current
portions, as of the Latest Balance Sheet
Date or the Closing Date, as the case
may be, of all Capital Leases, including
the Capital Leases between the Companies
and General Electric Credit Corporation,
Xxxxxxx Leasing Corporation and R.N.A.
Investment Associates (it being further
agreed that as of the Latest Balance
Sheet Date, the amount calculated under
this clause (iii) is $838,474); plus
(iv) the aggregate amount of the guaranteed
minimum profit payments that the
Companies are obligated to make to
Belco, Inc. from the Latest Balance
Sheet Date or the Closing Date, as the
case may be, through July 31, 1997 that
are referenced in Section 3 of the Co-
Packing and Lease Termination Agreement
dated as of October 27, 1995 (identified
on Schedule 4.16) (it being further
agreed that as of the Latest Balance
Sheet Date, the amount calculated under
this clause (iv) is $135,416); plus
(v) the aggregate amount of the non-compete
payments that the Companies are
obligated to make to Xxxxxxxx Xxxxxxx
("Xxxxxxx") from the Latest Balance
Sheet Date or the Closing Date, as the
case may be, through July 31, 1997 that
are referenced in the letter from B&R to
Xxxxxxx dated October 27, 1996
(identified on Schedule 4.16) (it being
further agreed that as of the Latest
Balance Sheet Date, the amount
calculated under this clause (v) is
$43,940); plus
(vi) the amount, if any, of the reserve
established by the Companies as an
estimate of the cost of finalizing a
settlement with Xxxxxxx and Belco, Inc.
relating to the closing out of the co-
pack relationship with Belco, Inc. (it
being further agreed that as of the
Latest Balance Sheet Date the aggregate
amount calculated under this clause (vi)
is $92,424); plus
(vii) the reserve established by the
Companies as the above-market portion of
the lease expense relating to the East
Brunswick facility governed by that
certain lease Agreement dated August 1,
1994 between Wilbel, Inc. and the
Companies (as successor-in-interest to
Belco, Inc.) through its expiration in
August, 1997 (it being further agreed
that as of the Latest Balance Sheet
Date, the aggregate amount calculated
under this clause (vii) is $98,000).
"Financial Statements" has the meaning set forth in
Section 4.06.
"Financing" has the meaning set forth in Section
5.06(a).
"Food, Drug and Cosmetic Act" means the Federal Food,
Drug and Cosmetic Act approved June 25, 1938.
"GAAP" means United States generally accepted
accounting principles.
"Hazardous Materials" means any pollutants,
contaminants, or hazardous or toxic substances, materials,
wastes, constituents or chemicals that are regulated by, or form
the basis for liability under, any Environmental Laws, including,
without limitation, petroleum products, asbestos and radioactive
materials.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended.
"Income Taxes" means (a) federal, state or local income
or franchise taxes or other similar taxes measured by income and
all other taxes reported on Returns which include federal, state
or local income or franchise taxes or other similar taxes
measured by income, together with any interest or penalties
imposed with respect thereto, and (b) any obligations under any
agreements or arrangements with respect to any Income Taxes
described in clause (a) above.
"Indemnified Party" has the meaning set forth in
Section 7.02(c).
"Indemnifying Party" has the meaning set forth in
Section 7.02(c).
"Initial Accounts Receivable Purchase Price" has the
meaning set forth in Section 1.03(a) of the Accounts Receivable
Purchase Agreement.
"Initial Purchase Price" has the meaning set forth in
Section 1.03(a).
"Insured Liability" has the meaning set forth in
Section 7.06(a).
"Latest Balance Sheet" has the meaning set forth in
Section 4.06.
"Latest Balance Sheet Date" means September 28, 1996.
"Leased Real Estate" has the meaning set forth in
Section 4.16.
"Lien" means any lien, encumbrance, license, defect of
title, easement, charge, security interest, mortgage, pledge,
right of first refusal, restrictive covenant, preemptive right or
option or contractual transfer restrictions.
"Losses" has the meaning set forth in Section 7.02(a).
"Material Contracts" has the meaning set forth in
Section 4.20.
"Net Assets" means the total Current Assets of BGH
Holdings, BRH Holdings and the Companies, on a consolidated
basis, less total Current Liabilities of BGH Holdings, BRH
Holdings and the Companies, on a consolidated basis. "Current
Assets" shall consist of (i) Cash and Cash Equivalents, (ii)
Trade Receivables (but only those Trade Recevables which were not
sold to Specialty Foods Finance Corporation ("SFFC") pursuant to
the terms and conditions of the Accounts Receivable Facility),
(iii) Inventory, (iv) Pre-Paid Expenses, and (v) Other Current
Assets, but excluding (x) current deferred Income Tax assets and
estimated Income Tax payments on behalf of BGH Holdings, BRH
Holdings and the Companies, and (y) all of those Trade
Receivables that have been sold to SFFC pursuant to the terms and
conditions of the Accounts Receivable Facility. "Current
Liabilities" shall consist of (i) Accounts Payable (other than
accounts payable included within the Excluded Liability Amount),
(ii) Accrued Expense, (iii) other current liabilities (including,
without limitation, current portions of long-term indebtedness or
capital lease obligations) included in the Excluded Liability
Amount and (iv), with respect to Net Assets reflected in the
Adjusted Closing Date Balance Sheet, all liabilities as of the
Closing Date not included in the Excluded Liability Amount;
provided that "Current Liabilities" shall exclude (x) current
deferred Income Tax Liabilities and current Income Tax
Liabilities, (y) the Excluded Liability Amount and (z)
intercompany current liabilities. Capitalized terms used in this
definition appear on the consolidated balance sheet of Holdings
and the Companies appearing as Attachment 4.06 to Schedule 4.06.
"Letter of Credit" has the meaning set forth in Section
5.06.
"Neutral Auditors" has the meaning set forth in Section
1.03(e).
"Other Taxes" means all Taxes which are not Income
Taxes.
"Owned Real Estate" has the meaning set forth in
Section 4.15.
"Permitted Exceptions" has the meaning set forth in
Section 4.15.
"Person" means an individual, a corporation, a
partnership, an association, a trust, or any other entity or
organization, including a government or political subdivision or
an agency or instrumentality thereof.
"Personal Property Leases" has the meaning set forth in
Section 4.17.
"Pre-Closing Period" means (i) all tax periods that end
on or before the Closing Date, or (ii) for tax periods that begin
before the Closing Date and end after the Closing Date, the
allocable portion of such period ending on the Closing Date as
set forth in Section 8.02(c) or 8.04(b).
"Post Closing Period" means (i) all tax periods that
begin after the Closing Date, or (ii) for tax periods that begin
before the Closing Date and end after the Closing Date, the
allocable portion of such period beginning on the day after the
Closing Date as set forth in Section 8.02(c) or Section 8.04(b).
"Purchase Price" has the meaning set forth in Section
1.03(a).
"Released" means released, spilled, leaked, discharged,
disposed of, pumped, poured, emitted, emptied, injected, leached,
dumped or allowed to escape.
"Remediation" means investigation, remediation,
removal, containment, monitoring or other response action.
"Resolution Period" has the meaning set forth in
Section 1.03(e).
"Returns" means any returns, reports and forms required
to be filed with any Taxing Authority.
"Seller's, BGH Holdings', BRH Holdings' and the
Companies knowledge," or "to the knowledge of Seller, BGH
Holdings, BRH Holdings and the Companies," or any similar phrase,
means the actual knowledge of Messrs. Brown, Burke, Cantwell,
Fishbune, Xxxxxxx, Xxxxx, Levine, Pilnick, Polaner, Wenner, or
Xx. Xxxxxxxxx, in each case after reasonable investigation.
"Shares" has the meaning set forth in Section 1.02.
"State Income Tax Stub Period" has the meaning set
forth in Section 8.02(c).
"State Income Tax" means (i) any state or local income
or franchise taxes measured by income together with any interest
or penalties imposed with respect thereto, and (ii) any
obligations under any agreements or arrangements with respect to
any taxes described in clause (i) above.
"Tax Attribute" means any deduction, net operating
loss, basis, credit or any other tax item of a similar nature.
"Tax Authority" means, with respect to any Tax, the
governmental entity or political subdivision thereof that imposes
such Tax, and the agency (if any) charged with the collection of
such Tax for such entity or subdivision.
"Taxes" means any federal, state, local or foreign
income, gross receipt, license, payroll, employment, excise,
severance, stamp, occupation, premium, capital stock, franchise,
profits, withholding, social security, unemployment, disability,
real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any
interest, penalty or addition thereto.
"Title Commitments" shall have the meaning set forth on
Section 2.01(h).
"Title Company" shall have the meaning set forth in
Section 2.01(h).
Section 1.02 Basic Transaction. Seller agrees to and will
sell, transfer, assign and deliver to Buyer at the Closing good
and marketable title to, free and clear of all Liens of every
kind, and Buyer agrees to and will purchase and accept from
Seller, on the terms and subject to the conditions set forth in
this Agreement, 100% of the issued and outstanding shares of
capital stock of BGH Holdings (the "BGH Shares") and 100% of the
issued and outstanding shares of capital stock of the BRH
Holdings (the "BRH Shares" and, together with the BGH Shares, the
"Shares").
Section 1.03 Consideration for Purchase of Shares.
(a) Aggregate Consideration. At Closing, Buyer will
pay to Seller $68,168,000, (i) increased dollar for dollar to the
extent Net Assets set forth on the Estimated Net Assets Statement
exceeds Net Assets as reflected in the Latest Balance Sheet, or
decreased dollar for dollar to the extent Net Assets set forth on
the Estimated Net Assets Statement is less than Net Assets
reflected in the Latest Balance Sheet, and (ii) decreased by (x)
the Initial Accounts Receivable Purchase Price, and (y) the
Excluded Liability Amount as of the Closing Date (the "Initial
Purchase Price"). The Initial Purchase Price will be paid by
wire transfer or equivalent means, in immediately available funds
in the United States as Seller shall direct to Buyer. The
Initial Purchase Price shall be adjusted to reflect changes in
the net worth of Holdings and the Companies, as set forth in
Section 1.03(c) below. The Initial Purchase Price, as so
adjusted, is referred to as the "Purchase Price".
(b) Delivery of Estimated Closing Balance Sheet.
Seller shall deliver to Buyer three days prior to the Closing
Date, a statement of the estimated Net Assets that will exist at
Closing (the "Estimated Net Assets Statement") and the Excluded
Liability Amount as of the Closing Date accompanied by the
calculation of the amount of the Initial Purchase Price. The
Estimated Net Assets Statement and the Excluded Liability Amount
as of the Closing Date shall be prepared by Seller in good faith
and in accordance with GAAP applied on a basis consistent with
the manner in which the Latest Balance Sheet was prepared and
shall be reasonably acceptable to Buyer.
(c) Adjustment of Initial Purchase Price. The Initial
Purchase Price shall be (i) increased dollar for dollar to the
extent Net Assets reflected in the Adjusted Closing Date Balance
Sheet exceeds Net Assets reflected in the Estimated Net Assets
Statement, or (ii) decreased dollar for dollar to the extent Net
Assets reflected in the Adjusted Closing Date Balance Sheet are
less than Net Assets reflected in the Estimated Net Assets
Statement and (iii) adjusted to reflect the finalization of the
Excluded Liability Amount as of the Closing Date. To the extent
that any such adjustment to the Excluded Liability Amount results
in (i) an increase in the amount thereof, such increase shall be
paid by Seller to Buyer or (ii) a decrease in the amount thereof,
such decrease shall be paid by Buyer to Seller. If the parties
agree, any such payment owing by one party to the other under the
preceding sentence may be netted against amounts payable as a
result of the determination of the Adjusted Closing Date Balance
Sheet. Any adjustments to the Initial Purchase Price made
pursuant to this Section 1.03(c) shall bear simple interest from
and including the Closing Date to, but not including, the date of
payment at 7% per annum, based on a 365-day year. Any
adjustments to the Initial Purchase Price made pursuant to this
Section 1.03(c), together with interest thereon, shall, within
five (5) Business Days after the day the Adjusted Closing Date
Balance Sheet is agreed to by Buyer and Seller or any remaining
disputed items are ultimately determined by the Neutral Auditors,
be paid by wire transfer in immediately available funds to an
account in the United States specified by the party to whom such
payment is owed.
(d) Procedures for Determination of the Closing Date
Balance Sheet. As soon as practicable, but in no event later
than sixty (60) days following the Closing Date, Seller shall
prepare an unaudited consolidated balance sheet of BGH Holdings,
BRH Holdings and the Companies as of the close of business on the
day prior to the Closing Date (the "Closing Date Balance Sheet").
The Closing Date Balance Sheet shall fairly present in all
material respects the financial position of BGH Holdings, BRH
Holdings and the Companies prepared on a consolidated basis in
accordance with GAAP consistent with the manner in which the
Latest Balance Sheet was prepared; and provided that any
increases to asset categories (including without limitation
increases in prepaid items) or decreases in liability categories
(including without limitation decreases in reserves or accruals)
from the Latest Balance Sheet to the Closing Date Balance Sheet
shall result only from cash transactions (which cash transactions
may include actual settlements of liabilities for which reserves
or accruals have been established). The Closing Date Balance
Sheet will reflect adjustments of a normal year-end nature,
including, but not limited to, appropriate prorations for
personal property, real estate, occupancy and water taxes, the
amount of any license or registration fees with respect to any
licenses or registrations of Holdings or the Companies which
remain in effect after Closing; the amount of sewer rents and
charges for water, telephone, electricity and other utilities and
fuel; and any other items which are normally prorated in
connection with similar transactions.
During the preparation of the Closing Date Balance
Sheet, and the period of any dispute within the contemplation of
this Section 1.03, Buyer shall (i) provide Seller and Seller's
authorized representatives with such access necessary to prepare
the Closing Date Balance Sheet during normal business hours to
the books, records (including workpapers, schedules, memoranda
and other documents), facilities and employees of Holdings and
the Companies, (ii) provide Seller as promptly as practicable
after the Closing Date (but in no event later than twenty (20)
Business Days after the Closing Date) with normal month end
closing financial information for Holdings and the Companies for
the period ending on the day prior to the Closing Date, and (iii)
cooperate as may be reasonably necessary with Seller and Seller's
authorized representatives, including the provision on a timely
basis of all information necessary or useful in preparing the
Closing Date Balance Sheet.
(e) Delivery of the Closing Date Balance Sheet;
Dispute Resolution. Seller shall deliver a copy of the Closing
Date Balance Sheet to Buyer promptly after it has been prepared.
After receipt of the Closing Date Balance Sheet, Buyer shall have
thirty (30) days to review the Closing Date Balance Sheet.
Unless Buyer delivers written notice to Seller on or prior to the
30th day after Buyer's receipt of the Closing Date Balance Sheet
specifying in reasonable detail the characterization and amount
of all disputed items and the basis therefor, Buyer shall be
deemed to have accepted and agreed to the Closing Date Balance
Sheet. If Buyer so notifies Seller of its objection to the
Closing Date Balance Sheet, Buyer and Seller shall, within thirty
(30) days following such notice (the "Resolution Period"),
attempt to resolve their differences and any resolution by them
as to any disputed amounts shall be final, binding and
conclusive.
If at the conclusion of the Resolution Period
there remain items in dispute, then all disputed items shall be
submitted to Xxxxxx Xxxxxxxx, L.L.P., a nationally recognized
independent public accounting firm (the "Neutral Auditors"). All
fees and expenses relating to the work, if any, to be performed
by the Neutral Auditors shall be borne equally by Seller and
Buyer. The Neutral Auditors shall act as an arbitrator to
determine, based solely on presentations by Seller and Buyer, and
not by independent review, only those issues still in dispute.
The Neutral Auditors' determination shall be made within thirty
(30) days of their selection, shall be set forth in a written
statement delivered to Seller and Buyer and shall be final,
binding and conclusive. The term "Adjusted Closing Date Balance
Sheet," as hereinafter used, shall mean the definitive Closing
Date Balance Sheet agreed to by Buyer and Seller in accordance
with this Section 1.03(e) or the definitive Closing Date Balance
Sheet resulting from the determinations made by the Neutral
Auditors in accordance with this Section 1.03(e) (in addition to
those items theretofore agreed to by Seller and Buyer).
Section 1.04 The Closing. The closing of the purchase and
sale of the Shares and other transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of
Dechert Price & Xxxxxx in New York, New York, at 8:30 a.m. local
time, on December 18, 1996 or at such other place or on such
other date as is mutually agreeable to the parties; provided,
however, that if any of the conditions to Closing set forth in
this Agreement have not been satisfied or waived by the party
entitled to the benefit of such condition, subject to Section
6.01, the Closing shall take place on the third Business Day
after all conditions have been satisfied or waived. The actual
date and time of the Closing are herein referred to as the
"Closing Date." On the first Business Day immediately prior to
the Closing Date, a pre-closing shall be held at the same
location specified above for the Closing.
Section 1.05 Procedures at Closing. At the Closing, the
parties shall take the following steps (provided, however, that
upon their completion all such steps shall be deemed to have
occurred simultaneously):
(a) Seller shall deliver to Buyer the documents
referred to in Section 2.01(g).
(b) Buyer shall deliver to Seller the documents
referred to in Section 2.02(f).
(c) Seller shall deliver to Buyer certificates in
valid form evidencing the Shares, duly endorsed in blank or
accompanied by duly executed stock powers.
(d) Buyer shall pay the Initial Purchase Price to
Seller.
(e) Buyer and Seller shall execute and deliver a cross-
receipt acknowledging receipt from the other, respectively, of
the Shares and the Initial Purchase Price.
(f) The closing under the Accounts Receivable Purchase
Agreement will take place.
