UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
----------------- -----------------
Commission file number 0-19263
SUPREMA SPECIALTIES, INC.
(Exact Name of Registrant as
specified in its charter)
New York 11-2662625
------------------------------- -----------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
510 EAST 35TH STREET
PATERSON, NEW JERSEY 07543
---------------------------------------
(Address of principal executive offices)
(Zip Code)
(973) 684-2900
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
As of February 12, 2001 there were 5,622,193 outstanding shares of the issuer's
Common Stock, $.01 par value.
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
INDEX
Page No.
--------
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
Consolidated Balance Sheets as of
December 31, 2000 (unaudited) and June 30, 2000 3
Consolidated Statements of Earnings
For The Three and Six Month Periods Ended
December 31, 2000 and 1999 (unaudited) 4
Consolidated Statements of Cash Flows
For the Six Month Periods Ended
December 31, 2000 and 1999 (unaudited) 5
Notes to Consolidated Financial 6
Statements
ITEM 2. Management's Discussion and Analysis of 8
Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K 11
Signatures 12
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
December 31, June 30,
2000 2000
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash $ 300,981 $ 950,121
Accounts receivable, net of allowances
of $770,290 at Dec. 31, 2000 and
$770,290 at June 30, 2000 78,329,806 62,326,908
Inventories 62,471,633 51,630,343
Prepaid expenses and other current assets 905,864 755,067
Deferred income taxes 89,000 89,000
------------- -------------
Total current assets 142,097,284 115,751,439
PROPERTY AND EQUIPMENT, NET 9,508,366 7,181,208
OTHER ASSETS 2,006,132 2,027,069
------------- -------------
$ 153,611,782 $ 124,959,716
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 16,928,427 $ 13,989,065
Current portion of long-term obligations 572,573 609,690
Mortgage payable - short term 55,711 53,574
Income taxes payable 1,430,869 1,539,000
Accrued expenses and other current liabilities 2,358,095 3,743,917
------------- -------------
Total current liabilities 21,345,675 19,935,246
DEFERRED INCOME TAXES 749,000 749,000
REVOLVING CREDIT LOAN 79,905,262 65,887,000
SUBORDINATED DEBT 10,500,000 10,500,000
LONG-TERM CAPITAL LEASES 845,656 1,105,637
MORTGAGE PAYABLE - LONG TERM 786,690 814,920
OTHER LIABILITIES 1,482,143 --
------------- -------------
115,614,426 98,991,803
STOCKHOLDERS' EQUITY:
Redeemable, convertible preferred stock, $.01
par value, 2,500,000 shares authorized, none
issued and outstanding at December 31, 2000
and June 30, 2000, respectively
Common stock, $.01 par value, 10,000,000 -- --
Shares authorized, 5,835,563 and 4,655,564
Issued and outstanding at December 31, 2000
And June 30, 2000 58,355 46,555
Additional paid-in capital 19,327,812 11,365,207
Retained earnings 20,053,809 15,998,771
Treasury stock at cost, 213,370 at
December 31, 2000 and June 30, 2000 (1,442,620) (1,442,620)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 37,997,356 25,967,913
------------- -------------
$ 153,611,782 $ 124,959,716
============= =============
</TABLE>
See notes to consolidated financial statements.
3
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------- -------------------------------
2000 1999 2000 1999
------------ ------------ ------------- -------------
<S> <C> <C> <C> <C>
Net sales $ 92,741,847 $ 65,323,099 $ 181,689,372 $ 126,704,215
Cost of sales 78,373,061 54,152,094 153,292,479 105,549,409
------------ ------------ ------------- -------------
Gross margin 14,368,786 11,171,005 28,396,893 21,154,806
------------ ------------ ------------- -------------
Expenses:
Selling and shipping 6,739,945 5,485,953 13,576,240 10,609,190
General and administrative 1,870,612 1,679,736 3,489,713 2,927,201
------------ ------------ ------------- -------------
8,610,557 7,165,689 17,065,953 13,536,391
------------ ------------ ------------- -------------
Income from operations 5,758,229 4,005,316 11,330,940 7,618,415
Other income (expense)
Interest expense, net (2,423,930) (1,418,290) (4,685,902) (2,677,980)
------------ ------------ ------------- -------------
(2,423,930) (1,418,290) (4,685,902) (2,677,980)
------------ ------------ ------------- -------------
Earnings Before Income Taxes 3,334,299 2,587,026 6,645,038 4,940,435
Income Taxes 1,266,000 1,083,000 2,590,000 2,023,000
------------ ------------ ------------- -------------
Net earnings $ 2,068,299 $ 1,504,026 $ 4,055,038 $ 2,917,435
============ ============ ============= =============
EARNINGS PER SHARE OF COMMON STOCK:
Basic earnings per share $0.37 $0.34 $0.78 $0.66
============ ============ ============= =============
Diluted earnings per share $0.33 $0.29 $0.69 $0.57
============ ============ ============= =============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING:
Basic 5,622,194 4,399,620 5,221,877 4,440,197
Diluted 6,256,840 5,100,196 5,910,461 5,143,589
============ ============ ============= =============
</TABLE>
See notes to consolidated financial statements.
4
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
December 31,
------------------------------------
2000 1999
------------ ------------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net Earnings $ 4,055,038 $ 2,917,435
Adjustments to reconcile net earnings to net cash
Used in operating activities:
Depreciation and amortization 323,744 301,385
Provision for doubtful accounts -- --
Changes in operating assets and liabilities:
Accounts receivable (16,002,898) (12,699,068)
Inventories (10,841,290) (5,796,658)
Prepaid expenses and other current assets (150,797) (339,826)
Other assets 20,937 460,960
Accounts payable 2,939,362 4,299,429
Income taxes payable (108,131) (433,223)
Accrued expenses and other current liabilities (1,385,822) (439,380)
------------ ------------
Other liabilities 1,482,143 --
------------ ------------
Net cash used in operating activities (19,667,714) (11,728,946)
------------ ------------
CASH FLOW FROM INVESTING ACTIVITIES:
Payments for purchase of property and equipment (2,650,902) (587,197)
------------ ------------
Net cash used in investing activities (2,650,902) (587,197)
------------ ------------
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from revolving credit loan 36,868,262 42,415,000
Principal payments of revolving credit loan (22,850,000) (28,741,599)
Principal payments of capital leases (297,098) (268,386)
Principal payments of mortgage (26,093) (15,992)
Proceeds from secondary public offering (net) 7,974,405 --
Proceeds from options -- 53,619
Acquisition of treasury stock -- (1,046,250)
Net cash provided by financing activities 21,669,476 12,396,392
------------ ------------
NET INCREASE (DECREASE) IN CASH (649,140) 80,249
CASH, BEGINNING OF PERIOD 950,121 358,214
------------ ------------
CASH, END OF PERIOD $ 300,981 $ 438,463
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOWS
INFORMATION:
Cash paid during the period for:
Interest $ 4,423,702 $ 2,649,326
============ ============
Income Taxes $ 2,698,131 $ 2,457,411
============ ============
</TABLE>
See notes to consolidated financial statements.
5
SUPREMA SPECIALTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. INTERIM FINANCIAL INFORMATION
The unaudited consolidated balance sheet as of December 31, 2000, the
unaudited consolidated statements of earnings for the three and six month
periods ended December 31, 2000 and 1999 and the unaudited consolidated
statements of cash flows for the six month periods ended December 31, 2000
and 1999 have been prepared in accordance with generally accepted
accounting principles for interim financial information and with the
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. The balance
sheet for June 30, 2000 is derived from audited financial statements. In
the opinion of management, all adjustments (which include normal recurring
accruals) necessary to present fairly the financial position and the
results of operations and cash flows at December 31, 2000 and for the three
and six month periods presented, have been included.
Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted from this quarterly
financial statement. The attached financial statements should be read in
connection with the consolidated financial statements and notes thereto
included in the Company's 2000 Annual Report on Form 10-K for the year
ended June 30, 2000.
The results of operations and cash flows for the three and six months ended
December 31, 2000 are not necessarily indicative of the results to be
expected for the entire fiscal year.
2. INVENTORIES
Inventories are summarized as follows:
Dec. 31, 2000 June 30, 2000
------------- -------------
Finished goods $46,495,520 $38,430,322
Raw materials 14,492,910 11,872,836
Packaging 1,483,203 1,327,185
----------- -----------
$62,471,633 $51,630,343
=========== ===========
3. LONG-TERM REVOLVING CREDIT LOAN
We have a bank revolving credit facility (the "Facility") that, in December
2000, was amended and increased the bank's potential commitment to
$111,000,000. The commitment for the Facility is through February 15, 2004.
The rate of interest on amounts borrowed under the Facility is the adjusted
LIBOR rate, as defined, plus 175 basis points. The Facility is
collateralized by substantially all existing and acquired assets as defined
in the credit facility, and is guaranteed by our subsidiaries, Suprema
Specialties West, Inc., Suprema Specialties Northeast, Inc., and Suprema
Specialties Northwest, Inc. and the pledge of all of the stock of these
subsidiaries. Advances under the Facility are limited to 85% of eligible
accounts receivable and 60% of all inventory except packaging material, as
defined in the agreement. The Facility Agreement contains restrictive
financial covenants, including the maintenance of consolidated net worth,
and the maintenance of leverage and fixed charge ratios, as defined in the
agreement, and a restriction on dividends to common shareholders. As of
December 31, 2000, we were in compliance with the covenants under the
Facility Agreement. Borrowings under the Facility are required to be used
for working capital purposes.
4. ISSUANCE OF COMMON STOCK
In August 2000, we completed an underwritten secondary public offering of
shares of our common stock of which 1,100,000 shares were sold by us and
100,000 shares
6
were sold by certain selling shareholders at a public offering price of
$8.00 per share. Gross proceeds of the shares sold by us was $8,800,000 and
net proceeds paid to us was $7,404,000. We received no proceeds from the
shares sold by the selling shareholders. In addition, in association with
the secondary public offering, the underwriters were granted an option to
purchase up to an additional 80,000 shares of common stock from us and
100,000 shares of common stock from the selling shareholders to cover
over-allotments.
On September 15, 2000 the underwriters exercised the over-allotment option.
Gross proceeds of the over-allotment shares sold by us was $640,000 and net
proceeds to us was $570,000. We received no proceeds from the shares sold
by the selling shareholders.
5. EARNINGS PER SHARE
Basic and diluted earnings per share for the three and six month periods
ended December 31, 2000 and December 31, 1999 are calculated as follows:
<TABLE>
<CAPTION>
Three months ended Dec. 31, 2000 Three months ended Dec. 31, 1999
---------------------------------- ----------------------------------
Net Income Shares Per Share Net Income Shares Per Share
<S> <C> <C> <C> <C> <C> <C>
Basic earnings
per share $2,068,299 5,622,194 $.37 $1,504,026 4,399,620 $.34
Effect of assumed
conversion of warrants
and employee stock
options 634,646 700,576
---------- --------- ---- ---------- --------- ----
Diluted earnings
Per share $2,068,299 6,256,840 $.33 $1,504,026 5,100,196 $.29
<CAPTION>
Six months ended Dec. 31, 2000 Six months ended Dec. 31, 1999
---------------------------------- ----------------------------------
Net Income Shares Per Share Net Income Shares Per Share
<S> <C> <C> <C> <C> <C> <C>
Basic earnings
Per share $4,055,038 5,221,877 $.78 $2,917,435 4,440,197 $.66
Effect of assumed
conversion of warrants
and employee stock
options 688,584 703,392
---------- --------- ---- ---------- --------- ----
Diluted earnings
Per share $4,055,038 5,910,461 $.69 $2,917,435 5,143,589 $.57
</TABLE>
6. TREASURY STOCK
During the six months ended December 31, 1999, we, in accordance with our
stock repurchase plan, purchased 135,000 shares of our common stock at a
cost of $1,046,250.
7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in this
report contains statements that are forward-looking, such as statements relating
to plans for future activities. Such forward-looking information involves
important known and unknown risks and uncertainties that could significantly
affect our actual results, performance or achievements in the future and,
accordingly, such actual results, performance or achievements may materially
differ from those expressed or implied in any forward-looking statements made by
or on behalf of us. These risks and uncertainties include, but are not limited
to, those relating to our growth strategy, customer concentration, outstanding
indebtedness, seasonality, expansion and other activities of competitors,
changes in federal or state laws and the administration of such laws, protection
of trademarks and other proprietary rights, and the general condition of the
economy and its effect on the securities markets and other risks detailed in our
other filings with the Securities and Exchange Commission. The words "believe,"
"expect," "anticipate," "intend," and "plan," and similar expressions identify
forward-looking statements. Readers are cautioned not to place undue reliance on
these forward-looking statements which speak only as of the date the statement
was made.
Results of Operations - Three months ended December 31, 2000 vs. Three months
ended December 31, 1999.
Net sales for the three month period ended December 31, 2000 were approximately
$92,742,000, as compared to approximately $65,323,000 for the three months ended
December 31, 1999, an increase of approximately $27,419,000 or 42.0%. This
increase reflects an increase in sales volume for food service products
manufactured by us, partially offset by the lower average selling price for
cheese (as a result of the lower CME Block Cheddar Market, the commodity index
on which bulk cheese prices are based).
Our gross margin increased by approximately $3,198,000 from approximately
$11,171,000 in the three month period ended December 31, 1999 to approximately
$14,369,000 in the three month period ended December 31, 2000, primarily as a
result of an increase in the sales volume for food service products manufactured
by us. Our gross margin as a percentage of sales decreased to 15.5% in the three
month period ended December 31, 2000 from 17.1% in the three month period ended
December 31, 1999. The decrease in gross margin as a percentage of sales was
primarily due to the lower average selling price for cheese (as a result of the
lower average CME Block Cheddar Market, the commodity index on which bulk cheese
prices are based) during the three months ended December 31, 2000, and, to a
lesser extent, the shift toward lower margin sales associated with the food
service markets, partially offset by the increase in sales volume.
Selling and shipping expenses increased approximately $1,254,000 from
approximately $5,486,000 for the three month period ended December 31, 1999 to
approximately $6,740,000 for the three month period ended December 31, 2000. The
increase in selling and shipping expenses is primarily due to increases in
advertising and promotional allowances, commission expense and shipping expenses
in support of our revenue growth. As a percentage of sales, selling and shipping
expenses decreased from 8.4% in the three month period ended December 31, 1999
to 7.3% in the three month period ended December 31, 2000. The percentage
decrease in selling and shipping expenses, which is primarily due to the
increase in our revenue, was partially offset by the increases in advertising
and promotional allowances, commission expense and shipping expenses in support
of our revenue growth.
General and administrative expenses increased by approximately $191,000 to
approximately $1,871,000 for the three month period ended December 31, 2000 as
compared to approximately $1,680,000 for the comparable period in 1999. The
increase in general and administrative expenses is primarily due to an increase
in personnel and other administrative expenses associated with our revenue
growth. As a percentage of sales, general and administrative expenses decreased
from 2.6% in the three month period ended December 31, 1999 to 2.0% in the three
month period ended December 31, 2000. The percentage decrease in general and
administrative expenses, which is primarily due to the increase in our revenue,
was partially offset by the increases in personnel and other administrative
expenses associated with the increase in our revenue.
Net interest expense increased to approximately $2,424,000 for the three month
period ended
8
December 31, 2000 from approximately $1,418,000 for the three month period ended
December 31, 1999. The increase in interest expense was primarily due to our
expanded borrowing requirements necessary for working capital needs.
The provision for income taxes for the three month period ended December 31,
2000 increased by approximately $183,000 compared to the three month period
ended December 31, 1999 as a result of increased taxable income.
Net earnings increased approximately $564,000 to approximately $2,068,000 for
the three month period ended December 31, 2000, from approximately $1,504,000
for the comparable period ended December 31, 1999 due to the increase in gross
margin as a result of increased sales volumes, which was partially offset by the
increases in selling and shipping expenses, general and administrative expenses
and interest expense.
Results of Operations - Six months ended December 31, 2000 vs. Six months ended
December 31, 1999.
Net sales for the six month period ended December 31, 2000 were approximately
$181,689,000 as compared to approximately $126,704,000 for the six months ended
December 31, 1999, an increase of approximately $54,985,000 or 43.4%. This
increase reflects an increase primarily in sales volumes for food service
products manufactured by us partially offset by the lower average selling price
for cheese (as a result of the lower CME Block Cheddar Market, the commodity
index on which bulk cheese prices are based).
Our gross margin increased by approximately $7,242,000, from approximately
$21,155,000 in the six month period ended December 31, 1999 to approximately
$28,397,000 in the six month period ended December 31, 2000, primarily as a
result of an increase in sales volume for food service products manufactured by
us. Our gross margin as a percentage of sales decreased from 16.7% in the six
months ended December 31, 1999 to 15.6% for the comparable six month period in
2000. The decrease in gross margin as a percentage of sales was primarily due to
the lower average selling price for cheese (as a result of the lower average CME
Block Cheddar Market, the commodity index on which bulk cheese prices are based)
during the six months ended December 31, 2000, and, to a lesser extent, the
shift toward lower margin sales associated with the food service markets, which
was partially offset by the increase in the sales volume.
Selling and shipping expenses increased by approximately $2,967,000 from
approximately $10,609,000 for the six month period ended December 31, 1999 to
approximately $13,576,000 for the six month period ended December 31, 2000. The
increase in selling and shipping expenses is primarily due to increases in
advertising and promotional allowances, commission expense and shipping expenses
in support of our revenue growth. As a percentage of sales, selling and shipping
expenses decreased from 8.4% in the six month period ended December 31, 1999 to
7.5% in the six month period ended December 31, 2000. The percentage decrease in
selling and shipping expenses, which is primarily due to the increase in our
revenue, was partially offset by the increases in advertising and promotional
allowances, commission expense and shipping expenses in support of the increase
in our revenue.
General and administrative expenses increased by approximately $562,000 from
approximately $2,927,000 for the six month period ended December 31, 1999 to
approximately $3,490,000 for the comparable period in fiscal 2000. The increase
in general and administrative expenses is primarily a result of an increase in
personnel and other administrative expenses associated with our revenue growth.
As a percentage of sales, general and administrative expenses decreased to 1.9%
for the six month period ended December 31, 2000, from 2.3% for the comparable
period in 1999, which is primarily due to the increase in our revenue, was
partially offset by an increase in personnel and other administrative expenses.
Net interest expense increased to approximately $4,686,000 for the six month
period ended December 31, 2000 from approximately $2,678,000 for the six month
period ended December 31, 1999. The increase was primarily the result of our
expanded borrowing requirements necessary for working capital needs.
The provision for income taxes for the six month period ended December 31, 2000,
increased by approximately $567,000 as compared to the six month period ended
December 31, 1999 primarily as a result of increased taxable income.
Net earnings increased by approximately $1,138,000 to approximately $4,055,000
for the six
9
month period ended December 31, 2000, from approximately $2,917,000 for the
comparable period ended December 31, 1999 due to the increase in gross margin
primarily as a result of increased sales volumes, which was partially offset by
the increases in selling and shipping expenses, general and administrative
expenses and interest expense.
Financial Position, Liquidity and Capital Resources
At December 31, 2000, we had working capital of approximately $120,752,000, as
compared with $95,816,000 at June 30, 2000, an increase of approximately
$24,936,000. The increase in working capital is primarily due to the increase in
accounts receivable and inventory levels in support of our increased sales
volumes, as well as decreases in income taxes payable and accrued expenses and
other current liabilities, partially offset by increases in accounts payable.
In August 2000 we completed an underwritten secondary public offering of shares
of our common stock of which 1,100,000 shares were sold by us and 100,000 shares
were sold by certain selling shareholders at a public offering price of $8.00
per share. Gross proceeds of the shares sold by us was $8,800,000 and net
proceeds paid to us was $7,404,000. We received no proceeds from the shares sold
by the selling shareholders. In addition, in association with the secondary
public offering, the underwriters were granted an option to purchase up to an
additional 80,000 shares of common stock from us and 100,000 shares of common
stock from the selling shareholders to cover over-allotments.
On September 15, 2000 the underwriters exercised the over-allotment option.
Gross proceeds of the over-allotment shares sold by us was $640,000 and net
proceeds to us was $570,000. We received no proceeds from the shares sold by the
selling shareholders.
In March, 1996, we purchased our Paterson, New Jersey production facility which
we previously had leased. The purchase was financed through a mortgage on the
property. Proceeds of the loan were $1,050,000, of which $686,250 was used to
pay the remaining obligation to the landlord. The balance of the proceeds was
used to complete the expansion of a 7,800 square foot refrigerated storage
facility. The five year note which bore interest at 8.51% per annum was being
amortized at a fifteen year rate and required a balloon payment at the end of
year five of approximately $840,000. On March 29,1999, we refinanced the
mortgage on our Paterson facility for the principal amount of $929,573. The
seven year note which bears interest at 7.85% per annum is being amortized at a
fifteen year rate and requires a balloon payment at the end of year seven of
approximately $501,000. At December 31, 2000, we had outstanding obligations of
approximately $842,401 under the mortgage financing the purchase of the Paterson
facility.
We have a bank revolving credit facility, (the "Facility"), that in December
2000 was amended and increased the bank's potential commitment to $111,000,000
through February 15, 2004. The rate of interest on amounts borrowed under the
Facility is the LIBOR rate plus 175 basis points. The interest rate at December
31, 2000 was 8.44%. Advances under the Facility are limited to 85% of eligible
accounts receivable, and 60% of most inventory. The agreement contains
restrictive covenants, including the maintenance of consolidated net worth and
the maintenance of leverage and fixed charge ratios as defined in the agreement,
and restriction on dividends to common shareholders. As of December 31, 2000, we
are in compliance with these covenants. At December 31, 2000 our total
outstanding debt to the bank was $79,905,262.
We previously entered into certain capital lease financing transactions to
purchase equipment. At December 31, 2000, we had obligations of approximately
$1,418,229 under capital leases.
Management believes that with an increase in the Facility to $111,000,000, we
have adequate working capital to meet our reasonably foreseeable cash
requirements.
Net cash used in operating activities in the six month period ended December 31,
2000 was approximately $19,668,000 as compared to $11,729,000 in the comparable
period of the prior year. The use of cash in operations was primarily the result
of increases in accounts receivable and inventories in support of our increased
revenue growth, and decreases in income taxes payable and accrued expenses and
other current liabilities partially offset by increases in accounts payable and
other liabilities, and net earnings as adjusted for non-cash expenses. The cash
used in operations was financed through cash flow from financing
10
activities. Net cash used in investing activities in the six month period ended
December 31, 2000 was approximately $2,651,000, as compared to $587,000 in the
six month period ended December 31, 1999, as a result of continued expenditures
for fixed assets including the purchase from Snake River Cheese, L.L.C. of land
and building located in Blackfoot, Idaho, and capital equipment utilized in our
California and New York manufacturing facilities. In August 2000, we completed
an underwritten secondary public offering of shares of our common stock of which
1,100,000 shares were sold by us and 100,000 shares were sold by certain selling
shareholders at a public offering price of $8.00 per share. Gross proceeds of
the shares sold by us was $8,800,000 and net proceeds paid to us was $7,404,000.
We received no proceeds from the shares sold by the selling shareholders. In
addition, in association with the secondary public offering, the underwriters
were granted an option to purchase up to an additional 80,000 shares of common
stock from us and 100,000 shares of common stock from the selling shareholders
to cover over-allotments. On September 15, 2000 the underwriters exercised the
over-allotment option. Gross proceeds of the over-allotment shares sold by us
was $640,000 and net proceeds to us was $570,000. We received no proceeds from
the shares sold by the selling shareholders. As a result of the foregoing, at
December 31, 2000 we had cash of approximately $300,981.
PART II. OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits
Exhibit 10.1 Amendment No. 2 to Third Amendment and Restated Revolving Loan,
Guaranty and Security Agreement among Fleet Bank, N.A., Sovereign
Bank, Mellon Bank, N.A., European American Bank, N.A., PNC Bank,
N.A., National City Bank, Suprema Specialties, Inc., Suprema
Specialties West, Inc., Suprema Specialties Northeast, Inc., and
Suprema Specialties Northwest, Inc.
Exhibit 10.2 Asset Purchase Agreement dated as of November 27, 2000 by and
among Snake River Cheese, L.L.C. and Suprema Specialties
Northwest, Inc.
Exhibit 10.3 Master Lease Agreement dated December 28, 2000 by and between PNC
Leasing and Suprema Specialties Northwest, Inc. and supplement.
Reports on Form 8-K
None
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SUPREMA SPECIALTIES, INC.
-------------------------
(registrant)
Date: February 12, 2001 By: /s/ Mark Cocchiola
------------------- ---------------------------------
Mark Cocchiola
President &
Chief Executive Officer
Date: February 12, 2001 By: /s/ Steven Venechanos
------------------ ------------------------------
Chief Financial Officer &
Secretary
12
AMENDMENT NO. 2
to
THIRD AMENDED AND RESTATED REVOLVING LOAN, GUARANTY AND
SECURITY AGREEMENT
among
SUPREMA SPECIALTIES, INC.,
SUPREMA SPECIALTIES WEST, INC,
SUPREMA SPECIALTIES NORTHEAST, INC.,
SUPREMA SPECIALTIES NORTHWEST INC.,
THE BANKS SIGNATORY THERETO,
FLEET NATIONAL BANK, as Administrative Agent,
SOVEREIGN BANK, as Syndication Agent
and
MELLON BANK, N.A., as Documentation Agent
Arranged by
FLEET SECURITIES, INC.
Dated as of December 28, 2000
AMENDMENT NO. 2
to
THIRD AMENDED AND RESTATED REVOLVING LOAN, GUARANTY
AND SECURITY AGREEMENT
This AMENDMENT NO. 2, dated as of December 28, 2000 (this "Amendment"), is
by and among FLEET NATIONAL BANK (successor by merger to Fleet Bank, National
Association and as successor to NatWest Bank N.A. and National Westminster Bank
NJ, "Fleet"), SOVEREIGN BANK ("Sovereign"), MELLON BANK, N.A. ("Mellon"),
EUROPEAN AMERICAN BANK ("EAB"), PNC BANK, NATIONAL ASSOCIATION ("PNC") and
NATIONAL CITY BANK ("National City" and, together with Fleet, Sovereign, Mellon,
EAB and PNC, the "Banks"), FLEET NATIONAL BANK, successor by merger to Fleet
Bank, National Association, as administrative and collateral agent for the Banks
(in such capacity, the "Agent"), SOVEREIGN BANK, as syndication agent for the
Banks (in such capacity the "Syndication Agent"), MELLON BANK, N.A., as
documentation agent for the Banks (in such capacity the "Documentation Agent"),
SUPREMA SPECIALTIES, INC., a New York corporation (the "Borrower"), SUPREMA
SPECIALTIES WEST, INC. ("Suprema West"), a California corporation, SUPREMA
SPECIALTIES NORTHEAST, INC. ("Suprema Northeast"), a New York corporation and
SUPREMA SPECIALTIES NORTHWEST INC. ("Suprema Northwest"), Delaware corporation
(Suprema West, Suprema Northeast and Suprema Northwest are collectively referred
to herein as the "Guarantor").
