SETTLEMENT AGREEMENT AND RELEASE
This Settlement Agreement and Release (the "Agreement") is
between Epitope, Inc., an Oregon corporation ("Epitope"), Xxxxx X. Xxxxxx and
Xxxxx X. Xxxxxx as cotrustees under the Xxxx X. and Xxxxxxxx X. Xxxxxx 1990
Revocable Living Trust (collectively, the "Trustees"), Xxxxx X. Xxxxxx
individually ("K. Andrew"), Xxxx X. Xxxxxxxxxx ("Xxxxxxxxxx, Sr."), Xxxx X.
Xxxxxxxxxx ("Xxxxxxxxxx, Jr."), and Xxxxxx and Xxxxxxxxxx Sales, Co., a
California corporation ("A&W") (collectively, the "Parties").
BACKGROUND
Epitope acquired all of the outstanding capital stock of A&W
on December 12, 1996 (the "Acquisition Date"), from Xxxx X. Xxxxxx ("F.
Xxxxxx"), K. Andrew, Williamson, Sr., and Xxxxxxxxxx, Jr. (collectively with the
Trustees, the "Former Owners"), pursuant to an Acquisition and Merger Agreement
among Epitope, Thamscoe, Inc., A&W, F. Xxxxxx, K. Andrew, Williamson, Sr., and
Xxxxxxxxxx, Jr., dated November 6, 1996 (the "Acquisition Agreement"). As part
of the acquisition, the number of outstanding shares of A&W common stock was
reduced from 20,000 to 100 (the "A&W Shares"). Following the acquisition,
Epitope made a $2.2 million subordinated loan to A&W (the "First Loan") and a
subsequent $3.5 million loan to A&W (the "Second Loan").
On February 28, 1997, Agritope, Inc., purchased A&W's
membership interest in Superior Tomato Associates, L.L.C., a Delaware limited
liability company ("STA"), for $25,032, representing A&W's investment in STA and
its share of losses through the purchase date, and assumed all ongoing
obligations of such membership. Agritope, Inc., an Oregon corporation, is a
wholly-owned subsidiary of Epitope.
Epitope has filed a complaint against F. Xxxxxx, K. Andrew,
Williamson, Sr., and Xxxxxxxxxx, Jr. in the United States District Court for the
District of Oregon, Civil No. CV 97-506 (the "Complaint"), seeking damages and
rescission of the A&W acquisition. The Former Owners have not yet answered the
complaint, but dispute the allegations made by Epitope and do not admit any
wrongdoing.
The Parties have sought to settle their differences without
litigation. Therefore, the Parties enter into this Agreement in consideration of
the mutual promises contained herein.
AGREEMENT
The Parties therefore agree as follows:
1. Rescission of Stock Acquisition. At Closing, as defined
below, subject to the terms and conditions of this Agreement, Epitope and the
Former Owners shall mutually renounce and rescind Epitope's acquisition of A&W,
including the issuance of
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520,000 shares of Epitope common stock (the "Epitope Shares") for the
then-outstanding shares of A&W common stock. To effect the rescission, each of
the Former Owners shall deliver to Epitope certificates for all Epitope Shares
originally issued in his name, duly endorsed or accompanied by appropriate stock
powers for transfer to Epitope. Epitope shall deliver the certificate for the
A&W Shares, accompanied by stock powers transferring the outstanding A&W Shares
as follows:
Former Owner Shares
------------ ------
Trustees, for the Trust, as defined below 40
K. Andrew 10
Xxxxxxxxxx, Jr. 10
Xxxxxxxxxx, Sr. 40
2. Preferred Stock.
a. As soon as practicable after execution of this Agreement,
Epitope, as sole shareholder of A&W, shall take all steps necessary to cause
A&W's articles of incorporation to be amended to read as set forth in Exhibit A
and to cause an officer's certificate to be filed establishing the rights and
preferences of preferred stock as stated in Exhibit B, subject to approval by
A&W's board of directors. As a result of the amendment and filing of the
officer's certificate, A&W shall have the ability to issue two series of
preferred stock having the rights and preferences stated in Exhibits A and B.