ARTICLE 2
CONDITIONS TO CLOSING
Section 2.01 Conditions to Buyer's Obligations. The
obligation of Buyer to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of the following
conditions on or before (with satisfaction continuing on) the
Closing Date:
(a) The representations and warranties set forth in
Article 4 hereof, both individually and considered as a whole,
which are qualified as to materiality shall be true and correct
in all respects and such representations and warranties that are
not so qualified shall be true and correct in all material
respects at and as of the Closing Date, except for those
warranties and representations that were given as of a specific
date, in which event such warranties and representations shall
have been true and correct in all material respects or, if
qualified as to materiality, in all respects, as of such date.
(b) Seller will have performed in all material
respects all of the covenants and agreements required to be
performed by it under this Agreement which are to be performed
prior to the Closing, and Seller shall have caused BGH Holdings,
BRH Holdings and the Companies to have performed in all material
respects all of the covenants and agreements required to be
performed by them under this Agreement which are to be performed
prior to the Closing.
(c) There will have been no material adverse change in
the operations, financial condition, operating results, assets or
liabilities of BGH Holdings, BRH Holdings or the Companies, all
taken as a whole, and there will have been no material casualty
loss or damage to the assets of the Companies all taken as a
whole (whether or not covered by insurance).
(d) Those consents, approvals, or other actions by
third parties that are required for the consummation of the
transactions contemplated hereby which are set forth on Schedule
2.01(d) will have been obtained.
(e) All governmental approvals required for the
consummation of the transactions contemplated hereby shall have
been obtained and all filings required pursuant to any applicable
law or regulation, including pursuant to the HSR Act, will have
been made and any approvals required thereunder will have been
obtained, or any waiting period required thereby will have
expired or have been terminated, as the case may be.
(f) No action or proceeding by or before any court or
governmental or administrative body or agency will be pending
wherein a judgment, decree or order might be issued that would
prevent any of the transactions contemplated or cause such
transactions to be declared unlawful or rescinded.
(g) On the Closing Date, Seller will have delivered to
Buyer the following:
(i) A certificate dated the Closing Date
executed by the President or a Vice
President of Seller stating that the
preconditions specified in subsections
(a), (b) and (c) hereof have been
satisfied;
(ii) Good standing certificates for Holdings
and each of the Companies from their
states of organization, dated not
earlier than five (5) business days
prior to the Closing Date;
(iii) Certified copies of the resolutions
duly adopted by Seller's board of
directors authorizing the execution,
delivery and performance of this
Agreement and the other agreements
contemplated hereby;
(iv) The written resignations of the
directors of BGH Holdings, BRH Holdings,
and of the Companies and the written
resignations of such officers of BGH
Holdings, BRH Holdings and of the
Companies who are not employees of BGH
Holdings, BRH Holdings or the Companies;
(v) The minute books, stock records and
stock ledgers of BGH Holdings, BRH
Holdings and each of the Companies; and
(vi) An affidavit stating, under penalties of
perjury, that neither BGH Holdings, BRH
Holdings nor any of the Companies is or
has ever been a United States Real
Property Holding Corporation (as defined
in Section 897(c)(2) of the Code) during
the applicable period specified in
Section 897(c)(1)(A)(ii) of the Code.
(h) Seller shall have delivered to Buyer, at Seller's
sole expense, ALTA title insurance binders or commitments
(collectively, the "Title Commitments," and each a "Title
Commitment"), in final form, from Chicago Title Insurance Company
or such other companies reasonably acceptable to Buyer
(collectively, the "Title Company"), committing the Title Company
to issuing ALTA form of title insurance policies insuring the
relevant Company's fee title to each parcel of the Owned Real
Estate in the respective amounts listed on Schedule 2.01(h) which
amounts are equal to the current fair market values of each of
such parcels, subject to no Liens or exceptions to title other
than the Permitted Exceptions and the so-called standard or pre-
printed exceptions (collectively, the "Title Polices"); provided
that the commitment of the Title Company to issue the Title
Policies may be subject to and the Title Commitments may set
forth or be subject to such standard requirements relating to the
issuance of final policies of title insurance as are reasonably
acceptable to Buyer, including a requirement that Buyer pay the
Title Company's premiums and other charges for the issuance of
the Title Policies. Each of the Title Commitments shall be
effective as of a date occurring not earlier than the date of the
execution of this Agreement and, if required by Buyer, the
effective dates of each of the Title Commitments shall be brought
down to the Closing Date, provided that Buyer provides Seller
with written notice thereof at least two weeks prior to the
Closing Date. If required in connecting with the Financing,
Seller shall and shall cause BGH Holdings, BRH Holdings and the
Companies, at no cost to BGH Holdings, BRH Holdings or the
Companies, to reasonably cooperate with Buyer as may be
reasonably necessary to cause the Title Company to issue Title
Commitments for extended form title insurance coverage deleting
or insuring over those so-called standard or pre-printed
exceptions. Buyer acknowledges that the Title Company may raise
additional exceptions in connection with deleting or insuring
over of such exceptions.
(i) Buyer, Seller and SFFC will have entered into that
certain Accounts Receivable Purchase Agreement and the
transaction contemplated thereby will be positioned to close
simultaneously with the closing of the transaction contemplated
by this Agreement.
(j) Buyer shall have received copies of releases
releasing each security interest set forth on Schedule 4.14 which
is not to be in existence as of Closing, and releases or
discharges of record with respect to the BONY Mortgage Documents
and the San-Del Mortgages, as such terms are defined in Schedule
4.15 of the BGH Holdings and B&G Companies disclosure schedules
attached to this Agreement.
(k) Buyer shall have received the duly executed
Estoppel Certificates from the landlords under each of the Leases
identified on Schedule 2.01(d), dated after the date of this
Agreement, and shall have received the Lessor Consents identified
on Schedule 2.01(d).
(l) All proceedings to be taken by Seller and all
documents required to be delivered by Seller in connection with
the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Buyer.
(m) On or prior to 5:00 p.m., Eastern Standard Time,
on the 30th day following the date of this Agreement, Buyer shall
have either (i) completed its arrangements for the Financing and
received the proceeds therefrom, or (ii) delivered to Seller the
Letter of Credit or Cash Contribution.
(n) A certificate from Seller, under penalties of
perjury, stating that none of Seller BGH Holdings, BRH Holdings
or any of the Companies is a foreign corporation, foreign
partnership, foreign trust or foreign estate and listing both the
U.S. Employer Identification Number and principal business office
address of each of Seller, BGH Holdings, BRH Holdings and the
Companies.
Any condition specified in this Section 2.01 may be
waived by Buyer, provided that no such waiver will be effective
unless it is set forth in a writing executed by Buyer.
Section 2.02 Conditions to Seller's Obligations. The
obligation of Seller to consummate the transactions contemplated
by this Agreement is subject to the satisfaction of the following
conditions on or before (with satisfaction continuing on) the
Closing Date:
(a) The representations and warranties set forth in
Article 5 hereof, both individually and considered as a whole,
which are qualified as to materiality shall be true and correct
in all respects and such representations and warranties that are
not so qualified shall have been true and correct in all material
respects as of the Closing Date, except for those warranties and
representations that were given as of a specific date, in which
event such warranties and representations shall have been true
and correct in all material respects or, if qualified as to
materiality, in all respects, as of such date.
(b) Buyer will have performed in all material respects
all of the covenants and agreements required to be performed by
it under this Agreement prior to the Closing.
(c) All consents, approvals or actions by third
parties that are required for consummation of the transactions
contemplated hereby which are set forth on Schedule 2.01(d)
hereto will have been obtained.
(d) All governmental approvals required to consummate
the transactions contemplated hereby shall have been obtained,
and all filings required pursuant to any applicable law or
regulation, including pursuant to the HSR Act, will have been
made, and any approvals required thereunder will have been
obtained or any waiting period required thereby will have expired
or have been terminated, as the case may be.
(e) No action or proceeding before any court or
government body will be pending wherein a judgment, decree or
order might be issued that would prevent any of the transactions
contemplated hereby or cause such transactions to be declared
unlawful or be rescinded.
(f) On the Closing Date, Buyer will have delivered to
Seller the following:
(i) An officers' certificate executed by the
President or a Vice President of Buyer
dated the Closing Date, stating that the
preconditions specified in subsections
(a) and (b) hereof have been satisfied;
(ii) Certified copies of the resolutions
adopted by Buyer's board of directors
authorizing the execution, delivery and
performance of this Agreement and the
other agreements contemplated hereby;
and
(iii) Such other documents as Seller may
reasonably request in connection with
the transactions contemplated hereby.
(g) Buyer, Seller and SFFC will have entered into that
certain Accounts Receivable Purchase Agreement and the
transaction contemplated thereby will be positioned to close
simultaneously with the closing of the transaction contemplated
by this Agreement.
(h) Seller will have received from Buyer a copy of any
solvency opinion delivered to Buyer at Closing, together with a
letter stating that the opinion is also being delivered for the
benefit of Seller and that Seller is entitled to rely on it.
Any condition specified in this Section 2.02 may be
waived by Seller, provided that no such waiver will be effective
unless it is set forth in a writing executed by Seller.
ARTICLE 3
COVENANTS PRIOR TO CLOSING
Section 3.01 Affirmative Covenants of Seller. Prior to
the Closing, unless Buyer has otherwise consented, Seller will
cause BGH Holdings, BRH Holdings and the Companies to take the
following actions:
(a) Continue to conduct operations at all locations at
which operations are presently conducted, but only in the
ordinary and usual course of business, including, without
limitation, the observance by the Companies of their historical
practices and timing with respect to the purchase of raw
materials and the creation and sale of finished goods inventory.
(b) Use reasonable commercial efforts to retain
employees and preserve present business relationships with
customers, suppliers and others having dealings with BGH
Holdings, BRH Holdings or the Companies, and continue to
compensate its employees consistent with past custom and
practice.
(c) Maintain its assets in the same operating
condition that existed on the date hereof, ordinary wear and tear
excepted, and to notify Buyer of any loss of, damage to or
destruction of any material asset.
(d) Maintain its books, accounts and records
consistent with past practice and in accordance with the
principles used in the preparation of the financial statements
referred to in Section 4.06 of this Agreement.
(e) Continue its historical practices with respect to
the maintenance and protection of its trademarks, trade names,
corporate names, copyrights, trade secrets, licenses and other
proprietary rights.
(f) Comply in all material respects with applicable
legal requirements and contractual obligations.
(g) Maintain the current insurance upon its assets and
properties and with respect to the conduct of its business.
(h) Promptly inform Buyer in writing of any event or
circumstance that has or could reasonably be expected to have a
material adverse effect upon BGH Holdings, BRH Holdings or the
Companies or the business, financial condition, results of
operation or operations thereof, all considered as a whole.
(i) Permit Buyer and its employees and agents to have
reasonable access to its books, records, contracts, leases, key
management personnel, plants and equipment as Buyer shall
reasonably request, except in cases where Seller reasonably
determines that such information or access is competitively
sensitive, in which event the parties will work in good faith to
attempt to have the information or access provided in a format or
manner, or subject to additional agreed upon restrictions, that
are reasonably acceptable to Seller.
(j) Use reasonable commercial efforts to cause the
satisfaction of all conditions to Buyer's or Seller's obligations
to close to the extent satisfaction of such conditions is in the
control of Seller, BGH Holdings, BRH Holdings or the Companies,
including making all necessary filings and obtaining all third
party and governmental approvals necessary to consummate the
transactions contemplated by this Agreement.
(k) Use reasonable commercial efforts to obtain and
deliver to Buyer at the Closing (i) estoppel certificates (such
estoppel certificates not to be conditioned on any increased
rental, other payment, reduced term, or other material change of
lease terms), in a form reasonably acceptable to Buyer (the
"Estoppel Certificates"), from each lessor of the Leases and (ii)
landlord consents in a form reasonably acceptable to Buyer with
respect to those leases identified on Schedule 2.01(d) (the
"Lessor Consents").
(1) Use reasonable commercial efforts to have
satisfied or discharged all of the Exceptions That Will Not Exist
At Closing, as defined in Section 4.15.
Section 3.02 Negative Covenants of Seller. Prior to the
Closing, without the prior written consent of Buyer, Seller will
cause BGH Holdings, BRH Holdings and each of the Companies to
not:
(a) Take any action that, if taken prior to the date
hereof, would have required disclosure under Section 4.09 of this
Agreement;
(b) Terminate or amend any plan, program, agreement or
arrangement listed on Schedule 4.21 or 4.22, or establish or
contribute to any new plan, program or arrangement covering its
employees;
(c) Accelerate the sale of any inventory or delay the
payment of any obligation other than in the ordinary course;
(d) Effect any amendment to the Certificate or
Articles of Incorporation or By-Laws of any of BGH Holdings, BRH
Holdings or the Companies;
(e) Merge or consolidate BGH Holdings, BRH Holdings or
any of the Companies with any other corporation, association,
partnership, or joint venture;
(f) Declare or pay any dividends on or make any
distributions of any kind with respect to any of its capital
stock other than in connection with settling intercompany
accounts pursuant to Section 7.11 of this Agreement or
distribution of cash pursuant to Section 7.13 of this Agreement;
(g) Borrow or agree to borrow any funds or incur, or
assume or become subject to, whether directly, by way of guaranty
or otherwise, any obligation or liability (absolute or
contingent) for borrowed money;
(h) Take any action, directly or indirectly, to cause,
promote or authorize any transaction competing or interfering
with any of the transactions contemplated by this Agreement,
including without limitation any merger, consolidation or
reorganization, acquisition or disposition of assets, tender
offer or exchange offer;
(i) Offer, issue or sell any shares of the capital
stock or other securities of BGH Holdings, BRH Holdings or the
Companies (including, without limitation, debt securities);
(j) Pay, discharge, waive, satisfy or compromise or
adjust any material claim, liability or obligation (absolute,
accrued, contingent or otherwise), other than the payment,
discharge, waiver or satisfaction in the ordinary course of
business consistent with past practice of liabilities or
obligations reflected or reserved against in the Latest Balance
Sheet or incurred in the ordinary course of business consistent
with past practice since the date of the Latest Balance Sheet;
(k) Sell, transfer, surrender, terminate, sublease or
lease, or license or sublicense any properties or assets to, or
enter into any agreement or arrangement with, any of the
Companies' (or any of the Companies' Affiliates, which for the
purposes of this Section (k) only, shall be deemed to include all
of the stockholders of SFAC), officers or directors or any
Affiliates or associate of any of such officers or directors of
any of BGH Holdings, BRH Holdings or the Companies, except
compensation paid in the ordinary course of business consistent
with past practices to current officers pursuant to, and in
accordance with the terms of, agreements disclosed in Schedule
4.21;
(l) Sell, assign or transfer any assets (including,
without limitation, the Companies' Seneca Castle facility),
except inventory in the ordinary course of business and
consistent with past practices, or in the case of accounts
receivable, pursuant to the terms of the Accounts Receivable
Facility; or
(m) Either as lessor or lessee (i) enter into, amend,
terminate, renew, extend, subordinate its interest under or
exercise any purchase option under any lease or sublease of real
property, including without limitation, the Leased Real Estate or
the property located at 000 Xxxxxxx Xx., Xxxxxxx, MD., or (ii)
enter into any lease or sublease of real property, including
without limitation, any of the Leased Real Estate unless such
lease or sublease can be terminated at an immaterial cost by BGH
Holdings, BRH Holdings or the Companies upon no more than thirty
days prior written notice, or consent to any amendment,
termination, renewal, subordination of its interest under or
extension of any lease or sublease relating to any of the Leased
Real Estate or the Owned Real Estate.
(n) Agree or commit, whether in writing or otherwise,
to do any of the foregoing.
Section 3.03 Covenants of Buyer. Prior to the Closing,
Buyer will use its reasonable commercial efforts to:
(a) Cause the satisfaction of all conditions to
Buyer's and Seller's obligations to close to the extent
satisfaction of such condition is in the control of Buyer and to
cooperate with Seller in obtaining all third party and
governmental approvals necessary to consummate the transactions
contemplated hereby; and
(b) Obtain the Financing.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants as follows:
Section 4.01 Corporate Organization, Power and
Subsidiaries. Each of BGH Holdings, BRH Holdings, the Companies
and Seller is a corporation duly organized, validly existing and
in good standing under the laws of its state of incorporation and
has the corporate power and authority to carry on its business as
now being conducted, and to own or lease and operate the
properties and assets now owned or leased and being operated by
it. Each of BGH Holdings, BRH Holdings, the Companies and Seller
is qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each
jurisdiction in which it owns or leases properties or conducts
any business so as to require such qualification, except such
jurisdictions where the failure to qualify will not have a
material adverse effect on the business, financial condition,
results of operations or operations of such Company. The copies
of BGH Holdings and BRH Holdings and each of the Companies'
certificate of incorporation and by-laws which have been
furnished to Buyer reflect all amendments made thereto and are
correct and complete. Except as set forth on Schedule 4.01,
neither BGH Holdings nor BRH Holdings has any direct or indirect
equity interest, or the right or obligation to acquire an equity
interest, in any other person or entity. Except as set forth in
Schedule 4.01, none of the Companies has a direct or indirect
equity interest, or the right or obligation to acquire an equity
interest, in any other person or entity.
Section 4.02 Authority; Authorization. Seller has full
legal capacity, power and authority to execute, deliver and
perform this Agreement and to consummate the transactions
contemplated hereby. The execution, delivery and performance by
Seller of this Agreement has been duly and validly authorized by
Seller. This Agreement constitutes the legal, valid and binding
obligation of Seller, enforceable against Seller in accordance
with its terms.