RECITALS:
A. The Borrower, the Banks, the Agent and the Guarantor (other than Suprema
Northwest) have entered into a Third Amended and Restated Revolving Loan,
Guaranty and Security Agreement, dated as of September 23, 1999, as amended by
an Amendment Number 1 and Assignment Agreement dated as of March 10, 2000 (as so
amended, the "Loan Agreement").
B. The Borrower, the Guarantor, the Banks and the Agent wish to amend the
Loan Agreement to permit an increase to the Commitment, to add Suprema Northwest
as a Guarantor and to otherwise amend the Loan Agreement as hereinafter set
forth.
NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration whose receipt and sufficiency are acknowledged, the
Borrower, the Guarantor, the Banks, the Agent, the Syndication Agent and the
Documentation Agent agree as follows:
1
Section 1. Definitions. Each capitalized term used but not defined in this
Amendment shall have the meaning ascribed to such term in the Loan Agreement.
Section 2. Amendments of Loan Agreement.
(a) The introductory paragraph of the Loan Agreement is amended to read in
its entirety as follows:
THIS THIRD AMENDED AND RESTATED REVOLVING LOAN, GUARANTY AND SECURITY
AGREEMENT dated as of September 23, 1999, as amended by Amendment No. 1 and
Assignment Agreement dated as of March 10, 2000 is by and among FLEET
NATIONAL BANK (successor by merger to Fleet Bank, National Association, as
successor to NatWest Bank N.A. and National Westminster Bank NJ, "Fleet"),
having an office at 208 Harristown Road, Glen Rock, New Jersey 07452,
SOVEREIGN BANK ("Sovereign"), having an office at 210 Smith Street, Perth
Amboy, New Jersey 08861, MELLON BANK, N.A. ("Mellon"), having an office at
379 Thornall Street, Edison, New Jersey 08837, EUROPEAN AMERICAN BANK
("EAB"), having an office at 335 Madison Avenue, New York, New York 10017,
PNC BANK, NATIONAL ASSOCIATION ("PNC"), having an office at 1 Garret
Mountain Plaza, West Paterson, New Jersey 07424, NATIONAL CITY BANK
("National City") having an office at One South Broad Street, 13th Floor,
Philadelphia, Pennsylvania 19107 (Fleet, Sovereign, Mellon, EAB, PNC and
National City, together with any other financial institution that becomes a
party hereto, are referred to herein individually as a "Bank" and
collectively as the "Banks"), FLEET NATIONAL BANK, as administrative and
collateral agent for the Banks hereunder (in such capacity, the "Agent"),
having an office at 208 Harristown Road, Glen Rock, New Jersey 07452,
SOVEREIGN BANK, as syndication agent for the Banks (in such capacity the
"Syndication Agent") having an office at 210 Smith Street, Perth Amboy, New
Jersey 08861, MELLON BANK, N.A., as documentation agent for the Banks (in
such capacity the "Documentation Agent") having an office at 379 Thornall
Street, Edison, New Jersey 08837, SUPREMA SPECIALTIES, INC. (the
"Borrower"), a New York corporation with its principal place of business at
510 East 35th Street, Paterson, New Jersey 07543, SUPREMA SPECIALTIES WEST,
INC. ("Suprema West"), a California corporation with its principal place of
business at 14253 South Airport Way, Manteca, California 95336, SUPREMA
SPECIALTIES NORTHEAST, INC. ("Suprema Northeast"), a New York corporation
with its principal place of business at 30 Main Street, Ogdensburg, New
York 13669 and SUPREMA SPECIALTIES NORTHWEST INC. ("Suprema Northwest"), a
Delaware corporation with its principal place of business at 295 South Ash
Street, Black Foot, Idaho (Suprema West, Suprema Northeast and Suprema
Northwest are collectively referred to herein as the "Guarantor").
Capitalized terms used herein without definition shall have the meanings
assigned to such terms in Section 1 hereof.
(b) A new definition for "Amendment No. 2" shall be added to Section 1 of
the Loan Agreement in its correct alphabetical order to read in its entirety as
follows:
"Amendment No. 2" means that certain Amendment No. 2 to this Agreement
dated as of December 28, 2000 among the parties thereto.
(c) The definition of "Capital Expenditures" contained in Section 1 of the
Loan Agreement is amended to read in its entirety as follows:
"Capital Expenditures" means, as to any Person, Capital Expenditures
(Non-Operating Leases).
2
(d) The definition of "Capital Expenditures (Non-Operating Leases)"
contained in Section 1 of the Loan Agreement is amended to read in its entirety
as follows:
"Capital Expenditures (Non-Operating Leases)" means, as to any Person,
for any period, the sum of (a) expenditures for any fixed assets or
improvements and replacements, substitutions or additions thereto which
would be treated as capital expenditures in accordance with GAAP and (b)
the portion of all payments with respect to each Capitalized Lease which
are required to be capitalized on the balance sheet of the applicable
lessee in accordance with GAAP.
(e) The definition of "Commitment" contained in Section 1 of the Loan
Agreement is amended to read in its entirety as follows:
"Commitment" means for the period from and including the Closing to,
but excluding, the Commitment Expiration Date, the commitment of the Banks
to make Loans to the Borrower pursuant to this Agreement in an aggregate
principal amount not to exceed at any time outstanding (i) $85,000,000 with
respect to the period from the Closing to, but excluding, the Effective
Date of Amendment No. 2 and (ii) $111,000,000 with respect to the period
from the Effective Date of Amendment No. 2 to, but excluding, the
Commitment Expiration Date, as such amounts may be increased pursuant to
Section 2.1 and reduced pursuant to Section 5.
(f) The definition of "Guarantor" contained in Section 1 of the Loan
Agreement is amended to read in its entirety as follows:
"Guarantor" means collectively Suprema Specialties West, Inc., Suprema
Specialties Northeast, Inc. and Suprema Specialties Northwest Inc., jointly
and severally.
(g) A new definition for "Increase Supplement" shall be added to Section 1
of the Loan Agreement in its correct alphabetical order to read in its entirety
as follows:
"Increase Supplement" means an increase supplement substantially in
the form of Exhibit A to Amendment No. 2.
(h) The definition of "Notes" contained in Section 1 of the Loan Agreement
is amended to read in its entirety as follows:
"Notes" means those certain Secured Revolving Notes dated December 28,
2000 made by the Borrower in favor of each institution that was a Bank as
of the date thereof, which Notes were given in substitution for certain
notes dated March 10, 2000, but in each case not in cancellation, discharge
or extinguishment of the indebtedness formerly evidenced by such notes, as
amended from time to time, together with all promissory notes delivered in
replacement or substitution thereof and any all notes made by the Borrower
in favor of an institution that becomes a Bank after the Effective Date of
Amendment No. 2.
(i) A new definition for "Permitted Snake River Transaction" shall be added
to Section 1 of the Loan Agreement in its correct alphabetical order to read in
its entirety as follows:
"Permitted Snake River Transaction" means the purchase by the Borrower
or Suprema Northwest (the actual purchaser of such facility is referred to
herein as the "Snake River Purchaser") from Snake River Cheese, LLC of the
furniture, fixtures, equipment and real property
3
comprising a certain privately-owned, approximately 37,280 square foot
turn-key cheese production facility located in Blackfoot, Idaho, for an
aggregate consideration of not in excess of [$6,000,000], from which some
or all of the property so purchased shall be sold by the Snake River
Purchaser to a leasing company (or other financing entity) and then leased
back to the Snake River Purchaser by such leasing company (or other
financing entity) pursuant to a sale-leaseback arrangement; provided, that,
with respect to such described transaction (the "Transaction"); each of the
following conditions shall have been satisfied (i) neither the Borrower nor
Suprema Northwest (if Suprema Northwest is such Snake River Purchaser) has
incurred any additional Indebtedness to finance such acquisition (other
than the sale-leaseback arrangement described above), whether in the form
of seller notes, third party Indebtedness or otherwise; (ii) at the time of
the Transaction no Default or Event of Default exists and no Default or
Event of Default would occur after giving effect to such Transaction; (iii)
the Borrower shall have delivered to the Agent, within five days of the
execution thereof, but in no event less than 10 days prior to the
consummation of such Transaction, copies of the purchase agreement and any
other material documents executed in connection with the Transaction and
each such document shall be in form and substance reasonably satisfactory
to the Agent; (iv) the assets being acquired are being acquired free and
clear of any and all Liens (other than Liens reasonably satisfactory to the
Agent); (v) the Agent shall have received such other information or
documents as it shall have reasonably requested in connection with such
Transaction; (vi) the Transaction shall have been consummated in accordance
with the definitive Transaction documents, without any waiver or amendment
of any material term or condition therein not consented to by the Agent
(acting with the consent of the Required Banks, if needed) and in
compliance with all applicable laws and all necessary approvals, except
where the failure to so comply could not reasonably be expected to have a
Material Adverse Effect; (vii) all applicable environmental issues shall
have been addressed in a manner reasonably satisfactory to the Agent and
(viii) all governmental and third-party consents and approvals necessary in
connection with each aspect of the Transaction shall have been obtained
(without the imposition of any unreasonable conditions) and shall remain in
effect, except where the failure to obtain same could not reasonably be
expected to have a Material Adverse Effect; all applicable waiting periods
shall have expired or been terminated or waived without any material
adverse action being taken by any authority having jurisdiction; and no law
or regulation shall be applicable that restrains, prevents or imposes
material adverse conditions upon any aspect of the Transaction as
reasonably determined by the Borrower.
(j) Section 2.1 of the Loan Agreement is amended to read in its entirety as
follows:
2.1 Commitment; Maximum Credit; Increases to Commitments.
(a) Subject to the terms and conditions of this Agreement, each Bank
severally (but not jointly) agrees to make loans to the Borrower
(hereinafter collectively referred to as "Loans" and individually as a
"Loan"), from time to time before the Termination Date, in such amounts as
Borrower may from time to time request, not to exceed at any time
outstanding the amount set opposite the Bank's name below; provided, that,
pursuant to the terms of Section 2.1(b) the table set forth below is
subject to revision upon written notice from the Agent consented to in
writing by the Borrower (and upon the Agent's distribution of any such
notice that includes a revised table, absent manifest error the table below
shall be deemed amended and automatically revised as set forth in such
notice); provided, however, that in no event shall the aggregate
outstanding principal amount of Loans at any time outstanding exceed the
lesser of (A) the Commitment, or (B) the Borrowing Base, each as in effect
at the time of such Loan (the "Maximum Credit"):
4
Name of Bank Amount
Fleet National Bank $ 30,000,000.00
Sovereign Bank $ 25,000,000.00
Mellon Bank, N.A. $ 22,500,000.00
National City Bank $ 15,000,000.00
PNC Bank, National Association $ 10,000,000.00
European American Bank $ 8,500,000.00
TOTAL $111,000,000.00
Each Loan shall be made by each Bank in the proportion which that
Bank's Commitment bears to the total amount of all the Banks' Commitments;
provided, however, that the failure of any Bank to make any requested Loan
to be made by it on the date specified for such Loan shall not relieve each
other Bank of its obligation (if any) to make such Loan on such date, but
no Bank shall be responsible for the failure of any other Bank to make any
Loan to be made by such other Bank. Subject to the terms hereof, the
Borrower may borrow, prepay and reborrow, and may continue and convert any
Loan in accordance with Section 2.5, until the Termination Date. The Banks
have no obligation to make any Loan on or after the Termination Date.
(b) Provided that no Default or Event of Default exists or would exist
immediately before and after giving effect thereto, the Borrower may at any
time and from time to time, at its sole cost and expense, request any one
or more of the Banks to increase its Commitment (such decision to increase
the Commitment of a Bank to be within the sole and absolute discretion of
such Bank), or request any other institution reasonably satisfactory to the
Agent to provide a new Commitment, by submitting an Increase Supplement,
duly executed by the Borrower and each such increasing Bank or other
institution agreeing to increase its Commitment or provide a new
Commitment, as the case may be. If such Increase Supplement is in all
respects reasonably satisfactory to the Agent, the Agent shall execute such
Increase Supplement and deliver a copy thereof to the Borrower and each
such increasing Bank or other institution, as the case may be. Upon
execution and delivery of such Increase Supplement, (i) in the case of each
such increasing Bank, such increasing Bank's Commitment shall be increased
to the amount set forth in such Increase Supplement, (ii) in the case of
each such other institution, such other institution shall become a party
hereto and shall for all purposes of the Loan Documents be deemed a "Bank"
with a Commitment in the amount set forth in such Increase Supplement,
(iii) in each case, the Commitment of such increasing Bank or such other
institution, as the case may be, shall be as set forth in the applicable
Increase Supplement, and (iv) the Borrower shall contemporaneously
therewith execute and deliver to the Agent (x) for each Bank providing an
increased Commitment, a new Note in the amount of such increased Commitment
in exchange for the return and cancellation of each such Bank's existing
Note and (y) for each such other institution providing a new Commitment, a
Note in the amount of its Commitment; provided, however, that:
(i) immediately after giving effect thereto, the aggregate
Commitment of all the Banks shall not be in excess of $125,000,000.00;
(ii) unless otherwise agreed to by the Agent, each such increase
shall be in an amount not less than $5,000,000 or an integral multiple
of $1,000,000 in excess thereof;
5
(iii) from the date hereof through the Commitment Expiration
Date, the Commitment shall not be increased on more than two
occasions;
(iv) if Loans shall be outstanding immediately after giving
effect to such increase, each Bank shall be deemed to have
automatically assigned or assumed from each other Bank such rights,
and shall have been deemed to have automatically assigned to or
assumed from or delegated to such other Bank such obligations, in each
case without recourse, representation or warranty, as shall cause the
outstanding principal balance of its Loans to be an amount equal to
its Percentage of the aggregate amount of all outstanding Loans (as
used herein, a Bank's "Percentage" shall be determined by dividing the
Commitment of such Bank as set forth in Section 2.1(a) of the Loan
Agreement, by the total Commitment of all the Banks as set forth in
such Section 2.1(a); provided, that, in each case (x) the table
utilized with respect to such Section 2.1(a) shall be the revised
table distributed by the Agent pursuant to this Section 2.1(b) , (y)
the Commitment shall be the increased Commitment of all the Banks as
provided by the Agent pursuant to this Section 2.1(b) and (z) the term
"Banks" shall include all then existing Banks and any and all such
"other institutions" that shall become Banks (as more fully described
above)). Each such Bank shall make such payments to, and as directed
by, the Agent and the Agent shall make such payments to the Banks in
order to cause the outstanding principal balance of the Loans by each
Bank to be an amount equal to its Percentage of the aggregate amount
of all outstanding Loans after giving effect to the Commitment
increase. The Borrower hereby agrees that (x) any amount that a Bank
so pays to another Bank pursuant to this Section 2.1(b) shall be
entitled to all rights of a Bank under this Agreement and such
payments to Banks shall constitute Loans held by each such payor Bank
under this Agreement, (y) that each such payor Bank may, to the
fullest extent permitted by law, exercise all of its right of payment
(including the right of set-off) with respect to such amounts as fully
as if such payor Bank had initially advanced the Borrower the amount
of such payments and (z) each Bank receiving payment of its Loans
pursuant to this Section may treat the assignment of Eurodollar Loans
as a prepayment of such Eurodollar Loans for purposes of Section 5.4
hereof.
(v) each such other institution shall have delivered to the Agent
and the Borrower all forms, if any, that are required to be delivered
by such other institution pursuant to this Agreement;
(vi) within two Business Days after the Agent executes and
delivers each Increase Supplement in accordance with the terms hereof,
the Agent shall revise the table set forth in Section 2.1(a) to
reflect the adjustments to the Commitments contemplated by clause (iv)
above and shall promptly send a copy thereof to the Banks and upon the
Agent's distribution of same, the Commitment of each Bank shall be
automatically adjusted to be the Commitment set forth therein; and
(vii) the Borrower shall have paid to Fleet Securities, Inc., as
arranger of the increase of the facility, an arrangement fee
satisfactory to Fleet Securities, Inc. and the Borrower.
In connection with any increase to the Commitment pursuant to this
Section, the Borrower, the Guarantor, the Agent and each of the Banks
hereby consents to the addition of each "other institution" as a new
Bank as a Bank under this Agreement with a Commitment as set forth in
Section 2.1(a) of this Agreement, as amended and updated by the Agent.
6
(k) Section 10.17 of the Loan Agreement is amended by adding the
following phrase immediately to the end thereof immediately before the
period:
and (iii) the sale of property pursuant to the Permitted Snake
River Transaction
(l) Section 10.19(vi) of the Loan Agreement is amended to read in its
entirety as follows:
(vi) the Permitted Snake River Transaction and transactions
permitted by Sections 10.16 and 10.21 hereof.
(m) Section 10.20(v) of the Loan Agreement is amended by replacing the
phrase "; provided, however, that in no event" with the phrase "; provided,
however, that, excluding obligations in connection with Equipment Operating
Leases, in no event".
(n) The initial paragraph of Section 10.27 of the Loan Agreement
(appearing prior to the table set forth in such Section 10.27) is amended
to read in its entirety as follows:
10.27 Limitation on Capital Expenditures.Expend in the
aggregate, for the Borrower and all Subsidiaries, in excess of
the amount set forth opposite the Fiscal Year ending the date set
forth below for Capital Expenditures including payments made on
account of Capitalized Leases (but excluding, for the avoidance
of doubt, payments made or to be made on account of Equipment
Operating Lease Obligations), to be tested on a quarterly basis.
For purposes of the foregoing, Capital Expenditures shall include
equipment acquired under direct purchases, bank financing and
payments made on account of any deferred purchase price or on
account of any indebtedness incurred to finance any such purchase
price:
(o) A new Section 10.31 shall be added to the Loan Agreement
immediately after Section 10.30 and shall read in its entirety as follows:
10.31 Margin Stock. Not use any portion of the proceeds of any
Loan, in whole or in part, for the purpose of purchasing or carrying
any "margin stock" as such term is defined in Regulation U of the Board
of Governors of the Federal Reserve System.
(p) Section 15.1(i) of the Loan Agreement is amended to read in its
entirety as follows:
(i) change the Commitments of the Banks, except as permitted by
Section 2.1 (which changes in Commitments shall only require the
consent of a Bank that is increasing its Commitment and shall
automatically apply to all other Banks; provided, that, changes to the
dollar amounts in the second clause (i) in Section 2.1(b) shall
require the approval of all Banks);
(q) Section 15.2 of the Loan Agreement is amended to read in its
entirety as follows:
15.2 WAIVER OF TRIAL BY JURY. THE BORROWER, GUARANTOR, AGENT AND
THE BANKS (BY ACCEPTANCE OF THE NOTES) MUTUALLY HEREBY
7
KNOWINGLY, VOLUNTARILY AND INTENIONALLY WAIVE THE RIGHT TO A TRIAL BY
JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS
CONTEMPLATED TO BE EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR
ACTIONS OF ANY PARTY, INCLUDING, WITHOUT LIMITATION, ANY COURSE OF
CONDUCT, COURSE OF DEALINGS, STATEMENTS OR ACTIONS OF THE AGENT AND/OR
THE BANKS RELATING TO THE ADMINISTRATION OF THE LOANS AND/OR ANY OTHER
CREDIT FACILITIES HEREUNDER OR THE ENFORCEMENT OF THE LOAN DOCUMENTS
AND AGREE THAT NEITHER PARTY WILL SEEK TO CONSOLIDATE ANY SUCH ACTION
WITH ANY OTHER ACTION IN WHICH JURY TRIAL CANNOT BE OR HAS NOT BEEN
WAIVED. EXCEPT AS PROHIBITED BY LAW, THE BORROWER AND GUARANTOR EACH
HEREBY WAIVE ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES
OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES. THE
BORROWER AND GUARANTOR EACH CERTIFY THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF THE AGENT AND/OR THE BANKS HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT THE AGENT AND/OR THE BANKS WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER. THIS WAIVER
CONSITUTES A MATERIAL INDUCEMENT FOR THE AGENT AND THE BANKS TO ACCEPT
THIS AGREEMENT, THE NOTES, THE OTHER LOAN DOCUMENTS AND TO EXTEND
CREDIT TO THE BORROWER.
(r) Section 15.3 of the Loan Agreement is amended to read in its
entirety as follows:
15.3 Notices. Except as otherwise expressly provided herein, all
notices hereunder shall be in writing and shall be delivered by
telecopier, hand, overnight delivery or by mail. Notices given by mail
shall be deemed to have been given three (3) days after the date sent
if sent by registered or certified mail, postage prepaid, and:
(i) if to the Borrower and/or the Guarantor, to:
Suprema Specialties, Inc.
510 East 35th Street
Paterson, New Jersey 07543
Attn: President
(ii) if to the Agent or Fleet, to:
Fleet National Bank
208 Harristown Road
Glen Rock, New Jersey 07452
Attn: Edward J. Waterfield,
Senior Vice President
(iii) if to Sovereign, to:
Sovereign Bank
210 Smith Street
Perth Amboy 08861
Attn: Owen McKenna, Vice President
8
(iv) if to Mellon, to:
Mellon Bank, N.A.
379 Thornall Street
Edison, New Jersey 08837
Attn: Russ J. Lopinto, Vice President
(v) if to EAB, to:
European American Bank
335 Madison Avenue
New York, New York 10017
Attn: George Stirling, Vice President
(vi) if to PNC, to:
PNC Bank, National Association
1 Garret Mountain Plaza
West Paterson, New Jersey 07424
Attn: Judy Land, Vice President
(vii) if to National City, to:
National City Bank
One South Broad Street
13th Floor
Philadelphia, Pennsylvania 19107
Attn: Lyle Cunningham, Vice President
or in the case of any party, such other address as such party may, by
written notice, received by the Agent, have designated as its address
for notices and in the case of any institution that became a Bank
after the Effective Date of Amendment No. 2, such address as shall be
designated on its assignment agreement or otherwise in writing to the
Agent. Notices given by (i) telecopier shall be deemed to have been
given when sent, (ii) hand shall be deemed to have been given the same
day they have been sent and (iii) overnight delivery shall be deemed
to have been given the day after they have sent, in each case if
properly addressed to the party to whom sent, at its address, as
aforesaid. The Agent shall be entitled to reasonably rely upon any
telephonic notices purportedly given pursuant to the terms of this
Agreement and the Borrower and the Guarantor shall hold the Agent
harmless from any loss, cost or expense ensuing from any such
reliance.
(s) Section 15.7 of the Loan Agreement is amended by adding the phrase
"(excluding the laws applicable to conflicts or choice of law)" immediately
after the phrase "construed by the laws of the State of New Jersey".
(t) Section 15.17 of the Loan Agreement is amended to read in its
entirety as follows:
15.17 References in Other Loan Documents. The Borrower and
Guarantor acknowledge and agree that any reference in any Loan
Document to "the Agreement", or words of like import shall mean this
Agreement, as amended from time to time, and any reference in any
9
Loan Document to the Notes, the Loans, or words of like import shall
mean the Notes and the Loans as defined herein.
(u) New Sections 15.19, 15.20 and 15.21 shall be added to the Loan
Agreement immediately after Section 15.18 and shall read in their entirety
as follows:
15.19 Payments. All payments under this Agreement and the Notes
shall be applied first to the payment of all fees, expenses and other
amounts due to the Banks (excluding principal and interest), then to
accrued interest, and the balance on account of outstanding principal;
provided, however, that after the occurrence of an Event of Default,
payments will be applied to the obligations of the Borrower to the
Banks as the Required Banks determine in their sole discretion.
15.20 Integration. This Agreement and the other Loan Documents
are intended by the parties as the final, complete and exclusive
statement of the transactions evidenced thereby. All prior or
contemporaneous promises, agreements and understandings, whether oral
or written, are deemed to be superceded by this Agreement and such
other Loan Documents, and no party is relying on any promise,
agreement or understanding not set forth in this Agreement or such
other Loan Documents.
15.21 Name of Fleet. Any reference in this Agreement or any other
Loan Document to Fleet Bank, National Association or Fleet Bank, N.A.
shall be deemed to mean Fleet National Bank, successor by merger to
Fleet Bank, National Association.
Section 3. Reallocation of Commitments; Notes.
(a) The total amount of each Bank's Commitment pursuant to the Loan
Agreement shall be the amount set forth in Section 2.1 of the Loan
Agreement, as amended by this Amendment.
(b) All Loans of each Bank to the Borrower shall be evidenced by a
Note of the Borrower substantially in the form of Exhibit A to the Loan
Agreement (the "Note"), which Note shall amend and restate the existing
Note payable to such Bank.
(c) Upon the Effective Date, the Commitment of each Bank shall be
automatically adjusted as set forth in this Amendment.
Section 4. Conforming Amendments. The Loan Agreement, the Loan Documents
and all agreements, instruments and documents executed and delivered in
connection with any of the foregoing, shall each be deemed to be amended and
supplemented hereby to the extent necessary, if any, to give effect to the
provisions of this Amendment, and each Bank is authorized to annex a copy of
this Amendment to its respective copy of the Loan Agreement. Except as so
amended hereby, the Loan Agreement and the other Loan Documents shall remain in
full force and effect in accordance with their respective terms.
10
Section 5. Acknowledgments, Confirmations and Consent.
(a) The Borrower and the Guarantor each acknowledge and confirm that
the Liens granted pursuant to the Loan Agreement secure the indebtedness,
liabilities and obligations of the Borrower to the Banks and the Agent
under the Notes as amended and restated pursuant to this Amendment, under
the Loan Agreement as further amended by this Amendment and under the other
Loan Documents, whether or not so stated in such Loan Agreement and/or
other Loan Document, and that the term "Obligations" as used in the Loan
Agreement (or any other terms used in the Loan Agreement to describe or
refer to the indebtedness, liabilities and obligations of the Borrower to
the Banks and the Agent) includes all other indebtedness, liabilities and
obligations of the Borrower under the Loan Agreement as amended by this
Amendment and under the amended and restated Notes executed in connection
with this Amendment.
(b) The Guarantor consents in all respects to the execution by the
Borrower of this Amendment and acknowledges and confirms that the Guarantor
continues to guarantee the full payment and performance of the
indebtedness, liabilities and obligations of the Borrower under the Loan
Agreement as further amended by this Amendment and under the amended and
restated Notes executed in connection with this Amendment as provided in
the Loan Agreement, and remain in full force and effect in accordance with
their respective terms.
Section 6. Representations and Warranties. The Borrower and the Guarantor,
as the case may be, each represents and warrants to the Banks, the Agent, the
Syndication Agent and the Documentation Agent as follows:
(a) After giving effect to this Amendment (i) each of the
representations and warranties set forth in Section 9 of the Loan Agreement
is true and correct in all respects as if made on the date of this
Amendment, except for changes in the ordinary course of business which,
either singly or in the aggregate, are not materially adverse to the
business or financial condition of the Borrower or the Guarantor, and (ii)
no Default or Event of Default exists under the Loan Agreement.
(b) Each of the Borrower and the Guarantor has the power to execute,
deliver and perform, and has taken all necessary corporate action to
authorize the execution, delivery and performance of, this Amendment and
the other agreements, instruments and documents to be executed by it in
connection with this Amendment. No consent or approval of any Person
(except for such consents as have been obtained) and no consent, license,
certificate of need, approval, authorization or declaration of, or filing
with, any governmental authority, bureau or agency is or will be required
in connection with the execution, delivery or performance by the Borrower
or the Guarantor, or the validity or enforceability of this Amendment and
the other agreements, instruments and documents executed in connection with
this Amendment.