b. At Closing, as defined below, A&W shall issue 100 shares of
Class A preferred stock to Epitope (the "Class A Preferred Shares"), having a
redemption value equal to the First Loan amount. A&W shall redeem the Class A
Preferred Shares beginning no later than three years after the Closing Date, as
defined below, by payment of the redemption value as required by Exhibit A. The
holders of the Class A Preferred Shares shall have the right to receive a
dividend equal to 33.3 percent of any dividends paid by A&W to holders of A&W
Common Stock, shall have a liquidation preference equal to the redemption value,
and shall have no voting rights, except as required by law.
c. At Closing, A&W shall issue 100 shares of Class B preferred
stock to Epitope (the "Class B Preferred Shares"), having a redemption value for
the first five years after the Closing Date equal to 80 percent of the Second
Loan amount and thereafter equal to 90 percent of the Second Loan amount. The
Class B Preferred Shares shall be subject to redemption, at the option of A&W,
upon the terms set forth in Exhibit A. The holders of the Class B Preferred
Shares shall have the right to receive a dividend equal to 66.7 percent of any
dividends paid by A&W to holders of A&W Common Stock, shall have a liquidation
preference equal to the Second Loan amount, and shall have no voting rights,
except as required by law.
3. WFB Guaranty.
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a. Epitope's guaranty of the operating credit facility and
term loan (the "WFB Loan Facility") from Xxxxx Fargo Bank, National Association
("WFB") shall remain in effect after Closing, subject to the terms and
conditions of this Agreement. If required by a new lender (the "Replacement
Facility Lender") providing any single new working capital credit facility to
A&W to replace the WFB Loan Facility (the "Replacement Loan Facility"), Epitope
shall guarantee the Replacement Loan Facility, provided (a) that the Replacement
Loan Facility and guaranty have substantially the same terms and conditions as
the WFB Loan Facility and guaranty and (b) the replacement occurs on or prior to
November 1, 1998. Epitope may terminate the WFB guaranty or any replacement
guaranty as to any advances after the date hereof if A&W fails to comply with
its obligations under the loan documents or if A&W has not procured a new
working capital credit facility (without Epitope's guaranty) to replace the then
current working capital credit facility by November 1, 1998.
b. K. Andrew, Williamson, Jr., and any transferee of either of
their A&W Shares (together, the "Individual Guarantors") shall each guarantee
the entire amount of the WFB Loan Facility and any Replacement Loan Facility,
using the standard guaranty forms of WFB and the Replacement Facility Lender,
respectively. No Individual Guarantor shall terminate his guaranty so long as
Epitope's guaranty remains in effect. As between the Individual Guarantors and
Epitope, Epitope shall have the right of full recourse (and immediate
reimbursement) against the Individual Guarantors, jointly and severally, for any
amounts paid by Epitope under its guaranty.
x. Xxxxxxxxxx, Xx. shall also guarantee the entire amount of
the WFB Loan Facility and any Replacement Loan Facility. Except as hereinafter
provided, as between Xxxxxxxxxx, Sr., the Individual Guarantors and Epitope,
Epitope shall have the right of full recourse (and immediate reimbursement)
against the Individual Guarantors and Xxxxxxxxxx, Sr., jointly and severally,
for any amounts paid by Epitope under its guaranty.
Notwithstanding the above, Xxxxxxxxxx, Sr.'s guaranty shall
provide that he will be unconditionally released from his guaranty if and when
(1) he is no longer a shareholder of A&W or (2) Epitope's guaranty no longer
remains in effect; at which time Xxxxxxxxxx, Sr. shall have no further
obligations of any kind whatsoever under his guaranty.
4. Releases.
a. "Epitope Parties" means Epitope, its subsidiaries (other
than A&W and its subsidiaries), and the directors, officers, agents, employees,
accountants, partners, successors, and assigns of Epitope and each of its
subsidiaries (other than A&W and its subsidiaries).
b. "A&W Parties" means A&W, its subsidiaries, the Former
Owners, and the respective directors, officers, agents, employees, accountants,
partners, successors, and assigns of A&W, each of its subsidiaries, and each
Former Owner.
c. Effective upon Closing, Epitope, on behalf of the Epitope
Parties, hereby releases the A&W Parties from any and all claims, losses,
liabilities, and causes of
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action, whether known or unknown (other than those created under this
Agreement), including all claims stated in the Complaint, arising from events
occurring before Closing.
d. Effective upon Closing, A&W and each of the Former Owners,
on behalf of the A&W Parties, hereby release the Epitope Parties from any and
all claims, losses, liabilities, and causes of action, whether known or unknown
(other than those created under this Agreement), arising from events occurring
before Closing.
e. Each of the releasing parties shall be deemed to have
waived and relinquished, to the fullest extent permitted by law, the provisions,
rights, and benefits of Section 1542 of the California Civil Code, which
provides that:
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the time of
executing the release, which if known by him must have materially
affected his settlement with the debtor."