Section 4.03 No Violations. Except as set forth on
Schedule 4.03, the execution, delivery and performance of this
Agreement by Seller and the consummation of the transactions
contemplated hereby do not and will not (a) conflict with or
result in any breach of any of, (b) constitute a default under,
(c) result in a Lien on any of the assets of BGH Holdings, BRH
Holdings or the Companies, or (d) result in a violation of, the
articles of incorporation or by-laws of any of Seller, BGH
Holdings, BRH Holdings or the Companies or any indenture,
mortgage, or loan agreement by which Seller, BGH Holdings, BRH
Holdings or the Companies is bound or to which any of its
properties are subject, or any law, statute, rule, regulation,
judgment or decree to which any of Seller, BGH Holdings, BRH
Holdings or the Companies is subject. Seller may execute,
deliver and perform this Agreement without the necessity of
obtaining any consent, approval, authorization or waiver, giving
any notice, or making any filing or disclosure, except as set
forth on Schedule 4.03 hereto.
Section 4.04 Shares. The authorized, issued and
outstanding equity capital of BGH Holdings, BRH Holdings and each
of the Companies is as set forth on Schedule 4.04. The Shares of
each of BGH Holdings, BRH Holdings and all issued shares of the
Companies have been duly authorized and validly issued and are
fully paid and non-assessable and have not been issued in
violation of any preemptive rights. There are no restrictions
affecting the transferability of the Shares, except as disclosed
on Schedule 4.04. At Closing, there will be no restrictions
affecting the transferability of the Shares. There are no
outstanding options, rights, warrants, conversion rights,
convertible securities or other agreements or commitments to
which Seller, Holdings or the Companies are a party or by which
they are bound, providing for the issuance of additional Shares
of capital stock of Holdings or the Companies, and there are no
proxies, voting trusts, or shareholder or other agreements with
respect to the voting or transfer of any capital stock of or
other equity interests in BGH Holdings, BRH Holdings or the
Companies.
Section 4.05 Ownership of Shares.
(a) Except as set forth on Schedule 4.05, Seller is
the record and beneficial owner of all outstanding Shares of BGH
Holdings and BRH Holdings. Except as set forth on Schedule 4.05,
Seller has good and marketable title to the Shares, free and
clear of any Liens. At Closing, Seller will have good and
marketable title to the Shares, free and clear of any Lien and
have the right, title, power and authority to sell, assign,
transfer and deliver the Shares to Buyer.
(b) Except as set forth on Schedule 4.05, BGH Holdings
is the record and beneficial owner of all outstanding capital
stock of B&G-DSD. Except as set forth on Schedule 4.05, BGH
Holdings has good and marketable title to the capital stock of
the B&G-DSD, free and clear of any Lien. At Closing, BGH
Holdings will have good and marketable title to the capital stock
of B&G-DSD, free and clear of any Lien.
(c) Except as set forth on Schedule 4.05, B&G-DSD is
the record and beneficial owner of all outstanding capital stock
of B&G Foods and B&G. Except as set forth on Schedule 4.05, B&G-
DSD has good and marketable title to the capital stock of each of
B&G Foods and B&G, free and clear of any Lien. At Closing, B&G-
DSD will have good and marketable title to the capital stock of
B&G Foods and B&G, free and clear of any Lien.
(d) Except as set forth on Schedule 4.05, B&G Foods is
the record and beneficial owner of all outstanding capital stock
of Roseland. Except as set forth on Schedule 4.05, B&G Foods has
good and marketable title to the capital stock of Roseland, free
and clear of any Lien. At Closing, B&G Foods will have good and
marketable title to the capital stock of Roseland, free and clear
of any Liens.
(e) Except as set forth on Schedule 4.05, BRH Holdings
is the record and beneficial owner of all outstanding capital
stock of B&R. Except as set forth on Schedule 4.05, BRH Holdings
has good and marketable title to the capital stock of B&R, free
and clear of any Lien. At Closing, BRH Holdings will have good
and marketable title to the capital stock of B&R, free and clear
of any Lien.
Section 4.06 Financial Statements.
(a) Attached as Schedule 4.06 (a) are copies of the
unaudited consolidated balance sheet of BGH Holdings, BRH
Holdings and the Companies as of September 28, 1996 (the "Latest
Balance Sheet"), and the unaudited balance sheet and consolidated
income statement for BGH Holdings, BRH Holdings and the Companies
for the fiscal years ended December 30, 1995 and December 31,
1994 (the "Financial Statements"). The Latest Balance Sheet and
the Financial Statements are in accordance with the books and
records of BGH Holdings, BRH Holdings and the Companies, present
fairly in all material respects the financial position of BGH
Holdings, BRH Holdings and the Companies at said dates and the
results of operations of BGH Holdings, BRH Holdings and the
Companies for the periods covered, and have been prepared in
accordance with GAAP consistently applied. BGH Holdings', BRH
Holdings' and the Companies' unaudited consolidated income
statement as of September 28, 1996, a copy of which is also
attached as part of Schedule 4.06, has been prepared in
accordance with GAAP consistently applied, subject to normal year-
end adjustments, and presents fairly in all material respects the
results of operations of BGH Holdings, BRH Holdings and the
Companies for the period covered.
(b) Attached as Schedule 4.06 (b) hereto is a schedule
of the liabilities comprising the Excluded Liability Amount as of
the Latest Balance Sheet Date. There are no long-term
liabilities of BGH Holdings, BRH Holdings or the Companies as of
the Latest Balance Sheet Date that are required to be reflected
on a balance sheet prepared in accordance with GAAP consistently
applied other than the Excluded Liability Amount as of the Latest
Balance Sheet Date set forth on Schedule 4.06 (b). As of the
Closing Date, there will be no long-term liabilities of BGH
Holdings, BRH Holdings or the Companies that are required to be
reflected on a balance sheet prepared in accordance with GAAP
consistently applied other than the Excluded Liability Amount as
of the Closing Date. The Excluded Liabilities as of the Closing
Date will be calculated in a manner consistent with the manner of
calculation of the Excluded Liabilities as of the Latest Balance
Sheet Date.
Section 4.07 No Undisclosed Liabilities. Except as
disclosed on Schedule 4.07 or otherwise in this Agreement or in
the Schedules hereto, and except as reflected, or reserved
against in the Latest Balance Sheet or incurred thereafter in the
ordinary course of business (and which do not and cannot
reasonably be expected to have, in the aggregate, a material
adverse effect on BGH Holdings, BRH Holdings and the Companies,
taken as a whole), BGH Holdings, BRH Holdings and the Companies
have no liabilities or obligations other than liabilities and
obligations that are immaterial in nature and incurred in the
ordinary course of business. The Financial Statements do not
include or reflect any assets, liabilities, equity, results of
operations or cash flows of any person, corporation, partnership
or other business other than BGH Holdings, BRH Holdings and the
Companies.
Section 4.08 No Material Adverse Change. Except as
disclosed on Schedule 4.08, since the date of the Latest Balance
Sheet (i) each of BGH Holdings, BRH Holdings and the Companies
has conducted its business only in the ordinary course and in
conformity with past practice, and (ii) there has been no
material adverse change in the business, operations, operating
results, assets or liabilities of BGH Holdings, BRH Holdings and
the Companies, all considered as a whole.
Section 4.09 Absence of Certain Changes. Except as
disclosed on Schedule 4.09, since the date of the Latest Balance
Sheet, none of BGH Holdings, BRH Holdings or the Companies has:
(a) Created, incurred, assumed or guaranteed any
indebtedness or become subject to any liabilities, except current
liabilities incurred in the ordinary course of business and
liabilities under contracts entered into in the ordinary course
of business;
(b) Subjected any of its assets, tangible or
intangible, to any Lien, except liens for current property taxes
not yet due and payable;
(c) Sold, assigned or transferred any assets, except
inventory in the ordinary course of business and consistent with
past practices or, in the case of accounts receivable, pursuant
to the terms of the Accounts Receivable Facility;
(d) Sold, assigned, transferred or permitted to lapse
any patents, trademarks, trade names, copyrights, trade secrets
or other intangible assets or rights thereto;
(e) Suffered any extraordinary losses, whether or not
covered by insurance, forgiven or canceled any debts or claims or
waived any right of material value;
(f) Entered into any transaction (except as
contemplated otherwise herein) other than in the ordinary course
of business or any transaction (not involving purchase and sales
of inventory) involving commitments for expenditures in excess of
$150,000;
(g) Made capital expenditures not previously committed
or new commitments for capital expenditures individually in
excess of $75,000 or that aggregate in excess of $150,000;
(h) Increased the compensation, bonuses, or benefits
payable or to become payable by Holdings or the Companies to any
of its officers or to any other employees, except for scheduled
annual increases in the normal course of business, consistent
with past practice and not exceeding six percent per annum;
(i) Suffered any work stoppage or labor dispute;
(j) Changed any of the accounting principles followed
by it or the methods of applying such principals;
(k) Except in accordance with GAAP applied on a basis
consistent with the Financial Statements, written down or written
up the value of, or changed the method of valuing any inventory,
changed the manner in which cost allocations are made; or written
off as uncollectible any note, trade account or other receivable;
(l) Conducted its operations otherwise than in the
ordinary due course; or
(m) Entered into any agreements to do any of the
things previously set forth in this Section 4.09.
Section 4.10 Directors, Officers and Bank Accounts.
Schedule 4.10 contains a complete and accurate list of all
officers and directors of each of BGH Holdings, BRH Holdings and
the Companies and a complete and accurate list (including
addresses) of all bank accounts, safe deposit boxes and lock
boxes maintained by each of BGH Holdings, BRH Holdings or the
Companies which will be retained by any of BGH Holdings, BRH
Holdings or the Companies after Closing, and a list of all
authorized signatories thereto.
Section 4.11 Accounts Receivable. All outstanding
receivables generated by the Companies, including, without
limitation, those accounts receivable that are to be sold to
Buyer by SFFC pursuant to the terms and conditions of the
Accounts Receivable Purchase Agreement are bona fide receivables
arising out of arms-length transactions and will, at Closing, be
valid and enforceable claims against customers (subject to no
defenses, offsets or counterclaims) for goods or services
delivered or rendered in the ordinary course of business.
Section 4.12 Inventory. All inventories reflected on the
Latest Balance Sheet (including, without limitation, finished
goods, work-in-process, raw materials and supplies) were as of
such date and all inventories existing on the Closing Date will
be:
(a) Properly valued at the lower of cost or fair
market value in accordance with GAAP consistently applied and
consistent with prior practices of the Companies;
(b) Valued so as to include no material amounts that
are not of good and merchantable quality, and salable and usable
for the purposes intended in the ordinary course of business;
(c) In conformity with warranties customarily given to
purchasers of like products; and
(d) At levels adequate and not excessive in relation
to the circumstances of the Companies' business and in accordance
with past inventory stocking practices.
Except as set forth on Schedule 4.12, no inventory is
held on consignment by or for the Companies and none of the
Companies is under any material liability or obligation with
respect to the return of inventory or merchandise. All
ingredients and finished products in inventory (i) comply in all
material respects with the Food, Drug and Cosmetic Act and all
acts amending or supplementing the Food, Drug and Cosmetic Act
(including, without limitation, the Food Additive Amendment of
1958), and with the pure food and drug laws of each and all
states of the United States into which any such product would
normally be shipped by the Companies, (ii) are not adulterated or
misbranded within the meaning of the Food, Drug and Cosmetic Act
or such state laws, (iii) are not prohibited from introduction
into interstate commerce under the provisions of Section 404 or
505 of the Food, Drug and Cosmetic Act, and (iv) do not contain a
hazardous substance or a banned substance.
Section 4.13 Insurance. Schedule 4.13 contains a complete
and correct list and summary description (including the name of
the insurer, coverage and expiration date) of all policies of
insurance relating to BGH Holdings', BRH Holdings' or the
Companies' businesses which are in force, or which are still open
for retroactive premium adjustments, including the amounts
thereof, maintained by BGH Holdings, BRH Holdings or the
Companies or in which BGH Holdings, BRH Holdings or the Companies
is a named insured or on which BGH Holdings, BRH Holdings or the
Companies is directly or indirectly paying premiums. All
premiums due and payable have been paid and all such policies are
in full force and effect in accordance with their respective
terms. Such policies comply with applicable law in all material
respects and are consistent in all material respects with
insurance coverage levels maintained by or for the Companies
since August 16, 1993. Such policies will remain in full force
and effect through the Closing Date.
Section 4.14 Title to Assets and Conditions.
(a) Except as set forth on Schedules 4.14, 4.15, 4.16
or 4.17, each of BGH Holdings, BRH Holdings and the Companies is
the sole and exclusive legal and equitable owner of all right,
title and interest in and has good and marketable title to all of
the properties or assets used in BGH Holdings, BRH Holdings or
such Company's business. Except as set forth in Schedules 4.14
and 4.15, such properties and assets are not subject to any Lien
which materially detracts from the value or interfere with the
present use of such properties or assets.
(b) Except as set forth on Schedule 4.14, all
properties and assets of the Companies are in satisfactory
operating condition and repair, ordinary wear and tear excepted.
Section 4.15 Owned Real Estate.
(a) None of Seller, BGH Holdings or BRH Holdings is
the legal or beneficial owner of any real estate.
(b) Schedule 4.15 sets forth a list of all of the real
estate owned by each of the Companies (such real estate is
collectively referred to herein as the "Owned Real Estate"),
including the street addresses and legal descriptions for all of
the Owned Real Estate. Except as set forth on Schedule 4.15(b),
with respect to each parcel of Owned Real Estate, the Company
identified on Schedule 4.15 as the Owner thereof has (and will
continue to have immediately following consummation of the
transactions contemplated hereby) good, valid, marketable, and
indefeasible fee simple title to, and, except as set forth on
Schedule 4.15 is in actual possession of, such parcel of Owned
Real Estate, including the buildings, structures, fixtures and
improvements situated thereon and the appurtenances thereto. To
the knowledge of Seller, each of the legal descriptions included
on Schedule 4.15 is accurate, current and complete. Seller has
delivered to Buyer complete copies of current surveys pertaining
to each parcel of the Owned Real Estate, and to Seller's
knowledge, such surveys are accurate in all material respects,
and no changes or improvements have been made to such properties
which would be reflected in an updated survey. The Owned Real
Estate is free and clear of all Liens, except (i) matters set
forth on Schedule 4.15 and referred to as "Exceptions that will
not exist at Closing" (the "Exceptions That Will Not Exist At
Closing"), (ii) matters set forth on Schedule 4.15 and referred
to as "Permitted Exceptions", none of which is material in amount
and none of which, individually or in the aggregate, impairs, or
grants or evidences rights which if exercised would impair, the
use of the affected property in the manner such property is
currently being used, or impairs the current operations of any of
the Companies (iii) defects of title, conditions, easements,
encroachments, covenants or restrictions, if any, none of which
is material in amount and none of which, individually or in the
aggregate, materially impairs, or grants or evidences rights
which if exercised would materially impair, the use of the
affected property in the manner such property is currently being
used, or impairs the current operations of any of the Companies,
and (iv) zoning or land use ordinances, none of which, to
Seller's knowledge, individually or in the aggregate, impairs the
use of the affected property in the manner such property is
currently being used or impairs the current operations of any of
the Companies (collectively, "Permitted Exceptions"). To
Seller's knowledge, none of Seller, BRH Holdings, BGH Holdings,
or the Companies has received written notice of any violation of
or non-conformity with any zoning, subdivision, wetlands or other
similar law, code, rule, regulation or ordinance from any
governmental authority with respect to any of the Owned Real
Estate, or of any condemnation action, eminent domain proceeding
or other litigation concerning any of the Owned Real Estate.
Except as set forth on the Title Commitments or on the surveys
delivered to Buyer by Seller as provided in this Section 4.15, to
the knowledge of Seller, no portion of any of the improvements
erected on the Owned Real Estate encroaches on adjoining property
or public streets. To Seller's knowledge none of Seller, BRH
Holdings, BGH Holdings, or the Companies has received any written
notice of the existence of any such encroachment not disclosed by
the Title Commitments or the aforesaid surveys. The water, gas,
electricity and other utilities serving each parcel of the Owned
Real Estate have been and are currently adequate to service the
normal operation of each parcel of the Owned Real Estate, as
conducted in the past and as currently conducted.
(c) On and as of the Closing Date, all of the Owned
Real Estate shall be free and clear of and none of the Owned Real
Estate shall be subject to any of the Exceptions That Will Not
Exist At Closing.
Section 4.16 Real Estate Leases.
(a) Neither BGH Holdings nor BRH Holdings leases any
real estate. Seller does not own or lease any real estate used
in connection with the businesses of BGH Holdings, BRH Holdings,
or the Companies.
(b) Schedule 4.16 sets forth a list of all of the
leases or rights of occupancy pursuant to which the Companies (or
any of them) lease or sublease any real property or interest
therein (collectively, the "Leases"), including the
identification of each of the Lessors thereof and the street
addresses of the real estate demised under any of the Leases
(collectively, the "Leased Real Estate"). Except as set forth in
Schedule 4.16, one or more of the Companies is the lessee under
all Leases, and no party other than one or more of the Companies
has any right to possession, occupancy or use of any of the
Leased Real Estate. A true and correct copy of each of the
Leases has been delivered to Buyer, together with all amendments
and modifications thereto, and no changes, amendments or
modifications have been made thereto since the date of such
delivery, except as permitted by Section 3.02 (k). Each of the
Leases is valid and is in full force and effect and is binding
and enforceable in accordance with its terms except to the extent
such enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
the enforcement of creditors' rights or by general equitable
principles. Except as set forth in Schedule 4.16, none of the
Companies is in default (after expiration of applicable cure or
grace periods) under any provision of any of the Leases, the
failure of which to perform would permit the lessor thereunder to
terminate such Lease, and, to Seller's knowledge, no event has
occurred which (with or without notice, lapse of time or both)
would render any of the Companies in default under any of such
provisions which default would permit the lessor thereunder to
terminate such Lease. To the knowledge of Seller, BRH Holdings,
BGH Holdings, or the Companies, no other party to any of the
Leases is in default under any of the material commitments and
obligations thereof, and no event has occurred which (with or
without notice, lapse of time or both) would render any such
other party in default under any of such provisions.