(c) The execution, delivery and performance by the Borrower and the
Guarantor of this Amendment and each of the agreements, instruments and
documents executed in connection with this Amendment to which it is a party
will not (i) violate any
11
provision of law, (ii) conflict with or result in a breach of any order,
writ, injunction, ordinance, resolution, decree or other similar document
or instrument of any court or governmental authority, bureau or agency,
domestic or foreign, or the certificate of incorporation or by-laws of the
Borrower or any Guarantor, (iii) create (with or without the giving of
notice or lapse of time, or both) a default under or breach of any
agreement, bond, note or indenture to which the Borrower or any Guarantor
is a party or by which any of them is bound or any of their respective
properties or assets is affected, or (iv) result in the imposition of any
Lien of any nature whatsoever upon any of the properties or assets owned by
or used in connection with the business of the Borrower or any Guarantor,
except for the Liens created and granted pursuant to the Loan Documents.
(d) This Amendment and each of the other agreements, instruments and
documents executed in connection with this Amendment to which the Borrower
or the Guarantor is a party has been duly executed and delivered by the
Borrower or the Guarantor, as the case may be, and constitutes the valid
and legally binding obligation of the Borrower or the Guarantor, as the
case may be, enforceable in accordance with its terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or other similar laws, now or hereafter in
effect, relating to or affecting the enforcement of creditors' rights
generally and except that the remedy of specific performance and other
equitable remedies are subject to judicial discretion; provided, however,
that such laws shall not materially interfere with the practical
realization of the benefits of the Security Documents or the Liens created
thereby, except for: (i) possible delay, (ii) situations which may arise
under Chapter II of the U.S. Bankruptcy Code, II U.S.C. ss.ss. 10 1 et
seq., and (iii) equitable orders of any United States Bankruptcy Court.
(e) Since January 1, 2000, the Borrower has not repurchased any of its
issued and outstanding capital stock.
(f) To the extent the Borrower remains in compliance with the
Borrowing Base, all obligations under the Loan Agreement, as further
amended pursuant to the terms of this Amendment, constitute "Senior Debt"
as defined in that certain Note Agreement dated as of March 9, 1998 with
respect to $10,500,000 16.5% Senior Subordinated Notes Due March 1, 2006.
Section 7. Fees and Expenses. The Borrower shall pay the following fees and
expenses in connection with this Amendment:
(a) The Borrower shall pay to each increasing Bank a fee in the amount
of .25% of the amount of the increase, if any, in Bank's Commitment set
forth in this Amendment from such Bank's Commitment set forth in Amendment
No. 1, such fee to be payable upon execution of this Amendment.
(b) The Borrower agrees to pay the Agent upon demand all reasonable
expenses, including reasonable fees of attorneys and paralegals for the
Agent, incurred by
12
the Agent in connection with the preparation, negotiation and execution of
this Amendment and any agreements, instruments and documents executed or
furnished in connection with this Amendment.
Section 8. Miscellaneous.
(a) Except as specifically amended by this Amendment, the Loan
Agreement and each of the other agreements, instruments and documents
executed in connection with the Loan Agreement shall remain in full force
and effect in accordance with their respective terms.
(b) THIS AMENDMENT AND ALL OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS
EXECUTED AND DELIVERED IN CONNECTION WITH THIS AMENDMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW JERSEY
APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE PERFORMED ENTIRELY WITHIN THE
STATE OF NEW JERSEY BY RESIDENTS OF SUCH STATE (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW).
(c) The provisions of this Amendment are severable, and if any clause
or provision shall be held invalid or unenforceable in whole or in part in
any jurisdiction, then such invalidity or unenforceability shall affect
only such clause, provision or part in such jurisdiction and shall not in
any manner affect such clause, provision or part in any other jurisdiction
or any other clause or provision in this Amendment in any jurisdiction.
(d) This Amendment may be signed in any number of counterparts with
the same effect as if all parties to this Amendment signed the same
counterpart.
(e) This Amendment shall be binding upon and inure to the benefit of
each of the Borrower and the Guarantor and their respective successors and
to the benefit of the Agent, the Banks, the Syndication Agent and/or the
Documentation Agent and their respective successors and assigns. The rights
and obligations of each of the Borrower and the Guarantor under this
Amendment shall not be assigned or delegated without the prior written
consent of the Agent and the Banks, and any purported assignment or
delegation without such consent shall be void.
Section 9. Effectiveness of Amendment. This Amendment shall become
effective (the "Effective Date") upon the later of (i) delivery from Borrower to
each Bank of a Note in a face amount equal to such Bank's Commitment (as amended
by this Amendment) which note shall amend and restate and be in replacement of
and substitution for its existing promissory note (such amended and restated
promissory note, when executed and delivered, shall be deemed one of the Notes
for all purposes of the Agreement) and documents relating thereto, (ii) receipt
by the Agent of counterparts of this Amendment duly signed by each party hereto,
(iii) receipt by the Agent of a fully executed
13
copy of an Amendment to the Pledge Agreement in the form of Exhibit B to
Amendment No. 2, (iv) receipt by the Agent of one or more certificates
representing all the issued and outstanding shares of Suprema Northwest and an
irrevocable power of attorney with respect to such shares in the form of Exhibit
A to the Pledge Agreement, (v) the payment of the fees and expenses set forth in
Section 7 of this Amendment, (vi) receipt by the Agent of corporate resolutions
and certificates of good standing with respect to Borrower and Guarantor, (vii)
receipt by the Agent of such other documents that it shall reasonably request,
including without limitation duly executed Uniform Commercial Code financing
statements with respect to all Collateral owned by Suprema Northwest, (vii)
receipt by the Agent of evidence to the consummation of the Permitted Snake
River Transaction and (ix) receipt by the Agent of an opinion of counsel to the
Borrower and Guarantor substantially similar to the opinion of counsel provided
in connection with Amendment No. 1.
[Signature Pages Follow]
14
IN WITNESS WHEREOF, the Borrower, the Banks, the Agent, the Syndication
Agent, the Documentation Agent and the Guarantor have signed and delivered this
Amendment No. 2 as of the date first written above.
SUPREMA SPECIALTIES, INC.,
as Borrower
By /s/ Mark Cocchiola
---------------------------------
Name: Mark Cocchiola
Title: President
Each of the guarantors indicated below hereby consents to this Amendment
and reaffirms its continuing obligations under its guarantee as set forth in the
Loan Agreement as amended hereby and all the documents, instruments and
agreements executed pursuant thereto or in connection therewith, without offset,
defense or counterclaim (any such offset, defense or counterclaim as may exist
being hereby irrevocably waived by each such guarantor).
SUPREMA SPECIALTIES WEST, INC.,
as a Guarantor
By /s/ Mark Cocchiola
---------------------------------
Name: Mark Cocchiola
Title: President
SUPREMA SPECIALTIES NORTHEAST, INC.,
as a Guarantor
By /s/ Mark Cocchiola
---------------------------------
Name: Mark Cocchiola
Title: President
SUPREMA SPECIALTIES NORTHWEST INC.,
as a Guarantor
By /s/ Mark Cocchiola
---------------------------------
Name: Mark Cocchiola
Title: President
15
FLEET NATIONAL BANK,
successor by merger to Fleet Bank,
National Association, as Agent and
as a Bank
By /s/ Edward D. Harrington
---------------------------------
Name: Edward D. Harrington
Title: Vice President
16
SOVEREIGN BANK,
as Syndication Agent and as a Bank
By /s/ Owen P. McKenna
---------------------------------
Name: Owen P. McKenna
Title: Vice President
17
MELLON BANK, N.A.,
as Documentation Agent and
as a Bank
By /s/ Russ J. Lopinto
---------------------------------
Name: Russ J. Lopinto
Title: Vice President
18
EUROPEAN AMERICAN BANK,
as a Bank
By /s/ George L. Stirling
---------------------------------
Name: George L. Stirling
Title: Vice President
19
PNC BANK, NATIONAL ASSOCIATION,
as a Bank
By /s/ Richard Bishop
---------------------------------
Name: Richard Bishop
Title: Vice President
20
NATIONAL CITY BANK,
as a Bank
By /s/ Thomas J. McDonnell
---------------------------------
Name: Thomas J. McDonnell
Title: Senior Vice President
21
EXHIBIT A
FORM OF INCREASE SUPPLEMENT
22
EXHIBIT B
FORM OF AMENDMENT TO PLEDGE AGREEMENT
23
ASSETS PURCHASE AGREEMENT
AGREEMENT, dated as of the 27th day of November 2000, by and among Snake
River Cheese, L.L.C., an Idaho limited liability company ("Seller"), and Suprema
Specialties Northwest Inc., a Delaware corporation ("Buyer").
W I T N E S S E T H:
WHEREAS, Seller owns a cheese plant in the City of Blackfoot, Idaho (the
"Plant");
WHEREAS, Beatrice Foods currently leases the Plant from Seller and operates
the Plant (the "Business"), which lease shall expire on November 30, 2000; and
WHEREAS, Buyer desires to purchase from Seller substantially all of the
properties and assets comprising the Plant, including the Real Property (as
defined below), and Seller desires to sell such properties and assets to Buyer,
upon the terms and conditions herein contained;
NOW, THEREFORE, in consideration of, and in reliance upon, the
representations, warranties, covenants and conditions herein contained, the
parties hereto hereby agree as follows:
1. Certain Definitions and Rules of Construction.
1.1 Certain Definitions. As used in this Agreement, the following
terms have the respective meanings set forth below:
"Affiliate" of any specified Person shall mean any other Person
directly or indirectly controlling or controlled by or under direct or
indirect common control with such specified Person. For the purposes of
this definition, "control" when used with respect to any specified Person
means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities,
by contract or otherwise.
"Allocation Statement" shall have the meaning set forth in
subparagraph 2.5.2 hereof.
"Ancillary Agreements" shall mean the Buyer Ancillary Agreements and
the Seller Ancillary Agreements.
"Applicable Law" means, with respect to any Person, any common law or
duty, case law or ruling, or any domestic or foreign, federal, state or
local statute, law, ordinance, rule, administrative interpretation,
regulation, order, writ, injunction, directive, judgment, decree or other
requirement of any Governmental Authority which is applicable to such
Person or its properties, assets or activities.
"Assumed Contracts" shall have the meaning set forth in subparagraph
4.10 hereof.
"Assumed Liabilities" means only those liabilities of Seller listed on
Schedule 2.3 and obligations relating to the Assumed Contracts included in
the Purchased Assets.
"Books and Records" shall mean originals or copies of all books,
records, files and papers of Seller which are used or held for use in
connection with the Business (or any portions thereof), whether in hard
copy or computer format, including bank account records, books of account,
invoices, sales and promotional materials, manuals, sales and purchase
correspondence, employment records, and documentation declared or used for
accounting, marketing, manufacturing.
"Business" shall have the meaning set forth in the preamble.
"Business Day" shall mean any day other than a Saturday, Sunday,
federal holiday or day on which banks in the State of New York are required
or permitted by law to be closed.
"Buyer" shall have the meaning set forth in the preamble.
"Buyer Ancillary Agreements" shall have the meaning set forth in
subparagraph 3.3 hereof.
"Cash Purchase Price" shall have the meaning set forth in subparagraph
2.5.1 hereof.
"Claims" shall mean, except with respect to Taxes and any insurance
policies of Seller, rights, claims, credits, causes of action or rights of
set-off against third parties, whether liquidated or unliquidated, fixed or
contingent, including rights under, or pursuant to, warranties,
representations and guaranties made by suppliers, manufacturers,
contractors or other third parties in connection with products or services
purchased by or furnished to the Business, which are owned by Seller and
which are used or held for use by Seller in connection with the Business.
"Closing" shall have the meaning set forth in subparagraph 3.1 hereof.
"Closing Date" shall have the meaning set forth in subparagraph 3.1
hereof.
"Code" shall mean the United States Internal Revenue Code of 1986, as
amended from time to time.
"Contract" shall mean any written or oral contract, agreement,
instrument, order, commitment or binding arrangement, express or implied,
of any nature whatsoever.
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"Contract Right" shall mean any right, power or remedy under any
Contract, including, but not limited to, rights to receive property or
services or otherwise to derive benefits from the payment, satisfaction or
performance of another party's obligations.
"Deposit" shall have the meaning set forth in subparagraph 2.5.1
hereof.
"Disclosure Schedules" shall have the meaning set forth in
subparagraph 1.2.2 hereof.
"Dollars" shall mean United States Dollars.
"Employee Plans" shall have the meaning set forth in subparagraph 4.15
hereof.
"Employees" shall mean all employees of Seller who are employed on the
Closing Date solely in connection with the Business.
"Environmental Costs" shall mean any (i) clean-up, remediation,
removal, or other response costs which may be required to cause the
Business or the Purchased Assets to come into compliance with Environmental
Laws or to comply with the requirements of a Governmental Authority or an
administrative or judicial order, and (ii) any costs, expenses, fines,
penalties, liabilities, amounts paid in settlement, and judgments arising
out of, relating to, or resulting from, any Environmental Matter.
"Environmental Laws" shall mean all Applicable Laws governing
Environmental Matters.
"Environmental Matters" shall mean any matters arising out of,
relating to or resulting from pollution, contamination, protection of the
environment, human health or safety, sanitation, and any matters relating
to emissions, discharges, disseminations, releases or threatened releases,
of Hazardous Substances into the air, surface water, groundwater, soil,
land surface or subsurface, buildings or facilities or otherwise arising
out of, relating to or resulting from the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Hazardous Substances.
"Environmental Permit" shall mean any Permit that is required pursuant
to any Environmental Laws, including, without limitation, the
Wastewater-Land Application Permit and IWA Permit described on Schedule
2.2(iv) hereof.
"Environmental Reports" shall have the meaning set forth in
subparagraph 4.13(v) hereof.
"Excluded Liabilities" shall have the meaning set forth in
subparagraph 2.4 hereof.
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"Financial Statements" shall have the meaning set forth in
subparagraph 4.6 hereof.
"Governmental Authority" shall mean any foreign, domestic, federal,
state or local governmental authority, quasi-governmental authority,
instrumentality, court, government or self-regulatory organization,
commission, tribunal or organization, or any regulatory administrative or
other agency, or any political or other subdivision, department or branch
of any of the foregoing.
"Hazardous Substances" shall mean hazardous material/waste as defined
by any Environmental Laws and/or any pollutants, contaminants, toxic or
hazardous substances, materials, wastes, constituents or chemicals that are
regulated by any Environmental Laws including, but not limited to, the
Comprehensive Environmental Response, Compensation and Liability Act, 42
U.S.C. Section 9601 et.seq., the Resource Conservation Act, 42 U.S.C.
Section 6901 et.seq., the Clean Air Act, 42 U.S.C. Section 7401 et.seq.,
the Clean Water Act, 33 U.S.C. Section 1251 et.seq., the Hazard
Communication Act and the Occupational Safety and Health Act 29 U.S.C.
Section 651 et.seq., the Federal Insecticide, Fungicide and Rodenticide Act
17 U.S.C. Section 136 et.seq., as amended, and all state and local
counterparts.
"Income Taxes" shall mean all Federal, state, local and foreign income
or franchise taxes, including interest, penalties and additions to tax
relating thereto.
"Lien" shall mean, with respect to any asset, any imperfection of
title, lien, pledge, encumbrance, or other charge or security interest, or
hire, purchase or leasing arrangement, in or on such asset.
"Loss" or "Losses" shall mean each and all of the following items:
claims, losses, liabilities, obligations, payments, damages, judgments,
fines, penalties, amounts paid in settlement, and reasonable costs and
expenses (including, but not limited to, reasonable fees and disbursements
of counsel and other experts) incurred by the Person (the "Indemnitee")
seeking indemnification (whether relating to claims asserted by or against
third parties or to claims asserted against the party providing
indemnification (the "Indemnitor")).
"Material Adverse Effect" means a material adverse change in, or a
material adverse effect upon, the Business or the Purchased Assets.
"Notice" shall have the meaning set forth in subparagraph 10.5 hereof.
"Optioned Property" shall mean the land more particularly described on
Schedule 6.12 annexed hereto with all buildings, structures, improvements
or other real property of any kind or nature whatsoever situated thereon,
and all appurtenant and ancillary rights thereto, including, without
limitation, easements, covenants, water rights, sewer rights and utility
rights.
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"Permits" shall mean licenses, permits, approvals, certificates,
consents, orders or other authorizations issued or granted by any
Governmental Authority, which are owned by Seller and which are used or
held for use by Seller in connection with the Business, including, without
limitation, Environmental Permits.
"Person" shall mean an individual, partnership (general or limited),
corporation, joint venture, business trust, limited liability company,
cooperative, association or other form of business organization (whether or
not regarded as a business entity under Applicable Law), trust, estate or
any other entity.
"Proceedings" shall have the meaning set forth in subparagraph 4.10
hereof.
"Purchase Price" shall have the meaning set forth in subparagraph
2.5.1 hereof.
"Purchased Assets" shall have the meaning set forth in subparagraph
2.2 hereof.
"Records" shall have the meaning set forth in subparagraph 6.6 hereof.
"Real Property" means the land more particularly described on Schedule
2.2(ii) annexed hereto with all buildings, structures, improvements or
other real property of any kind or nature whatsoever situated thereon, and
all appurtenant and ancillary rights thereto, including, without
limitation, easements, covenants, water rights, sewer rights and utility
rights.
"Seller" shall have the meaning set forth in the preamble.
"Seller Ancillary Agreements" shall have the meaning set forth in
subparagraph 3.2 hereof.
"Tangible Property" means any machinery, buildings, fixtures,
equipment, parts, furniture, leasehold improvements, office equipment,
vehicles, tools, forms, supplies or other tangible property of any kind or
nature whatsoever.
"Tax Returns" shall have the meaning set forth in subparagraph 4.15
hereof.
"Taxes" means all income, franchise, excise, real and personal
property, sales, use, value-added, payroll, withholding, social security
and other taxes imposed by any Governmental Authority, together with all
interest, penalties and additions imposed with respect to such amounts.
"Third Party Claim" shall have the meaning set forth in subparagraph
10.5 hereof.
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Anything herein contained to the contrary notwithstanding, if any of the
terms defined above are also expressly defined in any of the Ancillary
Agreements, then, in such event, the definition set forth in said Ancillary
Agreement shall control for all purposes of said Ancillary Agreement.
1.2 Certain Rules of Construction.
1.2.1 Interpretation. As used in this Agreement, unless the
context otherwise requires, words describing the singular number shall
include the plural and vice versa; words denoting any gender shall
include all genders; words denoting natural persons shall include
corporations, partnerships and other entities, and vice versa; and the
words "hereof", "herein" and "hereunder", and words of similar import,
shall refer to this Agreement as a whole (including the Exhibits
hereto), and not to any particular provision of this Agreement.
1.2.2 Schedules. The schedules delivered pursuant to this
Agreement (collectively, the "Disclosure Schedules") are an integral
part hereof, and are considered to be part of the representations and
warranties to which they relate. Each such Disclosure Schedule shall
be in writing and shall indicate the subparagraph pursuant to which it
is being delivered; provided, however, that such disclosure shall also
apply to any other subparagraph to which it is applicable, but only if
such information appears on such Disclosure Schedule in such form and
detail responsive to the requirements of the other Disclosure Schedule
to which it may be applicable.
2. Purchase and Sale.
2.1 Agreement of Purchase and Sale. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date (as defined in
subparagraph 3.1 hereof), Seller shall sell, transfer, assign and deliver
the Purchased Assets to Buyer, and Buyer shall purchase, the Purchased
Assets, free and clear of all Liens except as otherwise expressly provided
for in this Agreement. Buyer shall have the right to direct Seller to
transfer title to some or all of the Purchased Assets directly to a
designee of Buyer.
2.2 "Purchased Assets". As used in this Agreement, the term "Purchased
Assets" means:
(i) All of Seller's Tangible Property used in or for the Business and
as described in Schedule 2.2(i);
(ii) All of Seller's Real Property as described in Schedule 2.2(ii);
(iii) All of Seller's Contract Rights under the Assumed Contracts;
(iv) All transferable rights under all Permits granted or issued to
Seller or otherwise held by Seller relating to or for the benefit of the
Business and the Plant as described in Schedule 2.2(iv) hereof; and
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(v) All of Seller's claims, causes of action and other legal rights
and remedies, whether or not known as of the Closing Date, relating to
either (1) Seller's ownership of the Purchased Assets or (2) the operation
of the Business, but excluding causes of action and other legal rights and
remedies of Seller (A) against the Buyer with respect to the transactions
contemplated by this Agreement or (B) relating exclusively to Seller's
assets not included in the Purchased Assets.
2.3 Assumption of Liabilities. Subject to the terms and conditions set
forth in this Agreement, on the Closing Date, Buyer shall only assume,
become primarily liable for, and agree to pay and perform in due course,
the Assumed Liabilities. Seller shall retain and be responsible for all
Excluded Liabilities.
2.4 Excluded Liabilities. Except as may be otherwise expressly
provided in this Agreement, Buyer shall not assume, and shall not be liable
or responsible for, any other liabilities or obligations of Seller other
than the Assumed Liabilities (collectively, "Excluded Liabilities").
2.5 Purchase Price.
2.5.1 Amount of Purchase Price. The cash portion of the purchase
price for the Purchased Assets shall be the amount of Six Million
Dollars ($6,000,000) (the "Cash Purchase Price"), of which (i) Three
Hundred Thousand Dollars ($300,000) shall be deposited into escrow in
accordance with the provisions of subparagraph 3.3(ii) hereof as an
earnest money deposit (the "Deposit") and (ii) Five Million Seven
Hundred Thousand ($5,700,000) shall be paid on the Closing Date. The
sum of (a) the amount of the Assumed Liabilities, plus (b) the Cash
Purchase Price, is hereinafter sometimes referred to as the "Purchase
Price."
2.5.2 Allocation of Purchase Price. Set forth on Schedule 2.5.2
is an allocation of the Purchase Price (the "Allocation Statement").
Buyer and Seller shall each report the Tax consequences of the
purchase and sale contemplated hereby (including the filing of United
States Internal Revenue Service Form 8594) in a manner which is
consistent with the allocation that is set forth on the Allocation
Statement.
3. Closing.
3.1 Place and Date. The closing of the purchase and sale of the
Purchased Assets pursuant hereto (the "Closing") shall take place (i) at
the offices of Blank Rome Tenzer Greenblatt LLP, 405 Lexington Avenue, New
York, NY 10174 at 10:00 A.M., local time, on the second Business Day
following the day on which the last to be fulfilled or waived of the
conditions set forth in paragraph 11 hereof shall have been fulfilled or
waived, or (ii) at such other time, date and/or place as may be agreed upon
by the parties hereto, but no earlier than January 1, 2001 and no later
than January 5, 2001. The date on which the Closing occurs is hereinafter
referred to as the "Closing Date." Notwithstanding the foregoing, Buyer
shall have the right to accelerate the Closing Date to December 29, 2000 by
notice to Seller, which notice must be received by Seller on or before
December 27, 2000.
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3.2 Actions by Seller. At the Closing, Seller shall execute and
deliver to Buyer (or to such other party as identified below):
(i) a Bill of Sale and Assignment in substantially the form of Exhibit
A attached hereto and made a part hereof and such other instruments of
transfer and assignment as may be required in order to transfer to Buyer
all of Seller's right, title and interest in and to the Purchased Assets
(other than the Real Property);
(ii) one or more warranty deeds executed by Seller sufficient to
convey the Real Property as required under this Agreement, together with
any required transfer tax or ancillary conveyance documents;
(iii) an assignment of all Assumed Contracts (including, without
limitation, all warranties and guaranties in connection therewith) and all
assignable Permits (including, without limitation, the Environmental
Permits);
(iv) such affidavits and/or certificates reasonably required by
Buyer's title company to insure the title of the Real Property in the
manner required to be delivered in Section 11.1.5; and
(v) deliver to Escrow Agent (as defined in subparagraph 3.3(ii) below)
the sum of One Hundred Thousand Dollars ($100,000) (the "Physical
Improvements Fund") to be held in an interest bearing escrow account and
disbursed pursuant to the terms set forth in subparagraphs 10.3(iii), (iv)
and (v) below.
The documents referred to in clauses (i) through (iv) above are hereinafter
sometimes severally referred to as a "Seller Ancillary Agreement" and
collectively referred to as the "Seller Ancillary Agreements."
3.3 Actions by Buyer. The Buyer shall:
(i) deliver the Cash Purchase Price to Seller, by wire transfer of
immediately available funds to an account designated by Seller at least two
(2) business days prior to the Closing Date (less the Deposit);
(ii) deliver the Deposit to First American Title Company of East
Idaho, Inc., as escrow agent (the "Escrow Agent"), simultaneously with the
execution of this Agreement, to be held in escrow pursuant the provisions
of an escrow agreement (the "Escrow Agreement") in substantially the form
attached hereto as Exhibit B, which Deposit (together with any accrued
interest thereon) shall be released by the Escrow Agent in accordance with
provisions of the Escrow Agreement; and
(iii) execute and deliver to Seller, or cause to be executed and
delivered to Seller, on or prior to the Closing Date, each of the Seller
Ancillary Agreements to which Buyer or any of its Affiliates or designees
is a party.
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The documents referred to in clauses (ii) and (iii) above are hereinafter
sometimes severally referred to as a "Buyer Ancillary Agreement" and
collectively referred to as the "Buyer Ancillary Agreements."
4. Representations and Warranties of Seller. Seller hereby represents and
warrants to Buyer as follows:
4.1 Corporate Existence and Power. Seller is a limited liability
company duly organized, validly existing and in good standing under the
laws of the State of Idaho and has all power required to own and lease the
Purchased Assets and to carry on and operate the Business as now conducted.
Seller is duly qualified to do business as a foreign company and is in good
standing in each jurisdiction where the character of the Purchased Assets
owned or leased by it or the nature of its activities makes such
qualification necessary to carry on the Business as now conducted. A copy
of the Operating Agreement of Seller as amended to date (the "Operating
Agreement") has been furnished to Buyer and is complete and correct.
4.2 Authority. The execution and delivery by Seller of this Agreement
and the Seller Ancillary Agreements, the consummation of the transactions
contemplated hereby and thereby, and the performance by Seller of its
obligations hereunder and thereunder, are within the powers of Seller, and
have been duly authorized by all necessary action on the part of Seller,
and the Seller has all necessary power with respect thereto. This Agreement
constitutes, and each Seller Ancillary Agreement when executed and
delivered by Seller pursuant to this Agreement shall constitute, a legal,
valid and binding obligation of Seller in accordance with its terms.
4.3 Ownership of Seller. The members of Seller set forth on Schedule
4.3 (the "Members") own, beneficially and of record, all of the outstanding
membership interests of Seller.