Each of the releasing parties waives any and all provisions, rights, and
benefits conferred by any laws of any state or territory of the United States,
or principles of common law, which are similar, comparable, or equivalent to
Section 1542 of the California Civil Code. The releasing parties may discover
after Closing facts in addition to or different from those that they know or
believe to be true with respect to the subject matter of the released claims but
hereby stipulate and agree that as of Closing they each fully, finally, and
forever settle and release any and all released claims, known or unknown, as
described above.
5. Indemnification.
a. Tender. If any third party asserts a claim or institutes an
action against Epitope and A&W and/or A&W's Former Owners, the parties shall
first tender the third party claim to their insurance carriers. A&W shall not be
obligated to indemnify or reimburse Epitope for any loss, liability, damage,
cost, fees, or other expenses to the extent actually reimbursed by insurance. If
the insurance carrier does not defend the third party claim, Epitope may at its
option tender its defense to A&W and A&W will defend Epitope, along with itself,
at its own expense. If Epitope elects to defend the third party claim (e.g.,
hires its own attorneys, etc.), then Epitope shall bear the cost of its defense
subject to the terms of indemnification herein. A&W shall have no obligation to
defend Epitope in actions where A&W and/or a Former Owner are not also named as
party defendants.
b. Reservation of Right to Cross Claim. Epitope and A&W
reserve the right to bring the other into any action where they are not named as
a co-defendant. In such cases Epitope and A&W shall have reciprocal rights
against each other including the right of cross and/or counter claim,
notwithstanding the releases provided elsewhere in this Agreement.
c. Indemnity. A&W shall indemnify and hold harmless Epitope
against judgments for damages awarded by a court of competent jurisdiction and
damages payable
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under all settlements entered into with A&W's consent (which shall not be
unreasonably withheld), wherein A&W and Epitope are jointly and severally
liable, and against reasonable attorney fees (up to a maximum of $125 per hour
and only when no part of the fees is paid by insurance) incurred in defense of
the relevant claim or action.
d. Notice. If any third party claim is brought or asserted
against Epitope but not against A&W, and Epitope claims it is or will be
entitled to indemnity by A&W, Epitope shall notify A&W in writing. Any failure
to so notify A&W shall relieve A&W of any obligation to indemnify Epitope
regarding that third party claim.
6. Closing.
a. Closing. The consummation of the transactions contemplated
by this agreement (the "Closing") shall occur at a time and date mutually agreed
upon by the Parties (the "Closing Date"), but in no event later than five
business days after the conditions to Closing have been satisfied. Closing shall
occur at such location, shall begin at such time, and shall be conducted in such
manner, as may be agreed by the Parties.
b. Actions at Closing. At Closing, subject to satisfaction or
waiver of all conditions precedent set forth in this Agreement:
(1) Epitope shall deliver the certificate for the A&W Shares
and stock powers, as required by Section .
(2) Each Former Owner shall deliver to Epitope certificates
for the Epitope Shares issued in his name, as required by Section .
(3) A&W shall issue the Class A Preferred Shares and the Class
B Preferred Shares and deliver certificates for such shares to Epitope,
as required by Section .
(4) K. Andrew and Xxxxxxxxxx, Jr., shall each execute the
guaranty of the WFB Loan Facility.
(5) A&W shall execute and deliver to Epitope such documents as
are reasonably requested by Epitope to evidence the transfer of A&W's
membership interest in STA to Agritope.
(6) Xxxxxx X. Xxxxx, Ph.D., Xxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxx, and Xxxxxxx X. Xxxxxxxx, Ph.D., shall deliver to A&W written
resignations of their positions as A&W directors and officers.
(7) The Parties shall each deliver the various other documents
that are described elsewhere in this Agreement or reasonably requested
by another Party at least three business days before Closing, and shall
take any other
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actions expressly required by this Agreement or reasonably requested by
another Party at least three business days before Closing.