(c) Except as set forth in Schedule 4.16, the
Companies are in actual possession of the Leased Real Estate.
Except as set forth in Schedule 4.16, the Companies have good and
valid title to all the leasehold estates conveyed under the
Leases free and clear of all Liens except for (i) (A) those
provided under the relevant lease; (B) matters shown on Schedule
4.16; and (C) defects of title, conditions, easements, covenants
or restrictions, if any, none of which items referred to clauses
(A), (B) or (C) above is substantial in amount, and none of
which, individually or in the aggregate, materially impairs or
grants or evidences rights which, if exercised, would materially
impair the current use of the affected property in the manner
such property is currently being used by the Companies, or
impairs the operations of any of the Companies; (ii) zoning or
land use ordinances, none of which, to Seller's knowledge,
individually or in the aggregate, materially impairs the use of
the affected property in the manner such property is currently
being used, or impairs the current operations of any of the
Companies; and (iii) liens for taxes not yet due and payable (iv)
any mortgage liens granted by any lessor under any of the Leases
of the lessor's interest in the underlying real estate or the
Leases. To Seller's knowledge, none of the Companies has
received written notice of any violation of or non-conformity
with any zoning, subdivision, wetlands or other similar law,
code, rule, regulation or ordinance from any governmental
authority with respect to any of the Leased Real Estate, or of
any condemnation action, eminent domain proceeding or other
litigation concerning any of such properties.
(d) Except as set forth in Schedule 4.16, the basic
rent, all additional rent and all other charges and amounts
payable under the Leases have been paid to date and not more than
one month in advance. All work required to be performed under
the Leases by the landlords thereunder or by any of the Companies
have been performed, and, to the extent that any of the Companies
is responsible for payment of such work, has been fully paid for,
whether directly to the contractor performing such work or to
such landlord as reimbursement therefor, except for items which
any of the Companies is disputing in good faith (which items are
set forth in Schedule 4.16).
(e) Except as set forth on Schedule 4.16, there are no
brokerage commissions or finder's fees due from Seller or any of
the Companies which are unpaid with regard to any of the Leases
or the Leased Real Estate or which will become due at any time in
the future with regard to the Leases or the Leased Real Estate.
(f) Except as set forth in Schedule 4.16, there have
been no casualties which are reasonably likely to result in the
termination of any of the Leases or the exercise of any buy-out
provision contained in any of the Leases relative to damage by
casualty.
(g) Except as set forth on Schedule 4.16, (i) no
consent of any of the lessors under any of the Leases is required
by reason of any of the transactions contemplated by this
Agreement, and (ii) none of the rights of any of the Companies
under any of the Leases will be impaired by the consummation of
the transactions contemplated by this Agreement and all of such
rights will be enforceable by the Companies after the Closing
Date without the consent or agreement of any other party,
including all rights to purchase any of the Leased Real Estate or
to renew any of the Leases pursuant to options to purchase or
renew contained in any of the Leases. Any lessor under any of
the Leases whose consent or agreement is required is identified
as such on Schedule 4.16.
Section 4.17 Personal Property Leases.
(a) Neither BGH Holdings nor BRH Holdings leases any
personal property.
(b) Schedule 4.17 contains a complete and accurate
list of all leases of personal property, including vehicle and
equipment leases, leased by the Companies that require annual
payments in excess of $10,000 (the "Personal Property Leases").
Seller has delivered to Buyer copies of all the Personal Property
Leases.
(c) The Personal Property Leases are in full force and
effect and are valid, binding and enforceable in accordance with
their respective terms.
(d) No amount payable under any Personal Property
Lease is past due.
(e) Except as set forth on Schedule 4.17, the
Companies have, and, to the knowledge of each of Seller, BGH
Holdings, BRH Holdings and the Companies, each other party
thereto has complied with all material commitments and
obligations on its part to be performed or observed under each
Personal Property Lease.
(f) Neither Seller, BGH Holdings, BRH Holdings nor the
Companies has received any notice of a default (which has not
been cured), offset or claim under any Personal Property Lease,
or any other communication calling upon Seller, Holdings or the
Companies to comply with any provision of any Personal Property
Lease, and no event or condition has happened or presently exists
which constitutes a default or, after notice or lapse of time or
both, would constitute a default under any Personal Property
Lease.
Section 4.18 Motor Vehicles. All motor vehicles used in
the Company's business, whether owned or leased, are listed on
Schedule 4.18. All licenses, permits, inspections and other
authorizations necessary for the use of such vehicles by the
Companies have been obtained and are in full force and effect.
Section 4.19 Intellectual Property. Schedule 4.19
contains a complete and accurate list of all patents and patent
applications, trademark registrations and applications, copyright
registrations and applications, and all unregistered trademarks,
tradenames, service marks and logos, and registered and assumed
or fictitious names used by any of BGH Holdings, BRH Holdings or
the Companies in the conduct of its businesses specifying as to
each such item, as applicable: (i) the owner of the item; (ii)
the jurisdictions in which the item is issued or registered or in
which any application for issuance or registration has been
filed, including the respective issuance, registration, or
application number; and (iii) the date of issuance or
registration of the item. Schedule 4.19 also contains a complete
and accurate list and description of all licenses and other
agreements relating to any of the foregoing. Except as set forth
on Schedule 4.19:
(a) Each of BGH Holdings, BRH Holdings and the
Companies owns, has the exclusive right to use, and has the right
to bring actions for the infringement of, all patents,
trademarks, service marks and trade names set forth on Schedule
4.19 and to the knowledge of Seller, each of BGH Holdings, BRH
Holdings and the Companies has the right to use without cost the
other intellectual property necessary for the operation of its
business as currently conducted. The trademarks, service marks
and trade names set forth on Schedule 4.19 are the only such
intellectual property rights used in the conduct of the
Companies' business in the manner in which it is currently being
conducted.
(b) The operation of the businesses of each of BGH
Holdings, BRH Holdings and the Companies does not, to the
knowledge of Seller, infringe on the patents, trademarks, service
marks, trade names, trade dress, copyrights, industrial design
rights, trade secrets or other intellectual property rights of
any third party and, to the knowledge of Seller, no claim has
been made, notice given, or dispute arisen to that effect.
(c) None of the Companies, BGH Holdings, BRH Holdings
nor Seller has given any indemnification to any third party
against infringement of patent, trademark, copyright or other
intellectual property rights.
(d) None of the Companies, BGH Holdings, BRH Holdings
nor Seller has any pending claim that a third party has violated
or infringed any of its patents, trademarks, service marks, trade
names, trade dress, copyrights, industrial design rights, trade
secrets or other proprietary rights.
(e) Except for computer software licenses and implied
licenses relating to any equipment used by the Companies in the
ordinary course of business, no trademark, service xxxx or trade
name is used pursuant to a license from a third party or licensed
to a third party. None of the Companies, BGH Holdings, BRH
Holdings, Seller nor any other party is in breach of or default
under any such license and each such license is now and
immediately following the Closing will be valid and in full force
and effect.
(f) All of the patents, trademark and service xxxx
registrations, and copyright registrations set forth on Schedule
4.19 are valid and in full force, are held of record in the name
of the designated Company free and clear of all liens,
encumbrances and other claims, and are not the subject of any
cancellation or reexamination proceeding or any other proceeding
challenging their extent or validity. The designated Company on
Schedule 4.19 is the applicant of record in all patent
applications, and applications for trademark, service xxxx, and
copyright registrations, and no opposition, extension of time to
oppose, interference, rejection, or refusal to register has been
received in connection with any such application.
(g) No order, holding, decision or judgment has been
rendered by any governmental authority, and no agreement, consent
or stipulation exists, which would limit the use by any of the
Companies of any intellectual property or any advertising or
promotional claim or campaign.
Seller has delivered to Buyer copies of each document listed
on Schedule 4.19.
Section 4.20 Material Contracts. All contracts,
agreements, instruments, plans and leases (other than those
disclosed on another schedule to this Agreement or entered into
after the date hereof with the written consent of Buyer) to which
any of BGH Holdings, BRH Holdings or the Companies are parties,
or by which any of BGH Holdings', BRH Holdings' or any of the
Companies' properties are subject or bound, meeting any of the
descriptions set forth below (together with all contracts,
agreements and leases disclosed on another Schedule to this
Agreement, the "Material Contracts"), are listed on Schedule
4.20.
(a) Any purchase order, agreement or commitment
obligating any of BGH Holdings, BRH Holdings or the Companies to
purchase or sell any products or services or pay any amount and
which either (i) was not entered into in the normal course of
business, or (ii) is not terminable without payment or penalty
upon sixty (60) days' (or less) notice, or (iii) is in an
aggregate amount exceeding $25,000;
(b) Any loan agreement, promissory note, indenture, or
letter of credit that will affect any of BGH Holdings, BRH
Holdings or the Companies or their assets after Closing, any
contract or agreement for the deferred purchase price of property
(excluding normal trade payables), or any instrument guaranteeing
any indebtedness;
(c) Any contract or agreement by which any of BGH
Holdings, BRH Holdings or the Companies is guaranteeing any
obligations of any person or entity, or any person or entity is
guaranteeing any obligations of any of BGH Holdings or BRH
Holdings or the Companies;
(d) Any joint venture, partnership or other
arrangement involving a sharing of profits;
(e) Any sales agency, brokerage, distribution or
similar contract;
(f) Any agreement which includes provisions regarding
minimum volumes or volume discounts;
(g) Any agreement pursuant to which a rebate,
discount, bonus, commission or other payment with respect to the
sale of any product of the Companies will be payable or required
after the Closing;
(h) Any consulting agreement or arrangement;
(i) Any contract or agreement involving the sale by or
to the Companies of products on consignment;
(j) Any contract or agreement containing a power of
attorney;
(k) Any contract or agreement restricting any of BGH
Holdings, BRH Holdings or the Companies from carrying on business
anywhere in the world; and
(l) Any contract or arrangement with any Affiliate of
Holdings or the Companies; and
(m) Any subordination, non-disturbance, attornment or
similar agreement relating to the Leased Real Estate.
Except as set forth on Schedule 4.20:
(i) all Material Contracts are in full force and
effect and are valid, binding and enforceable
against BGH Holdings, BRH Holdings or such
Company (and, to the knowledge of Seller, BGH
Holdings, BRH Holdings and the Companies,
other parties thereto) in accordance with
their terms;
(ii) none of BGH Holdings, BRH Holdings or the
Companies is, and, to the knowledge of
Seller, BGH Holdings, BRH Holdings and the
Companies, no other party to any Material
Contract is, in breach of any provision of,
in violation of, or in default under the
terms of any Material Contract;
(iii) no event has occurred which, after the
giving of notice or passage of time or both,
would constitute a default under or result in
the breach of any Material Contract by any of
BGH Holdings, BRH Holdings or the Companies,
or to the knowledge of Seller, BGH Holdings,
BRH Holdings or the Companies, by any other
party; and
(iv) no consent of any other party under any
Material Contract is required by reason of
any of the transactions contemplated by this
Agreement, and none of the material rights of
any of the Companies under any of the
Material Contracts will be impaired by the
consummation of the transactions contemplated
by this Agreement and all of such rights will
be enforceable by the Companies after the
Closing Date without the consent or agreement
by any other party.
Seller has delivered to Buyer copies of each Material
Contract.
Section 4.21 Employees. Schedule 4.21 contains a complete
and accurate list of all of the following to which Holdings or
the Companies is a party or by which it is bound, whether written
or unwritten, all of which are collectively referred to herein as
the "Benefit Plans".
(a) Employment contracts with employees of Holdings or
the Companies;
(b) Collective bargaining agreements;
(c) Commission, incentive or bonus plans or
arrangements;
(d) Pension and retirement plans as defined in ERISA
Section 3(2), including multiemployer pension plans as defined in
ERISA Section 3(37), and multiemployer health and welfare plans
to which any obligation to contribute exists under a collective
bargaining or similar agreement;
(e) Profit sharing plans;
(f) Non-qualified deferred compensation plans;
(g) Medical, dental, life or health insurance plans;
(h) Stock purchase, stock option, phantom stock or
similar plans;
(i) Severance plans or policies;
(j) Welfare benefit plans as defined in Section 3(1)
of ERISA;
(k) All other material employee fringe benefits; and
(l) Any plan or arrangement that provided any of the
benefits described above but was terminated since August 16, 1993
or, to the Seller's knowledge, in the three-year period preceding
such date.
Except as set forth on Schedule 4.21, BGH Holdings, BRH
Holdings and each of the Companies has complied in all material
respects with its obligations related to, and is not in default
under, any of the foregoing and each of the foregoing has been
operated in compliance with its terms, the Code and ERISA in all
material respects since August 16, 1993 and, to the Seller's
knowledge, in the three year period preceding such date. Seller
has delivered to Buyer a true and complete list of the name,
position and present rate of compensation, including accrued
bonuses, of each employee of each of BGH Holdings, BRH Holdings
and the Companies. Except as set forth on Schedule 4.21, on the
date hereof there are no unfair labor practices, employment
related litigation, administrative proceedings or controversies
pending or, to the knowledge of Seller, Holdings or the
Companies, threatened involving any employee of Holdings or the
Companies. Each of BGH Holdings, BRH Holdings and the Companies
is in compliance in all material respects with its obligations
under all statutes, executive orders and other governmental
regulations governing its employment practices, including without
limitation, provisions relating to wages, hours, equal
opportunity, discrimination in employment, and payment of social
security and other taxes. None of BGH Holdings, BRH Holdings or
the Companies has suffered or sustained any labor disputes
resulting in any work stoppage, and no such work stoppage is
threatened. Except as set forth on Schedule 4.21, to Seller's,
Holdings' and the Companies' knowledge on the date hereof, there
are no attempts being made to organize any employees presently
employed by the Companies. All payments to employees which would
have been paid in the ordinary course of business on or before
the Closing Date shall have been paid as of the Closing. As of
the Closing, none of the employees of BGH Holdings, BRH Holdings
or the Companies will then, or, will by the passage of time
hereafter become, entitled to receive any vacation time or
vacation pay attributable to services rendered prior to the
Closing except as provided for in the Adjusted Closing Date
Balance Sheet. Accrued bonuses of employees of BGH Holdings, BRH
Holdings or the Companies existing at the Closing Date will be
consistent with the past compensation practices of the Companies
and will be fully set forth on the Adjusted Closing Date Balance
Sheet.
Section 4.22 ERISA. Except as set forth on Schedule 4.22,
with respect to each Benefit Plan that is an employee pension
benefit plan (as defined in Section 3(2) of ERISA (an "ERISA
Plan")):
(a) Each of BGH Holdings, BRH Holdings and the
Companies has, with respect to each ERISA Plan, fulfilled the
obligations under the minimum funding standards of ERISA and the
Code and is in compliance in all material respects with the
applicable provisions of ERISA and the Code, and (i) has not
incurred any liability to the Pension Benefit Guaranty
Corporation or under an ERISA Plan, (ii) to Seller's knowledge,
has not received any written notice providing that BGH Holdings,
BRH Holdings or the Companies has any liability to the Pension
Benefit Guaranty Corporation or under an ERISA Plan, and (iii) to
Seller's knowledge, no event has occurred which would be
reasonably likely to result in liability to the Pension Benefit
Guaranty Corporation or under an ERISA Plan, in each case in
connection with the termination of an ERISA Plan pursuant to
Title IV of ERISA, where such liability would have a material
adverse effect on the financial condition of BGH Holdings, BRH
Holdings or the Companies;
(b) With respect to any ERISA Plan, there have been no
prohibited transactions (as defined in Section 4975(c) of the
Code and Section 406 of ERISA) or reportable events (as defined
in Section 4043(b) of ERISA and regulations thereunder);
(c) Each ERISA Plan which is intended to be a
qualified plan under Section 401(a) of the Code is qualified
under Code Section 401(a) and has received a favorable
determination letter from the Internal Revenue Service and no
such letter has been revoked or threatened to be revoked;
(d) No withdrawal liability (as defined in ERISA
Section 4201) has been incurred by or asserted against BGH
Holdings, BRH Holdings, the Companies or any of its ERISA
Affiliates with respect to a withdrawal from any multiemployer
pension (as defined in Section 3(37) of ERISA) or any
contractually imposed withdrawal liability under any
multiemployer health and welfare plan which has not been
satisfied in full. To Seller's knowledge, no liability could be
imposed against any of BGH Holdings, BRH Holdings or any of the
Companies for any withdrawal liability, as defined in ERISA
Section 4201, if as of the Closing Date, any of the Companies or
any ERISA Affiliate were to have a complete withdrawal, as
defined in ERISA Section 4203, from any multiemployer plan, as
defined in ERISA Section 3(37). No liability has been assessed
against any of BGH Holdings, BRH Holdings or the Companies under
Title IV of ERISA with respect to any ERISA Plan or any other
employee pension benefit plan, as defined in ERISA Section 3(2),
contributed to or maintained by an ERISA Affiliate;
(e) Except as set forth on Schedule 4.22, all material
reports, returns and similar documents with respect to the
Benefit Plans required to be filed with any government agency or
distributed to any Benefit Plan participant have been duly and
timely filed or distributed;
(f) Each of BGH Holdings, BRH Holdings and the
Companies has complied with the notice and continuation coverage
requirements of Section 4980B of the Code and the regulations
thereunder ("COBRA") with respect to each Benefit Plan that is a
group health plan within the meaning of Section 5000(b)(1) of the
Code;
(g) Except as set forth on Schedule 4.22, there are no
pending investigations by any governmental agency involving the
Benefit Plans, no termination proceedings involving the Benefit
Plans, and no threatened or pending claims (except for claims for
benefits payable in the normal operation of the Benefit Plans),
suits or proceedings against any Benefit Plans asserting any
rights or claims to benefits under any Benefit Plan which could
give rise to any material liability, nor to the knowledge of
Seller, are there any facts which could rise to any material
liability in the event of any such investigation, claim, suit or
proceeding;
(h) Except as set forth on Schedule 4.22, no payment
which is or may be made by any of BGH Holdings, BRH Holdings, or
the Companies, or from any Benefit Plan, to any employee, former
employee, director or agent of any of BGH Holdings, BRH Holdings
or the Companies under the terms of any Benefit Plan, either
alone or in conjunction with any other payment, has been or could
in all reasonably likelihood be characterized as an excess
parachute payment under Section 280G of the Code; and
(i) No Benefit Plan, other than on ERISA Plan,
provides or will provide any benefits to any current retiree or
any future retiree of any of BGH Holdings, BRH Holdings or the
Companies, except as required under COBRA.