4.4 Noncontravention. The execution and delivery by Seller of this
Agreement and the Seller Ancillary Agreements, the performance by it of its
obligations hereunder and thereunder, and the consummation of the
transactions contemplated hereby and thereby, do not and will not (with or
without the giving of notice or the passage of time) (a)(i) contravene or
conflict with the Articles of Organization or Operating Agreement of
Seller; (ii) contravene or conflict with or constitute a violation of any
provision of Applicable Law; or (iii) result in a breach, conflict,
violation, or constitute a default under or give rise to any right of
termination, cancellation or acceleration of, or to a loss of any benefit
to which Seller is entitled under, any Assumed Contract or Permit, or (b)
result in the creation or imposition of any Lien upon any of the Purchased
Assets.
4.5 Consents. Except as set forth on Schedule 4.5, the execution and
delivery by Seller of this Agreement and the Seller Ancillary Agreements,
the performance by Seller of its obligations hereunder and thereunder, and
the consummation of the transactions contemplated hereby and thereby,
require no action by, consent or approval of, or filing with, any
Governmental Authority or other Person.
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4.6 Financial Statements of the Business. Seller has previously
delivered to Buyer: (i) the unaudited balance sheets of the Seller as at
December 1996, 1997 and 1998 , and (ii) the unaudited statements of
operations of the Seller for the years then ended (collectively, the
"Financial Statements"). The Financial Statements fairly present the
financial position of the Business as at the dates thereof and its results
of operations for the periods indicated.
4.7 Absence of Certain Changes. Since December 31, 1998, Seller has
not, with respect to the Purchased Assets:
(i) experienced any event or circumstances which has had or would be
reasonably expected to have a Material Adverse Effect;
(ii) subjected any of the Purchased Assets to a Lien;
(iii) except for the lease of the Plant to Beatrice Foods, which lease
expires on November 30, 2000, sold, transferred, leased to others or
otherwise disposed of any of the items included in the Purchased Assets, or
cancelled or compromised any debt or claim, or waived or released any right
of substantial value;
(iv) suffered any damage, destruction or loss (whether or not covered
by insurance) which, individually or in the aggregate, has had a Material
Adverse Effect;
(v) encountered any labor union organizing activity, had any actual or
threatened employee strikes, work stoppages, slowdowns or lockouts, or had
any material change in its relations with its employees, agents, customers
or suppliers;
(vi) instituted, settled or agreed to settle any Proceeding before any
court or governmental body other than in the ordinary course of the
Business consistent with past practice;
(vii) entered into any Contract other than in the ordinary course of
the Business; or
(viii) agreed to do any of the foregoing.
4.8 Title to and Adequacy of Purchased Assets. The Purchased Assets
and the rights granted to Buyer pursuant to the Seller Ancillary Agreements
comprise all of the properties and assets used and/or owned by Seller
(other than the Optioned Property). At the Closing, Buyer shall acquire
good and valid title to the Purchased Assets free and clear of all Liens.
Seller has good and valid title to all of the Purchased Assets, free and
clear of all Liens. To the best of Seller's knowledge, the buildings,
plants, structures and equipment of the Seller which are included among the
Purchased Assets are in operating condition and are (i) structurally sound
and (ii) in good condition and repair. Seller has no knowledge about
whether the buildings, plants, structures and equipment of the Seller which
are included among the Purchased Assets are (i) safe for the type of
business currently conducted by the Seller or (ii) fit for the particular
purpose for which they are intended. To the best of Seller's knowledge,
none of such
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buildings, plants, structures or equipment is in need of maintenance or
repairs except for ordinary, routine maintenance or repairs that are not
material in nature or cost.
4.9 Legal Proceedings. There are no actions, suits, hearings,
arbitrations, proceedings (public or private) or governmental
investigations that have been brought by or against any Governmental
Authority or any other Person (collectively, "Proceedings") pending or
threatened against Seller with respect to the Business or any of the
Purchased Assets or the Assumed Liabilities as to which there is a
likelihood of a determination or resolution adverse to Seller; and there
are no outstanding orders, judgments or decrees (other than those of
general application) of any Governmental Authority which are binding upon
any of the Purchased Assets or the Business. There are no Proceedings
pending or threatened against Seller which seek to enjoin or rescind any of
the transactions contemplated by this Agreement or otherwise prevent Seller
or any of its Affiliates from complying with any of the terms and
provisions of this Agreement or any of the Seller Ancillary Agreements.
There is no condemnation proceeding pending with regard to all or any part
of the Real Property and, to Seller's knowledge, there is no such
proceeding contemplated by any Governmental Authority.
4.10 Contracts and Leases. Schedule 4.10 sets forth a complete list of
all Contracts that shall be assumed by Buyer hereunder (the "Assumed
Contracts"). Each Assumed Contract is a legal, valid and binding obligation
of the Seller and is enforceable against each other party thereto in
accordance with its terms. Neither Seller nor any other party thereto is in
default or has failed to perform any obligation thereunder. Complete and
correct copies of each Contract have been previously delivered or made
available to Buyer. There are no leases, tenancies or rights of occupancy
affecting the Real Property and the Real Property shall be delivered free
and clear of any of the foregoing.
4.11 Permits. Schedule 2.2(iv) hereof sets forth all Permits which
Seller has obtained and which, to the best of Seller's knowledge, are
required to be obtained with the respect to the Purchased Assets. Except as
set forth on Schedule 4.11 hereof, all such Permits have been duly obtained
and are in full force and effect, all conditions and requirements
applicable to such Permits have been complied with and there is no pending
threat of modification or cancellation of any such Permit; and no
buildings, improvements or Tangible Property located on the Real Property
or the current use of the Real Property depend on any dedication, variance,
subdivision, special exception or other special governmental approval which
has not been unconditionally granted for their continuing legality; and
neither the Real Property, the Tangible Property nor the maintenance or use
thereof violates any Applicable Law relating thereto.
4.12 Compliance with Laws. Except as set forth on Schedule 4.12, (i)
to the best of Seller's knowledge, the use and ownership of the Purchased
Assets by Seller do not violate any Applicable Law or Permits (including,
but not limited to, any Environmental Laws or Environmental Permits); (ii)
to the best of Seller's knowledge, no Applicable Laws are or shall be
violated by the construction, maintenance, operation or use of the
Purchased Assets, including, without limitation, any buildings or other
improvements on the Real Property or by such continued maintenance
operation or use of the parking of delivery areas; and (iii) Seller has
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received no written notice of any violation of, or applicable to, any
Applicable Law or Permit with respect to the Business or the Purchased
Assets.
4.13 Environmental Matters.
(i) Except as set forth on Schedule 4.13(i), there are no underground
or aboveground storage tanks, active or inactive waste treatment and/or
disposal facilities including, but not limited to, incinerators or surface
impoundments at, on, under or within any of the facilities of the Business;
and none of the foregoing has been closed or removed by Seller;
(ii) Except as set forth on Schedule 4.13(ii), Seller has not received
any notice from a Governmental Authority that it is, or may be deemed to
be, a "potentially responsible person" (as such term may be defined in any
Environmental Law) or otherwise liable in connection with any waste
disposal site allegedly containing any Hazardous Substances or other
location used for the disposal of any Hazardous Substances, or notice of
any failure by Seller to comply in any material respect with any
Environmental Law or the requirements of any Environmental Permit held by
Seller;
(iii) Except for (x) those items identified in the environmental
reports referenced in Schedule 4.13(i) and (y) de minimis quantities of
substances stored and/or or disposed of in compliance with Environmental
Laws, during the period of Seller's ownership of the Real Property and, to
the best of the knowledge of Seller prior to Seller's ownership of the Real
Property, the Real Property has not been used for the generation, storage
or disposal of Hazardous Substances or as a land-fill or other waste
disposal site and no Hazardous Substances or any toxic wastes, substances
or materials (including, without limitation, asbestos) have been released
or discharges from or onto the Real Property. The term "Hazardous
Substances" includes, without limitation, petroleum, including crude oil or
any fraction thereof, natural gas, natural gas liquids, liquified natural
gas, or synthetic gas usable for fuel (or mixtures of natural gas or such
synthetic gas), and any substance, material waste, pollutant or contaminant
listed or defined as hazardous or toxic under any Environmental Law;
(iv) Seller has not been required by any Governmental Authority to
perform any remedial activity or other response action in connection with
any Environmental Matter;
(v) Seller has made available to Buyer all studies, analyses and test
results in the possession, custody or control of Seller regarding
Environmental Matters relating to the Business and the Purchased Assets
(collectively, the "Environmental Reports");
(vi) Except as described in the Environmental Reports and to the best
of Seller's knowledge, there are no conditions, events, circumstances,
facts, activities, practices, incidents, actions or omissions at or on the
facilities of the Business, or with respect to the operation of the
Business or the use or ownership of the Purchased Assets:
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(a) that would reasonably be expected to give rise to any
Environmental Costs to the Buyer; or
(b) that would reasonably be expected to form the basis of any
Proceedings relating to any Environmental Matter;
(vii) To the best of Seller's knowledge, no event has occurred which,
with the passage of time or the giving of notice or both, would constitute
non-compliance with Environmental Laws. Seller has received no written
notice of any actions, suits, claims, or proceedings relating to a
violation or non-compliance with any Environmental Laws pending which may
affect the Real Property, or with respect to the disposal, discharge or
release of Hazardous Substances at or from the Real Property.
4.14 Taxes. With respect to the Purchased Assets (including, without
limitation, the Real Property), Seller has: (i) timely filed in accordance
with all Applicable Laws, all material returns, statements, reports,
estimates, declarations and forms (collectively, "Tax Returns") required to
be filed by it with respect to Taxes, (ii) paid all Taxes shown to have
become due pursuant to such Tax Returns, and (iii) paid all Taxes for which
a notice of, or assessment or demand for, payment has been received, other
than Taxes which are being contested in good faith. All Tax Returns filed
by Seller are true, correct and complete in all material respects, and all
Taxes for which Seller is liable have been paid or adequate provisions in
the financial books of the Seller have been made. All material amounts
required to be collected or withheld by Seller with respect to Taxes have
been duly collected or withheld and any such amounts that are required to
be remitted to any taxing authority have been duly remitted, no extension
of time within which to file any Tax Return under which Buyer could be held
responsible has been requested, which Tax Return has not since been filed,
and there are no waivers or extensions of any applicable statute of
limitations for the assessment or collection of Taxes with respect to any
Tax Return for which Buyer could be held responsible which remain in
effect.
4.15 Employee Plans. Schedule 4.15 lists each stock bonus, stock
option, stock purchase, bonus, incentive, deferred compensation, vacation,
insurance, disability, severance, termination indemnity, or other plan,
fund, program, policy, contract or arrangement providing employee benefits
maintained or contributed to by Seller or any of its Affiliates in which
any present or former employees of the Business participated or have
participated and under which any of them or any beneficiaries of any of
them has accrued and remains entitled to any benefits (collectively, the
"Employee Plans"). Seller has heretofore delivered or made available to
Buyer a copy of each Employee Plan, or a written summary thereof which is
correct and complete in all material respects. Seller has also made
available to Buyer copies of all material documents and instruments
relating to each of the Employee Plans. Each of the Employee Plans which is
intended to be qualified under Section 401(a) of the Code, and the trust
(if any) forming a part thereof, has received a favorable determination
letter from the Internal Revenue Service as to its qualification under the
Code and to the effect that such trust is exempt from taxation under
Section 501(a) of the Code. All contributions to the Employee Plans
attributable to any period on or before the Closing Date shall have been
paid or accrued prior to the Closing Date. Each of the Employee Plans has
been operated and administered in all
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material respects in accordance with Applicable Law, including, but not
limited to, the Code and the Employee Retirement Income Security Act of
1974, as amended.
4.16 Insurance. The Business and the Purchased Assets are, and prior
to the date hereof have been, insured against risks normally insured
against, in amounts normally carried, by companies engaged in similar
businesses. Set forth on Schedule 4.16 attached hereto is a true, correct
and complete list of the insurance policies in effect with respect to the
Business and Purchased Assets (including the deductibles), which policies
shall expire on November 30, 2000. Seller shall (i) cause to be maintained
in full force and effect until November 30, 2000 all of the insurance
policies listed on Schedule 4.16. and (ii) obtain and maintain property and
casualty insurance with respect to the Purchased Assets in the minimum
amount of Six Million Dollars ($6,000,000) from December 1, 2000 through
the Closing Date. No written notice has been received from the insurance
company which issued any of such insurance policies stating in effect that
such policy will not be renewed or will be renewed at a higher premium than
is presently payable thereunder.
4.17 Tax Lots. The Real Property is comprised of tax lot 10343100.
4.18 No Repairs Required. To the best of Seller's knowledge, all
buildings and improvements (including all roads, parking areas, curbs,
sidewalks, sewers, water system, heating, ventilation, air conditioning and
other utilities and building systems) on the Real Property have been
constructed on soil having sufficient density and installed in accordance
with the plans and specifications approved by the governmental authorities
having jurisdiction and are in good working order without defects in
workmanship and do not require any repairs, other than such repairs as are
necessary for normal maintenance or which may be necessary due to normal
wear and tear; and Seller has not received any notice from any insurance
company or underwriter requesting performance of any repairs or alterations
to the Real Property or of any defect in the Real Property or that would
adversely affect the insurability of the Real Property or cause an increase
in insurance premiums.
4.19 Building Systems. To the best of Seller's knowledge, all water,
sewer, gas, electric, telephone, drainage facilities and other utilities
required for the normal and proper operation of the Real Property are
installed and connected to the Real Property with valid permits and are
serving the Real Property and are adequate to serve the Real Property for
its intended use and to permit full compliance with all requirements of
Applicable Law; all permit and connection fees are fully paid and no action
is necessary on the part of Buyer to transfer such permits to it; all
utilities serving the Real Property either enter the Real Property through
adjoining public streets or if they pass through adjoining private land, do
so in accordance with valid public easements or private easements of
unlimited duration; and no fact or condition exists which would result in
the termination of such utilities services to the Real Property.
4.20 Independent Unit. To the best of Seller's knowledge, the Real
Property is an independent unit which does not now rely on any facilities
(other than facilities covered by easements of unlimited duration
appurtenant to the Real Property or facilities of municipalities or public
utilities or the other Permitted Liens) located on any property that is not
part of the Real Property to fulfill any municipal or other governmental
requirement, or for the
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furnishing to the Real Property of any essential building systems or
utilities (including drainage facilities, catch basins and retention
ponds). No other building or other property that is not part of the Real
Property relies upon any part of the Real Property to fill any municipal or
other governmental requirement, or to provide any essential building
systems or utilities.
4.21 No Assessments. To the best of Seller's knowledge, no assessments
or impact fees for public improvements have been made or charged or, to the
best of Seller's knowledge, proposed against the Real Property which remain
unpaid or which will remain unpaid at the Closing, including without
limitation those for street widenings, intersection restructurings,
construction of traffic signals, sewer, water, gas and electric lines and
mains, streets, roads, sidewalks and curbs. In the event any such
assessments or impact fees are pending or proposed or if any work for
public improvements, including but not limited to street widenings,
intersection restructurings, traffic signals, sewer, water, gas and
electric lines and mains, streets, roads, sidewalks or curbs has commenced,
Seller shall be responsible for the portions, or installments, if any, of
such assessments due and payable prior to the Closing Date.
4.22 Violations. To the best of Seller's knowledge, there is no
violation of any covenant, condition or restriction or any agreement
contained in any instrument encumbering or benefiting the Real Property.
Seller has not granted any rights to adjoining land owners which shall be
binding upon Buyer.
4.23 Mechanic's Liens. To the best of Seller's knowledge, there are
no, and on the Closing Date there shall be no, filed or inchoate
mechanics', materialmen's or similar liens against the Real Property or any
portion thereof.
4.24 No Contracts or Agreements. Except as set forth on Schedule 4.24,
there are no contracts or agreements of any kind relating to the Real
Property to which Seller or its agents are a party which shall be binding
on Buyer after the Closing. There are no facts or events which could
materially affect the Real Property which have not been disclosed in
writing to Buyer.
4.25 No Liens. There are no Liens on the Real Property except (a) as
disclosed in the title insurance report attached to Schedule 4.25 attached
hereto and (b) zoning restrictions on the use of the Real Property
(provided such zoning restrictions are not violated by present use or any
reasonable expansion of extension of present use) and minor defects or
irregularities in title, provided the same do not individually or in the
aggregate render title unmarketable or otherwise adversely affect the
Seller's Real Property. Seller has the right to use all easements and
rights of way including, but not limited to easements for power lines,
water lines, sewers and roadways and other means of ingress and egress,
which are necessary for the use of the Real Property.
4.26 Information as to Seller. None of the representations or
warranties made by the Seller in this Agreement or in any agreement or
document executed and delivered by or on behalf of it pursuant hereto are
false or misleading with respect to any material fact, or omit to state any
material fact necessary in order to make the statements therein contained
not misleading.
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5. Representations and Warranties of Buyer. Buyer hereby represents and
warrants to Seller as follows:
5.1 Corporate Existence and Power. Buyer is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has all corporate power required to own, lease and
operate its properties and assets and to carry on its business.
5.2 Corporate Authorization. The execution and delivery by Buyer of
this Agreement and the Buyer Ancillary Agreements, the consummation of the
transactions contemplated hereby and thereby, and the performance by Buyer
of its respective obligations hereunder and thereunder, are within the
corporate powers of Buyer and has been duly authorized by all necessary
corporate action on the part of Buyer. This Agreement constitutes, and each
Buyer Ancillary Agreement when executed and delivered by Buyer pursuant to
this Agreement shall constitute, a legal, valid and binding obligation of
Buyer in accordance with its terms.
6. Certain Covenants.
6.1 Further Assurances. Subject to the terms and conditions herein
contained, promptly after the date hereof each of the parties hereto shall
cooperate with the other and use its reasonable best efforts to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary, proper or advisable, to ensure that the conditions set forth in
paragraph 11 hereof are satisfied and to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements.
6.2 Consents and Authorizations. Seller shall obtain, and shall
cooperate with Buyer in obtaining, all authorizations, consents, orders and
approvals of any Governmental Authority or any other Person that is
necessary in connection with the consummation of the transactions
contemplated by this Agreement and the Ancillary Agreements, and to take
all reasonable actions to avoid the entry of any order or decree by any
Governmental Authority prohibiting the consummation of the transactions
contemplated hereby or thereby.
6.3 Conduct of Business.
6.3.1 Affirmative Covenants. During the period from the date of
this Agreement until the Closing Date, except as Buyer may otherwise
consent to in writing or as otherwise contemplated by this Agreement
(including the Disclosure Schedules), Seller shall in respect of the
Purchased Assets:
(i) Except with respect to those employees that Buyer notifies Seller
that Buyer does not intend to retain after the Closing, Seller shall use
its best efforts to keep available the services of the employees who are
currently working at the Plant up to and including the Closing Date.
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(ii) maintain the Purchased Assets in the usual, regular and ordinary
course and in accordance with past practice;
(iii) use its best efforts to maintain insurance in full force and
effect with respect to the Purchased Assets that is comparable in amount,
scope and type to that in effect on the date of this Agreement;
(iv) maintain the Books and Records in the usual, regular and ordinary
manner, on a basis consistent with prior years;
(v) perform and comply in all material respects with its obligations
under the Assumed Contracts;
(vi) maintain in existence all licenses, permits and approvals in
existence now or in the future with respect to the ownership, operation or
improvement of the Purchased Assets and shall not apply or consent to any
action or proceeding which shall have the effect of terminating or changing
such licenses, permits and approvals or the zoning of the Real Property;
and
(vii) comply with all notices of violations of law or municipal
ordinances, orders or requirements noted in or issued by any Governmental
Authority, against or affecting the Purchased Assets as of the Closing and
the same shall be discharged of record prior to the Closing.
6.3.2 Negative Covenants. During the period from the date of this
Agreement until the Closing Date, except as Buyer may otherwise
consent to in writing or as otherwise contemplated by this Agreement
(including the Disclosure Schedules), Seller shall not in respect of
the Purchased Assets.
(i) vary or amend the terms of any of the Assumed Liabilities other
than in the ordinary course of business consistent with past practice;
(ii) subject any of the Purchased Assets to any Lien;
(iii) sell, lease, transfer, assign or otherwise dispose of any
material portion of the Purchased Assets;
(iv) enter into any material Contract, or materially modify,
terminate, amend or grant any waiver in respect of any Contract, except, in
either case, in the ordinary course of the Business consistent with past
practice;
(v) hire executive Employees, grant to any Employee any increase in
compensation in any form (other than pursuant to existing Contracts and
Employee Plans, and except for regularly scheduled increases made in the
ordinary course of the Business and consistent with past practice);
17-
(vi) enter into any transaction, take any action, or by inaction
permit any event to occur, that would result in any of the representations
and warranties of Seller contained herein not being true and correct in all
material respects immediately after the occurrence of such transaction,
action or event or on the Closing Date;
(vii) mortgage or charge any of the Purchased Assets;
(viii) sell, assign, create, terminate, or modify any right, title or
interest whatsoever in or to the Real Property or create, or permit to
exist, any lien, encumbrance, easement, or charge thereon, without properly
discharging same prior to Closing;
(ix) list the Real Property with any broker or otherwise solicit or
make or accept any offers to sell the Real Property, engage in any
discussions or negotiations with any third party with respect to the sale
or other disposition of the Real Property, or enter into any contracts or
agreements (whether binding or not) regarding any disposition of the Real
Property, other than such offers, discussions, negotiations, contracts or
agreements which are contingent upon the failure of the transactions
contemplated in this Agreement to be consummated in accordance with the
terms hereof;
(x) assign, transfer, encumber or remove any intangible property or
Tangible Property at the Real Property;
(xi) engage in any activity that would permit any party to file a Lien
against the Purchased Assets after the Closing Date; or
(xii) agree or otherwise commit to take any of the actions prohibited
by the foregoing clauses (i) through (xi).
6.4 Access to Information. During the period commencing on the date of this
Agreement and ending on the Closing Date (i) Seller shall provide, or cause to
be provided to, Buyer and its representatives (A) such financial and operating
data and other information as Buyer or its representatives may from time to time
reasonably request with respect to the Business and the Purchased Assets, and
(B) access during normal business hours to the assets, properties, plants,
offices, warehouses and other facilities, Books and Records of and Contracts
relating to the Business and the Purchased Assets as Buyer may from time to time
reasonably request; and (ii) Buyer and its representatives shall be entitled to
consult with the representatives, officers and employees of Seller with respect
to the Business. Seller agrees that no investigation by Buyer or its
representatives shall affect or limit the scope of the representations and
warranties of Seller contained herein or in any of the Seller Ancillary
Agreements.
6.5 Mail; Payments. Seller shall promptly deliver to Buyer any mail or
other communication received by it after the Closing Date pertaining to the
Business or the Purchased Assets. Seller and Buyer shall promptly (but, in any
event, not more than five Business Days after receipt thereof) pay or deliver to
the other party any cash or checks which have been mistakenly sent to it but
which should properly have been sent to such other party.
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6.6 Access to Records. (a) For a period of at least three years from the
Closing Date, Seller shall retain or cause to be retained all agreements,
documents, books, records and files in its possession or in the possession of
any of its Affiliates relating to the Business or the Purchased Assets
(collectively, the "Records"). After the Closing, upon reasonable advance notice
given to Seller, Seller shall give, or cause to be given, to the
representatives, employees, counsel and accountants of Buyer, access during
normal business hours to the books and records relating to the Business and the
Purchased Assets, and shall permit such representatives to examine and copy such
Records to the extent reasonably requested by the other party in connection with
the preparation of tax and financial reporting matters, audits, legal
proceedings, governmental investigations and other valid business purposes.
6.7 Further Assurances. At any time and from time to time after the Closing
Date, Buyer and Seller shall each execute or cause to be executed and deliver or
cause to be delivered all such documents and instruments, and do or cause to be
done all such acts, as the other may reasonably request in order to: (i)
transfer, assign, deliver and convey to Buyer the Business and the Purchased
Assets free and clear of all Liens; (ii) implement the assumption by Buyer of
the Assumed Liabilities; (iii) implement the provisions of the Ancillary
Agreements; or (iv) otherwise carry out the intent of the parties under this
Agreement and the Ancillary Agreements.
6.8 Public Announcements. Each of the parties hereto (i) shall consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or the transactions contemplated hereby, and (ii)
shall not, except as may be required by Applicable Law, issue any such public
statement without the prior verbal consent of the other parties (such consent
not to be unreasonably withheld or delayed).
6.9 Waiver of Compliance with Bulk Transfer Laws. Buyer waives compliance
by Seller with the provisions of Article 6 of the Uniform Commercial Code ("Bulk
Sales Laws") in each applicable jurisdiction. Seller shall comply with all other
Laws relating to bulk sales and/or the sale and purchase of the Purchased
Assets.
6.10 Noncompetition. Until the third anniversary of the Closing Date,
neither Seller nor the Members (other than Gary Seamons) shall and shall cause
each of their Affiliates not to, directly or indirectly, (A) engage or become
interested in any entity (whether as owner, manager, operator, licensor,
licensee, lender, partner, stockholder, joint venturer, employee, consultant or
otherwise) which sells manufactures, distributes or markets any products or
services within a radius of one hundred (100) miles of the Plant that are
competitive with the products and services sold, manufactured, distributed or
marketed by the Business or (B) take any other action which constitutes an
interference with or a disruption of Buyer's use, ownership and enjoyment of the
Purchased Assets. On or prior to the Closing Date, Seller shall cause Gary
Seamons to execute and deliver to Buyer a noncompetition agreement containing
provisions substantially similar to the provisions of this subparagraph 6.10.
6.11 Supplemental Disclosure Schedules. Seller shall, from time to time
after the date of this Agreement and prior to the Closing Date (but no later
than three days prior to the Closing), by notice given in accordance with this
Agreement, supplement or amend
19-
any Disclosure Schedule to correct any matter which would constitute a breach of
any of its representations and warranties herein contained; provided, however,
that Buyer shall not be obligated to consummate the transactions contemplated by
this Agreement if any such amended disclosure shall modify the terms and
conditions set forth herein to Buyer's material detriment. No such supplemental
or amended Disclosure Schedule shall be deemed to cure any breach of such
representation or warranty for any purpose if the Closing does not occur as a
result of such breach.
6.12 Purchase Option. At any time during a six (6) month period commencing
on the Closing Date, Buyer shall have the option, but not the obligation, to
purchase the Optioned Property (as described in Schedule 6.12), at a purchase
price of One Hundred Twenty-Five Thousand Dollars ($125,000), by notifying the
Seller in writing of its desire to do so. The closing of the transaction for the
purchase by Buyer of the Optioned Property shall take place on the date
designated by Buyer in its notice to Seller, which date shall not be more than
sixty (60) nor less than thirty (30) days following the date of such notice,
whereupon Buyer shall pay to Seller the aforesaid purchase price and Seller
shall deliver to Buyer such duly executed deeds, conveyance documents and bills
of sale and any other documents reasonably requested by the Buyer to transfer
title to the Optioned Property to the Buyer, free and clear of all Liens.
7. Certain Tax Matters.
7.1 Transfer Taxes. Seller shall be responsible for any and all (i)
sales, use, transfer, stamp, conveyance, recording, value-added and other
similar Taxes (other than any Income Taxes) imposed under Applicable Law,
and (ii) recording and filing fees, notarial fees and other similar costs
of Closing, with respect to the purchase and sale of the Purchased Assets
and the Business or otherwise on account of this Agreement or any of the
Ancillary Agreements, or any of the transactions contemplated hereby or
thereby.