7. Representations and Warranties of Former Owners. Each
Former Owner, as to Section , and each of Xxxxx X. Xxxxxx, K. Andrew and
Xxxxxxxxxx, Jr., as to Sections and , represents and warrants to Epitope as
follows:
a. No Conflict; Title. The execution, delivery, and
performance of this Agreement by the Former Owner will not conflict with any
undertaking, agreement, decree, order, or judgment by which he is bound. The
Former Owner has good and marketable title to his Epitope Shares, free and clear
of all liens (statutory or otherwise), security interests, pledges, or other
encumbrances of any nature whatsoever, and has not assigned any interest in his
Epitope Shares to any third party.
b. Investment Representations.
(1) Access to Information. On account of his involvement in
the day-to-day business of A&W, the Former Owner has had access to such
information regarding A&W as he deems relevant to a decision to enter
this Agreement.
(2) Experience. The Former Owner has sufficient knowledge and
experience in financial and business matters to be capable of
evaluating the merits and risks of an investment in A&W common stock
and has the ability to bear the economic risk of that investment.
(3) Investment Intent. The Former Owner is acquiring A&W
common stock for the Former Owner's own account and not on behalf of
any other person. The Former Owner is not acquiring A&W common stock
with a view to distribution or with the intent to divide the Former
Owner's participation with others by reselling or otherwise
distributing A&W common stock, other than in a registered offering, or
pursuant to the will of F. Xxxxxx.
c. Nature of Shares. The Former Owner is aware that:
(1) No SEC or State Registration. A&W common stock will not be
registered under federal or state securities laws when transferred to
the Former Owner, must be held indefinitely unless registered or unless
an exemption from registration is available, and will bear
substantially the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED UNLESS THE TRANSACTION IS REGISTERED OR
UNLESS THE ISSUER IS FURNISHED A
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SATISFACTORY OPINION OF COUNSEL THAT REGISTRATION IS NOT
REQUIRED.
(2) No Obligation. A&W has no obligation to register A&W
common stock, comply with any exemptions from registration, or
repurchase A&W common stock at any time.
8. Representations and Warranties of Epitope. Epitope
represents and warrants to the Former Owners as follows:
a. No Conflict. The execution, delivery, and performance of
this Agreement by Epitope will not conflict with any undertaking, agreement,
decree, order, or judgment by which Epitope is bound.
b. Investment Representations.
(1) Accredited Investor Status. Epitope is an "accredited
investor" for purposes of the Securities Act of 1933, as amended.
(2) Access to Information. On account of Epitope's ownership
of the common stock of A&W, Epitope has had access to such information
regarding A&W as it deems relevant to a decision to enter this
Agreement.
(3) Experience. Epitope has sufficient knowledge and
experience in financial and business matters to be capable of
evaluating the merits and risks of an investment in A&W preferred stock
and has the ability to bear the economic risk of that investment.
(4) Investment Intent. Epitope is acquiring A&W preferred
stock for Epitope's own account and not on behalf of any other person.
Epitope is not acquiring A&W preferred stock with a view to
distribution or with the intent to divide Epitope's participation with
others by reselling or otherwise distributing A&W preferred stock,
other than in a registered offering.
c. Nature of Shares. Epitope is aware that:
(1) No SEC or State Registration. A&W preferred stock will not
be registered under federal or state securities laws when transferred
to Epitope, must be held indefinitely unless registered or unless an
exemption from registration is available, and will bear substantially
the following legend:
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THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER UNITED STATES FEDERAL OR STATE SECURITIES
LAWS. THEY MAY NOT BE OFFERED FOR SALE, SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED UNLESS THE TRANSACTION IS REGISTERED OR
UNLESS THE ISSUER IS FURNISHED A SATISFACTORY OPINION OF
COUNSEL THAT REGISTRATION IS NOT REQUIRED.
(2) No Obligation. A&W has no obligation to register A&W
preferred stock or comply with any exemptions from registration.