Section 4.23 Taxes.
(a) Each of BGH Holdings, BRH Holdings and the
Companies (or an Affiliate on behalf of Holdings and the
Companies) has filed when due (after giving effect to applicable
extensions of the time for filing) all Returns for Taxes that it
was required to file and has timely paid in full all Taxes shown
to be due on such Tax Returns or, except as disclosed in Schedule
4.23(a), for which notice of assessment or demand for payment has
been received. All such Returns for Taxes were correct and
complete in all material respects. Except as set forth on
Schedule 4.23, neither BGH Holdings, BRH Holdings nor the
Companies is currently the beneficiary of any extension of time
within which to file any Tax Return. To The knowledge of Seller,
Holdings and the Companies, no claim has been made by a Tax
Authority in a jurisdiction where any of BGH Holdings, BRH
Holdings or the Companies do not file Income Tax Returns that any
of BGH Holdings, BRH Holdings or the Companies is subject to
taxation by that jurisdiction. There is no Lien affecting any of
the assets of BGH Holdings, BRH Holdings or the Companies that
arose in connection with any failure or alleged failure to pay
any Tax.
(b) Except as set forth on Schedule 4.23, there is
currently no dispute or claim raised by any Tax Authority in
writing concerning any Tax liability of BGH Holdings, BRH
Holdings or the Companies and no notification of an intent to
examine has been received from any Tax Authority. Schedules 4.23
(a) and (b) list all Income Tax Returns of BGH Holdings, BRH
Holdings and the Companies for taxable periods ended on or after
December 31, 1993 and indicates those Tax Returns that have been
audited and indicates those Tax Returns that currently are the
subject of audit. Seller has delivered to Buyer copies of those
portions of all filed Income Tax Returns, examination reports
related to Taxes, and statements of deficiencies related to Taxes
assessed against or agreed to by Seller, BGH Holdings, BRH
Holdings or the Companies for any taxable period ended on or
after December 31, 1993 that pertain to BGH Holdings, BRH
Holdings or the Companies.
(c) Except as set forth on Schedule 4.23, neither
Seller, BGH Holdings, BRH Holdings, nor the Companies have waived
any statute of limitations in respect of Taxes applicable to BGH
Holdings, BRH Holdings or the Companies or agreed to any
extension of time with respect to an Income Tax assessment or
deficiency applicable to BGH Holdings, BRH Holdings or the
Companies.
(d) The transactions contemplated by this Agreement
are not subject to tax withholding pursuant to the provisions of
Section 3406 or Subchapter A of Chapter 3 of the Code or any
other provisions of applicable law. Neither Seller, BGH
Holdings, BRH Holdings nor the Companies is a Person other than a
United States Person within the meaning of the Code.
(e) Except as set forth on Schedule 4.23, neither BGH
Holdings, BRH Holdings nor any of the Companies is a party to any
tax allocation or tax sharing agreement. Since August 16, 1993,
neither BGH Holdings, BRH Holdings nor the Companies has been a
member of an affiliated group filing a consolidated Federal
Income Tax Return other than a group the common parent of which
is Specialty Foods Acquisition Corporation.
(f) Neither BGH Holdings, BRH Holdings nor the
Companies is a party to any joint venture, partnership or other
arrangement or contract which could be treated as a partnership
for Federal Income Tax purposes.
(g) Except as disclosed on Schedule 4.23(g), neither
BGH Holdings, BRH Holdings nor any Company has ever (i) filed any
consent agreement under Section 341(f) of the Code; (ii) been the
subject a Tax ruling that continuing effect; (iii) been the
subject of a closing agreement with any Tax Authority that has
continuing effect; (iv) filed or been the subject of an election
under Section 338(g) or Section (h)(10) of the Code or caused or
been the subject of a deemed election under Section 338(e) of the
Code; or (v) granted a power of attorney with respect to any Tax
matters that has continuing effect. Except as disclosed on 4.23,
neither BGH Holdings, BRH Holdings nor any Company has agreed to
make, nor is it required to make, any adjustment under Section
481 of the Code by reason of a change of accounting method or
otherwise. Neither BGH Holdings, BRH Holdings nor any Company is
a party to any agreement that under any circumstances could
obligate it to make any payments that would not be deductible
under Section 280G of the Code. BGH Holdings, BRH Holdings and
the Companies have withheld and paid all Taxes required to have
been withheld and paid in connection with amounts paid or owing
to any employee, shareholder, creditor, independent contractor or
other party.
Section 4.24 Litigation.
(a) Except as set forth on Schedule 4.24, neither BGH
Holdings, BRH Holdings nor any of the Companies is engaged in or
a party to or, to the knowledge of Seller, BGH Holdings, BRH
Holdings or the Companies, threatened with, any suit, action,
proceeding, investigation or legal, administrative, arbitration
or other method of settling disputes or disagreements or any
governmental investigation. There are no actions, suits,
proceedings, orders or investigations pending or, to the
knowledge of Seller, BGH Holdings, BRH Holdings and the
Companies, threatened against any of Seller, BGH Holdings or the
Companies, at law or in equity, or before or by any federal,
state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign,
which question or challenge the validity of this Agreement or the
consummation of the transactions contemplated hereby.
(b) Except as set forth on Schedule 4.24, neither BGH
Holdings, BRH Holdings nor any of the Companies is currently, and
none has been since August 16, 1993, subject to any judgment,
decree, binding arbitration, order, settlement or consent
agreement (other than generally issued executive or regulatory
orders which are intended to apply to substantially all companies
in the industry) which could reasonably be expected to have a
material adverse effect on the business, financial condition,
results of operations or operations of BGH Holdings, BRH Holdings
and the Companies, all taken as a whole.
Section 4.25 Compliance with Law, and Licenses and
Permits.
(a) Neither BGH Holdings, BRH Holdings nor the
Companies is in violation of any law ordinance, code, rule or
regulation, including, without limitation, any Environmental Law
or any law or regulation pertaining to occupational safety or
health, environmental protection, price discrimination,
antitrust, equal employment opportunity, employees' retirement
income security or any other law, ordinance, judicial decree,
order or regulation applicable to it, which could reasonably be
expected to have a material adverse affect on the business,
financial condition, results of operations or operations of BGH
Holdings, BRH Holdings and the Companies, all taken as a whole.
Except as set forth on Schedule 4.25, no notice has been issued
since January 1, 1993 by any governmental body or other person of
any violation of any law, ordinance, code, rule or regulation or
requiring or calling attention to the necessity the payment of
penalties or of any work, repairs, new construction,
installation, alteration or Remediation in connection with any
real or personal property or equipment of the Companies.
(b) Each of BGH Holdings, BRH Holdings and the
Companies has duly filed all reports and returns and has obtained
all material licenses, permits, approvals, franchises, clearances
and other authorizations as are necessary in order to enable it
to own, operate, and use its assets and conduct its businesses as
it is currently being conducted and occupy and lease its real
property. All such material licenses, permits, approvals,
franchises, clearances and authorizations are listed on Schedule
4.25, and are in full force and effect.
Section 4.26 Environmental Matters
(a) Except as disclosed on Schedule 4.26, the
operations of the Companies, including, without limitation, the
use and operation by the Companies of each parcel of Owned Real
Estate and the Leased Real Estate identified on Schedule 2.01(d)
has been, and on the Closing Date will be, in compliance in all
material respects with all Environmental Laws.
(b) Except as disclosed on Schedule 4.26, no Hazardous
Materials have been Released in violation of applicable
Environmental Law, or in a manner that requires Remediation of
property under applicable Environmental Law at, on, or under any
Owned Real Estate or the Leased Real Estate identified on
Schedule 2.01(d) or, to Seller's knowledge, at any other property
formerly used in connection with the operation of the businesses.
(c) Except as disclosed on Schedule 4.26, there are no
claims, notices, civil, criminal or administrative actions,
suits, hearings, investigations, inquiries or proceedings
("Environmental Proceedings") pending or to the knowledge of
Seller, BGH Holdings, BRH Holdings or the Companies threatened
that are based on or related to Environmental Matters.
(d) Except as disclosed on Schedule 4.26, neither
Holdings nor any of the Companies has used any waste disposal
treatment, storage or recycling site, or otherwise disposed of,
transported, or arranged for the transportation of, any Hazardous
Materials to any place or location which is listed or, to
Seller's knowledge, proposed for listing under CERCLA or any
similar state list, or in violation of any Environmental Laws and
none of the Owned Real Property, or, to the Seller's knowledge,
Leased Real Property identified on Schedule 2.01(d) are listed
under CERCLA or any similar State List.
(e) Except as disclosed on Schedule 4.26, there are no
underground storage tanks, regulated concentrations of
polychlorinated biphenyls ("PCBs"), surface impoundments at, on,
under or within any Owned Real Estate or, to the Seller's
knowledge, Leased Real Estate identified on Schedule 2.01(d), and
any underground storage tanks which were removed by anyone from
any Owned Real Estate during the period when the Companies owned
such real estate or, by or on behalf of the Companies from any
Leased Real Estate or, to the Seller's knowledge, by any other
person from any Leased Real Estate identified on Schedule 2.01(d)
during the term of the relevant lease, in each case were removed
in compliance in all material respects with all Environmental
Laws as such laws existed at the time of such removal and any
Remediation required by Environmental Laws in connection with
such removal was conducted in compliance in all material respects
with all Environmental Laws.
(f) Except as disclosed on Schedule 4.26, neither
Holdings nor the Companies has filed or received any oral or
written notice of a Release or threat of Release of a Hazardous
Material or been notified that it is or may be a potentially
responsible party at any waste disposal site or other location
used for the disposal, treatment or storage of any Hazardous
Materials.
(g) No individual item disclosed on Schedule 4.26 (g)
will result in Losses in excess of $10,000 (the "Environmental
Threshold"), and the aggregate of all such items will not result
in Losses in excess of $200,000 (the "Aggregate Environmental
Threshold").
(h) Schedule 4.26 identifies all environmental audits
or assessments or occupational health studies undertaken since
August 16, 1993 by employees of, or consultants engaged by, the
Companies, and, to the knowledge of Seller, Holdings and the
Companies, by any governmental agency, the results of ground
water and soil testing, the results of underground fuel, water or
waste tank tests and soil samples, written communications with
environmental agencies, and OSHA citations or communications
which are in the possession or control of Seller, BGH Holdings,
BRH Holdings or the Companies ("Environmental Reports"), and
copies of all such Environmental Reports have been provided to
Buyer.
Section 4.27 Adequacy of the Companies' Assets/Related
Party Transactions. Except as described on Schedule 4.27:
(a) The Companies' assets are (i) the same in all
material respects as those assets used in the conduct of the
Companies' businesses since August 16, 1993, and (ii) constitute,
in the aggregate, all of the property necessary for the conduct
of the Companies' business in the manner in which it is currently
being conducted; and
(b) There are no contracts or arrangements currently
in effect between BGH Holdings, BRH Holdings and/or the
Companies, on the one hand, and Seller and any of its
subsidiaries or Affiliates other than BGH Holdings, BRH Holdings
and the Companies, on the other hand.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants:
Section 5.01 Corporate Organization and Power. Buyer is a
corporation duly organized and validly existing under the laws of
the State of Delaware, with full corporate power and authority to
execute, deliver and perform this Agreement and the other
agreements contemplated hereby.
Section 5.02 Authority; Authorization. Buyer has full
legal capacity, power and authority to execute, deliver and
perform this Agreement and the other agreements contemplated
hereby and to consummate the transactions contemplated hereby and
thereby. Buyer may execute, deliver and perform this Agreement
without the necessity of obtaining any consent, approval,
authorization or waiver, giving any notice, or making any filings
or disclosures, except as set forth on Schedule 5.02 hereto. The
execution, delivery and performance by Buyer of this Agreement
and the other agreements contemplated hereby have been duly and
validly authorized by Buyer. This Agreement and the other
agreements contemplated hereby constitutes the legal, valid and
binding obligation of Buyer, enforceable against Buyer in
accordance with their terms.
Section 5.03 No Violation. The execution, delivery and
performance of this Agreement and all other agreements
contemplated hereby by Buyer and the consummation of the
transactions contemplated hereby do not and will not (a) conflict
with or result in any breach of any of, (b) constitute a default
under, or (c) result in a violation of the articles of
incorporation or by-laws of Buyer or any indenture, mortgage, or
loan agreement to which Buyer is bound or affected, or any law,
statute, rule, regulation, judgment or decree to which Buyer is
subject.
Section 5.04 Litigation. There are no actions, suits,
proceedings, orders or investigations pending or, to Buyer's
knowledge, threatened against Buyer at law or in equity, or
before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which question or challenge the validity of
this Agreement or the consummation of the transactions
contemplated hereby.
Section 5.05 Acquisition of Shares for Investment. Buyer
has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of
its purchase of the Shares. Buyer confirms that Seller has made
available to Buyer the opportunity to ask questions of the
officers and management employees of Seller, BGH Holdings, BRH
Holdings and the Companies and to acquire additional information
about the business and financial condition of the Companies.
Buyer is acquiring the Shares for investment and not with a view
toward the "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"). Buyer
agrees that the Shares may not be sold or otherwise disposed of
without registration under the Securities Act, except pursuant to
an exemption from such registration available under the
Securities Act, and without compliance with state, local, or
foreign securities laws, in each case, to the extent applicable.
Section 5.06 Financing/Sufficient Funds.
(a) Buyer agrees to use its reasonable commercial
efforts to obtain and accept a commitment letter in form and
substance reasonably satisfactory (and Seller acknowledges that
the Letter of Xxxxxx Financial, Inc. dated November 19, 1996, if
accepted by Buyer, would be satisfactory to Seller (a "Commitment
Letter")) no later than 5:00 p.m. (New York time) on December 10,
1996 (the "Delivery Date") from a commercial lending institution
indicating such institution's willingness to provide to Buyer
aggregate senior bank financing of approximately $50 million.
Upon receipt of a Commitment Letter, Buyer will promptly deliver
to Seller a true and complete copy thereof, and thereafter will
deliver copies of all other final documentation received by Buyer
or Bruckman, Rosser, Xxxxxxxx & Co., Inc. ("BRS") relating to
such senior bank financing. In the event that Buyer or BRS has
not delivered to Seller a Commitment Letter to Seller on or prior
to the Delivery Date, Seller shall have the right at any time
after the Delivery Date and prior to the actual delivery to
Seller of a Commitment Letter to (i) terminate this Agreement
pursuant to a written notice delivered by Seller to Buyer, and/or
(ii) commence negotiations with persons other than Buyer
regarding the terms of a potential sale or other business
combination involving any or all of BGH Holdings, BRH Holdings or
the Companies.
(b) BRS has delivered to Seller a letter setting forth
its commitment to provide an aggregate of up to $30,000,000 of
equity and subordinated debt financing. The financing specified
in Section 5.06 (a) and this Section 5.06 (b) is referred to
herein as the "Financing". The aggregate proceeds of the
Financing, if obtained, will be in an amount sufficient to effect
the purchase of the Shares hereunder and pay all related fees and
expenses.
(c) If, at any time on or after 5:00 p.m. on December
27, 1996, all of the conditions specified in Section 2.01 have
been satisfied or waived by Buyer, but the Closing has not
occurred as a result of Buyer's failure to obtain the proceeds of
the Financing, then:
(i) Buyer shall either (x) obtain a letter
of credit in the face amount of $5
million and containing such other terms
and conditions as are reasonably
acceptable to Seller (the "Letter of
Credit") which shall at all times
thereafter prior to the Closing remain
effective for the sole purpose of
satisfying Buyer's obligation to Seller
or (y) obtain from BRS a cash
contribution in the amount of $5 million
in a form reasonably satisfactory to
Seller (a "Cash Contribution") which
shall at all times thereafter prior to
Closing remain an unencumbered asset of
Buyer; and for so long as such Letter of
Credit remains effective or Cash
Contribution remains an unencumbered
asset of Buyer, this Agreement shall
remain in full force and effect, subject
only to a termination hereof in
accordance with Section 6.01; or
(ii) In the event that either (x) Buyer fails
to deliver to Seller the Letter of
Credit or evidence of the Cash
Contribution in accordance with the
provisions of (i) above or (y) either
the Letter of Credit expires, terminates
or otherwise becomes ineffective for its
intended purpose or the Cash
Contribution is not retained as an
unencumbered asset of Buyer, then Seller
shall have the right at any time
thereafter to either (x) terminate this
Agreement pursuant to a written notice
delivered by Seller to Buyer, and/or (y)
commence negotiations with persons other
than Buyer regarding the terms of a
potential sale or other business
combination involving any or all of BGH
Holdings, BRH Holdings or the Companies.