7.2 Apportionment of Certain Taxes. As of the Closing Date, any
personal property taxes, real estate taxes, assessments and penalties and
water, sewer, utility charges and other items in respect of the Purchased
Assets and the Assumed Liabilities shall be apportioned (on a pro rata
basis, based upon the number of days in the relevant taxable period)
between Seller and Buyer. Seller shall be responsible for all such Taxes
relating (as determined under Applicable Law) to periods up to and
including the Closing, and Buyer shall be responsible for all such taxes
relating to post-Closing periods. Any payments or reimbursements of such
Taxes required to be made by Seller to Buyer or by Buyer to Seller pursuant
to this subparagraph 7.2 shall be paid by Seller or Buyer within the later
of five days of Seller's or Buyer's request therefor or five days prior to
the date on which Seller is required to pay or cause to be paid the related
Tax liability.
20-
8. Employment. Buyer may, but shall not be obligated to offer employment,
effective as of the Closing Date, to certain of the Employees. Buyer shall not
assume nor be liable to pay any pre-closing liabilities of Seller in respect of
the Employees.
9. Environmental Matters. Seller shall be responsible for all Environmental
Costs relating to the Business or the Purchased Assets to the extent arising out
of events occurring or conditions existing prior to the Closing Date and Buyer
shall be responsible or all Environmental Costs relating to the Business or the
Purchased Assets arising out of events occurring or conditions existing
subsequent to the Closing Date.
10. Survival; Indemnification.
10.1 Survival of Representations, Warranties and Covenants. Each
representation and warranty contained in this Agreement or any of the
Ancillary Agreements shall survive the execution and delivery hereof and
the Closing Date indefinitely. The covenants and agreements contained in
this Agreement or any of the Ancillary Agreements shall survive the Closing
Date and shall continue in effect in accordance with their respective
terms.
10.2 Indemnification by Seller. Subject to the terms and conditions
herein contained, from and after the Closing Date, Seller shall indemnify
and hold harmless Buyer, its Affiliates, and their respective officers,
directors, employees, agents, consultants, representatives and successors
from and against any Losses which may be sustained or incurred by any of
them and which arise out of or result from:
(i) any breach by Seller of any representation or warranty made by
them in this Agreement or in any of the Seller Ancillary Agreements;
(ii) any failure by Seller to perform any of their obligations
contained in this Agreement or in any of the Seller Ancillary Agreements
(subject, in the case of each of the Seller Ancillary Agreements, to any
and all limitations upon and qualifications with respect to the liability
of Seller or any of its Affiliates which may be set forth therein);
(iii) Buyer's waiver of or Seller's noncompliance with any applicable
Bulk Sales Laws; and/or
(iv) the Excluded Liabilities.
This indemnification obligation shall also apply to claims directly by Buyer
against the Seller as well as to third party claims.
10.3 Seller's Undertaking.
(i) Seller hereby undertakes to cause to be completed the physical
improvements, including, without limitation, the installation of up to six
(6) monitoring wells if required by Idaho DEQ (the "Physical Improvements")
and other recommendations identified in paragraph 4 of that certain letter
dated September 12,
21-
2000 from Idaho DEQ (the "DEQ Letter") regarding Permit LA-000084-03 (the
"DEQ Permit") no later than June 30, 2001. If Seller has not caused the
Physical Improvements and such other recommendations to be completed on or
before June 30, 2001, or immediately in the event of an emergency,
including, without limitation, the threat of the Idaho DEQ canceling the
DEQ Permit ("Emergency"), Buyer may cause the Physical Improvements or such
other recommendations to be completed and may withdraw the money in the
Physical Improvements Fund and apply the proceeds of such fund to the cost
of the Physical Improvements and such other recommendations. Seller further
undertakes to cooperate with Buyer to cause Gary Seamons, the operator (the
"Operator") of the land subject of the Permit, to comply with his
obligations under the Whey Transport and Disposal Agreement (included in
Schedule 4.10) and with the recommendations set forth in paragraph 4 of the
DEQ Letter. Notwithstanding the foregoing, Seller specifically does not
assume any of the management or reporting obligations or responsibilities
of Buyer (as opposed to requirements under paragraph 4 of the DEQ Letter to
perform installations or physical work or improvements to effectuate such
management or reporting obligations or responsibilities) which may arise
from and after the Closing as the holder of the DEQ Permit (such
obligations or responsibilities hereinafter the "Excluded Obligations").
(ii) Seller shall indemnify and hold harmless Buyer, its Affiliates,
and their respective officers, directors, employees, agents, consultants,
representatives and successors from and against any Losses which Buyer may
sustain or incur which arise out of or result from any matters described in
the DEQ Letter; provided, however, that Seller shall not be required to
indemnify Buyer from any Losses which Buyer may sustain or incur which
arise out of Buyer's action or inaction with respect to the Excluded
Obligations.
(iii) On or prior to June 30, 2000, (x) Seller shall obtain a letter
from Idaho DEQ confirming that the recommendations identified in paragraph
4 of the DEQ Letter (other than the Excluded Obligations) have been
completed to the satisfaction of Idaho DEQ ("Confirmation Letter"), and
Buyer shall cooperate with Seller with respect thereto, and (y) Seller
shall deliver to each of Escrow Agent and Buyer a copy of the Confirmation
Letter and a statement from Seller that the Physical Improvements have been
completed. Unless Escrow Agent has already disbursed the Physical
Improvement Funds pursuant to subparagraph 10.3(i) or unless Escrow Agent
has received an objection from Buyer not later than ten (10) days after the
date Buyer received from Seller a copy of the Confirmation Letter and said
statement from Seller, Escrow Agent shall deliver the Physical Improvements
Fund to Seller, less Escrow Agent's fees and expenses.
(iv) If Seller has not caused the Physical Improvements and other
recommendations identified in paragraph 4 of the DEQ Letter (other than the
Excluded Obligations) to be completed by June 30, 2001 (as evidenced by the
delivery of the Confirmation Letter to Escrow Agent and Buyer), or earlier
in the event of an Emergency, Buyer may notify Escrow Agent in writing and
Escrow Agent shall provide a copy of such notice to Seller, and, unless
Escrow Agent has received an objection from Seller not later than ten (10)
days after the date such notice was given to Seller, Escrow
22-
Agent shall deliver the Physical Improvements Fund to Buyer, less Escrow
Agent's fees and expenses.
(v) If Escrow Agent has received no notice from either party hereto
pursuant to this subparagraph 10.3 by December 31, 2001, Escrow Agent shall
deliver the Physical Improvements Fund to Seller, less Escrow Agent's fees
and expenses.
10.4 Indemnification by Buyer. Subject to the terms and conditions
herein contained, from and after the Closing Date, Buyer shall indemnify
and hold harmless Seller and its Affiliates, and their respective officers,
directors, employees, agents, consultants, representatives and successors
from and against any Losses which may be sustained or incurred by any of
them and which arise out of or result from any breach by Buyer or any of
its Affiliates of any representation or warranty made by it in this
Agreement or in any of the Buyer Ancillary Agreements or the Assumed
Liabilities.
10.5 Third Party Claims. Promptly after receipt by an Indemnitee of
written notice of the assertion of a claim or the commencement of any
action, litigation or proceeding by any third party (a "Third-Party Claim")
with respect to any matter for which indemnification is or may be owing
pursuant to subparagraphs 10.2, 10.3 or 10.4, the Indemnitee shall give
written notice thereof (the "Notice") to the Indemnitor; provided, however,
that failure of the Indemnitee to give the Indemnitor the Notice as
provided herein shall not relieve the Indemnitor of any of its obligations
hereunder unless the Indemnitor shall have been materially prejudiced
thereby. The Indemnitor shall have the right, at its option and at its own
expense, to participate in or, by giving notice to the Indemnitee no later
than 30 days after delivery of the Notice, to take control of, the defense,
negotiation and/or settlement of any such Third-Party Claim with counsel
reasonably satisfactory to the Indemnitee. The Indemnitee shall have the
right to participate in the defense, negotiation and/or settlement of any
such Third-Party Claim with counsel of its own choosing. Notwithstanding
the foregoing, with respect to any such Third-Party Claim, the defense,
negotiation and/or settlement of which the Indemnitor has taken control,
the Indemnitee shall have the right to retain separate counsel to represent
it, and the Indemnitor shall pay the reasonable fees and expenses of such
separate counsel, if the named parties to any such Third Party Claim
include both the Indemnitee and Indemnitor and the Indemnitee reasonably
determines that defenses are available to it that are unavailable to the
Indemnitor. The Indemnitor and the Indemnitee shall each cooperate with and
render to each other such assistance as may reasonably be requested in
order to insure the proper and adequate defense of any such Third Party
Claim or proceeding, which assistance shall include, without limitation,
making appropriate personnel reasonably available for any discovery or
trial. If the Indemnitor fails or refuses to undertake the defense of any
such Third-Party Claim within 30 days after delivery of the Notice, the
Indemnitee shall have the right to take exclusive control of the defense,
negotiation and/or settlement of such Third-Party Claim at the Indemnitor's
expense. Neither the Indemnitor nor the Indemnitee shall settle or
compromise any Third-Party Claim without the consent of the other, which
consent shall not be unreasonably withheld. The provisions of this
subparagraph 10.5 shall also govern any right of indemnification granted
pursuant to any other provision of this Agreement or any of the Ancillary
Agreements (unless such other provision of this Agreement or the relevant
Ancillary Agreement specifically sets forth a different procedure).
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11. Conditions to Closing.
11.1 Conditions to Obligations of Buyer. The obligations of Buyer to
consummate the transactions contemplated hereby shall be subject to the
satisfaction or written waiver by Buyer, on or before the Closing Date, of
each of the following conditions:
11.1.1 Representations, Warranties and Covenants.
(i) Seller shall have performed in all material respects each of
the agreements and covenants made by it herein and required to be
performed on or prior to the Closing Date; and
(ii) the representations and warranties of Seller contained
herein shall be true, complete and correct at and as of the Closing
Date, as if made at and as of such date except for the passage of
time.
11.1.2 Deliveries. Seller shall have delivered, or caused to be
delivered to Buyer, duly executed counterparts of each of the Seller
Ancillary Agreements.
11.1.3 Opinion of Counsel. Buyer shall have received an opinion
of counsel for Seller and its Affiliates, dated the Closing Date, to
the effect specified in Exhibit C attached hereto and made a part
hereof.
11.1.4 Consents and Approvals. All consents, waivers, approvals,
licenses and authorizations by third parties and Governmental
Authorities (and all amendments and modifications to existing
agreements with third parties) required as a precondition to the
performance by Seller of its obligations hereunder (including, without
limitation, the assignment by Seller of the Assumed Contracts and
Permits to Buyer) shall have been duly obtained and shall be in full
force and effect.
11.1.5 Title of the Real Property.
(i) Seller shall have given to Buyer, and Buyer shall have
accepted from Seller, good, marketable and insurable fee simple title
to the Real Property, subject only to the title exceptions listed on
Schedule 11.1.5 and any title exceptions caused by Buyer or its
employees or agents, and any title exceptions approved by Buyer in
writing after the date hereof. Title shall be evidenced by an ALTA
Owner's Policy and shall contain at Buyer's election, the expense of
which shall be borne by Buyer, to the extent available under the laws
of the State of Idaho, the following endorsements: (i) separate tax
lot, (ii) legal lot, (iii) access, (iv) owner's comprehensive, (v)
legal description same as survey, (vi) zoning 3.1 with parking and
(vii) contiguity endorsements. Such policy shall, in addition, insure
that any covenants, conditions or restrictions listed on Schedule
11.1.5 have not been violated and, if violated, shall not cause a
forfeiture or reverter of title.
(ii) Buyer shall have procured the title policy and a current
ALTA-ACSM survey of the Real Property certified to Buyer and Buyer's
lender and title
24-
company in form acceptable to Buyer. Seller shall pay the premium for
the title policy and the Buyer shall pay the surveyor's fees for the
survey.
11.1.6 Confidentiality Agreement. Seller and the Members shall
have executed and delivered an agreement, in form and substance
reasonably satisfactory to the Buyer, not to disclose confidential
information relating to the Purchased Assets for a period of two (2)
years from the Closing Date.
11.1.7 Certificate of Manager. Seller shall have furnished the
Buyer with a certificate, executed by the Manager of Seller, dated the
Closing Date, to the effect that it has fulfilled the conditions
specified in subparagraphs 11.1.1(i) and (ii) hereof.
11.1.8 Consent of the Members. Seller shall have furnished Buyer
with a copy of the consent of the Members, authorizing Seller to
execute and deliver this Agreement and the Seller Ancillary
Agreements, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereunder and thereunder,
duly certified by the Manager of the Seller.
11.1.9 Incumbency. Seller shall have furnished the Buyer with a
certificate of the Managers of Seller certifying as to the incumbency
and specimen signatures of the Manager of the Seller executing the
this Agreement and the Seller Ancillary Documents on behalf of such
corporation.
11.1.10 Milk Supply Contract. The Buyer shall have entered into a
milk supply contract with Snake River Dairymen's Association (the
"Association"); provided that this condition shall be deemed satisfied
if the Association is willing to enter into a contract with Buyer
substantially similar to the contract that was negotiated and agreed
to between Buyer and the Association on November 27, 2000.
11.1.11 Escrow Agreement. Buyer, Seller and Escrow Agent shall
have entered into an escrow agreement with respect to the Physical
Improvements Fund in a form reasonably satisfactory to Buyer and
Seller and containing the provisions set forth in subparagraphs
10.3(iii), (iv) and (v) hereof.
11.2 Conditions to Obligations of Seller. The obligations of Seller to
consummate the transactions contemplated hereby shall be subject to the
satisfaction or written waiver by Seller, on or before the Closing Date, of
each of the following conditions:
11.2.1 Representations, Warranties and Covenants.
(i) Buyer shall have performed in all material respects each of the
agreements and covenants made by it herein and required to be performed on
or prior to the Closing Date; and
(ii) The representations and warranties of Buyer contained herein
shall be true, complete and correct at and as of the Closing Date, as if
made at and as of such
25-
date (except that any representation and warranty made as of a specified
date shall continue to be true, complete and correct on and as of such
date).
11.2.2 Deliveries. Buyer shall have delivered or caused to be
delivered to Seller, duly executed counterparts of each of the Buyer
Ancillary Agreements.
12. Termination Prior to Closing.
12.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing:
(i) by the mutual written consent of Seller and Buyer;
(ii) by either Seller or Buyer if the Closing shall not have occurred
on or before January 5, 2001, provided, however, that neither Seller nor
Buyer may terminate this Agreement pursuant to this clause (ii) if the
Closing shall not have been consummated within such time period by reason
of the failure of the party electing to terminate this Agreement to perform
in all material respects any of its covenants and agreements contained in
this Agreement;
(iii) by either Seller or Buyer if any Applicable Law shall be enacted
that makes the purchase and sale of the Business and the Purchased Assets
pursuant hereto illegal or otherwise prohibited;
(iv) by either Seller or Buyer in the event that a judgment,
injunction, decree, cease and desist order or other order issued by any
Governmental Authority prohibiting or preventing the purchase and sale of
the Business pursuant hereto shall be in effect and shall have become final
and nonappealable; or
(v) by Buyer if (a) a survey of the Real Property reveals a defect or
other matter that has a Material Adverse Effect and Seller, within a
reasonable time after notice from Buyer, fails to cure such defect or other
matter; or (b) a deficiency or noncompliance exists with respect to a
Permit that has a Material Adverse Effect or Buyer determines that Seller
does not have one or more Permits required to maintain the Plant or operate
the Business or the Purchased Assets and Seller, within a reasonable time
after notice from Buyer, fails to cure such deficiency or noncompliance;
provided, however, that the Buyer may only terminate this Agreement
pursuant to this clause (v) on or prior to December 1, 2000.
12.2 Effect of Termination. Upon the termination of this Agreement in
accordance with the terms hereof, it shall forthwith become void and of no
further force and effect, except for the provisions of subparagraph 13.10
hereof; provided, however, that no such termination shall be deemed to
relieve any party hereto of liability for its breach of any of the terms
and provisions hereof.
26-
13. General Provisions.
13.1 Execution in Counterparts. This Agreement (A) may be executed in
one or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same document, and (B)
shall become effective when one or more counterparts have been signed by
each of the parties hereto and delivered to each of the other parties
hereto.
13.2 Notices. All notices, requests, demands and other communications
given hereunder shall be in writing and shall be deemed to have been duly
given: (i) on the date of delivery, if delivered personally or by
messenger, (ii) on the first business day following the date of timely
deposit with Federal Express or other nationally recognized overnight
courier service, if sent by such courier specifying next day delivery,
(iii) upon receipt of confirmation of transmission, if transmitted by
telecopier; and (iv) on the third business day after mailing, if mailed by
registered or certified mail (postage prepaid, return receipt requested);
provided, however, that a notice of change of address or telecopier number
shall not be deemed to have been given until actually received by the
addressee. All such notices, requests, demands and other communications
shall be directed to the address or telecopier number set forth below or to
such other address or telecopier number as any party hereto may designate
to the other party hereto by like notice:
If to Seller or
the Members, to: Dairyland, Inc.
320 Memorial Drive
Idaho Falls, Idaho 83401
Attn: Secretary
Fax No.: 208-528-6636
Copy to:
If to Buyer, to: Suprema Specialties Northwest Inc.
510 East 35th Street
P.O. Box 280
Patterson, NJ 07543-0280
Attn: Steven Venechanos, CFO
Copy to: Blank Rome Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
Telecopier No. (212) 885-5001
Attn: Martin Luskin, Esq.
27-
13.3 Amendments. This Agreement may only be amended or modified by a
written instrument executed by all of the parties hereto.
13.4 Entire Agreement. This Agreement, together with the Ancillary
Agreements, constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof, and supersedes all prior agreements
and understandings among the parties hereto, oral and written, with respect
to the subject matter hereof.
13.5 Applicable Law Jurisdiction. This Agreement shall be governed by
and construed in accordance with the laws of the State of Idaho, without
regard to the principles of conflicts of law thereof, and any action
brought hereunder shall be brought exclusively in the Federal courts
located in the State of Idaho or in the state courts located in Bonneville
County, Idaho. With respect to any action brought hereunder in said courts,
each party hereto (a) irrevocably waives any objection on the grounds of
venue, forum non-conveniens or any similar grounds and (b) irrevocably
consents to service of process in any manner permitted by applicable law
and consents to the jurisdiction of said courts.
13.6 Headings. The headings contained herein are for the sole purpose
of convenience of reference, and shall not in any way limit or affect the
meaning or interpretation of any of the provisions of this Agreement.
13.7 Assignment; Binding Effect. Neither this Agreement nor any of the
rights, interests or obligations hereunder may be assigned by any of the
parties hereto, by operation of law or otherwise, without the prior written
consent of the other parties hereto, and any such purported assignment
without such consent shall be null and void; provided, however, that Buyer
may assign any or all of its rights, interests and obligations hereunder to
any direct or indirect wholly owned subsidiary of Buyer. Subject to the
provisions of the immediately preceding sentence, this Agreement shall
inure to the benefit of, and be binding upon, the parties hereto and their
respective successors and permitted assigns.
13.8 Third Party Beneficiaries. Except as otherwise provided in
subparagraphs 10.2, 10.3 and 10.4 hereof, nothing in this Agreement,
express or implied, is intended to confer upon any person or entity other
than the parties hereto and their respective successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
13.9 Waiver, etc. The failure of any of the parties hereto to at any
time enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, nor to in any way affect
the validity of this Agreement or any provision hereof or the right of any
of the parties hereto to thereafter enforce each and every provision of
this Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument
executed by the party against which enforcement of such waiver is sought;
and no waiver of any such breach shall be construed or deemed to be a
waiver of any other or subsequent breach.
28-
13.10 Expenses. Except as otherwise specifically provided in this
Agreement or any of the Ancillary Agreements, all costs and expenses
incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such costs or
expenses, whether or not the transactions contemplated hereby are
consummated.
13.11 Telefacsimile Execution. Delivery of an executed counterpart of
this Agreement or any of the Ancillary Agreements by telefacsimile shall be
equally as effective as delivery of an original executed counterpart of
this Agreement or any of the Ancillary Agreements. Any party delivering an
executed counterpart of this Agreement or any of the Ancillary Agreements
by telefacsimile also shall deliver an original executed counterpart of
such instrument, but the failure to deliver an original executed
counterpart thereof shall not affect the validity, enforceability or
binding effect of this Agreement or any of the Ancillary Agreements.
(SIGNATURES ON FOLLOWING PAGE)
29-
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be duly executed on its behalf as of the date first above written.
BUYER:
SUPREMA SPECIALTIES NORTHWEST INC.
By: /s/ Mark Cocchiola
------------------------------------
Name: Mark Cocchiola
Title: President
SELLER:
SNAKE RIVER CHEESE, L.L.C.
By: Dairyland, Inc., its Manager
By: /s/ Frank L. VanderSloot
------------------------------------
Name: Frank L. VanderSloot
Title: President
AGREED TO ACCEPTED BY
WITH RESPECT TO
SUBPARAGRAPH 6.10:
MEMBERS:
/s/ Frank L. VanderSloot
------------------------------
Frank L. VanderSloot
Dairyland, Inc.
By: Frank L. VanderSloot
-------------------------
Name: Frank L. VanderSloot
Title: President
30-
EXHIBIT A
BILL OF SALE AND ASSIGNMENT
Bill of Sale and Assignment, made by Snake River Cheese, L.L.C., an Idaho
limited liability company ("Seller"), in favor of Suprema Specialties Northwest
Inc., a Delaware corporation, or its designee ("Buyer").
WHEREAS, pursuant to the provisions of the Assets Purchase Agreement (the
"Agreement"), dated as of November ___, 2000, by and between Seller and Buyer,
Seller agreed to sell to Buyer, and Buyer agreed to purchase from Seller, the
Purchased Assets (as defined in subparagraph 2.2 of the Agreement); and
WHEREAS, in accordance with the foregoing, Seller is executing and
delivering this Bill of Sale and Assignment to Buyer for the purpose of
transferring to and vesting in Buyer all of the properties and assets (excluding
the Real Property as defined in the Agreement) comprising the Purchased Assets;
NOW, THEREFORE, in consideration of the covenants in the Agreement
contained, and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Seller hereby sells, conveys,
transfers and assigns to, and vests in, Buyer, all of its right, title and
interest in and to, all of the properties and assets (excluding the Real
Property) comprising the Purchased Assets, free and clear of any and all liens,
claims, charges or encumbrances of any nature whatsoever.
TO HAVE AND TO HOLD all of the Purchased Assets (excluding the Real
Property) unto Buyer, its successors and assigns, forever.
Seller hereby irrevocably constitutes and appoints Buyer, its successors
and assigns, its true and lawful attorney and attorneys, with full power of
substitution, in its name and stead, but on behalf and for the benefit of Buyer,
its successors and assigns, to demand and receive any and all of the Purchased
Assets (excluding the Real Property), and to give receipts and releases for and
in respect of the same, and any part thereof, and from time to time to prosecute
in its name, or otherwise, for the benefit of Buyer, its successors and assigns,
any and all proceedings at law, in equity or otherwise, which Buyer, its
successors or assigns, may deem proper for the collection or reduction to
possession of any of the properties or assets (excluding the Real Property)
comprising the Purchased Assets or for the collection and enforcement of any
claim or right of any kind hereby sold, conveyed, transferred and assigned, and
to take all such other actions with respect to the Purchased Assets (excluding
the Real Property) as Buyer, its successors or assigns, in its sole discretion,
shall deem to be desirable in order to carry out the intent hereof.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale and
Assignment to be executed on its behalf by it duly authorized officer this ___
day of _________, ______.
SNAKE RIVER CHEESE, L.L.C.
By:__________________________
Name:
Title:
32-
EXHIBIT B
FIRST AMERICAN TITLE COMPANY OF EAST IDAHO, INC.
ESCROW INSTRUCTIONS
ORDER NO.: 843029
DATE OPENED: November 27, 2000
TO: FIRST AMERICAN TITLE COMPANY OF EAST IDAHO, INC.
THE UNDERSIGNED, First American Title Company of East Idaho, Inc.
(hereinafter referred to as First American), Snake River Cheese, L.L.C.
("Seller") and Suprema Specialties Northwest Inc. ("Buyer"), in consideration of
the premises and the consent of First American, to act as holder of the escrow
deposited herewith, (and as a neutral escrow depository pursuant to I.C.
54-2049) agree and represent as follows:
Seller has agreed to sell, and Buyer has agreed to purchase, the Purchased
Assets (as defined in the Purchase Agreement dated November 27, 2000 (the
"Purchase Agreement"), between Buyer and Seller, a copy of which is attached
hereto, for the consideration and under the terms as set forth therein and have
concurrently handed you the sum of Three Hundred Thousand and 00/100 Dollars
($300,000.00) as the deposit described in the Purchase Agreement to hold said
deposit under the terms and conditions of these instructions.
You are hereby authorized and instructed to deposit said $300,000 with
__________, into its ___________, with interest to be assessed and payable to
Buyer or Seller, as the case may be, in accordance with the provisions hereof.
1. The account will read: First American Title Company, Trustee for Snake
River Cheese, L.L.C. and Suprema Specialties Northwest Inc.
2. First American will not be held responsible for any loss of principal
and/or interest in said account (collectively, the "Escrow Fund"),
except if such loss is caused by First American's willful misconduct
or gross negligence.
3. First American has not represented nor is it guaranteeing any interest
or yield in said account.
4. Any fees or commissions of said deposit shall be paid 50% by Seller
and 50% by Buyer.
5. If said funds have not previously been withdrawn and unless notified
in writing to the contrary by both parties on or prior to January 5,
2001, First American shall
close said account and disburse the Escrow Fund into its general trust
account to be held pursuant to these instructions.
You are hereby authorized and instructed to hold the Escrow Fund until
happening of the following events, whichever first occurs:
A. If on or before January 5, 2001, First American receives a notice signed
by Buyer and Seller stating that the Closing (as defined in the Purchase
Agreement) has occurred, First American shall deliver the Escrow Fund (less the
Indemnification Fund) to Seller in accordance with such notice from Buyer.
B. If on or after January 5, 2001, First American receives a notice signed
by Seller stating that the conditions to Closing set forth in the Purchase
Agreement have not been satisfied (solely by reason of Buyer's failure to
perform its covenants and agreements thereunder in all material respects), First
American shall provide a copy of such notice to Buyer and, unless First American
has received an objection from Buyer no later than ten (10) days after the date
such notice was given to Buyer, First American shall deliver the Escrow Fund to
Seller in accordance with such notice from Seller.
C. If First American receives a notice signed by Buyer stating that the
Purchase Agreement was terminated for any reason other than Buyer's failure to
perform it covenants and agreements under the Purchase Agreement in all material
respects and the Closing has not occurred, First American shall provide a copy
of such notice to Seller and, unless First American has received an objection
from Seller no later than ten (10) days after the date such notice was given to
Seller, First American shall deliver the Escrow Fund to Buyer in accordance with
such notice from Buyer.
and each event, you are hereby authorized and instructed to pay over such funds
after first deducting additional fees and costs of the escrow, if any.