9. Trust and Estate Matters. Trustees represent and warrant
that they are the cotrustees of the Xxxx X. and Xxxxxxxx X. Xxxxxx 1990
Revocable Living Trust and of the Administration Trust, the Survivors Trust, the
Marital Trust, the Residual Trust, and any other trust established under the
1990 Revocable Living Trust Agreement (the "Trust") and are nominated as
alternate coexecutors of the will and estate of Xxxx X. Xxxxxx in the event
Xxxxxxxx X. Xxxxxx shall for any reason fail to qualify or cease to act as
executor. Trustees further represent, covenant, and warrant that at the date of
death of Xxxx X. Xxxxxx on April 11, 1997, the Trust was the owner of 208,000 of
the Epitope Shares (the "Trust Shares"); that the estate of Xxxx X. Xxxxxx will
not be probated; that no person, association, firm or corporation other than the
Trustees has any claim or interest in or to the Trust Shares; that to the best
of their knowledge, the assets of the Trust, other than the Trust Shares, are
more than sufficient to satisfy all known claims, taxes, and expenses of
administration of the decedent's estate and of the Trust; and that the Trustees
have full power and authority to transfer the Trust Shares. The representations,
covenants, and warranties of this section shall survive Closing.
10. Conditions.
a. Conditions to Each Party's Obligations. The respective
obligation of each Party to effect the Closing shall be subject to the
satisfaction of the following condition:
(1) No order, injunction or decree issued by any court or
agency of competent jurisdiction or other legal restraint or
prohibition (an "Injunction") preventing the consummation of the
transactions contemplated by this Agreement shall be in effect. No
statute, rule, regulation, or Injunction shall have been enacted,
entered, promulgated or enforced which prohibits, restricts or makes
illegal consummation of the transactions.
b. Conditions to Obligations of Epitope. The obligation of
Epitope to effect the transactions contemplated by this Agreement is also
subject to the satisfaction or waiver by Epitope of all the following
conditions:
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(1) Epitope's board of directors shall have approved the terms
of this Agreement and authorized Epitope to consummate the transactions
contemplated by this Agreement.
(2) A&W's articles of incorporation shall have been amended to
read as set forth in Exhibit A and A&W's board of directors shall have
authorized the issuance of the Class A Preferred Shares and Class B
Preferred Shares on the terms set forth in this Agreement.
(3) A&W and the Former Owners shall have performed in all
material respects all obligations required to be performed by them
under this Agreement at or prior to the Closing Date, and Epitope shall
have received a certificate signed on behalf of A&W by an officer of
A&W and by each of the Former Owners to such effect.
(4) Epitope shall have received a satisfactory opinion of its
counsel, Miller, Nash, Wiener, Hager & Xxxxxxx LLP, in form and
substance reasonably satisfactory to Epitope, to the effect that the
transfer of the A&W Shares as required by Section 1 does not require
registration under the Securities Act or applicable state law. Such
counsel may rely upon certificates of the Parties and upon the
representations and warranties of the Parties in this Agreement and any
document or agreement referred to in this Agreement or delivered in
connection with the transactions contemplated hereby. The opinion shall
not be provided to, and may not be relied upon by, any Party to this
Agreement other than Epitope.
(5) WFB shall have agreed to continue making advances to A&W
on the current terms of the WFB Loan Facility agreements.
c. Conditions to Obligations of Former Owners. The obligation
of the Former Owners to effect the transactions contemplated by this Agreement
is also subject to the satisfaction or waiver by the Former Owners of all the
following conditions:
(1) Xxxxxx X. Xxxxx, Ph.D., Xxxxxxx X. Xxxxxx, Xxxxxxx X.
Xxxxxx, and Xxxxxxx Xxxxxxxx, Ph.D. shall have resigned as directors
and officers of A&W.
(2) Epitope shall have performed in all material respects all
obligations required to be performed by it under this Agreement at or
prior to the Closing Date, and the Former Owners shall have received a
certificate signed on behalf of Epitope by the Chief Executive Officer
of Epitope to such effect.
11. Management through Closing. So long as A&W and the Former
Owners comply with this Agreement, K. Andrew and Xxxxxxxxxx, Jr., shall have
primary responsibility and authority for day-to-day management of A&W's business
and
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affairs from the date of this agreement through the Closing Date, subject only
to the ultimate direction of A&W's board of directors as required by statute.