(d) Seller hereby agrees that so long as Buyer
complies with the provisions of this Section 5.06(b)(i), Seller's
sole recourse upon Buyer's failure to satisfy its obligations
under this Agreement shall be to draw either upon the Letter of
Credit and/or commence litigation against Buyer to recover all or
a portion of the Cash Contribution, as the case may be, and
Seller further agrees that under such circumstances, Seller shall
have no recourse whatsoever against BRS or any of its officers,
directors, partners, shareholders, employees, agents,
representatives or other Affiliates (other than Buyer).
ARTICLE 6
TERMINATION
Section 6.01 Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) By mutual written consent of Seller and Buyer;
(b) By either Seller or Buyer by written notice if
there has been a material breach on the part of Buyer or Seller
of the representations and warranties or covenants of such other
party set forth in this Agreement, which has not been cured
within ten (10) Business Days of notice thereof or if events have
occurred which have made it impossible to satisfy a condition
precedent to the terminating party's obligation to consummate the
transactions contemplated hereby; provided that the party giving
such notice shall not be in material breach of its
representations and warranties or covenants hereunder at the time
of such notice;
(c) By either Seller or Buyer by written notice if the
Closing hereunder has not been consummated by January 31, 1997,
provided that (i) if a party's willful breach of its
representations and warranties or covenants under this Agreement
has prevented the consummation of the transactions contemplated
hereby, or that party shall not be entitled to terminate this
Agreement pursuant to this Section 6.01(c), and (ii) if Buyer has
obtained the Financing, but the Closing has not occurred because
of Buyer's failure to obtain the proceeds thereof, the Buyer
shall not be entitled to terminate this Agreement pursuant to
this Section 6.01(c);
(d) By Seller in accordance with the provisions of
Section 5.06(b); or
(e) By Seller if the parties receive a so called
"Second Request" under the HSR Act.
Section 6.02 Effect of Termination. In the event of
termination of this Agreement by either Seller or Buyer as
provided above, this Agreement will forthwith become void and
there will be no liability on the part of either Buyer or Seller,
except for (i) material willful breaches of and intentional
misstatements in or pursuant to this Agreement prior to the time
of such termination, and (ii) the provisions set forth in Section
6.03 below.
Section 6.03 Confidentiality. In the event of any
termination of this Agreement, each of Seller and Buyer shall
continue to be bound by the terms and conditions of that certain
Confidentiality Agreement between Buyer and Seller dated August
20, 1996.
ARTICLE 7
ADDITIONAL AGREEMENTS
Section 7.01 Survival. The representations, warranties,
covenants and agreements set forth in this Agreement and in the
Accounts Receivable Purchase Agreement will survive the Closing
Date and the consummation of the transactions contemplated
hereby; provided, however, that the representations and
warranties of Seller contained in Article 4 of this Agreement,
the representations and warranties of Buyer contained in Article
5 of this Agreement, and the representations and warranties
contained in the Accounts Receivable Purchase Agreement shall
survive only until the end of the 18th complete month following
the Closing Date, provided, however, that the representations and
warranties contained in Sections 4.02, 4.04, 4.05, and 4.23 shall
survive without limitations as to time, and provided further that
the representations and warranties contained in Section 4.26
shall survive for five (5) years to the extent they relate to
formerly Owned Real Estate, formerly Leased Real Estate and
properties other than Owned Real Estate and Leased Real Estate.
No claim for the recovery of indemnifiable damages based upon the
inaccuracy of such representations and warranties may be asserted
by a party after such representations and warranties shall be
thus extinguished; provided, however, that claims first asserted
in writing within the applicable period shall not thereafter be
barred.
Section 7.02 Indemnification.
(a) Seller agrees to indemnify Buyer and hold it
harmless from and against any loss, claim, liability, damage,
cost or expense, including reasonable legal expenses and costs
(collectively, the "Losses") which Buyer, BGH Holdings, BRH
Holdings or the Companies may suffer, sustain or become subject
to, as the result of, arising out of or connected with; (i) any
breach of the representations and warranties made by Seller in
this Agreement or by SFFC in the Accounts Receivable Sale
Agreement or in any certificate or instrument furnished or to be
furnished by Seller to Buyer hereunder (each a "Loss Event"); or
(ii) the breach or non-fulfillment of any agreement or covenant
made by Seller in this Agreement or in any instrument furnished
or to be furnished by Seller to Buyer hereunder or by SFFC in the
Accounts Receivable Sale Agreement; provided, however, that
Seller will not be liable for any such Loss arising out of a
breach by Seller of any representation or warranty contained in
this Agreement or by Seller or SFFC contained in the Accounts
Receivable Purchase Agreement unless the aggregate amount of all
such Losses resulting to Buyer from all such breaches or claims
exceeds $1,000,000 of the Purchase Price (the "Basket"), in which
case Seller will be liable for all such amounts in excess of the
Basket. Notwithstanding the foregoing, (i) any Loss Event
relating to a breach of Section 4.26(g), or which could have been
brought under Section 4.26(g), shall only be subject to rights of
indemnification hereunder if the aggregate Losses resulting to
Buyer from such Loss Event exceed the Environmental Threshold,
and then only to the extent of such excess amount (provided that
if the aggregate Losses resulting to Buyer from one or more of
such Loss Events exceed the Aggregate Environmental Threshold,
the Environmental Threshold shall no longer apply and all such
Losses in excess of the Aggregate Environmental Threshold shall
be subject to rights of indemnification hereunder (including the
Basket)), (ii) the Basket shall not apply to any recovery as a
result of a breach of the warranties and representations set
forth in Sections 4.04, 4.05 or 4.06 (b), (iii) in the event (x)
any Loss resulting from a singular Loss Event exceeds $500,000 (a
"Significant Loss"), and (y) the aggregate amount of all Losses
prior to such date together with the amount of such Significant
Loss exceeds the Basket, Seller will be liable for the entire
amount of the Significant Loss, (iv) the Basket shall not apply
to any recovery as a result of a breach of the representations
and warranties set forth in Section 4.07 resulting from
undisclosed liabilities for borrowed money, (v) the Basket shall
not apply to any recovery as a result of a breach of a
representation or warranty contained in this Agreement of which
an officer of Seller had actual knowledge on the Closing Date,
and (vi) in no event shall Seller's aggregate liability arising
out of breaches by Seller of representations or warranties
contained in this Agreement exceed one-half of the Purchase
Price, except to the extent that a Loss is a direct result of a
breach of a representation or warranty contained in this
Agreement of which an officer of Seller had actual knowledge on
the Closing Date, then, in which case, the aggregate liability of
Seller arising out of such breach by Seller of such
representation and warranty shall not exceed the Purchase Price.
(b) Buyer agrees to indemnify Seller and hold it
harmless from and against any Losses which Seller may suffer,
sustain or become subject to, as the result of a breach of any
representation, warranty, covenant, or agreement by Buyer
contained in this Agreement or in the Accounts Receivable
Purchase Agreement.
(c) If a claim by a third party is made against an
indemnified party (the "Indemnified Party"), and if such party
intends to seek indemnity with respect thereto under this
Agreement, from the other party (the "Indemnifying Party"), the
Indemnified Party shall promptly, but in any event, within twenty
(20) Business Days, notify the Indemnifying Party in writing of
such claims setting forth such claims in reasonable detail, but
failure to give such notice shall not relieve the Indemnifying
Party of any liability hereunder except to the extent that the
Indemnifying Party is actually prejudiced thereby. With respect
to claims for monetary damages only, if the Indemnifying Party
acknowledges in writing its obligations to indemnify the
Indemnified Party to the full extent provided by this Section
7.02, the Indemnifying Party shall be entitled, at its option, to
assume and control the defense of such liabilities, payments and
obligations at its expense and through counsel of its choice if
it gives prompt notice of its intention to do so to the
Indemnified Party. The Indemnifying Party shall not be entitled
to settle or compromise any such claim, action, suit or
proceeding without the prior written consent of the Indemnified
Party, which consent shall not be unreasonably withheld; except
that the consent of the Indemnified Party shall not be required
if such settlement would entail solely the payment of cash
damages for which the Indemnifying Party shall be responsible and
shall effect payment simultaneously with the execution of any
settlement, and does not entail any admission or stipulation
which might adversely affect the Indemnified party (or its
successors and assigns), or the business, financial condition,
results of operations, operations or prospects thereof. The
Indemnified Party shall cooperate with it in connection
therewith; provided, that the Indemnified Party may participate
in (but not control) such settlement or defense through counsel
chosen by such Indemnified Party, provided that the fees and
expenses of such counsel shall be borne by such Indemnified
Party. So long as the Indemnifying Party is reasonably
contesting any such claim in good faith, the Indemnified Party
shall not pay or settle any such claim. Notwithstanding the
foregoing, the Indemnified Party shall have the right to pay or
settle any such claim, provided that in such event it shall waive
any right to indemnity therefor by the Indemnifying Party. If
the Indemnifying Party does not notify the Indemnified Party in
writing within thirty (30) days after the receipt of the
Indemnified Party's notice of a claim of indemnity hereunder that
it elects to undertake the defense thereof, the Indemnified Party
shall have the right to contest, settle or compromise the claim
but shall not thereby waive any right to indemnity therefor
pursuant to this Agreement.
(d) Notwithstanding anything to the contrary contained
in this Agreement, any indemnification owed under this Agreement
shall be reduced by the amount of any reimbursements received by
the Indemnified Party from any insurance carriers or from third
parties for the same Loss Event.
(e) Notwithstanding anything to the contrary contained
in this Agreement, Buyer, Holdings and the Companies shall have
no right to indemnification with respect to any Loss if any
matter forming the basis for such Loss relating to amounts or
levels of cash and cash equivalents, trade receivables,
inventories, prepaid expenses, other current assets, accounts
payable or accrued expenses as such terms are used in the balance
sheets attached as Schedule 4.06 was or could have been asserted
as a reduction in the value of Net Assets pursuant to the
provisions of Section 1.03 of this Agreement.
(f) The indemnification rights provided in this
Section 7.02 and in Sections 8.04 and 9.10 shall be the sole and
exclusive remedy available to each of the parties to this
Agreement as against the other party for any breach of a
representation or warranty, or failure to fulfill any covenant or
agreement contained herein or the Accounts Receivable Purchase
Agreement. Section 7.02 shall not be interpreted to permit a
double recovery with respect to Taxes for which indemnification
is provided under Section 8, nor to permit a party to recover
amounts with respect to Taxes that are such party's
responsibility under Section 8.
(g) The parties agree that any indemnification
payments made pursuant to this Agreement shall be treated for tax
purposes as adjustments to the Purchase Price, unless otherwise
required by applicable law.
Section 7.03 Expenses. Except as otherwise expressly
provided herein, each party will pay all of its expenses,
including attorneys' and accountants' fees, incurred in
connection with the negotiation of this Agreement and the
performance of its obligations hereunder (whether or not the
Closing occurs) and the consummation of the transactions
contemplated by this Agreement.
Section 7.04 Press Releases and Announcements. No press
releases, announcements or other disclosures related to this
Agreement or the transactions contemplated herein will be issued
or made by any parties hereto or by Holdings or the Companies
without the joint approval of Buyer and Seller, except for any
public disclosure which either party in good faith believes is
required by law (in which case such party will consult with the
other party prior to making such disclosure). Buyer and Seller
will cooperate to prepare a joint press release to be issued on
the Closing Date. Notwithstanding the generality of the
foregoing, in the event that the Agreement is terminated solely
under Section 5.06, neither party will make any press release,
announcement, public statement or other disclosure that is
harmful to the reputation of the other party or its Affiliates,
or their respective shareholders, directors, officer, employees,
agents, representatives; provided, that Seller shall be permitted
to specifically state that the transaction was terminated as a
result of a lack of financing.
Section 7.05 Continuing Access to Records. Except as
otherwise required by Section 8.06(c), for a period of not less
than five (5) years from the Closing Date: (i) Buyer agrees to
give Seller reasonable cooperation, access, and staff assistance,
as reasonably necessary, during normal business hours with
respect to books and records and other financial data delivered
to Buyer hereunder or in the possession of Holdings or the
Companies for periods prior to Closing as may be necessary for
general business purposes, and (ii) Seller agrees to give Buyer
reasonable cooperation, access and staff assistance, as needed,
during normal business hours with respect to books and records
and other financial data relating to Holdings or the Companies
that are retained by Seller, as may be reasonably necessary for
general business purposes.
Section 7.06 Existing Insurance Coverage.
(a) From and after the Closing, Seller shall use
reasonable efforts (which shall not require acceptance of adverse
changes in its existing insurance policies or in any replacement
insurance policies or other unreasonably adverse effects on
Seller), subject to the terms of Seller's insurance policies, to
retain the right to make claims and receive recoveries, subject
to the provisions of this Section 7.06, for the benefit of
Holdings and the Companies under existing insurance policies of
Seller which benefit Holdings or the Companies and which are not
transferred to Buyer at Closing or retained by Holdings or the
Companies. With respect to any actions, suits and proceedings
against, and any losses, liabilities, damages or expenses of,
Holdings or the Companies arising out of events or circumstances
which are covered by any such existing insurance policies (each
an "Insured Liability"), Seller shall promptly pay to Buyer,
Holdings and the Companies the proceeds of such insurance
policies in respect of any such Insured Liability actually
received by Seller (it being understood that any proceeds of such
insurance policies applied directly by the insurance carrier(s)
to such Insured Liability shall be deemed to be a payment made by
Seller in respect of such Insured Liability). Subject to the
right of Buyer to seek indemnification pursuant to the provisions
of Section 7.02(a), (i) Buyer, Holdings and the Companies shall
be fully liable, jointly and severally, for all deductibles,
retentions, exclusions and any portion of retrospective premium
adjustments attributable to such Insured Liabilities as
reasonably determined by Seller and Seller's insurance carrier,
and other amounts, losses and expenses to the full extent not
paid, for whatever reason, by such insurance carrier(s) or not
covered by such insurance policies, it being understood that
Seller shall be under no obligation to make any such payments or
to advance any such payments; and (ii) Buyer agrees to reimburse,
indemnify and hold Seller and its Affiliates harmless for out-of-
pocket costs and expenses (including, without limitation, any
retroactive premium adjustments and current or prospective
premium increases imposed on Seller or any of its Affiliates
resulting from Insured Liabilities, but not including normal
internal administrative expenses) incurred after the Closing Date
by Seller to carry out any obligations pursuant to this Section
7.06. Buyer and Seller shall mutually agree on an acceptable
arrangement for the submission of claims for such Insured
Liabilities to the appropriate insurer.
(b) With respect to any master insurance policies that
apply to Holdings and/or the Companies, or to other subsidiaries
of Seller which Seller is unable to separate at Closing, Buyer
shall be liable and shall promptly pay to Seller any and all
retroactive premium adjustments attributable to the activities of
Holdings and the Companies under such policies as reasonably
determined by Seller and Seller's insurance carrier.
(c) Nothing contained herein to the contrary shall
prohibit Seller from managing its risk management program with
respect to Post-Closing periods, including, without limitation,
the cancellation or reduction of the amount or scope of insurance
coverage with respect to Pre- or Post-Closing periods, in a
manner consistent with its reasonable business judgment as
applied to the continuing operations of Seller and its Affiliates
(other than Holdings and the Companies).
Section 7.07 Companies Performance. Seller will cause
Holdings and the Companies to perform all of their obligations
hereunder and under the other agreements contemplated hereby
which are to be performed prior to Closing.
Section 7.08 Continuing Assistance. Subsequent to the
Closing, Buyer will use commercially reasonable efforts to
provide to Seller, and Seller will use commercially reasonable
efforts to provide to Buyer, such assistance that the other party
reasonably may request in connection with the transfer of
ownership and control of the Shares and the consummation of the
transactions contemplated by this Agreement.
Section 7.09 Employee Matters.
(a) Buyer agrees that for a period of at least one
year after the Closing Date it will provide all employees of the
Companies which continue to be employed by Buyer, Holdings or the
Companies during such period with benefits which are in the
aggregate substantially equivalent to those benefits provided to
such employees by Holdings and the Companies immediately prior to
the Closing. In addition, Buyer agrees to give to the fullest
extent possible such employees service credit for all periods of
employment with Seller or its Affiliates (including the
Companies) prior to the Closing Date for purposes of eligibility
and vesting (but not benefit accrual) under any plan adopted by
the Companies or by Buyer or any Affiliate of Buyer to provide
benefits to such employees.
(b) Buyer represents that it does not contemplate a
plant closing or mass lay-off of employees of the Companies, or
any terminations that in the aggregate would constitute a mass
lay-off of employees of the Companies, within 90 days of the
Closing.
Section 7.10 Third Party Beneficiaries. This Agreement
does not create any rights in parties who are not a party to this
Agreement.
Section 7.11 Elimination of Inter-Companies and Affiliate
Accounts. Effective immediately prior to Closing, all inter-
company receivables, payables and loans then existing between
Holdings and the Companies, on the one hand, and Seller and any
of Seller's subsidiaries (other than Holdings or the Companies),
on the other hand, shall be settled by way of a capital
contribution in kind with respect to a net inter-company amount
due from Holdings or the Company to Seller or any of Seller's
subsidiaries (other than Holdings or the Companies) or by way of
a dividend in kind with respect to a net inter-company amount due
from Seller or any of Seller's subsidiaries (other than Holdings
or the Companies) to Holdings or the Companies. Any such
settlement shall be accomplished in the manner reasonably
selected by Seller, without any violation of any law or
regulation or the incurrence of any tax, penalties, interest or
other charges (other than taxes with respect to which Seller
shall be responsible).