The parties to these instructions have instructed First American where and
how to deposit said funds. They thus agree that First American has no liability
for loss of funds caused by the deposits being placed in the account or
investment designated by the parties. First American shall not be liable for any
business failure of the depository or institution holding such deposits, or
investment. The parties acknowledge that the placement of the funds is being
directed by the parties based upon independent advice and not from any
recommendation of First American or its employees. The parties further agree
that any loss caused by the deposit being placed in the designated account or
investment is the responsibility of the parties; and if additional funds are
required to complete the escrow by reason of the loss of the funds, the parties
assume responsibility and agree to provide the funds. The parties and each of
them agree to hold First American harmless from any costs, expenses, attorneys'
fees or other loss which may arise by reason of the designation.
It is expressly understood among the parties hereto that First American
shall not be responsible or liable in any manner whatsoever for the sufficiency
of any deposit in this escrow, nor as to the identity, authority or rights of
any person executing the same; also that First
American assumes no responsibility, nor is it to be held liable as to the
condition of the title to any of the property affected hereby, nor as to any
assignments, liens, or encumbrances, against said deposit or property; and that
its duties hereunder shall be limited to the safekeeping of such money
consistent with these instructions and for the delivery of the same; it is
further agreed that First American shall in no case or event be liable for the
failure of any of the conditions of this escrow or damage or loss caused by the
exercise of First American's discretion in any particular manner, or for any
other reasons, except gross negligence or willful misconduct with reference to
the escrow.
If any dispute among the parties hereto by reason of the terms and
conditions hereof results in adverse claims and demands by Seller or Buyer
against First American, First American shall be entitled, at its option, to
refuse to comply with said demands so long as such dispute shall continue; and
in so refusing, First American may refuse to deliver any monies involved in or
affected by this escrow and in so refusing, First American shall not be or
become liable to the Buyer or Seller for First American's failure and/or refusal
to comply with the conflicting or adverse demands of the such party. Further,
First American shall be entitled to continue to so refrain to act until:
(a) Buyer and Seller have reached an agreement resolving their differences
and shall have notified First American in writing of such agreement,
or
(b) the rights of the parties have been duly adjudicated by a court of
competent jurisdiction.
In the event that First American shall be uncertain as to its duties or
rights hereunder or shall receive instructions, claims or demands from either
Buyer or Seller which, in its opinion, conflict with any of the provisions of
this Escrow Agreement or with instructions received from the other of Buyer or
Seller, as the case may be, First American shall be entitled to refrain from
taking any action and its sole obligation shall be (i) to keep safely all Escrow
Funds held in escrow until it shall be directed otherwise by an order or
judgment of a court of competent jurisdiction or (ii) to deliver the Escrow
Funds to a court of competent jurisdiction and commence an action for
interpleader or its equivalent. The costs of the foregoing shall be borne by
whichever of Buyer or Seller is the losing party.
If any dispute among the parties hereto by reason of the terms and
conditions hereof results in adverse claims and demands by Seller or Buyer or by
any other party against First American, First American shall have the right to
employ legal counsel to advise it and/or to represent it in any suit or action,
including an action in interpleader brought affecting this escrow and the Buyer
and Seller shall be jointly and severally liable to First American for any and
all attorneys' fees, costs, and disbursements incurred by First American in
connection herewith, and upon demand shall forthwith pay the same. First
American shall have a lien upon all monies, held in connection herewith for any
fees, costs, expenses or disbursements incurred.
The parties acknowledge that they have been specifically informed that
First American is not licensed to practice law and no legal advice has been
offered by First American or any of its employees and have been further informed
that First American is acting only as
35-
escrow holder and that it is forbidden by law from offering any advice to any
party respecting the merits of this escrow transaction or the nature of the
instruments utilized, and that it has not done so. The parties acknowledge that
they have not been referred by First American to any named attorney or attorneys
or discouraged from seeking advice of any attorney, but have been requested to
seek legal counsel of their own choosing at their own expense, if they have
doubt concerning any aspect of this transaction .
The parties understand and acknowledge that (i) First American is a title
insurance company agent for First American Title Insurance Company and in the
primary business of insuring land titles and (ii) simultaneously with the
execution of these instructions, First American shall issue a title commitment
to insure title to the real property described in the Purchase Agreement and in
the manner more particularly described in said commitment.
Any amendments of and/or supplement to any instructions contained herein
must be in writing and accepted by First American. If there is any conflict or
inconsistency between the provisions of these instructions and the provisions of
the attached Agreement these instructions shall prevail to the extent of any
inconsistency.
Notices or other written communications placed in the United States mail,
postage prepaid and addressed to the undersigned, or any of them, at their or
his post office address, shall be deemed to have been given to them or him on
the date of mailing.
[Signature page to follow]
36-
BUYER:
SUPREMA SPECIALTIES NORTHWEST INC.
By:
------------------------------------------------------
SSN#
----------------------------------
SELLER:
SNAKE RIVER CHEESE, L.L.C.
By:
-----------------------------------------
SSN#
---------------------------------------
Accepted by:
FIRST AMERICAN TITLE COMPANY OF EAST IDAHO, INC.
By:__________________________
Name:
Title:
37-
Exhibit C
FORM OF OPINION
1. The Company is a limited liability company duly organized and validly
existing in good standing under the laws of the State of Idaho with all
requisite power and authority to execute, deliver, and perform its
obligations under the Transaction Documents, to carry on its business as
now conducted, and to own its property and assets, including, without
limitation, the Purchased Assets. The Company has no subsidiaries.
2. To the best of our knowledge, each of Frank L. VanderSloot and Gary Seamons
is an individual with the requisite capacity, to execute, deliver and
perform his obligations under the Transaction Documents to which he is a
party. Dairyland, Inc. is an Idaho corporation with the requisite corporate
authority to execute, deliver and perform its obligations under the
Transaction Documents to which it is a party.
3. The execution and delivery of the Transaction Documents, and the
consummation of the transactions contemplated thereby, have been duly
authorized by all necessary action on the part of the Company. The
Transaction Documents have been duly executed and delivered by the Company,
and are valid and binding benefits and obligations of the Company
enforceable by and against the Company, as the case may be, in accordance
with their respective terms, except that such enforceability may be limited
by applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws or court decisions relating to
or affecting the enforcement of creditors' rights generally.
4. The execution, delivery and performance by the Company of the Transaction
Documents to which it is a party will not (i) violate or conflict with any
term of either the Articles of Organization or Operating Agreement of the
Company; or (ii) violate or, alone or with the passage of time, result in
the breach or termination of, or otherwise (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or
declare a default under any agreement to which the Company is a party or by
which it is bound, or to which any of the Company's properties, assets or
businesses are subject; or (iii) violate any judgment, order, injunction,
decree or award binding upon the Company or the business or assets of the
Company.
5. There is no (i) claim, suit, action, arbitration or legal, administrative
or other proceeding or governmental investigation or tax audit, pending or
threatened against or related to the Company or (ii) judgment, order,
injunction or decree of any court, governmental authority or regulatory
agency, to which either the Company or any Member is subject, which might
adversely affect or restrict the ability of the Company to consummate the
transactions in the manner contemplated by the Transaction Documents or
have an adverse effect on the Company.
6. Except as provided in the Schedules to the Purchase Agreement, no consent,
approval or
38-
authorization of or by, or any designation, declaration, filing,
registration, or qualification with any governmental authority is required
in connection with the execution, delivery and performance of the Company's
obligations under the Transaction Documents.
39-
SCHEDULES
TO
ASSET PURCHASE AGREEMENT
Schedule 2.2(i) - Tangible Property
1. The personal property listed on the appraisal commissioned by Buyer.
Schedule 2.2(ii) - Real Property
1. The land described in Schedule A.4 of the title report and all buildings
and improvements located thereon.
Schedule 2.2(iv) - Permits
1. Wastewater-Land Application Permit, LA-000084-03, Idaho Division of
Environmental Quality.
2. City of Blackfoot Industrial Wastewater Acceptance Permit dated October 12,
2000.
Schedule 2.5.2 - Allocation Statement
The Cash Purchase Price shall be allocated $1.5 million to the land, buildings
and improvements and $4.5 million to the equipment.
Schedule 4.3 - List of Members
The Members of Snake River Cheese LLC are:
Dairyland, Inc., an Idaho corporation (Managing Member)
Frank VanderSloot, and individual (Member)
Gary Seamons, an individual (Member)
Schedule 4.10 - Consents
1. The consent of the Idaho Department of Environmental Quality will be
required for the assignment to Buyer of the Wastewater Land Application
Permit, LA-000084-03.
Schedule 4.11 - Exceptions to Permits
1. Letter from Idaho DEQ dated September 12, 2000 regarding Permit
LA-000084-03.
Schedule 4.12 - Exceptions to Applicable Laws and Permits
1. Letter from Idaho DEQ dated September 12, 2000 regarding Permit
LA-000084-03.
Schedule 4.13(i) - Storage Tanks
1. Underground storage tanks identified in paragraph 6.2.4, and aboveground
storage tanks identified in paragraph 6.2.5 of the Phase I Site
Environmental Assessment prepared for Kraft General Foods by Triad
Engineering Incorporate, dated March 1994.
Schedule 4.13(ii) - Potentially Responsible Party Notices
None
Schedule 4.13(iii) - Environmental Reports
1. Phase I Site Environmental Assessment prepared for Kraft General Foods by
Triad Engineering Incorporated, dated March 1994.
2. All environmental reports with respect to the Purchased Assets obtained by
Buyer.
Schedule 4.15 - Employee Plans
None, other than the company vacation policy and insurance benefits.
Schedule 4.16 - Insurance Policies
1. $45,000,000 comprehensive all risk property and casualty policy issued by
ACE American Insurance Co. to ConAgra, Inc. - Beatrice Cheese naming Snake
River Cheese LLC as Additional Insured.
Schedule 4.24 - Title Report
1. Commitment for Title Insurance issued to Seller by First American Title
Insurance Company dated November 7, 2000 at 7:30 A.M., Order No., B43029.
Schedule 6.12 - Description of Optioned Property
The land, together with all buildings and improvements thereon, described as
follows:
Lots 11 through 16, Block 41, Danielson's Addition to the City of
Blackfoot, Bingham County, Idaho, as shown on the recorded plat thereof.
TOGETHER WITH all and singular the tenements, hereditaments, and
appurtenances thereunto belonging or in anywise appertaining, including all
water, water rights, ditch and ditch rights.
Schedule 11.1.5 - Exceptions to Title
1. Exceptions 1, 2, 3, 4, 5, 7, 8 and 9 of Schedule B - Section 2 of the Title
Report.
41-
Table of Contents
Page
42-
Master Lease Agreement
Lease No. 2557
THIS MASTER LEASE AGREEMENT ("Lease") is made this 28th day of December, 2000,
by and between PNC LEASING. LLC ("Lessor"), a subsidiary of PNC Bank, National
Association (the "Bank"), with an address at Two PNC Plaza, 13th Floor, 620
Liberty Avenue, Pittsburgh, Pennsylvania 15222-2719, and SUPREMA SPECIALTIES
NORTHWEST, INC. ("Lessee"), with its principal place of business at 510 East
35th Street, Paterson, New Jersey 07543-0280.
1 LEASE AGREEMENT. Lessor hereby leases to Lessee, and Lessee hereby
rents from Lessor, all the machinery, equipment and other personal property
(individually an "Item of Equipment" and collectively the "Equipment") described
in Schedules of Leased Equipment which may be executed by Lessor and Lessee and
attached hereto or incorporated herein by reference ("Schedules"). "Equipment"
shall mean the Equipment described in a specific Schedule, unless the context
clearly indicates otherwise. The disposition of any rights or obligations of
either party under this Lease in conjunction with any Schedule shall not affect
the rights and/or obligations with either party under any other Schedule, so
long as Lessee is not in default under this Lease or any Schedule beyond any
applicable cure period. In the event of any such default by Lessee beyond any
applicable cure period, Lessor may declare this Lease and any Schedule to be in
default hereunder and Lessor may proceed with its remedies against Lessee in
accordance with paragraph 24 herein, with respect to any particular Schedule or
all Schedules. The terms of this Lease are also modified by any one or more
Supplements which are attached to and which make reference to this Lease (a
"Supplement"). A Supplement contains terms and conditions applicable to the type
of equipment leasing product described therein. An executed counterpart of this
Lease (including any Schedules, Supplements, amendments, addenda or riders
thereto) or a photocopy thereof, together with an executed original of any
numbered Schedule (marked "Lessor," if more than one counterpart of such
Schedule is executed), shall be the original "lease" for the Equipment described
in such Schedule and together they shall constitute a separate and enforceable
lease. All other executed counterparts (if any) shall be marked and considered a
"Duplicate". Facsimiles will be considered "originals" upon receipt and
countersignature by Lessor for all evidentiary purposes including any
requirement of a "writing" under applicable Statute of Frauds provisions. To the
extent this Lease constitutes chattel paper, as that term is defined in the
Uniform Commercial Code as adopted and in effect in the Commonwealth of
Pennsylvania ("UCC"), no security interest in the Lease may be created through
the transfer of possession of any counterpart other than Lessor's counterpart of
the numbered Schedule.
2 TERM. The obligations under this Lease begin with Lessor's written
acceptance and shall end upon full performance and observance of all terms,
conditions and covenants of the Lease and any extensions. The rental term for
Equipment begins on the date indicated on the related Schedule and shall end on
the last day of the term stated in such Schedule. Lessee may not terminate the
Lease or any Schedule prior to the last day of the term except as otherwise
provided in such Schedule. Any interim rental term shall be set forth in any
such Schedule.
3 RENT. The rent, including interim rental payments, for the Equipment
shall be the amount stated in the applicable Schedule (the "Rent"). Rent is an
absolute obligation of
Lessee due as specified in each applicable Schedule irrespective of any claims,
demands, set-offs, actions, suits or proceedings that Lessee may have or assert
against Lessor or any vendor of Equipment. Rent shall be payable to Lessor at
P.O. Box 640306, Pittsburgh, PA 15264-0306, or at such other place as Lessor or
its assigns may designate in writing to Lessee.
4 DELINQUENT RENT PENALTY. If any Rent or other amount due is not paid
when due for ten (10) days following receipt of Lessor's invoice, Lessee agrees
to pay a delinquent rent penalty of three percent (3%) on the amount of such
Rent or other amount due, but not exceeding the lawful maximum, if any.
Delinquent interest at a rate per annum equal to the Bank's prime rate shall be
payable on demand with respect to all such delinquent amounts. Interest shall
accrue whether or not judgment has been entered.
5 ADVANCES. Before the beginning date of the base lease term, Lessor may
in its sole discretion make such advances, deposits and reimbursements as may be
required for purchase of the Equipment. Before Lessor makes any advance, Lessee
agrees to sign and deliver a Progress Payment Addendum and any other documents
Lessor may reasonably request, such as certified resolutions, incumbency
certificates or other evidence of authority and opinions of counsel in form and
substance reasonably satisfactory to Lessor.
6 DELIVERY AND INSTALLATION. Lessee will select the Equipment and the
supplier, and in reliance thereon, Lessor will order the Equipment, or Lessor
may, at its option, accept from Lessee an assignment of any existing purchase
order. Lessor shall not be liable for loss or damage for any reason, such as
failure of or delay in delivery, delivery to wrong location, delivery of
improper equipment or property other than the Equipment, defects in or damage to
the Equipment, governmental regulations, strikes, embargoes or other causes,
circumstances or events. If the cost of any Item of Equipment differs from the
price set forth in the purchase order, the periodic rental shall be changed to
fully reflect any such difference.
7 WARRANTY OF LESSEE'S QUIET POSSESSION. Lessor covenants, subject to
the disclaimer of warranties set forth immediately below, that so long as Lessee
faithfully performs this Lease, Lessee may quietly possess and use the Equipment
without interference by Lessor, or by any party claiming by or through Lessor.
8 DISCLAIMER OF WARRANTIES. LESSEE ACKNOWLEDGES AND AGREES THAT (i) THE
EQUIPMENT AND EACH PART THEREOF IS OF A SIZE, DESIGN, CAPACITY, AND MANUFACTURE
SELECTED BY AND ACCEPTABLE TO LESSEE, (ii) LESSEE IS SATISFIED THAT THE
EQUIPMENT AND EACH PART THEREOF IS SUITABLE FOR ITS RESPECTIVE PURPOSE, (iii)
LESSOR IS NOT A MERCHANT, MANUFACTURER OR A DEALER IN PROPERTY OF SUCH KIND,
(iv) THE EQUIPMENT AND EACH PART THEREOF IS LEASED HEREUNDER SUBJECT TO ALL
APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW IN EFFECT OR HEREAFTER ADOPTED
AND IN THE STATE AND CONDITION WHEN THE SAME FIRST BECAME SUBJECT TO TIES LEASE,
WITHOUT REPRESENTATION OR WARRANTY OF ANY KIND BY LESSOR AND (v) LESSOR LEASES
THE EQUIPMENT, AS IS, WITHOUT WARRANTY OR REPRESENTATION, EITHER EXPRESS OR
IMPLIED, AS TO (A) THE CONDITION, FITNESS, DESIGN, QUALITY, CAPACITY,
WORKMANSHIP, OPERATION, AND MERCHANTABILITY OF THE EQUIPMENT, (B) LESSOR'S TITLE
THERETO, OR (C) ANY OTHER MATTER WHATSOEVER, IT BEING AGREED THAT ALL SUCH
RISKS, AS BETWEEN LESSOR AND LESSEE, ARE TO BE BORNE BY LESSEE, AND THE BENEFITS
OF ANY AND ALL IMPLIED WARRANTIES AND REPRESENTATIONS OF LESSOR ARE HEREBY
WAIVED BY LESSEE. Lessor is not responsible or liable for any direct, indirect,
incidental, or consequential damage to, or loss resulting from, the
installation, operation, or use of the Equipment or any product manufactured
thereby. Lessee's recourse for breach of any representation or warranty of the
vendor or supplier is limited to such vendor or supplier. Lessee will be
subrogated to Lessor's claims, if any, against the manufacturer or supplier of
the Equipment for breach of any warranty or representation and, upon written
request from Lessee, Lessor shall take all reasonable action requested by Lessee
to enforce any such warranty, express or implied, applicable to any of the
Equipment, which is enforceable by Lessor in its own name, provided, however,
that (a) Lessee is not in default and (b) Lessor shall not be obligated to
resort to litigation to enforce any such warranty unless Lessee shall pay all
expenses in connection therewith. Notwithstanding the foregoing, Lessee's
obligations to pay the rentals or otherwise under this Lease shall be and are
absolute and unconditional. All proceeds of any such warranty recovery from the
manufacturer or supplier of the Equipment shall first be used to repair the
affected Equipment
9 NATURE OF EQUIPMENT. The Equipment shall remain personal property even
if it is affixed to any real property. Lessee shall obtain and cause to be
recorded, where appropriate, at its own expense, from each landlord, owner,
mortgagee or any person or entity having an encumbrance or lien upon the real
property where any of the Equipment is located, a waiver of any lien,
encumbrance or interest which such third party might have or hereafter obtain or
claim with respect to the Equipment. Lessee, at its expense, will protect and
defend Lessor's title to the Equipment and will do everything required to keep
the Equipment free and clear of all claims, levies, liens and encumbrances.
Lessor assumes no liability and makes no representation as to the treatment by
Lessee of this Lease, the Equipment, or the rental payments for financial
accounting or tax purposes.
10 LESSOR'S RIGHT OF INSPECTION. Lessor, or its authorized agents, shall
have the right during normal business hours to enter upon the premises where the
Equipment is located for the purpose of inspection. Provided no Event of Default
has occurred and is continuing, Lessor shall provide Lessee prior notice of such
inspection.
11 USE OF EQUIPMENT. Lessee represents that it is leasing the Equipment
for a business or commercial purpose and not for personal, family or household
use. Lessee must use the Equipment in a careful and proper manner in conformity
with (i) all statutes and regulations of each governmental authority having
jurisdiction over Lessee and/or the Equipment and its use, and (ii) all policies
of insurance relating to the Equipment and/or its use. In addition, Lessee shall
not (i) use the Equipment in any manner that would impair the applicability of
manufacturer's warranties or render the Equipment unfit for its originally
intended use; (ii) permit anyone other than authorized and competent personnel
to operate the Equipment; nor (iii) terminate the use of the Equipment prior to
the last day of the term indicated in the applicable Schedule except as
otherwise expressly provided for in this Agreement.
12 ALTERATIONS. Without Lessor's prior written consent, Lessee may only
make alterations, modifications or attachments to the Equipment which maintain
or improve its economic value, economic and useful life, or functional utility.
To the extent alterations, modifications and attachments made to the Equipment
are not removed upon the termination of the Lease, they shall automatically
become Lessor's property. Under no circumstances shall any such alteration,
modification or attachment be subject to third party financing or encumbered by
Lessee or result in the creation of a mechanic's or materialman's lien, except
as may arise by operation of law pending payment within ordinary business terms.
13 MAINTENANCE AND REPAIRS. At its expense Lessee shall maintain,
operate, repair and make all modifications to the Equipment in accordance with
good industry practice, manufacturer's warranty requirements and specifications
and Lessee's established operation, maintenance and repair programs, without
discrimination as to leased equipment, so as to keep the Equipment in good
working order for commercial purposes, and so as to comply with all applicable
laws, regulations or governmental actions and so as not to incur liability
(whether or not there is a lack of compliance) under any environmental law or
otherwise account for any release of, or exposure to, any hazardous material.
Lessor shall not be required to maintain, repair or replace the Equipment or
part thereto and Lessee hereby waives the right, however arising, to (i) require
Lessor to maintain, repair or replace any of the Equipment or part thereto, or
(ii) make repairs at Lessor's expense pursuant to any applicable law. Lessor
may, upon reasonable advance notice to Lessee, review Lessee's established
operating procedures and maintenance records to assure compliance with this
section. Upon installation, title to replacement parts shall pass to Lessor, and
be deemed part of the Equipment.
14 RISK OF LOSS, DAMAGE AND THEFT.
A. Lessee will bear all risk of loss, damage, theft or destruction,
partial or complete, to the Equipment from and after delivery of the
Equipment to a carrier FOB point of origin, whether the terms of shipment
require or authorize the Equipment to be shipped by carrier, to be
delivered to Lessee's place or places of business, or provide that Lessee
accept possession of or title to the Equipment at any other location.
Lessee shall promptly notify Lessor of any theft of or loss or material
damage to the Equipment
B. Neither total nor partial loss of use or possession of the
Equipment shall abate the rent.
C. The Equipment shall be deemed subjected to total loss (i) if it has
disappeared regardless of the reason for disappearance or (ii) if it has
sustained physical damage and the estimated cost of repair exceeds 75% of
its fair market value on the date of damage. Lessee's duty to pay Rent for
the Equipment subjected to total loss shall be discharged by paying to
Lessor, on demand, ail accrued but unpaid Rent for such Equipment as of the
date of disappearance or damage, plus the greater of: (i) Lessor's book
value of the Equipment, which shall be deemed to be the Equipment's cost as
set forth in the applicable Schedule minus straight-line depreciation based
on recognized physical life prorated to the date of disappearance or
damage, or (ii) the fair market value of the Equipment as of the date of
disappearance or damage. The amount of applicable
insurance proceeds, if any, actually received by Lessor shall be subtracted
from the amount for which Lessee is liable under this paragraph 14.
D. Lessee shall cause the Equipment subjected to partial loss to be
restored to original capability. Lessor shall, as such restoration proceeds
upon terms and conditions reasonably acceptable to Lessor, pay to Lessee
the proceeds of any insurance or compensation received by Lessor, by reason
of such partial loss.
E. Lessor shall not be obligated to undertake the collection of any
claim against any person for either total or partial loss of the Equipment.
After Lessee discharges its obligations to Lessor under either paragraph
14(c) or 14(d) above, Lessee may, for Lessee's own account, proceed to
recover from third parties and shall be entitled to retain any amount
recovered. Lessor shall supply Lessee with any necessary assignment of
claim.
15 INDEMNIFICATION.
A. Non-Tax Liability. Lessee agrees to indemnify each of Lessor, its
directors, officers and employees and each legal entity, if any, who
controls Lessor (the "Indemnified Parties") and to hold each Indemnified
Party harmless from and against any and all claims, damages, losses,
liabilities and expenses (including all reasonable fees and charges of
internal or external counsel with whom any Indemnified Party may consult
and all reasonable expenses of litigation or preparation therefor) which
any indemnified Parry may incur or which may be asserted against any
Indemnified Party in connection with or arising out of the Lease or any
related document by any person, entity or governmental authority (including
any person or entity claiming derivatively on behalf of Lessee), whether
(a) arising from or incurred in connection with any breach of a
representation, warranty or covenant by Lessee, (b) the manufacture,
installation, use, condition (including, but not limited to, latent and
other defects and whether or not discoverable by Lessee or Lessor),
operation, ownership, selection, delivery, leasing, removal or return of
the Equipment, regardless of where, how and by whom operated, or (c)
arising out of or resulting from any suit, action, claim, proceeding or
governmental investigation, pending or threatened, whether based on
statute, regulation or order, or tort, or contract or otherwise, before any
court or governmental authority, which arises out of or relates to the
Lease or any related document; provided, however, that the foregoing
indemnity agreement shall not apply to claims, damages, losses, liabilities
and expenses to the extent attributable to an Indemnified Party's gross
negligence or willful misconduct. The indemnity agreement contained in this
Section shall survive the termination of this Lease, payment of any amounts
due and assignment of any rights hereunder. Lessee may participate at its
expense in the defense of any such action or claim.
B. Direct Tax Costs. Lessee agrees to indemnify, protect, and hold
harmless each Indemnified Party, from and against any and all taxes,
license fees, assessments and other governmental charges, fees, fines or
penalties of whatsoever kind or character and by whomsoever payable, which
are levied, assessed, imposed or incurred during the lease
term, (i) on or relating to the Equipment, including any tax on the sale,
ownership, use, leasing, shipment, transportation, delivery or operation
thereof, (ii) on the exercise of any option, election or performance of any
obligation by Lessee hereunder, (iii) of the kind generally referred to in
items (i) and (ii) above which may remain unpaid as of the date of delivery
of the Equipment to Lessee irrespective of when the same may have been
levied, assessed, imposed or incurred, and (iv) by reason of all gross
receipts and like taxes on or measured by Rents payable hereunder levied by
any state or local taxing authority having jurisdiction where the Equipment
is located. Lessee agrees to comply with all state and local laws requiring
the filing of ad valorem tax returns relating to the Equipment. Any
statements for taxes received by Lessor shall be promptly forwarded to
Lessee. This subparagraph shall not be deemed to obligate Lessee to pay (i)
any taxes, fees, assessments and charges which may have been included in
Lessor's cost of the Equipment as set forth in Schedule(s) hereto, or (ii)
any income or like taxes against Lessor on or measured by the net income
from the Rents payable hereunder. Lessee shall not be obligated to pay any
amount under this subparagraph so long as it shall, at its expense and in
good faith and by appropriate proceedings, contest the validity or the
amount thereof unless such contest would adversely affect the title of
Lessor to the Equipment or would subject the Equipment to forfeiture or
sale. Lessee agrees to indemnify each Indemnified Party against any loss,
claim, demand and expense including reasonable legal expense resulting from
such nonpayment or contest.