12. Covenants. Through and after Closing:
a. The Parties shall continue to cooperate to minimize the
costs of the recent recall of A&W frozen strawberries, through the date of the
FDA's notice of termination of recall, and shall cooperate in asserting any
mutual defenses.
b. Epitope and A&W shall not take any action to terminate or
reduce the coverage provided to A&W under their respective existing insurance
policies, through the end of the current policy year. For the same period,
Epitope and A&W shall use their best efforts to assure that no gaps occur in
their present coverage, provided that each Party shall be responsible for paying
any additional premiums charged to maintain coverage for that Party.
c. A&W shall use its best efforts to obtain a working capital
credit facility not guaranteed by Epitope to replace the WFB Loan Facility (and
any other A&W credit facility guaranteed by Epitope) by November 1, 1998.
d. So long as Epitope continues to be a guarantor of any
credit facility extended to A&W, A&W shall provide Epitope with full access
during normal business hours to its books and records upon reasonable notice,
and shall provide Epitope with its unaudited monthly financial statements and
any other financial information required to be delivered to WFB or any
Replacement Facility Lender, when provided to WFB or the Replacement Facility
Lender. The provisions of this section are in addition to any statutory rights
Epitope may have as a holder of A&W preferred stock.
e. So long as Epitope's guaranty of A&W indebtedness remains
outstanding, neither K. Andrew nor Xxxxxxxxxx, Jr., shall transfer any A&W
shares unless Epitope gives its written consent to the transfer, which shall not
be unreasonably withheld.
13. Termination and Amendment.
a. Termination. This Agreement may be terminated at any time
prior to Closing:
(1) By mutual consent of Epitope and the Former Owners in a
written instrument.
(2) By any Party if the Closing shall not have occurred on or
before June 1, 1997, unless the failure of the Closing to occur by such
date shall be due to the breach by the Party seeking to terminate this
Agreement of any representation, warranty, covenant, or other agreement
of such Party set forth herein.
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(3) By Epitope (provided that Epitope is not then in material
breach of any representation, warranty, covenant or other agreement
contained herein) if there shall have been a material breach of any of
the covenants or agreements or any of the representations or warranties
set forth in this Agreement on the part of the Former Owners, which
breach is not cured within fifteen (15) days following written notice
to the Party committing such breach, or which breach, by its nature,
cannot be cured prior to Closing.
(4) By the Former Owners (provided that the Former Owners are
not then in material breach of any representation, warranty, covenant
or other agreement contained herein) if there shall have been a
material breach of any of the covenants or agreements or any of the
representations or warranties set forth in this Agreement on the part
of Epitope, which breach is not cured within fifteen (15) days
following written notice to Epitope, or which breach, by its nature,
cannot be cured prior to Closing.
b. Effect of Termination. In the event of termination of this
Agreement as provided in Section , this Agreement shall become void and have no
effect. Notwithstanding anything to the contrary contained in this Agreement, no
Party shall be relieved or released from any liabilities or damages arising out
of its intentional or willful breach of any provision of this Agreement.
c. Extension; Waiver. At any time prior to Closing, Epitope
and the Former Owners, may, to the extent legally allowed, (a) extend the time
for the performance of any of the obligations or other acts of the other Parties
hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto, and (c) waive
compliance with any of the agreements or conditions contained herein. Any
agreement on the part of a Party hereto to any such extension or waiver shall be
valid only if set forth in a written instrument signed on behalf of such Party,
but such extension or waiver or failure to insist on strict compliance with an
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
14. General Provisions.
a. Expenses. Except as otherwise stated herein, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the Party incurring such expense.
b. Notices. All notices under this Agreement shall be in
writing and shall be deemed given when delivered personally, when sent by fax
(with prompt confirmation by mail), four business days after mailed by certified
mail (return receipt requested), or one business day after being sent by a
recognized overnight courier, to the
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Parties at the following addresses (or at such other address for a Party as
shall be specified by like notice):
If to Epitope, or to A&W before Closing, to:
0000 X.X. Xxxxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with copies to:
Miller, Nash, Wiener, Hager & Xxxxxxx LLP
3500 U. S. Bancorp Tower
000 X.X. Xxxxx Xxxxxx
Xxxxxxxx, Xxxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxx X. Xxxxxxx, Xx., P.C.
If to A&W after Closing to:
Xxxxxx & Xxxxxxxxxx Sales, Co.
0000 Xxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
Attention: President
with copies to:
Xxxxx, Wegis, DeNatale, Xxxxxxx & Xxxx, llp
X.X. Xxx 00000
Xxxxxxxxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxxx
and
Xxxx, Xxxxxx and Scudi
0000 Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. X. Scudi
If to a Former Owner, to the address set forth in the records
of A&W.