Section 7.12 Cash Management.
(a) BGH Holdings and BRH Holdings and the Companies
participate in Seller's central cash management system and shall
continue to so participate in accordance with prior practice
until the Closing.
(b) Seller shall be responsible for funding all
disbursements of BGH Holdings and BRH Holdings and the Companies
that are presented for payment prior to the opening of business
on the Closing Date.
(c) Effective as of the close of business on the day
prior to the Closing Date, Seller shall not have any further
right to any funds in any account listed on Schedule 4.10 and in
any event will not remove any funds or assets from BGH Holdings,
BRH Holdings or the Companies to the extent such funds or assets
are reflected on the Closing Date Balance Sheet, and if so
removed, will be owed by Seller to Buyer. Effective at the
opening of business on the Closing Date, Buyer and the Companies
shall take physical possession of each of such accounts and the
balances therein and of the unused check stock, if any, related
to such accounts.
Section 7.13 Surety Bonds and Letters of Credit. Promptly
after Closing, Buyer shall use its commercially reasonable
efforts to cause itself or one or more of its affiliates,
including Holdings and the Companies, to be substituted in all
respects for Seller or any of Seller's subsidiaries other than
Holdings and the Companies, effective as of Closing, under all of
the surety bonds and letters of credit listed on Schedule 4.20 to
this Agreement.
Section 7.14 License Applications. Seller has made or
will make before the Closing timely application or notification
for the renewal, reissuance or, if required, transfer of all such
licenses, permits, approvals, franchises, clearances and other
authorizations for which any law, ordinance, code, rule or
regulation (including, without limitation, any Environmental Law)
requires that applications or notices must be filed on or before
the Closing to maintain the licenses, permits, approvals,
franchises, clearances and other authorizations in full force and
effect up to and through the Closing.
Section 7.15 Purchased Accounts Receivable.
(a) Seller guarantees to Buyer that, except to the
extent of the reserve for doubtful accounts in an amount equal to
one percent (1%) (the "Receivable Reserve") of the face amount of
the Purchased Accounts Receivable (as such term is defined in the
Accounts Receivable Purchase Agreement), the Purchased Accounts
Receivable will be valid and legally binding obligations of the
account debtors thereof and will be collected by Buyer or its
designee on or before 120 days after the Closing Date. Any
Purchased Accounts Receivable, or portion thereof in excess of
the Receivable Reserve not so collected may, at the option of
Buyer, be assigned, without representation, warranty or recourse,
by Buyer to Seller, and the face amount thereof, or the unpaid
portion thereof, as the case may be, shall be paid by Seller to
Buyer.
(b) Buyer shall use all reasonable commercial efforts
to collect the Purchased Accounts Receivable. For purposes of
determining whether an account receivable of a particular
customer has been collected, payments received from that customer
shall be applied on a first-in, first-out basis, except for
instances when (i) Buyer or the Companies has converted the
customer to a "cash on delivery" payment terms in accordance with
its normal credit policies, or (ii) as a result of a bona fide
dispute relating to a Purchased Accounts Receivable, the customer
has directed Buyer or the Companies in writing to apply its
payment to a receivable other than the Purchased Accounts
Receivable.
Section 7.16 Buyer's Notice. Buyer agrees to notify
Seller prior to Closing of any matter of which Buyer becomes
aware of that could reasonably constitute a violation by Seller
of any of Seller's warranties, representations, covenants or
agreements under this Agreement.
Section 7.17 Allocation of Purchase Price. Buyer and
Seller agree to discuss the allocation of the Purchase Price as
between the Shares of BGH Holdings and BRH Holdings. If the
parties are able to reach agreement on an allocation, such
allocation shall be reflected in an allocation schedule which
shall be attached to this Agreement. In the event such a
schedule is so attached, Buyer and Seller agree to allocate for
all purposes, and to account for and report the purchase and sale
contemplated hereby for all purposes (including, without
limitation, financial, accounting and tax purposes) in accordance
with such allocations, and not to take any position (whether in
financial statements, audits, tax returns or otherwise) which is
inconsistent with such allocations without the prior written
consent of the other, except to the extent such consistency is
not permitted by applicable law or generally accepted accounting
principles.
ARTICLE 8
TAX MATTERS
Section 8.01 Allocation of Federal and State Income Taxes.
Seller shall timely prepare and file all Tax Returns for any U.S.
Federal Income Taxes and any State Income Taxes attributable to
Holdings or the Companies for any Pre-Closing Period and shall
pay all Taxes related to such Tax Returns including, but not
limited to, liabilities with respect to U.S. Federal Income Taxes
and/or State Income Taxes for Pre-Closing Periods which are
assessed or asserted after the Closing Date (collectively, "Post-
Closing Assessments"). Buyer shall timely prepare and file all
Tax Returns for any U.S. Federal Income Taxes and any State
Income Taxes attributable to BGH Holdings, BRH Holdings or the
Companies for any Post-Closing Period and shall pay all Taxes
related to such Tax Returns.
Section 8.02 Determination of Pre- and Post-Closing
Taxable Income for Federal Income Tax Purposes.
(a) In General. For purposes of computing the U.S.
Federal Income Taxes and State Income Taxes attributable to BGH
Holdings, BRH Holdings or the Companies for the Pre-Closing
Period beginning on January 1, 1996 and ending on the Closing
Date, Seller and Buyer expressly acknowledge and agree that items
of income and deduction shall be allocated for Federal and State
Income Taxes to the Pre-Closing Period on the one hand, and to
the Post-Closing Period, on the other hand, in accordance with
Treas. Reg. 1.1502-76(b)(2)(i).
(b) No Contrary Elections. Consistent with the
general allocation agreement set forth in Section 8.02(a), each
of Seller and Buyer expressly acknowledge and agree that it shall
not (either directly or through any of their respective
Affiliates) make any election available under Treas. Reg.
1.1502-76(b)(2)(ii) regarding ratable allocation of a period's
items or any corresponding provision of any Law.
(c) Special Provision Regarding State Income Taxes.
Buyer and Seller expressly acknowledge and agree that if BGH
Holdings, BRH Holdings and the Companies are permitted but not
required under any applicable State Income Tax Laws to treat the
Closing Date as the last day of a taxable period beginning on
January 1, 1996 and ending on the Closing Date (the "State Income
Tax Stub Period"), then Buyer and Seller shall treat the Closing
Date as the last day of such period and compute State Taxable
Income with respect to such jurisdiction consistent with the
computation of Federal Income Taxes under Section 8.02 (a) and
(b). Consistent with the general provisions of this Article 8,
if BGH Holdings, BRH Holdings and the Companies are not permitted
under applicable State Income Tax Laws to treat the Closing Date
as the last day of the State Income Tax Stub Period (a "Straddle
Tax"), then the parties shall allocate the State Income Taxes
with respect to such jurisdiction between the Pre-Closing Period
and the Post-Closing Period in accordance with the principles of
Treas. Reg. Sec. 1.1502-76(b)(2) (i). Buyer shall be responsible
for the preparation and filing of all Tax Returns related to
Straddle Taxes and shall pay all Taxes shown as due and payable
on such Tax Returns. At least thirty (30) days prior to the due
date for any such Tax Return, Buyer shall submit to Seller
calculation of Seller's allocable share of the Straddle Tax for
the Pre-Closing Period. Within 5 days of Seller's receipt of
such calculation, Seller shall have the right to contest such
calculation. To the extent Seller and Buyer are unable to
resolve any such disagreement within 15 days prior to the due
date for such Tax Return, such disagreement shall be referred to
the Neutral Auditors for final resolution. No later than the due
date for such Tax Return, (x) Seller shall pay to Buyer the
excess, if any, of the amount by which the State Income Tax
allocable to the State Income Tax Stub Period (as finally
resolved) exceeds the aggregate estimated payments made by Seller
(or by any Affiliate of Seller in respect of Holdings or the
Companies) prior to the Closing Date (the "Pre-Closing Estimated
Payments"), and (y) Buyer shall pay to Seller the excess, if any,
of the amount by which the Pre-Closing Estimated Payments exceed
the State Income Tax allocable to the State Income Tax Stub
Period as finally resolved.
Section 8.03 Other Taxes. Except as set forth in the last
sentence of this section 8.03, Seller shall timely prepare and
file all Tax Returns related to Other Taxes of BRH Holdings, BGH
Holdings, or the Companies that are required to be filed on or
before the Closing Date and shall pay all Taxes related to such
Tax Returns. Buyer shall timely prepare and file all Tax Returns
related to Other Taxes of BRH Holdings, BGH Holdings, or the
Companies that are required to be filed after the Closing Date
and shall pay all Taxes related to such Tax Returns.
Notwithstanding anything to the contrary set forth herein, Buyer
shall pay all taxes incurred in connection with the transfer of
the Shares including, without limitation, any sales, use or
transfer taxes.
Section 8.04 Indemnification.
(a) Seller shall indemnify and hold harmless Buyer,
BRH Holdings, BGH Holdings, and the Companies from and against
(i) any Tax liability with respect to Income Tax Returns for
which Seller is responsible for the preparation, filing and
payment of Taxes pursuant to Section 8.01, including the portion
of any Straddle Taxes for which Seller is responsible under
Section 8.02(c); (ii) any Tax liability for periods prior to and
including the Closing Date resulting from BRH Holdings, BGH
Holdings, or the Company being severally liable for any Taxes of
any consolidated group of corporations of which BRH Holdings, BGH
Holdings, or the Company (prior to the Closing Date) is or was a
member pursuant to Treasury Regulations Section 1.1502-6 or any
analogous state or local tax provision; (iii) any Tax liability
for any predecessor of BRH Holdings, BGH Holdings, or the Company
for any period prior to and including the Closing Date; and (iv)
any liability for any other taxes of BRH Holdings, BGH Holdings,
or the Company for any Pre-Closing Period to the extent such
liability exceeds the accrual for such Other Taxes on the Closing
Balance Sheet. Buyer shall indemnify and hold harmless Seller
from and against any tax liability with respect to Income Tax
Returns for which Buyer is responsible for the preparation,
filing and payment of Taxes pursuant to Section 8.01, including
the portion of any Straddle Taxes for which Seller is responsible
under Section 8.02 (c). Seller shall pay such amounts as it is
required hereunder and Buyer shall pay such amounts as it is
required to pay Seller hereunder in each case within fifteen (15)
calendar days after payment of any applicable Tax liability by
Buyer, BRH Holdings, BGH Holdings, or the Company.
(b) Any Other Taxes for a period of time including
both a Pre-Closing Period and a Post-Closing Period shall be
apportioned between such period based, in the case of real and
personal property Taxes, on a per diem basis, and in the case of
all other Taxes, on the actual activities of BRH Holdings, BGH
Holdings, or the Companies during such periods, as if the books
of BRH Holdings, BGH Holdings, or the Companies were closed on
the Closing Date.
Section 8.05 Refunds and Carrybacks.
(a) Seller shall be entitled to any refunds or credits
of Federal or State Income Taxes or Other Taxes attributable to
or arising in Pre-Closing Periods.
(b) Buyer, BGH Holding, BRH Holdings or the Companies,
as the case may be, shall be entitled to any refunds or credits
of Federal or State Income Taxes or Other Taxes attributable to
Post-Closing Periods.
(c) Buyer shall cause BGH Holding, BRH Holdings and
the Companies to promptly forward to Seller or to reimburse
Seller for any refunds or credits due Seller pursuant to this
Section 8.05, after receipt thereof, and Seller shall promptly
forward to Buyer or reimburse Buyer pursuant to this Section
8.05, for any refunds or credits due Buyer after receipt thereof.
(d) Buyer agrees that, with respect to any Income Tax
neither Buyer nor BGH Holdings, BRH Holdings or the Companies
shall carry back any item of loss, deduction or credit which
arises in any taxable period ending after the Closing Date
("Subsequent Loss") into any taxable period ending on or before
the Closing Date. If a Subsequent Loss with respect to any
Income Tax is carried back into any taxable period ending on or
before the Closing Date, Seller shall be entitled to any refund
or credit of taxes realized as a result thereof and Buyer shall
promptly forward any such refund or the amount of such credit
received by the Buyer, Holdings or the Companies to Seller
pursuant to Section 8.0 5 (c).
Buyer shall not, without Seller's consent, file or
permit Holdings or the Companies to file any Amended Tax Return
for any period ending on or prior to the Closing Date, or
beginning before the Closing Date and ending after the Closing
Date, without Seller's written consent.
Section 8.06 Interperiod Adjustments. If there is any
adjustment to a Tax Return of Seller, BGH Holdings, BRH Holdings
or the Companies for any tax period and an item of deduction,
credit, loss or expense is disallowed in a period for which
Seller is or may be liable for taxes hereunder, (or an item of
income is required to be recognized on a return with respect to
such period which was not reported on the return), in either such
case resulting in a tax detriment suffered by Seller or by either
BGH Holdings, BRH Holdings or the Companies, as the case may be,
for such period, and such disallowance or recognition results in
a tax benefit to Buyer, BGH Holdings, BRH Holdings or the
Companies for a Post-Closing Period (the "Tax Benefit"), or vice
versa, then the party receiving the Tax Benefit shall pay to the
party receiving the Tax Detriment the lesser of the amount of the
Tax Benefit or Tax Detriment actually received (each such payment
a "Tax Benefit Reimbursement"). The foregoing computation shall
be made separately for U. S. Federal Income Tax and State Income
Tax purposes. Each such Tax Benefit Reimbursement shall be paid
within thirty (30) calendar days after the Tax Benefit and Tax
Detriment are actually received and shall not be reduced by any
time value of money or other discount component. If a party
should fail to pay any Tax Benefit Reimbursement within five (5)
Business Days of the determination of the amount thereof, such
amount shall accrue interest at an amount equal to 10% per annum
compounded annually from the date of determination to the date of
payment.
Section 8.07 Covenants.
(a) Termination of Existing Tax-Sharing Agreements.
All tax-sharing agreements or similar arrangements with respect
to or involving BGH Holdings, BRH Holdings and the Companies
shall be terminated (but only with respect to BGH Holdings, BRH
Holdings and the Companies) effective as of the Closing.
(b) Cooperation and Records Retention. Seller and
Buyer shall (i) each provide the other, and Buyer shall cause BGH
Holdings, BRH Holdings and the Companies to provide Seller, with
such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return, audit or other
examination by any Taxing Authority or judicial or administrative
proceedings relating to liability for taxes, which the other
party may be liable for, (ii) each retain and provide the other,
and Buyer shall cause BGH Holdings, BRH Holdings and the
Companies to retain and provide Seller, with any records or other
information which may be relevant to such Tax Return, audit or
examination, proceeding or determination, and (iii) each provide
the other with any final determination of any such audit or
examination, proceeding or determination that affects any amount
required to be shown on any such Tax Return of the other for any
period. Without limiting the generality of the foregoing, Buyer
shall retain, and shall cause BGH Holdings, BRH Holdings and the
Companies to retain, and Seller shall retain, until the
applicable statutes of limitations (including any extensions)
have expired, copies of all Tax Returns, supporting work
schedules and other records or information which may be relevant
to such returns for all tax periods or portions thereof ending
before or including the Closing Date and shall not destroy or
otherwise dispose of any such records without first providing the
other party with a reasonable opportunity to review and copy the
same. In the event that a party fails to reasonably comply with
any request by the other to provide any assistance, records,
information or other items contemplated by this Section 8.07 (b),
the requesting party shall have the right, in addition to any
other remedies which it might have under this Agreement or under
Law, to retain (at the other party's expense) such accountants,
attorneys or other advisors as reasonably necessary for the
purpose of conducting an audit of the books and records of the
other party or its Affiliates, as applicable, in order to obtain
such requested assistance, records, information or other items.
(c) Tax Proceedings. Seller shall exercise, at its
expense, the control, handling, disposition and settlement of any
governmental inquiry, examination or proceeding that could result
in a determination with respect to Taxes due or payable by BGH
Holdings, BRH Holdings or the Companies for which Seller may be
liable, or against which Seller may be required to indemnify
Buyer pursuant hereto. Notwithstanding the foregoing, Buyer
shall have the right to participate in controlling, handling,
disposing and settling (together with Seller) any issue relating
to any Tax Return that includes a Pre-Closing Period and a Post-
Closing Period, and Seller shall promptly notify Buyer of such an
issue and provided further that, if there is a disagreement with
respect to the manner in which the issues related to such a Tax
Return should be handled, the party with the greater economic
interest in the resolution of such issues shall have the ultimate
right to determine the disposition of such issues. Buyer shall
notify Seller of its election to participate as provided above
within sixty (60) days of Buyer's receipt of Seller's notice. If
Seller does not receive such a notice, it shall be conclusively
presumed that Buyer has elected not to so participate. In the
event Buyer does not elect to participate as provided above,
Seller shall promptly notify Buyer if, in connection with any
such inquiry, examination or proceeding, any government authority
proposes to make any assessment or adjustment with respect to tax
items of BGH Holdings, BRH Holdings or the Companies, which
assessments or adjustments could affect Holdings or the Companies
following the Closing Date, and shall not agree to any such
assessment or adjustment without the consent of Buyer, which
consent shall not be unreasonably withheld. Buyer shall notify
Seller in writing within thirty (30) days, (but in no event later
than ten (10) days prior to the time in which such Tax Authority
has required a response), of receiving either verbal or written
notice of learning of any such inquiry, examination or
proceeding. Any failure of Buyer to so notify Seller shall
release Seller from any obligation or indemnification with
respect to such Tax under this Agreement to the extent Seller is
actually prejudiced thereby. Buyer shall cooperate (and shall
cause Holdings and the Companies to cooperate) with Seller, as
Seller may reasonably request, in any such inquiry, examination
or proceeding.