C. Indemnity Payment. The amount payable pursuant to subparagraphs
15(a) and 15(b) shall be payable upon demand of Lessor accompanied by a
statement describing in reasonable detail such loss, liability, injury,
claim, expense or tax and setting forth the computation of the amount so
payable and such other information as Lessee may reasonably request.
D. Survival. The indemnities and assumptions of liabilities and
obligations of this paragraph 15 shall continue in full force and effect
notwithstanding the expiration or other termination of this Lease.
16 LESSEE'S ASSIGNMENT. Without Lessor's prior written consent, Lessee
shall not assign, bail, sublease, hypothecate, transfer or dispose of the
Equipment or any interest in this Lease nor impair Lessor's title to the
Equipment. No assignment, whether or not with Lessor's consent, shall release
Lessee or any guarantor from any of its respective obligations or otherwise
materially adversely affect an-, rights or remedies of Lessor under the Lease.
Any attempted assignment without Lessor's written consent shall be void and of
no effect. Lessee shall not assign this Lease, nor shall this Lease or any
rights under this Lease or in the Equipment inure to the benefit of any trustee
in bankruptcy, receiver, creditor, or other successor of Lessee whether by
operation of law or otherwise. Notwithstanding the foregoing. Lessee may,
without Lessor's prior consent, replace all or any portion of the Equipment,
provided that the value of the replacement equipment is equal to or greater than
the value of the replaced Equipment.
17 LESSOR'S ASSIGNMENT. All rights of Lessor hereunder in the Rents and
in the Equipment may be assigned, pledged, mortgaged, transferred, or otherwise
disposed of,
either in whole or in part, following notice to Lessee. No such assignee shall
be obligated to perform any duty, covenant, or condition required to be
performed by Lessor under the terms of this Lease unless such assignee expressly
assumes such obligations. Lessor shall remain liable to Lessee hereunder to
perform such duty, covenant, and condition unless such assignee expressly
assumes Lessor's obligations, in which event Lessee hereby releases Lessor from
such obligations. Such assignee shall have all rights, powers and remedies given
to Lessor by this Lease, and shall be named as lender loss payee or co-insured
under all policies of insurance maintained pursuant to paragraph 18 hereof. If
Lessor assigns this Lease or the monies due or to become due hereunder or any
other interest herein, Lessee agrees not to assert against Lessor's assignee any
defense, set-off, recoupment, claim or counterclaim which Lessee may have
against Lessor, whether arising under this Lease or any other transaction
between Lessor and Lessee. Subject to paragraph 16 hereof and this paragraph 17,
this Lease inures to the benefit of, and is binding upon the heirs, personal
representatives, successors and assigns of the parties hereto.
18 INSURANCE. Lessee will at its own expense insure the Equipment in
compliance with the terms and conditions of the applicable Supplement, in form,
in an amount and subject to deductibles as are commercially reasonable in
Lessor's good faith judgment, with insurance carriers reasonably approved by
Lessor. The proceeds of any insurance claim due to the theft or loss of or
damage to the Equipment shall be applied as provided in paragraph 14 hereof In
addition to the compliance with the terms and conditions of the applicable
Supplement and the other terms and conditions of this paragraph 18, Lessee shall
comply with the following conditions:
A. Lessee, prior to the inception of the term, shall deliver to Lessor
all required policies of insurance or other proper binding evidence of
insurance, which shall be sufficiently detailed to advise Lessor of all
types of coverage and inclusions;
B. Lessee shall cause each insurer to agree by endorsement to the
policies that each insurer will give at minimum thirty (30) days' written
notice to Lessor before any policy will be altered or cancelled for any
reason, including Lessee's failure to pay premiums;
C. All coverage must be in effect upon delivery, or when Lessee
assumes the risk of loss, whichever is earlier, and will provide coverage
without geographic limitation;
D. All policies must provide that Lessor is an additional insured for
all aspects of general liability insurance, and is lender loss payee for
all aspects of insurance relating to the theft or loss of or damage to the
Equipment;
E. Lessee will famish renewal policies or renewal evidence of
insurance listing Lessor as an additional insured and lender loss payee, as
required by this Lease, no later than thirty (30) days prior to the
expiration of any insurance required hereby;
F. Lessee appoints Lessor its attorney-in-fact to apply any insurance
proceeds received with respect to the Equipment in accordance with this
Agreement.
19 ADDITIONAL DOCUMENTS. If Lessor shall so request, Lessee shall execute
and deliver to Lessor such documents, including UCC financing, amendment and
continuation statements, as Lessor shall, in its reasonable judgment, deem
necessary or desirable for purposes of continuing this Lease or recording or
filing to protect the interest of Lessor in the Equipment. By its signature
hereon, Lessee hereby authorizes Lessor to execute and file against Lessee any
such UCC financing, amendment and continuation statements. Any such filing or
recording shall not be deemed evidence of any intent to create a security
interest. All filing fees and expenses shall be borne by Lessee.
20 FURNISHING FINANCIAL INFORMATION. During the term of this Lease and
any extensions or renewals hereof, Lessee will furnish to Lessor:
A. As soon as available, but in any event within ninety (90) days
after the last day of each of its fiscal year ends, the Form 10-K report of
Suprema Specialties, Inc. (the "Parent") and its subsidiaries, including
Lessee, Suprema Specialties West, Inc., and Suprema Specialties Northeast,
Inc. (collectively, the "Subsidiaries") as at the end of such fiscal year
and statements of income and retained earnings and cash flows for such
fiscal year, each prepared in accordance with GAAP and audited by a firm of
independent certified public accountants reasonably satisfactory to the
Lessor (with such audit to be accompanied by an unqualified opinion of such
independent certified public accountant (other than immaterial
qualifications) without limitation as to the scope of such audit), together
with management prepared consolidated and consolidating balance sheets.
Management shall provide an itemized statement of capitalized expenses,
which shall be broken out on the management balance sheet, and any expenses
related thereto shall be itemized on the management income statement.
Management shall also provide a breakdown of selling, general and
administrative expenses. Notwithstanding the foregoing, if the Parent has
been granted an extension from filing its Form 10-K report by the
Securities and Exchange Commission, then the reports required hereunder
shall be due simultaneously with the filing thereof, but in no event later
than one hundred ten (110) days from the last day of its fiscal year.
B. As soon as available, but in any event within forty-five (45) days
after the close of each of the first three quarters of each fiscal year,
Form I O-Q report and management prepared consolidated and consolidating
balance sheets, statements of income and retained earnings and cash flows
of the Parent and the Subsidiaries as of the last day of and for such
quarter and for the period of the fiscal year ended as of the close of the
particular quarter, all such quarterly statements to be certified by the
chief financial or accounting officer of the Parent as having been prepared
in accordance with GAAP (subject to year-end adjustments and other
exceptions specified therein). Management shall provide an itemized
statement of capitalized expenses, which shall be broken out on the
prepared balance sheet, and any expenses related thereto shall be itemized
on the prepared income statement. Management shall also provide a breakdown
of selling. general and administrative expenses. Notwithstanding the
foregoing, if the Parent has been granted an extension from filing its Form
10Q report by the Securities and Exchange Commission, then the reports
required hereunder shall be due simultaneously
with the filing thereof, but in no event later than fifty (50) days from
the last day of its fiscal year.
All such financial statements required by this paragraph 20 (the "Financial
Statements") are to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein (except (i) as
approved by such accountants or the chief financial officer of the Parent, as
the case may be, and disclosed therein and (ii) with respect to any interim
statements which may not include all disclosure required by GAAP).
C. At the same time as Lessee delivers the financial statements called
for by subparagraphs (a) and (b) above, the Parent shall deliver to Lessor
the certificate of its chief financial officer as called for in Section
10.2 of the Syndicated Revolving Credit Facility, as that agreement is
defined in paragraph 21 below, as the same may be amended from time to
time.
21 INCORPORATION OF COVENANTS BY REFERENCE. Any and all affirmative,
negative and financial covenants which may be set forth in any credit agreement,
loan agreement, promissory note, guaranty or other agreement, instrument or
document entered into between Lessee (or any of its affiliates) as borrower and
any affiliate of Lessor, as lender (whether directly as a lender to Lessee or as
one lender in a bank syndicate agreeing to lend to Lessee, or as holder of a
participation in a loan by another lender to Lessee), including, without
limitation, that certain Third Amended Restated Revolving Loan, Guaranty and
Security Agreement dated September 23, 1999, between Lessee and Fleet National
Bank, et al. (the "Syndicated Revolving Credit Facility") (the "Loan
Documents"), are hereby incorporated herein by this reference as if set forth
herein at length, as any of the foregoing may be amended or supplemented from
time to time (the "Incorporated Provisions"). Any amendments, modifications,
waivers or other changes in the terms of any of the Incorporated Provisions
shall automatically constitute an amendment to this Lease without any need for
further action or documentation. Notwithstanding the foregoing, any such changes
to any Incorporated Provision which operate to waive or prevent the occurrence
of a default or Event of Default under any Loan Document shall not be effective
unless consented to in writing by Lessor in its sole discretion. If any Loan
Document terminates or otherwise ceases to be in full force and effect (a
"Termination"), all of the Incorporated Provisions of such Loan Document shall
survive the Termination and shall continue in full force and effect as a part of
this Lease. At any time after a Termination, Lessee shall promptly upon Lessor's
request execute and deliver to Lessor an amendment to this Lease, which
amendment will expressly incorporate into this Lease all or any number of the
Incorporated Provisions of the terminated Loan Document as Lessor in its sole
discretion shall select, as such Incorporated Provisions are in effect
immediately prior to the date of Termination.
22 PERFORMANCE OF OBLIGATIONS OF LESSEE BY LESSOR. If Lessee fails to
promptly perform any of its obligations (other than payment obligations) under
this Lease for more than thirty (30) days following notice from Lessor, Lessor
may perform the same for the account of Lessee without waiving Lessee's failure
as a default All sums paid or expense or liability incurred by Lessor in such
performance (including reasonable legal fees) together with interest thereon at
the highest contract rate enforceable against Lessee. but never at a higher rate
than fifteen percent (15%) per annum simple interest, shall be payable by Lessee
upon demand as additional rent.
23 EVENTS OF DEFAULT. Any of the following events or conditions shall
constitute an event of default ("Event of Default") hereunder and entitle
Lessor, at its option, to avail itself of the remedies more fully set forth in
paragraph 24 hereof:
A. Non-payment by Lessee of any Rent or other amount provided for in
this Lease when due, which continues for a period of ten (10) days
following the date of invoicing from Lessor;
B. Lessee shall (i) fail to perform any covenant or requirement
relating to insurance or environmental matters; (ii) fail to keep the
Equipment free and clear of any claims, levies, liens and encumbrances;
(iii) fail to prevent the Equipment from being subjected to a foreclosure
or forfeiture proceeding, execution or attachment; or (iv) terminate the
Lease or any Schedule prior to the last day of the term;
C. Death or judicial declaration of incompetency of Lessee, if an
individual, or death or judicial declaration of incompetency of an
individual partner or member, if Lessee is a partnership or limited
liability company;
D. The filing by or against Lessee of any proceeding in bankruptcy,
receivership, insolvency, reorganization, liquidation. conservatorship, or
similar proceeding (and in the case of any such proceeding instituted
against Lessee, such proceeding is not dismissed or stayed within ninety
(90) days of the commencement thereof, provided that Lessor shall not be
obligated to advance additional funds during such period);
E. Lessee shall make an assignment for the benefit of creditors, or
any levy, garnishment, attachment or similar proceeding is instituted
against any property of Lessee held by or deposited with Lessor;
F. A final judgment for the payment of money in excess of $250,000 is
rendered against Lessee, or any attachment proceedings are instituted with
respect to any significant portion of Lessee's assets or property, and the
same shall remain undischarged for a period of ninety (90) days during
which execution shall not be effectively stayed;
G. Lessee, or any affiliate of Lessee, shall default in the payment of
principal and/or interest when due (whether by acceleration or otherwise)
or shall default in the performance of any obligation or indebtedness owed
to the Bank or to any subsidiary or affiliate of the Bank (whether directly
as a lender to Lessee or as one lender in a bank syndicate agreeing to lend
to Lessee or Lessee's affiliate, or as holder of a participation in a loan
by another lender to Lessee or lessee's affiliate), which obligation shall
remain in default for lack of performance or which indebtedness shall
remain unpaid and unsatisfied following the conclusion of any applicable
grace period in respect to such obligation or indebtedness;
H. If (i) the Lessee ceases to be a wholly owned subsidiary of Suprema
Specialties, Inc. ("Suprema"); or (ii) either Mark Cocchiola or Paul
Lauriero is no longer actively involved in the day-to-day management of
Suprema and the Lessee as President and Executive Vice President,
respectively, in substantially the same manner as presently exist; or (iii)
Suprema and the Lessee shall fail to continue to engage principally in the
businesses of the same general type now conducted by them and preserve,
renew and keep in full force and effect their respective corporate
existences and take all reasonable action to maintain all rights,
privileges, licenses and franchises necessary or desirable as determined in
the normal conduct of their respective businesses and comply in all
material respects with all material contractual obligations and
requirements of law;
I. Any event described in subparagraphs 23(c) through 23(g) hereof
shall occur with respect to any guarantor or any other party liable for
payment or performance of this Lease;
J. Any certificate, or written statement, representation, warranty or
financial statement furnished pursuant to or in connection with this Lease
by or on behalf of Lessee or any guarantor or other party liable for
payment or performance of this Lease is false in any material respect at
the time as of which the facts therein set forth were stated or certified,
or omits any substantial contingent or unliquidated liability or claim
against Lessee or any such guarantor or other party, or, upon the date of
execution of this document or any Schedule, there shall have been any
materially adverse change in any of the facts disclosed by any such
certificate, statement, representation or warranty, which shall not have
been disclosed in writing to Lessor at or prior to the time of execution of
this document or such Schedule;
K. An event of default shall have occurred under any other lease
agreement wherein Lessor is, at the time of such default, the "lessor" and
Lessee is the "lessee";
L. An event of default shall have occurred under the Syndicated
Revolving Credit Facility;
M. Lessee shall fail to perform any non-monetary covenant, obligation,
term or condition of this Lease not described in this Paragraph 23 which
failure continues for a period of thirty (30) days following the date of
written notice thereof to Lessee by Lessor; provided, however, if such
default is of a nature that it cannot reasonably be cured within thirty
(30) days, if Lessee fails to (i) commence curing such default within
thirty (30) days and (ii) diligently pursue the curing of such default.
24 REMEDIES. Upon the occurrence of any Event of Default hereunder, the
rights and duties of the parties shall be as set forth in this paragraph, Lessor
may elect, in its sole discretion, to do one or more of the following upon the
occurrence of an Event of Default and at any time thereafter:
A. Upon written notice to Lessee terminate this Lease as to any or all
of the Schedules then in effect;
B. Demand that Lessee return the Equipment to Lessor whereupon Lessee
shall promptly deliver the Equipment to Lessor to the place or places
designated by Lessor. If Lessee does not so deliver the Equipment, Lessee
shall make the Equipment available for retaking and authorizes Lessor, its
employees and agents to enter Lessee's premises and any other premises
(insofar as Lessee can permit) for the purpose of retaking. In the event of
retaking, Lessee expressly waives all rights to possession and all claims
for injuries to persons or property suffered through or loss caused by
retaking. Any repossession accomplished under this paragraph 24(b) shall
not release Lessee from liability for damages of Lessor sustained by reason
of Lessee's default hereunder.
C. Lessor may revoke Lessee's privilege of paying Rent in installments
causing acceleration of all remaining Rents through the remaining term of
the Lease, and, upon Lessor's demand, as liquidated damages, and not as a
penalty, Lessee shall promptly pay to Lessor the aggregate of (i) all Rent
accrued and unpaid prior to the date of such Event of Default, (ii) all
future Rent due through the end of the basic term or through the end of the
current renewal term, as the case may be, discounted to present value, the
discount rate to be applied equal to the discount rate of the Federal
Reserve Bank of Cleveland then in effect on the earlier of the date of
entry of judgment on such claim or the date of payment of such sum by
Lessee, (iii) all costs and expenses incurred by Lessor in the
repossession, recovery, storage, repair, inspection, appraisal,
refurbishing, sale, release or other disposition of the Equipment, (iv)
reasonable attorney's fees and costs, including any fees or costs incurred
by Lessor in defending any action relating to this Lease or participating
in any bankruptcy or insolvency proceeding to which Lessee is a party, or
otherwise incurred due to Lessee's default, (v) the estimated residual
value of the Equipment as of the end of the current term of the Lease, if
any, and (vi) any claim for indemnity under paragraph 15 of this Agreement
or under the Supplement, if any, in favor of Lessor hereunder. In the event
that any court having jurisdiction shall determine that in calculating
damages hereunder as a result of a default by Lessee that sums payable in
the future under the Lease, other than future Rent, must be discounted to
present value, the discount rate to be applied equal to the discount rate
of the Federal Reserve Bank of Cleveland then in effect on the earlier of
the date of entry of judgment on such claim or the date of payment of such
sum by Lessee.
D. In its sole discretion, Lessor may sell or release the Equipment or
any part thereof, at public auction or by private sale or lease at such
time or times and upon such terms as Lessor may determine, free and clear
of any rights of Lessee and, if notice thereof is required by law, any
notice in writing of such sale or lease by Lessor to Lessee given not less
than ten (10) days prior to the date thereof shall constitute reasonable
notice thereof to Lessee. All proceeds of the sale or releasing, or both,
less (i) all expenses incurred in retaking the Equipment, making necessary
repairs to the Equipment and enforcing this Lease, (ii) all damages that
Lessor shall have sustained by reason of Lessee's default, and (iii)
reasonable attorney's fees and expenses shall be credited against Lessee's
liability hereunder as and when received by Lessor. Sums in excess of
Lessee's liability shall belong to Lessor. Lessee shall be liable for any
deficiency.
E. The provisions of this paragraph 24 shall not prejudice Lessor's
right to recover or prove damages for unpaid Rent accrued prior to default,
or bar an action for a deficiency as herein provided, and the bringing of
an action with an entry of judgment against Lessee shall not bar Lessor's
right to repossess any or all of the Equipment
F. Lessor's remedies shall be available to Lessor's successors and
assigns, shall be in addition to all other remedies provided to it under
the UCC (specifically, the remedies set forth in 13 Pa. C.S. ss.ss.
2A523(a), (b) and (c), or by any other applicable law, and may be exercised
concurrently or consecutively. LESSEE WAIVES ANY AND ALL RIGHTS TO NOTICE
AND TO JUDICIAL HEARING WITH RESPECT TO THE REPOSSESSION OF THE EQUIPMENT
BY LESSOR IN THE EVENT OF A DEFAULT HEREUNDER BY LESSEE.
G. Lessor shall use commercially reasonable efforts to mitigate its
damages under this Agreement.
25 LESSEE REPRESENTATIONS AND WARRANTEES. In order to induce Lessor to
enter into this Lease and to lease the Equipment to Lessee, Lessee represents
and wan-ants, as of the date hereof, and as of the date of execution of each
Schedule hereunder, that:
A. If not a natural person, Lessee is duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization
with full power and authority to conduct its business as such business is
presently being conducted, to own or hold property under lease and to enter
into and perform its obligations under this Lease. Lessee is duly qualified
to do business and is in good standing as a foreign entity in all states
where its failure to so qualify would have a material adverse effect on its
ability to perform its obligations under this Lease.
B. Lessee has full power and authority to enter into the transactions
provided for in this Lease and has been duly authorized to do so by all
necessary and appropriate action and, when executed and delivered by
Lessee, this Lease will constitute the legal, valid and binding obligations
of Lessee, enforceable in accordance with its terms.
C. The execution, delivery, and performance by Lessee of this Lease
and all related instruments and the consummation by Lessee of the
transactions contemplated hereby: (i) do not require any stockholder
approval or the consent of any trustee or holder of any indebtedness or
obligation of Lessee or any consent, authorization, or approval of, any
filing of or registration with, or other action in respect to any federal,
state, governmental authority or agency (or, if so required, such approval
or consent has been obtained), (ii) do not and will not result in any
material violation of any term of any agreement, instrument, judgment,
decree, franchise, permit, order, law, statute, rule, or governmental
regulation presently applicable to it, (iv) are not in conflict with and do
not constitute a default under any of the terms or provisions of, or
subject the leased Equipment or any part thereof to any lien of, any
indenture, mortgage, lease, contract, or other agreement or instrument
(other than this Lease) to which Lessee is a party or by
which it or its property is bound or affected, and (v) do not and will not
contravene Lessee's articles of incorporation and by-laws or other
organizational documents.
D. There are no pending actions or proceedings to which Lessee is a
party, and there are no other pending or threatened actions or proceedings
of which Lessee has knowledge, before any court, arbitrator, or
administrative agency, which would materially adversely affect the
financial condition of Lessee or the ability of Lessee to perform its
obligation hereunder. Further, Lessee is not in default under any material
obligations for the payment of borrowed money, for the deferred purchase
price of property or for the payment of any Rent which would have the same
such effect.
E. Under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property.
F. Lessee's financial statements (copies of which have been furnished
to Lessor) have been prepared in accordance with generally accepted
accounting principles consistently applied, and accurately and completely
present Lessee's financial condition and the results of its operations as
of the date of and for the period covered by such statements, and since the
date of such statements there has been no material adverse change in such
conditions or operations.
G. The address stated on page one of this Lease is the chief place of
business and chief executive office of Lessee; and Lessee does not conduct
business under a trade, assumed, or fictitious name.
H. Prior to the year 2000, Lessee reviewed the areas within its
business and operations which could be adversely affected by, and developed
a program to address on a timely basis, the risk that certain computer
applications used by Lessee may be unable to recognize and properly perform
date-sensitive functions involving dates prior to and after December 31,
1999 (the "Year 2000 Problem"). The Year 2000 Problem did not result in,
and is not reasonably expected to result in, any material adverse effect on
the business, properties, assets, financial condition, results of
operations or prospects of Lessee, or the ability of Lessee to duly and
punctually pay or perform its obligations hereunder and under the related
documents.
26 FINANCE LEASE.
A. Acknowledgment. The Lease is intended as a "Finance Lease" as that
term is defined in Section 2A103 of the UCC. Lessee acknowledges that
Lessor has not selected, manufactured or supplied the Equipment; that
Lessor has acquired the Equipment at the direction of Lessee and solely for
the purpose of leasing the Equipment to Lessee; and that (i) Lessee has
selected the supplier or vendor of the Equipment, (ii) as provided in
paragraph 8, Lessee is entitled to directly enforce against the supplier or
vendor of the Equipment, any and all warranties and promises made to Lessor
by the supplier or vendor, and (iii) Lessee may communicate directly with
the vendor or supplier
to obtain a complete and accurate statement of all such warranties or
promises, including any disclaimers or limitations thereof
B. Waiver of Certain of Lessee's Remedies. In recognition that this is
a Finance Lease and that Lessor has not sold, selected or delivered the
Equipment to Lessee and has made no warranties or representations in
respect thereto, to the extent permitted by applicable law, Lessee, for
itself and for its successors and assigns, hereby waives any and all rights
or remedies afforded a lessee by Sections 2A503 through 2A522 inclusive, of
the UCC, including, without limitation, Lessee's right to (i) cancel,
terminate or repudiate this Lease or any Schedules hereto; (ii) reject or
revoke acceptance of the Equipment; (iii) recover damages from Lessor for
any breach of warranty or representation in respect to the Equipment; (iv)
assert any security interest in the Equipment in Lessee's possession or
control; (v) deduct, recoup or offset of any claimed damages due to
Lessor's default; (vi) accept partial delivery of the Equipment or to
"cover" by purchasing or leasing replacement equipment; (vii) recover any
general, incidental or consequential damages (including without limitation,
expenses and commissions in connection with the inspection, receipt, caring
for, storing, repair or disposal of any Equipment or (viii) assert a claim
by way of replevin, detinue, sequestration, claim, delivery, or the like,
for any Equipment.
27 GOVERNING LAW AND JURISDICTION. This Lease has been delivered and
accepted and will be deemed to be made in the State where Lessor's office
indicated above is located. THIS LEASE AND ALL AGREEMENTS, INSTRUMENTS AND
DOCUMENTS HERETOFORE, NOW OR HEREAFTER EXECUTED BY LESSEE AND DELIVERED TO
LESSOR RELATING TO THIS LEASE OR THE TRANSACTIONS CONTEMPLATED HEREBY WILL BE
INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN
ACCORDANCE WITH THE LAWS OF THE STATE WHERE LESSOR'S OFFICE INDICATED ABOVE IS
LOCATED, EXCLUDING ITS CONFLICT OF LAWS RULES. Lessee hereby irrevocably
consents to the exclusive jurisdiction of any state or federal court in the
county or judicial district where Lessor's office indicated above is located;
provided that nothing contained in this Lease will prevent Lessor from bringing
any action, enforcing any award or judgment or exercising any rights against
Lessee individually, against any security or against any of Lessee's property
within any other county, state or other foreign or domestic jurisdiction. Lessor
and Lessee agree that the venue provided above is the most convenient forum for
both parties. Lessee waives any objection to venue and any objection based on a
more convenient forum in any action instituted under this Lease.
28 NOTICES. All notices, demands, requests, consents, approvals and other
communications required or permitted hereunder must be in writing and will be
effective upon receipt. Such notices and other communications may be
hand-delivered, sent by facsimile transmission with confirmation of delivery and
a copy sent by first-class mail, or sent by nationally recognized overnight
courier service, to a party's address set forth above or to such other address
as any party may give to the other in writing for such purpose. Copies of all
notices to Lessee shall be sent to Blank Rome Tenzer Greenblatt, LLP, 405
Lexington Avenue, New York, NY 10174, Attention: Martin Luskin, Esq.
29 MISCELLANEOUS.
A. Whenever the context of this Lease requires, the neuter gender
includes the masculine and feminine, and the singular number includes the
plural. Whenever the word Lessor is used herein, it shall include all
assignees of Lessor. If this Lease is executed by more than one party as
Lessee, the obligations of such persons or entities will be joint and
several.
B. References to agreements and other contractual instruments shall be
deemed to include all subsequent amendments and other modifications to such
instruments, but only to the extent such amendments and other modifications
are not prohibited by the terms of this Lease. Section headings in this
Lease are included for convenience of reference only and shall not
constitute a part of this Lease for any other purpose. Unless otherwise
specified in this Lease, all accounting terms shall be interpreted and all
accounting determinations shall be made in accordance with GAAP.
C. Time is of the essence in the performance of this Lease and each
and all of its provisions.
D. If any provision of this Lease is held invalid or unenforceable,
the remaining provisions will not be affected thereby, and to this end, the
provisions of this Lease are declared severable.
E. If there is any conflict between the terms of any Schedule and this
document or between any Schedule and any other document, the terms of the
Schedule shall control.