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c. Interpretation. When a reference is made in this Agreement
to Sections, Exhibits, or Schedules, such reference shall be to a Section of or
Exhibit or Schedule to this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Whenever the words
"include," "includes," and "including" are used in this Agreement, they shall be
deemed to be followed by the words "without limitation." No provision of this
Agreement shall be construed to require any person to take any action that would
violate any applicable law, rule, or regulation.
d. Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall become effective when counterparts have been signed by each of the Parties
and delivered to the other Parties, it being understood that all Parties need
not sign the same counterpart. Facsimile transmission of a signed original shall
have the same effect as delivery of the original.
e. Entire Agreement. This Agreement (including the documents
and the instruments referred to herein) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral, among
the Parties with respect to the subject matter hereof other than the agreements
specifically referred to herein.
f. Severability. Any term or provision of this Agreement that
is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction,
be ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction. If any provision of this
Agreement is so broad as to be unenforceable, the provision shall be interpreted
to be only so broad as is enforceable.
g. Assignment. Neither this Agreement nor any of the rights,
interests, or obligations shall be assigned by any of the Parties hereto without
the prior written consent of the other Parties. Subject to the preceding
sentence, this Agreement will be binding upon, inure to the benefit of, and be
enforceable by the Parties and their respective successors and assigns. This
Agreement (including the documents and instruments referred to herein) is not
intended to confer upon any person other than the Parties hereto any rights or
remedies hereunder.
h. Attorney Fees. In the event any Party shall seek
construction or enforcement of any covenant, warranty, indemnity, or other term
or provision of this Agreement, the Party that prevails in such construction or
enforcement proceeding shall be entitled to recover such reasonable costs and
attorney fees which shall be determined by the arbitrator or court (including
any appellate court).
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i. Governing Law. This Agreement shall be governed and
interpreted pursuant to the law of the State of California, and the Parties
consent to the jurisdiction of California courts for any action brought
concerning this Agreement whether for declaratory judgment, breach of contract,
damages, or otherwise.
The Parties have executed this Agreement as of the 4th day of
May, 1997.
EPITOPE, INC.
By
Title:
XXXXXX AND XXXXXXXXXX SALES, CO.
By
Title:
Xxxxx X. Xxxxxx, as cotrustee under the Trust
Xxxxx X. Xxxxxx, individually and as cotrustee
under the Trust
Xxxx X. Xxxxxxxxxx
Xxxx X. Xxxxxxxxxx
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The undersigned spouses of the Former Owners hereby consent
and agree to the terms of this Agreement.
Xxxxxxxx X. Xxxxxx, individually and as
prospective executor of the estate of Xxxx X.
Xxxxxx
Xxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxxxx
Xxxxxxxxx Xxxxxxxxxx
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Exhibit A
RESTATED ARTICLES OF INCORPORATION
OF
XXXXXX AND XXXXXXXXXX SALES, CO.
1. Name. The name of this corporation is XXXXXX AND XXXXXXXXXX
SALES, CO.
2. Purpose. The purpose of this corporation is to engage in
any lawful act or activity for which a corporation may be organized under the
General Corporation Law of California other than the banking business, the trust
company business, or the practice of a profession permitted to be incorporated
by the California Corporations Code.
3. Authorized Capital Stock. This corporation is authorized to
issue two classes of stock, 100,000 shares of Common Stock and 200 shares of
Preferred Stock. The Preferred Stock shall consist of 100 shares of Class A
Preferred Stock and 100 shares of Class B Preferred Stock.
(a) Common Stock. Holders of Common Stock are
entitled to one vote per share on all matters submitted to a vote of
shareholders. No dividends shall be declared or paid on shares of Common Stock
unless all obligations to pay dividends on Preferred Stock are satisfied. On
dissolution of this corporation, after payment of all amounts that the holders
of Preferred Stock are entitled to receive, the holders of Common Stock may
receive, pro rata, any remaining assets of the corporation.
(b) Preferred Stock. The Board of Directors is
authorized, subject to limitations prescribed by the California General
Corporation Law, to provide for the issuance of shares of Preferred Stock in two
series of 100 shares each and to determine the relative rights, preferences, and
limitations of the shares of each series. Holders of Preferred Stock shall be
entitled to receive such dividends as shall be lawfully declared by this
corporation's board of directors.