(d) Preparation of Tax Return Package for Short Year
Ending on the Closing Date. Buyer agrees to cause BGH Holdings,
BRH Holdings and the Companies to prepare the usual and customary
"Tax Reporting Packages" which have historically been prepared
for Holdings and the Companies with respect to the period
beginning January 1, 1996 and ending on the Closing Date. Buyer
shall provide Seller with a copy of such "Tax Reporting Packages"
as soon as practicable and, in any event, no later than the
earlier of (i) the date which is one hundred and eighty calendar
days (180) after the Closing Date, or (ii) June 1, 1997. Buyer
agrees to cause BGH Holdings, BRH Holdings and the Companies to
prepare an estimated "Tax Reporting Package" for this same period
by March 1, 1997 if so requested by Seller.
Section 8.08 Disagreements Over Tax Matters. The parties
shall cooperate fully with each other in all matters relating to
Taxes and in the determination of amounts payable hereunder. In
the case of disagreement as to the course of action to be pursued
in dealing with Tax Authorities (including, without limitation,
matters with respect to preparation and filing of Tax Returns,
conduct of audits, and proceedings in courts), the decision of
the party (Seller, on the one hand, or Buyer, on the other hand)
which will economically benefit from or be burdened by the course
of action (or in the case both parties benefit and/or are
burdened, the decision of the party with the greatest benefit or
burden) shall control, but the controlling party shall indemnify
the other party from and against losses, damages and expenses
incurred by the indemnified party in pursuance of such course of
action in excess of the losses, damages and expenses which would
have been incurred by the indemnified party had the course of
action proposed by the indemnified party been pursued. Any party
involved in any formal or informal act or proceeding relating to
tax matters which affects the other party shall promptly give
such other party notice thereof and keep such other party fully
and timely informed of developments.
Section 8.09 338(h)(10) Election. Buyer shall not make
any election pursuant to Section 338 of the Code or take any
action or commit any omission, or permit Holdings or the
Companies to take any action or commit any omission that is
deemed to be such an election.
ARTICLE 9
MISCELLANEOUS
Section 9.01 Amendment and Waiver.
(a) This Agreement may be amended, or any provision of
this Agreement may be waived, provided that any such amendment
and waiver will be binding upon Seller only if set forth in a
writing executed by Seller and any such amendment or waiver will
be binding upon Buyer only if set forth in a writing executed by
Buyer.
(b) No course of dealing between or among any persons
having any interest in this Agreement will be deemed effective to
modify, amend or discharge any part of this Agreement or any
rights or obligations of any person under or by reason of this
Agreement.
Section 9.02 Notices. Except as otherwise expressly set
forth in this Agreement, all notices, demands and other
communications to be given or delivered under or by reason of the
provisions of this Agreement will be in writing and will be
deemed to have been given when delivered personally or by
documented overnight delivery service, or sent by telecopy,
telefax or other electronic transmission service, provided a
confirmation copy is also sent no later than the next Business
Day by first class mail (return receipt requested and first class
postage prepaid), or by certified mail or registered mail (return
receipt requested and first class postage prepaid). Notices,
demands and communications to Buyer or Seller will, unless
another address is specified in writing, be sent to the address
indicated below:
Notices to Seller:
Specialty Foods Corporation
0000 X. Xxxxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Attn.: General Counsel
FAX: 847/000-0000
Notices to Buyer: with a copy to:
B Companies Acquisition Corp. Dechert Price &
Xxxxxx
c/o Bruckmann, Xxxxxx, Xxxxxxxx & Co., 000
Xxxxxxx Xxxxxx
Inc. Xxx Xxxx, XX 00000
000 Xxxx 00xx Xxxxxx Xxxx.: Xxxx
X. Xxxxxxx, Esq.
Xxx Xxxx, XX 00000 FAX: 212/000-0000
Attn.: Xx. Xxxxxxx X. Xxxxxxxx
FAX: 212/000-0000
or to such address as any party shall specify by written notice
so given.
Section 9.03 Assignment. This Agreement and all of the
provisions hereof will be binding upon and inure to the benefit
of the parties hereto and their respective successors and
permitted assigns, except that neither this Agreement nor any of
the rights, interests or obligations hereunder may be assigned by
either party without the prior written consent of the other
party. Notwithstanding the foregoing, Buyer may assign all or
any portion of its rights and obligations hereunder (including
its rights under Section 4.12): (i) as collateral security to
one or more persons that provide the Financing; (ii) to any
person that acquires all or any substantial portion of the
businesses of Buyer or the Companies following the Closing in
connection with the disposition by Buyer of its businesses or of
the Companies; and (iii) to an Affiliate of Buyer (any such
person referred to in Subsections (i), (ii) and (iii) is referred
to herein as an "Assignee"). Such assignment shall be made
pursuant to documentation in form and substance reasonably
acceptable to Seller which documents shall include, without
limitation, in the case of the assignments contemplated in clause
(ii) and (iii) hereof, an assumption by the Assignee of all of
the obligations of Buyer hereunder. In the event of any such
assignment and assumption, all rights and obligations of Buyer
shall be assumed by the Assignee, but Buyer shall remain liable
for any and all such obligations to Seller regardless of such
assignment.
Section 9.04 Severability. Whenever possible, each
provision of this Agreement will be interpreted in such manner as
to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective
only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining
provisions of this Agreement.
Section 9.05 No Strict Construction. The language used in
this Agreement will be deemed to be the language chosen by the
parties hereto to express their mutual intent. Seller and Buyer
each acknowledges that it has been represented by counsel in
connection with this Agreement and the transactions contemplated
by this Agreement. Accordingly, any rule of law, or any legal
decision that would require interpretation of any claimed
ambiguities in this Agreement against the party that drafted it
has no application and is expressly waived. The provisions of
this Agreement shall be interpreted in a reasonable manner to
effect the intent of Buyer and Seller.
Section 9.06 Captions. The captions used in this
Agreement are for convenience of reference only and do not
constitute a part of this Agreement and will not be deemed to
limit, characterize or in any way affect any provision of this
Agreement, and all provisions of this Agreement will be enforced
and construed as if no caption had been used in this Agreement.
Section 9.07 Complete Agreement. This document and the
documents referred to herein contain the complete agreement
between the parties and supersede any prior understandings,
agreements or representations by or between the parties, written
or oral, which may have related to the subject matter hereof in
any way.
Section 9.08 Governing Law/Jurisdiction.
(a) THE SUBSTANTIVE LAW (AND NOT THE LAW OF CONFLICTS)
OF THE STATE OF NEW YORK WILL GOVERN ALL QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY AND INTERPRETATION OF THIS AGREEMENT AND
THE PERFORMANCE OF THE OBLIGATIONS IMPOSED BY THIS AGREEMENT.
(b) The parties hereby irrevocably and unconditionally
consent to submit to the exclusive jurisdiction of the courts of
the State of New York and of the United States of America located
in the City of New York for any actions, suits, or proceedings
arising out of or relating to this Agreement and the transactions
contemplated hereby (and agree not to commence any action, suit
or proceeding relating thereto except in such courts), and
further agree that service of any process, summons, notice or
document by U.S. registered mail to the address set forth above
shall be effective service of process for any action, suit or
proceeding brought by a party against a party in any such court
relating to this Agreement or the transaction contemplated
hereby. The parties hereby irrevocably and unconditionally waive
any objection to the laying of venue of any action, suit or
proceeding arising out of this Agreement or the transactions
contemplated hereby, in the courts of the State of New York or
the United States of America located in the City of New York, and
hereby further irrevocably and unconditionally waive and agree
not to plead or claim in any such court that any such action,
suit or proceeding brought in any such court has been brought in
an inconvenient forum.
Section 9.09 Counterparts. This Agreement may be executed
in one or more counterparts (including by means of faxed
signature pages), any one of which need not contain the
signatures of more than one party, but all such counterparts
taken together will constitute one and the same instrument.
Section 9.10 Advisor Fees. Buyer has not used an
investment advisor or broker in connection with the transactions
contemplated by this Agreement, and there are no claims for
investment banker, broker, or finder fees or similar compensation
in connection with the transactions contemplated by this
Agreements based on any arrangement or agreement by or on behalf
of Buyer, except pursuant to an arrangement with BRS, for which
Buyer is solely responsible. Neither Seller, BGH Holdings, BRH
Holdings, nor the Companies have retained any investment advisor
or incurred any liability or obligation for any investment banker
fees, or similar compensation in connection with the transactions
contemplated by this Agreement, except pursuant to an arrangement
with Xxxxxxx Xxxxx & Co., for which Seller is solely responsible.
Notwithstanding anything to the contrary in Section 7.02, Buyer
will indemnify Seller for any breach of its representation in
this Section, and Seller will indemnify Buyer for any breach of
its representation in this Section.
Section 9.11 Disclaimer Regarding Projections. In
connection with Buyer's investigation of the Companies, Buyer has
received from Seller or its representatives certain projections,
including the information contained in (i) the Confidential
Information Package, (ii) responses to requests by Buyer for
additional information, and (iii) the management presentation.
Buyer acknowledges that there are uncertainties inherent in
attempting to make such projections and other forecasts and
plans, that Buyer is familiar with such uncertainties, that Buyer
is taking full responsibility for making its own evaluation of
the adequacy and accuracy of all estimates, projections and other
forecasts and plans so furnished to it (including the
reasonableness of the assumptions underling such estimates,
projections and forecasts), and that Buyer shall have no claim
against Seller with respect thereto. Accordingly, Buyer agrees
that Seller makes no representation or warranty with respect to
such projections and other forecasts and plans, except that
Seller has no knowledge of any information that would render the
projections misleading in any material respects.
Section 9.12 Filings and Applications.
(a) Each of Seller and Buyer shall use its reasonable
commercial efforts and shall fully cooperate with the other to
make promptly all registrations, filings and applications, give
all notices and obtain all governmental and third party permits,
authorizations, consents, approvals, orders, qualifications and
waivers which are necessary or desirable for the consummation of
the transactions contemplated hereby (collectively, the
"Consents"), and each party shall keep the other party fully
apprised of its actions with respect to all of the foregoing.
(b) If applicable, within five (5) Business Days of
this Agreement, Buyer and Seller shall each file or cause to be
filed with the Federal Trade Commission and the United States
Department of Justice any notifications required to be filed
under the HSR Act with respect to the transactions contemplated
herein and will each bear the costs and expenses of their
respective filings. Buyer will pay the filing fee therefore.
Each of Buyer and Seller will use its respective good faith
efforts to respond to any requests for additional information
made by either of such agencies and to cause the waiting periods
under the HSR Act to terminate or expire at the earliest possible
date and to resist in good faith, at each of their respective
cost and expense (including, without limitation, the institution
or defense of legal proceedings), any assertion that the
transactions contemplated herein constitute a violation of the
antitrust laws, all to the end of expediting consummation of the
transactions contemplated herein, and each party shall keep the
other party fully apprised of its actions with respect to all of
the foregoing.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the day and year first above written.
SPECIALTY FOODS CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
B COMPANIES ACQUISITION CORP.
By: /s/ Xxxxxxx X. Xxxxxxxx
Name: Xxxxxxx X. Xxxxxxxx
Title: President
LIST OF SCHEDULES
Exhibit A Accounts Receivable Agreement
Schedule 2.01(d) Consents and Approvals
Schedule 2.01(h) Title Policies
Schedule 4.01 Corporate Organization, Power and
Subsidiaries
Schedule 4.03 No Violations
Schedule 4.04 Shares
Schedule 4.05 Ownership of Shares
Schedule 4.06 Financial Statements
Schedule 4.07 Undisclosed Liabilities
Schedule 4.08 No Material Adverse Change
Schedule 4.09 Absence of Certain Changes
Schedule 4.10 Directors, Officers and Bank Accounts
Schedule 4.12 Inventory
Schedule 4.13 Insurance
Schedule 4.14 Title to Assets and Conditions
Schedule 4.15 Owned Real Estate
Schedule 4.16 Real Estate Leases
Schedule 4.17 Personal Property Leases
Schedule 4.18 Motor Vehicles
Schedule 4.19 Intellectual Property
Schedule 4.20 Material Contracts
Schedule 4.21 Employees
Schedule 4.22 ERISA
Schedule 4.23 Taxes
Schedule 4.24 Litigation
Schedule 4.25 Compliance with Law, and Licenses and
Permits
Schedule 4.26 Environmental Matters
Schedule 4.26 (d) Environmental Matters Subject to
Environmental Threshold and
Aggregate Environmental Threshold.
Schedule 4.27 Adequacy of Companies' Assets/Related
Party Transactions
Schedule 5.02 Authority; Authorization
[Execution Copy]
STOCK PURCHASE AGREEMENT
by and between
SPECIALTY FOODS CORPORATION
and
B COMPANIES ACQUISITION CORP.
GOVERNING THE OUTSTANDING CAPITAL STOCK OF BGH HOLDINGS, INC.
AND BRH HOLDINGS, INC.
November 26, 1996
TABLE OF CONTENTS
Page
ARTICLE 1
PURCHASE AND SALE OF STOCK
Section 1.01 Definitions 2
Section 1.02 Basic Transaction 12
Section 1.03 Consideration for Purchase of Shares 12
Section 1.04 The Closing 15
Section 1.05 Procedures at Closing 16
ARTICLE 2
CONDITIONS TO CLOSING
Section 2.01 Conditions to Buyer's Obligations 16
Section 2.02 Conditions to Seller's Obligations 21
ARTICLE 3
COVENANTS PRIOR TO CLOSING
Section 3.01 Affirmative Covenants of Seller 23
Section 3.02 Negative Covenants of Seller 25
Section 3.03 Covenants of Buyer 27
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 4.01 Corporate Organization, Power and Subsidiaries28
Section 4.02 Authority; Authorization 28
Section 4.03 No Violations 29
Section 4.04 Shares 29
Section 4.05 Ownership of Shares 30
Section 4.06 Financial Statements 31
Section 4.07 No Undisclosed Liabilities 32
Section 4.08 No Material Adverse Change 32
Section 4.09 Absence of Certain Changes 32
Section 4.10 Directors, Officers and Bank Accounts 33
Section 4.11 Accounts Receivable 34
Page
Section 4.12 Inventory 34
Section 4.13 Insurance 35
Section 4.14 Title to Assets and Conditions 36
Section 4.15 Owned Real Estate 36
Section 4.16 Real Estate Leases 38
Section 4.17 Personal Property Leases 41
Section 4.18 Motor Vehicles 41
Section 4.19 Intellectual Property 42
Section 4.20 Material Contracts 44
Section 4.21 Employees 46
Section 4.22 ERISA 48
Section 4.23 Taxes 51
Section 4.24 Litigation 53
Section 4.25 Compliance with Law, and Licenses and
Permits 54
Section 4.26 Environmental Matters 54
Section 4.27 Adequacy of the Companies' Assets/Related Party
Transactions 56
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF BUYER
Section 5.01 Corporate Organization and Power 57
Section 5.02 Authority; Authorization 57
Section 5.03 No Violation 57
Section 5.04 Litigation 58
Section 5.05 Acquisition of Shares for Investment 58
Section 5.06 Financing/Sufficient Funds 58
ARTICLE 6
TERMINATION
Section 6.01 Termination 61
Section 6.02 Effect of Termination 62
Section 6.03 Confidentiality 62
ARTICLE 7
ADDITIONAL AGREEMENTS
Page
Section 7.01 Survival 62
Section 7.02 Indemnification 63
Section 7.03 Expenses 66
Section 7.04 Press Releases and Announcements 66
Section 7.05 Continuing Access to Records 67
Section 7.06 Existing Insurance Coverage 67
Section 7.07 Companies Performance 68
Section 7.08 Continuing Assistance 69
Section 7.09 Employee Matters 69
Section 7.10 Third Party Beneficiaries 69
Section 7.11 Elimination of Inter-Companies and Affiliate
Accounts 69
Section 7.12 Cash Management 70
Section 7.13 Surety Bonds and Letters of Credit 70
Section 7.14 License Applications 71
Section 7.15 Purchased Accounts Receivable 71
Section 7.16 Buyer's Notice 72
Section 7.17 Allocation of Purchase Price 72
ARTICLE 8
TAX MATTERS
Section 8.01 Allocation of Federal and State Income Taxes 72
Section 8.02 Determination of Pre- and Post-Closing Taxable
Income
for Federal Income Tax Purposes 73
Section 8.03 Other Taxes 74
Section 8.04 Indemnification 74
Section 8.05 Refunds and Carrybacks 75
Section 8.06 Interperiod Adjustments 76
Section 8.07 Covenants 77
Section 8.08 Disagreements Over Tax Matters 79
Section 8.09 338(h)(10) Election 80
Page
ARTICLE 9
MISCELLANEOUS
Section 9.01 Amendment and Waiver 80
Section 9.02 Notices 80
Section 9.03 Assignment 81
Section 9.04 Severability 82
Section 9.05 No Strict Construction 82
Section 9.06 Captions 82
Section 9.07 Complete Agreement 82
Section 9.08 Governing Law/Jurisdiction 83
Section 9.09 Counterparts 83
Section 9.10 Advisor Fees 84
Section 9.11 Disclaimer Regarding Projections 84
Section 9.12 Filings and Applications 85