F. This document, the Schedule(s), the Supplement(s), the Addendum(s)
and the Acceptance(s) executed by Lessor and Lessee constitute the. entire
agreement between Lessor and Lessee with respect to the Equipment and the
subject matter of this Lease and supersede all other prior agreements and
understandings whether oral or written between the parties with respect to
the subject matter hereof. This Lease may not be changed, waived, amended
or terminated except by a written agreement signed by both Lessor and
Lessee, except that Lessor may insert on the appropriate Schedule the
serial numbers of the Equipment after delivery thereof. No express or
implied waiver by Lessor of any Event of Default hereunder shall in any way
be, or be construed to be, a waiver of any future and/or subsequent Event
of Default whether similar in kind or otherwise but shall be effective only
in the specific instance and for the purpose for which given. No notice to
or demand on Lessee in any case will entitle Lessee to any other or further
notice or demand in the same, similar or other circumstance.
G. Lessee hereby authorizes Lessor to make appropriate announcements
of the leasing arrangements entered into between Lessor and Lessee,
including but not limited to announcements which are commonly known as
tombstones, in such publications and to such selected parties as Lessor
deems appropriate in its sole and absolute discretion. Lessee shall not
issue any press releases or other public disclosures,
either written or oral, of the existence or terms of this Lease without
Lessor's prior written consent; provide , that the foregoing shall not
prohibit Lessee from making any disclosures to or filings with any
governmental authority, or from disclosing this Lease to Lessee's
accountants, attorneys and other agents or to Lessee's lenders, or from
reflecting the terms of this Lease in any financial or accounting
statements or reports made public in the ordinary course of Lessee's
business.
30 SECURITY INTEREST. If the Lease is deemed at any time to be a lease
intended as security, Lessee hereby grants to Lessor a security interest in the
Equipment to secure all sums due hereunder, as well as any other obligations or
sums due by Lessee to Lessor, whether now existing or hereafter contracted for
or hereafter arising.
31 COUNTERPARTS. This Lease may be signed in any number of counterpart
copies and by the parties hereto on separate counterparts, but all such copies
shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Lease by facsimile transmission shall be
effective as delivery of a manually executed counterpart. Any party executing
this Lease by facsimile transmission shall promptly deliver a manually executed
counterpart, provided that any failure to do so shall not affect the validity of
the counterpart executed by facsimile transmission.
32 WAIVER OF JURY TRIAL. EACH OF LESSOR AND LESSEE HEREBY WAIVES ANY RIGHT
TO DEMAND A JURY TRIAL WITH RESPECT TO ANY ACTION OR PROCEEDING INSTITUTED BY
LESSOR OR LESSEE IN CONNECTION WITH THIS LEASE OR ANY TRANSACTION RELATED
HERETO. LESSEE AND LESSOR ACKNOWLEDGE THAT THE FOREGOING WAIVER IS KNOWING AND
VOLUNTARY.
Lessee acknowledges that it has read and understood all the provisions of this
Lease, including the waiver of jury trial, and has been advised by counsel as
necessary or appropriate.
WITNESS the due execution hereof with the intent to be legally bound.
ATTEST: SUPREME SPECIALTIES
NORTHWEST, INC., LESSEE
By: /s/ Mark Cocchiola (SEAL)
---------------------------------- -------------------------------------
Name: Name: Mark Cocchiola
---------------------------- -----------------------------------
Title: Title: President
--------------------------- ----------------------------------
Federal Tax I.D.#
----------------------
Accepted at Pittsburgh, Pennsylvania by:
PNC LEASING, LLC, LESSOR
By: /s/ Michael J. Woodring (SEAL)
------------------------------------
Name: Michael J. Woodring
----------------------------------
Title: President
---------------------------------
<TABLE>
<CAPTION>
Schedule of Leased Equipment
(First Amendment Tax Lease) PNC LEASING
<S> <C>
Master Lease Agreement Number: 2557
Schedule Number: 1 Master Lease Agreement Date: December 28, 2000
Schedule Date: December 28,2000 Supplement (First Amendment) Date: December 28, 2000
</TABLE>
1 SCHEDULE: This Schedule is attached to and made a part of that certain
Master Lease Agreement as described above between PNC LEASING, LLC as Lessor and
SUPREMA SPECIALTIES NORTHWEST, INC. as Lessee, as modified by a Supplement
(First Amendment Tax Lease) between Lessor and Lessee as identified above (the
"Lease").
2 EQUIPMENT DESCRIPTION AND LOCATION: See Equipment descriptions and
locations on Exhibit A, attached hereto and made a part hereof. The Equipment
described on the original copy of Exhibit A in Lessor's possession shall be
conclusively presumed to be true and correct
3 CAPITALIZED COSTS:
================== ===================== ==================
Equipment Cost Upfront Sales Tax Total
------------------ --------------------- ------------------
$5,957,400.00 -0- $5,957,400.00
================== ===================== ==================
4 INTERIM RENT AND PROGRESS PAYMENT FACTORS: During any interim rent
term (as defined in the Supplement), Interim Rent shall be calculated based on a
Daily Lease Rate Factor of 0 percentage points (0%). During any progress payment
term (as defined in the Supplement), Progress Payments shall be calculated based
on the Prime Rate [plus/minus] a Progress Payment Factor of 0 percentage points
(0%).
5 BASE LEASE TERM: The base term of the Lease for the Equipment
described in this Schedule is eighty-four (84) months commencing on December 28,
2000 and terminating on December 28, 2007, unless sooner terminated under the
Lease. A Termination Value Table is attached hereto as Exhibit "B" and made a
part hereof.
6 RENT: Total rent of $6,689,620.22, exclusive of applicable sales
taxes, is due and payable as follows:
<TABLE>
<CAPTION>
=============================== =================== ============ ===================
Number and Type Date Payments Amount of Date Payments
Of Payments Commence Payments Terminate
------------------------------- ------------------- ------------ -------------------
<S> <C> <C> <C>
84 monthly payments, in advance December 28, 2000 $79,638.34 November 28, 2007
=============================== =================== ============ ===================
</TABLE>
7 SALES TAX: Upfront sales tax on the lease transaction in the amount of
$-0- is due from Lessee on the commencement date of the base term of the Lease.
8 EARLY TERMINATION OPTION: In accordance with paragraph 8 of the
Supplement referenced above, Lessee may terminate the Lease on the last day of
the twelfth
(12th) month of the base term by returning all (but not less than all) of the
Equipment to Lessor, and paying to Lessor a termination fee equal to 80.10 % of
the Equipment Cost.
9 EARLY BUYOUT OPTION: In accordance with paragraph 11 of the Supplement
referenced above, Lessee may purchase all (but not less than all) of the
Equipment on the last day of the seventy-second (72nd) month of the base term
for a purchase price equal to thirty-five percent (35%) of the Equipment Cost.
10 PURCHASE OPTION: In accordance with subparagraph 12(a) of the
Supplement referenced above, Lessee may purchase all, but not less than all, of
the Equipment described herein, by paying to Lessor on the last day of the base
term of the Lease, an amount equal to the greater of (i) the fair market value
of the Equipment determined as provided in subparagraph 12(b) of the Supplement
referenced above, or (ii) twenty percent (20%) of the Equipment cost.
11 RENEWAL: In accordance with subparagraph 12(c) of the Supplement
referenced above, Lessee may extend the Lease for a Renewal Term of sixteen (16)
months with a monthly rent equal to 1.33680 percent of the Equipment cost, plus
applicable taxes, with the first such rent being due and payable by Lessee on
December 28, 2007.
12 DEPRECIATION RECOVERY PERIOD: For purposes of Sections 168(e)(3) and
168(c) of the Code (as defined hereafter), the Equipment constitutes seven (7)
year recovery property.
Lessee Acceptance Certificate
This Lessee Acceptance Certificate ("Acceptance") is hereby made a part of the
Lease referenced above, the terms and conditions of which are incorporated
herein by reference. All of the Equipment on Exhibit A was received by us and is
in good order and condition, installed to our satisfaction and acceptable to us.
We reaffirm all of the terms of Paragraph 8 of the Master Lease. We approve the
payment of the invoice(s) covering the Equipment for the amount(s) shown
thereon. We represent and warrant (a) that the representations and warranties as
set forth in paragraph 25 of the Lease are true and correct as of the date
hereof; (b) that we have satisfied or complied with all requirements set forth
in the Lease to be satisfied or complied with on or prior to the date hereof;
and (c) that no Event of Default under the Lease has occurred and is continuing
on the date hereof. All of the Equipment has been fully delivered and installed
at the location where it will be used as of the following date: December 28,
2000
WITNESS the due execution hereof with the intent to be legally bound.
PNC LEASING, LLC, Lessor SUPREME SPECIALTIES NORTHWEST, INC., Lessee
By: /s/ Michael J. Woodring By: /s/ Mark Cocchiola
-------------------------- ----------------------------------------
Title: Vice President Title: President
------------------------ --------------------------------------
upplement to Master Lease Agreement PNC LEASING
(First Amendment Tax Lease)
Lessee: SUPREMA SPECIALTIES NORTHWEST, INC.
Supplement Date: December 28,2000
Master Lease Agreement No.: 2557
Master Lease Agreement Date: December 28, 2000
1 SUPPLEMENT. This Supplement to Master Lease Agreement ("Supplement") is
hereby made a part of the Lease referenced above between the undersigned Lessor
and Lessee. All terms and conditions of said Lease are incorporated herein by
reference.
2 EQUIPMENT. The Equipment which is subject to the Lease is or will be
described on one or more Schedule(s) of Leased Equipment which make reference to
the Lease and this Supplement, and includes all products (including without
limitation insurance proceeds) of the Equipment, and all additions and
accessions thereto, substitutions therefor and replacements thereof.
3 TITLE OF EQUIPMENT. At Lessee's request, Lessor has purchased the
Equipment as a buyer in the ordinary course of business for value. Title to the
Equipment leased hereunder shall remain with the Lessor at all times. Lessee
shall have no right, title or interest in or to the Equipment except as
expressly set forth in the Lease.
4 EQUIPMENT LOCATION. The Equipment shall be located at the address stated
in the applicable Schedule and shall not be removed without Lessor's prior
written consent.
5 INTERIM RENT TERM. The interim rent term of the Lease as respects any
Equipment described in the applicable Schedule shall commence on the earlier of
(a) the date of Lessor's first advance of funds for the purchase of such
Equipment and (b) the date of Lessee's acceptance of such Equipment, and shall
terminate on the day before the commencement of the base lease term for such
Schedule.
6 INTERIM RENT. During the interim rent term, Lessee shall pay Lessor as
additional Rent Interim Rent for each Item of Equipment, an amount equal to the
product of Lessor's capitalized cost for such Item times the number of days in
the interim rent term times the Daily Lease Rate Factor provided for in the
applicable Schedule. Interim Rent shall be due and payable monthly in arrears
during the interim rent term.
7 LEASE TERM. The base term of the Lease as respects the Equipment is set
forth in the applicable Schedule.
8 EARLY TERMINATION OPTION. After ninety (90) days prior written notice to
Lessor, provided that no Event of Default exists under the Lease, and further
provided Lessor has received Lessee's twelfth (12th) monthly rental payment,
Lessee shall have the option to terminate the Lease and return all (but not less
than all) of the Equipment to Lessor. Lessee shall
exercise such option by paying to Lessor, on the last day of the twelfth (12th)
month of the base term, a termination fee in immediately available funds equal
to 80.10% of the Equipment Cost as set forth in the applicable Schedule. Upon
return of all the Equipment in accordance with paragraph 13 below, and payment
of the termination fee to Lessor, the Lease shall be terminated; subject,
however, to the post-termination survival of such indemnitees, liabilities and
obligations as may be required under the Lease. This early termination option
shall be available to Lessee only in the time period set forth in this paragraph
8. available to Lessee only in the time period set forth in this paragraph 8.
9 RENT. The Lessee agrees to pay basic rent for the Equipment in the amount
and on the dates set forth in the applicable Schedule plus applicable taxes, if
any.the dates set forth in the applicable Schedule plus applicable taxes, if
any.
10 TAX INDEMNIFICATION. 10 TAX INDEMNIFICATION.
A. Tax Assumptions. This Lease has been entered into on the basis that
Lessor is entitled to such federal, state and local income tax deductions,
credits and other benefits (the "Tax Benefits') as are provided to an owner
of property including, without limitation: (A) the Recovery Deductions (as
defined herein); and (B) the interest deduction under the Internal Revenue
Code of 1986, as amended (the "Code') in the fall amount of any interest
paid or accrued by Lessor, using Lessor's method of tax accounting, for any
indebtedness incurred by Lessor in financing its purchase of the Equipment
(the "Interest Deductions").
B. Tax Representations. Lessee represents and warrants to Lessor (the
"Tax Representations") that: (A) for purposes of Section 168(e)(3) and
168(c) of the Code, each Item of Equipment constitutes an
--------------------- asset described in the "property class" and
"applicable recovery period" as designated in paragraph 10 of the
applicable Schedule; (B) the Lessor shall be entitled to claim federal,
state and local depreciation deductions (the "Recovery Deductions" which
are based upon, and will fully recover, the total cost of each Interim of
Equipment, including, for federal income tax purposes, modified accelerated
cost recovery system deductions computed pursuant Supplement to Code
Section 168(b)(1)(A) and (B) and 168(e)(3) based upon 100% of Lessor's
original cost of each Item of Equipment; (C) each Item of Equipment is not
"limited use property" within the meaning of Revenue Procedure 76-30
(1976-2 Cum. Bull. 647), and no improvements, changes, additions, or
alterations made by or at the request of Lessee will cause such Item of
Equipment to be "limited use property"; (D) this Lease, including any and
all Schedules, constitutes a true lease" for federal, state and local
income tax purposes and Lessor will be the "true owner" of each Item of
Equipment entitled to claim the Recovery Deductions and other Tax Benefits
anticipated by Lessor hereunder; (E) each Item of Equipment is reasonably
estimated to have an economic useful life of at least 125% of the initial
term of the Lease and have an economic value of at least 20% of Lessor's
original cost of the Item of Equipment at the expiration of the lease term;
(F) each Item of Equipment does not and will not require any improvements.
modifications, alterations or additions in order to render it complete for
its intended use by Lessee; (G) Lessor will not realize any taxable income
as a result of any improvements, modifications, alterations or additions to
the Equipment or any Item of Equipment made by anyone other than Lessor,
(H) all amounts includable in the gross income of Lessor
with respect to each Item of Equipment and all deductions allowable to
Lessor with respect to each Item of Equipment will be treated as derived
from, or allocable to sources within the United States; and (I) Lessee will
maintain sufficient records to verify such use which records will be
furnished to Lessor within 30 days after receipt of a demand therefor.
C. Tax Indemnity. If for any reason whatsoever, including, without
limitation, the falsehood or inaccuracy of any Tax Representation
(excluding only a failure of Lessor to claim properly or timely the
Recovery Deductions or Interest Deductions for the appropriate year, or the
failure of Lessor to have sufficient taxable income to benefit from the
Recovery Deductions or Interest Deductions): (A) Lessor shall lose, shall
not have or shall lose the right to claim or there shall be disallowed,
eliminated, reduced, or recaptured with respect to Lessor, for federal,
state or local income tax purposes, all or any portion of the Tax Benefits
with respect to an Item of Equipment; or (B) the Lessor's anticipated net
after-tax economic and accounting yields and periodic net after-tax cash
flows over the term of the applicable Schedule (based upon the same
assumptions used by Lessor in originally evaluating the Lease and
applicable Schedule at the commencement of the term of the applicable
Schedule) (the Lessor's "Anticipated Economics") is adversely affected due
to (i) any income or deductions with respect to any Item of Equipment being
treated as derived from, or allocable to, sources without the United
States, or (ii) enactments of new income tax legislation or amendments and
other changes to the Code or any other state or local income tax law,
including the promulgation of regulations and judicial or administrative
rulings with respect thereto; or (C) the Lessor shall be required to
include any amount in its taxable income as a result of any improvements.
modifications, alterations or additions to any Item of Equipment made by
anyone other than Lessor (an occurrence of an event under (A), (B) and/or
(C) being referred to individually or collectively as a "Loss"); then, at
the option of the Lessor, (x) the rent over the remainder of the term of
the applicable Schedule shall, on and after the next succeeding rent
payment date, after written notice to Lessee by Lessor that a Loss has
occurred, be increased by such amount which, in the sole opinion of Lessor,
after deduction of all taxes owed by Lessor to any governmental or taxing
authority as a result of such increase in rent, will cause Lessor's actual
net after-tax economic and accounting yields and periodic net after-tax
cash flows over the term of the applicable Schedule (the Lessor's "Actual
Economics") to equal the Lessor's Anticipated Economics that would have
been available if such Loss had not occurred. and Lessee shall forthwith
pay to Lessor, on demand, an amount which, after deduction of all taxes
owed by Lessor to any governmental or taxing authority as a result of the
receipt of such amount, shall be equal to the amount of any penalties,
interest or additions to tax which may be assessed by any governmental or
taxing authority against Lessor attributable to the Loss, or (y) after
written notice to Lessee by Lessor that a Loss has occurred, Lessee shall
pay to Lessor, upon demand, in a lump sum, an amount which, after deduction
of all taxes owed to any governmental or taxing authority by Lessor as a
result of the receipt of such lump sum payment, will cause Lessor's Actual
Economics to be equal to the Lessor's Anticipated Economics that would have
been available if such Loss had not occurred plus an amount which, after
deduction of all taxes owed by Lessor to any governmental or taxing
authority as a result of the receipt of such amount, shall be
equal to the amount of any penalties, interest, or additions to which may
be assessed by any governmental or taxing authority against Lessor
attributable to the Loss.
D. Calculation. All calculations of Lessor's Actual Economics with
respect to a Loss shall be determined on the basis of that assumption that
Lessor will be subject to federal, state and local corporate income tax
rates at the maximum statutory rate. Any written notice that any Loss has
occurred pursuant to this paragraph 10 shall be accompanied by a written
statement from Lessor describing in reasonable detail such Loss and the
computations of the amounts payable, either in a lump sum or revised rent
payments as set forth above, which computation shall be binding and
conclusive upon Lessee, absent manifest error.
E. Interest. Upon failure to pay any indemnification amount when due,
by demand or otherwise, such unpaid obligation shall bear interest at a per
annum, rate equal to the prime rate of interest as announced, from time to
time, by the Bank.
F. Consolidated Return. As used in this paragraph 10, the term
"Lessor" shall include any successor or assign of Lessor and an, member of
an affiliated group of which Lessor is, or may become, a member if
consolidated, joint or combined returns are filed for such affiliated group
for federal, state or local income tax purposes.
G. Survival. The indemnities and assumptions of liabilities and
obligations provided for in this paragraph 10 shall continue in full force
and effect notwithstanding the expiration or other termination of this
Lease.
11 EARLY BUYOUT OPTION. After ninety (90) days prior written notice to
Lessor, provided that no Event of Default exists under the Lease, and further
provided that Lessor has received Lessee's seventy-second (72nd) monthly rental
payment, Lessee may, on the last day of the seventy-second (72nd) month of the
base term, purchase all (but not less than all) of the Equipment for a purchase
price equal to 35% of the Equipment Cost as set forth in the applicable
Schedule, payable in immediately available funds. Thereupon, the Lessor shall
convey the Equipment to the Lessee on an as-is, where-is basis, without
representation or warranty whatsoever, except that the Equipment shall be
conveyed free and clear of any liens or encumbrances created due to or through
the acts or omissions of Lessor. This early buyout option shall be available to
Lessee only in the time period set forth in this paragraph 11.
12 END OF TERM OPTIONS.
A. Provided that no Event of Default will have occurred and be
continuing, on the expiration of the base lease term under any applicable
Schedule, at its option, Lessee may purchase all of the Lessor's right,
title and interest in and to all, but not less than all of the Equipment
described in such Schedule. On the last day of the base lease term under
any applicable Schedule, the Lessee shall pay to the Lessor an amount equal
to the greater of (i) the fair market value of the Equipment described in
the applicable Schedule determined in accordance with the provisions of
subparagraph (b), or (ii) the percent of the Equipment Cost stated in such
Schedule. In order to exercise its option,
Lessee shall notify Lessor in writing of its intention to exercise such
option at least 180 days prior to the expiration of the base lease term
under any applicable Schedule. Lessee will deliver to the Lessor, on or
before the expiration of the base lease term, an appraisal of the Equipment
as described in subparagraph (b), together with the payment of the purchase
price in immediately available funds. Thereupon, the Lessor shall convey
the Equipment to the Lessee on an as-is, where-is basis without
representation or warranty whatsoever, except that the Equipment shall be
conveyed free and clear of any liens or encumbrances created due to or
through the acts or omissions of the Lessor.
B. As used in subparagraph (a), "fair market value" of the Equipment
described in the applicable Schedule shall be the value of the Equipment as
of the last day of the base term of the Lease, as determined by an
appraiser selected by the Lessor and retained at Lessee's expense. For
purposes of determining the fair market value, the appraiser shall be
instructed to assume that the Equipment is in the condition required by the
terms of the Lease. The report of the appraiser shall be in writing and
delivered to the Lessor on or before the expiration of the base lease term.
C. In the event that the Lessee does not purchase the Equipment in
accordance with subparagraph (a), then (i) Lessee shall continue to pay
rent for the remainder of the base lease term in the amount set forth in
the applicable Schedule, and (ii) this Schedule shall automatically be
extended for an additional term (the "Renewal Term") as stated in the
applicable Schedule, without further action on the part of the Lessor or
the Lessee. At the expiration of the Renewal Term and conditioned that no
Event of Default shall have occurred and be continuing, the Lessee may
either (i) purchase the Equipment at the fair market value as of the last
day of the Renewal Term as determined in accordance with this paragraph 12,
or (ii) return the Equipment to the Lessor in accordance with paragraph 13.
Lessee shall notify Lessor of its election to either purchase or return the
Equipment not less than sixty (60) days prior to the expiration of the
Renewal Term. If Lessee fails to so notify Lessor of its election, this
Lease will be deemed extended on a month-to-month basis on the same terms
and conditions until Lessee provides Lessor with written notice of its
election to terminate the Lease not less than sixty (60) days from the date
of such notice.
13 RETURN OF EQUIPMENT. Upon the expiration or earlier termination of this
Lease, Lessee shall return the Equipment described in the applicable Schedule,
freight and insurance prepaid, to Lessor (or Lessor's nominee) at a location
designated by Lessor. If requested by Lessor, Lessee will provide 180 days free
storage at the Equipment's location at the expiration of the term. During the
storage period, Lessee shall maintain the Equipment in operating condition for
the purpose of on-site inspections by prospective buyers and shall keep the
Equipment insured in accordance with paragraph 18 of the Lease. The Equipment
and all parts thereto shall be free and clear of all liens (other than Lessor
liens), and shall be free of all advertising or insignia and residual materials,
cleaned, painted, complete with no missing components or attachments, and fully
operational and able to perform its described task effectively, without repair
or overhaul, within the original tolerances and specifications set by the
manufacturer. Any and all costs of dismantling, packing, and removing of the
Equipment shall also be paid by Lessee. If the Equipment is returned in a
condition other than that described,
Lessor may commission an independent appraiser, licensed professional engineer,
or manufacturer technical representative, obtained by Lessor at Lessee's cost
and expense, to determine the extent of costs to return the Equipment to the
condition required herein. Lessee shall promptly advance payment for all
necessary repairs. Lessee's obligations to pay for repairs shall be reduced by
any proceeds of insurance which Lessor has received due to the damage to the
Equipment. If Lessee fails to provide timely notice of return or fails to return
the Equipment to the designated location at the end of the base lease term or
any renewal thereof under the applicable Schedule, and does not exercise the
renewal or purchase options provided for herein (if any), then, at Lessor's
option, the Lease as it relates to the applicable Schedule will be deemed
extended on a month-to-month basis for a minimum renewal term of three (3)
months, with rent due on the day of each month applicable and at the rate
applicable to the base lease or renewal term just ended.
14 FAIR MARKET VALUE AND ESTIMATED USEFUL LIFE. In all circumstances,
except where Lessee has elected to purchase the Equipment pursuant to paragraph
12(a), fair market value, fair market rental value and estimated useful life of
the Equipment shall be determined by an appraiser selected by the Lessor and
approved by Lessee in its reasonably judgment. The appraiser shall determine the
fair market value of the Equipment on its in place value without reduction or
consideration of the cost of dismantling, preparation for shipping or
transportation of the Equipment. For purposes of determining the fair market
value, the appraiser shall be instructed to assume that the Equipment is in the
condition required by the terms of the Lease. The appraiser's decision shall be
binding on the parties. If Lessee has given Lessor notice of Lessee's intention
to exercise its purchase or renewal option, and the Lessor has obtained an
appraisal of the Equipment as provided for herein, Lessee shall be bound by the
appraisal and shall purchase the Equipment, or renew the Lease, as the case may
be, at the value determined by the appraisal. The cost of the appraisal shall be
borne by the Lessee.
15 MARKETING OF EQUIPMENT. At Lessor's request, Lessee shall mark the
Equipment in a reasonably distinct and conspicuous manner with the name of the
Lessor followed by the words "Owner and Lessor" or other appropriate words
designated by Lessor. Lessee shall not alter, deface or remove any of Lessor's
ownership identification plates or markings on the Equipment and, upon Lessor's
request, Lessee shall affix or re-affix such identification.
16 INSURANCE. In addition to the requirements contained in paragraph 18 of
the Lease, the following insurance requirements shall apply:
Liability Coverage:
A. General liability including/comprehensive form:
premises/operations; products/completed operations, contractual liability;
independent contractors; broad form property damage; personal injury; and
collapse hazard.
B. Bodily Injury and Property Damage Combined Single Limit Per
Occurrence: $3,000,000.
C. Fire-legal liability-custody, care or control, each occurrence: $
1,000,000.
Property Coverage:
(a) All risk of physical loss; Equipment must be insured for at least the
total original cost
17 COVENANTS. By executing and delivering to Lessor the Lessee Acceptance
Certificate included within each applicable Schedule Lessee warrants, covenants
and agrees that (a) Lessee has received all of the Equipment described in such
Schedule at the location, described in such Schedule; (b) Lessee has duly
inspected and accepts such Equipment without reservation; (c) Lessee L,
unconditionally bound to pay to Lessor the total rent and other payments due
under the Lease, whether or not the related Equipment may now or hereafter
become unsatisfactory in any respect; and (d) notwithstanding anything contained
herein, Lessor and Lessee shall continue to have all rights which either of them
might otherwise have with respect to the related Equipment against any
manufacturer or seller of such Equipment or any part thereof.
18 ADDITIONAL PROVISIONS. (a) Each applicable Schedule is incorporated
herein by reference; and (b) Lessee grants Lessor the right to insert the
Equipment description and payment dates and terms in each applicable Schedule at
the time of commencement of the base lease term.
WITNESS the due execution hereof with the intent to be legally bound.
Lessor: PNC LEASING, LLC Lessee: SUPREME SPECIALTIES NORTHWEST, INC.
By: /s/ Michael J. Woodring By: /s/Mark Cocchiola
-------------------------- ---------------------------------------
Title: Vice President Title: President
----------------------- ------------------------------------