4. Limitation of Liability. The liability of the directors of
this corporation for monetary damages shall be eliminated to the fullest extent
permitted under California law.
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Exhibit B
RELATIVE RIGHTS, PREFERENCES AND LIMITATIONS
OF PREFERRED STOCK
Class A Preferred Stock and Class B Preferred Stock shall have
the following relative rights, privileges and limitations:
1. Dividend Preference. No dividends shall be declared or paid
on shares of Common Stock unless a dividend of at least the aggregate amount
indicated below is declared and paid simultaneously on shares of Preferred
Stock:
Class of Stock Aggregate Dividend
Class A Preferred Stock 33.3 percent of aggregate dividend
declared and paid on Common
Stock
Class B Preferred Stock 66.7 percent of aggregate dividend
declared and paid on Common
Stock
2. Voting Rights. Except as otherwise required by the
California General Corporation Law, the Preferred Stock shall not be entitled to
vote on any matter submitted to a vote of the shareholders.
3. Liquidation Preference. In the event of any liquidation,
dissolution or winding up of the corporation, whether voluntary or involuntary,
including any sale of substantially all assets of the corporation, each holder
of shares of Preferred Stock shall be entitled to receive cash or other value
out of the assets of the corporation equal to the liquidation value of their
shares. If the assets of the corporation are insufficient to pay such amount in
full, then the corporation shall distribute all its assets, pro rata in
proportion to the liquidation value to which the shares are entitled, to holders
of the Preferred Stock.
4. Liquidation Value.
(a) Class A Preferred Stock. The liquidation value
of each share of Class A Preferred Stock shall be $22,000.
(b) Class B Preferred Stock. The liquidation value
of each share of Class B Preferred Stock shall be $35,000.
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5. Redemption at Corporation's Option. The corporation, at the
option of the Board of Directors, may at any time redeem all or any part of the
outstanding Preferred Stock by paying the redemption value for each share to be
redeemed. In the case of a redemption of only a portion of the outstanding
Preferred Stock, the corporation shall designate the shares to be redeemed. In
the case of either a complete or partial redemption, at least 30 days prior
written notice shall be given to the holders of record of the Preferred Stock to
be redeemed, such notice to be addressed to each shareholder at the address
appearing for that shareholder in the corporation's records or at the
address given to the corporation by such shareholder for the purpose of notice.
Such notice shall state the date fixed for redemption and the total value of
shares to be redeemed and shall designate the place for surrender of such
holder's certificate or certificates representing the shares to be redeemed.
On or after the date fixed for redemption in such notice, the holder of each
share of Preferred Stock called for redemption shall surrender the certificate
evidencing such shares to the corporation at the place designated in such notice
and shall thereupon be entitled to receive payment of the redemption value of
the shares surrendered. If less than all the shares represented by any
surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
6. Mandatory Redemption of Class A Preferred Stock. If less
than all the outstanding shares of Class A Preferred Stock have been redeemed at
the corporation's option as of April 15, 2000, the corporation shall redeem
any outstanding shares of Class A Preferred Stock by annual redemption of shares
of Class A Preferred Stock with an aggregate value of $440,000, beginning with
an initial redemption on April 15, 2000, and continuing annually until all
outstanding shares of Class A Preferred Stock have been redeemed. Such
redemption shall otherwise be made in accordance with the provisions of Section
5 above applicable to the redemption of shares of Preferred Stock at the
corporation's option.
7. Redemption Value.
(a) Class A Preferred Stock. The redemption value of
each share of Class A Preferred Stock shall be its liquidation value, $22,000.
(b) Class B Preferred Stock. The redemption value of
each share of Class B Preferred Stock shall be $28,000 until April 15, 2002.
After April 15, 2002, the redemption value for each share of Class B Preferred
Stock shall be $31,500.
8. Effect. If the corporation deposits funds equal to the
aggregate redemption value of the Preferred Stock to be redeemed into a separate
bank
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account solely for the benefit of holders of Preferred Stock to be redeemed and
not subject to claims of other creditors, then the Preferred Stock called for
redemption shall represent only the right to receive the redemption value on and
after the date fixed for redemption. Otherwise, the holders of the Preferred
Stock called for redemption shall continue to have all rights as shareholders of
such shares until such shares are surrendered for redemption and the full
redemption value has been paid.
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