AGREEMENT OF PURCHASE AND SALE OF ASSETS AMONG ORGANIC TO GO, INC., ORGANIC TO GO FOOD CORPORATION, HIGH NOON HOLDINGS, LLC, and BALDUCCI’S, LLC May 29, 2008
EXHIBIT
10.1
AGREEMENT
OF PURCHASE AND SALE OF ASSETS
AMONG
ORGANIC
TO GO, INC.,
ORGANIC
TO GO FOOD CORPORATION,
HIGH
NOON HOLDINGS, LLC,
and
XXXXXXXX’X,
LLC
May
29, 2008
AGREEMENT
OF PURCHASE AND SALE OF ASSETS
THIS
AGREEMENT OF PURCHASE AND SALE OF ASSETS is made as of May 29, 2008, by and
among HIGH NOON HOLDINGS, LLC, a Delaware limited liability company
(“Company”),
XXXXXXXX’X, LLC, a Delaware limited liability company (“Member”), ORGANIC
TO GO, INC., a Delaware corporation (“Buyer”)
and
ORGANIC TO GO FOOD CORPORATION, a Delaware corporation (“Parent”).
Company and Member are
together referred to in this agreement as “Selling
Parties.”
This
agreement is made under the following circumstances:
A. Buyer
is
a wholly owned subsidiary of Parent.
B. Buyer
desires to purchase from Company and Company desires to sell to Buyer, on
the
terms and subject to the conditions set forth in this agreement, certain
business and properties of Company.
C. Selling
Parties desire that this transaction be consummated on the terms and subject
to
the conditions of this agreement.
NOW,
THEREFORE, in consideration of the mutual covenants, agreements,
representations, and warranties contained in this agreement, the parties
agree
as follows:
ARTICLE
1
PURCHASE
AND SALE OF ASSETS
1.1
SALE
AND TRANSFER OF ASSETS
Subject
to the terms and conditions set forth in this agreement, Company shall sell,
convey, transfer, assign, and deliver to Buyer, and Buyer shall purchase
from
Company, all of the assets, properties, and business of Company of every
kind,
character, and description, whether tangible, intangible, personal, or mixed,
and wherever located, including without limitation the assets described under
the heading “Acquired Assets” on Schedule
1
attached
to this agreement (the “Acquired
Assets”),
excluding the assets, property and rights described under the heading “Excluded
Assets” on Schedule
1
attached
to this agreement (the “Excluded
Assets”).
1.2
CONSIDERATION
FROM BUYER AT CLOSING
The
total
purchase price of the Acquired Assets shall be Three Million Seven Hundred
Fifty
Thousand Dollars ($3,750,000) plus
the sum
of: (a) the aggregate amount of the credits set forth on Section 1.2 of
Schedule
1
(the
“Purchase
Price Credits”),
(b)
the actual cost to Company of Company’s inventory on hand as of the close of
business on the Closing Date (as hereinafter defined) (the “Inventory
Cost”),
and
(c) $10,000 for supplies of Company (the “Supply
Cost”).
As
payment of such purchase price, Buyer shall deliver to Selling
Parties:
1.2(a) Cash.
At the
Closing (as hereinafter defined) by wire transfer to an account designated
in
writing by Company of immediately available funds in the amount of Three
Million
Five Hundred Thousand Dollars ($3,500,000) plus
the sum
of: (a) the Purchase
Price
Credits, (b) $23,408.00 (the “Closing
Inventory Payment”),
representing the estimated Inventory Cost as of the Closing Date, and (c)
the
Supply Cost.
1.2(b) Parent
Common Stock.
A stock
certificate issued to Member (the “Stock
Certificate”)
representing a total number of shares of the Common Stock of Parent, par
value
$0.001 per share (the “Parent
Shares”),
equal
to shares having an aggregate Market Value (as hereinafter defined) of Two
Hundred Fifty Thousand Dollars ($250,000) which shall be delivered to Company
within five (5) business days after the Closing Date. For purposes of this
Agreement, the “Market
Value”
of the
Parent Shares shall equal the average of the closing prices of the Parent
Shares
in the over the counter market (or on any national securities exchange if
shares
of Parent’s Common Stock are listed on a national securities exchange) during
the five (5) consecutive trading days ending three (3) trading days before
the
Closing.
1.3
ASSUMPTION
OF LIABILITIES
Buyer
assumes no contracts, leases, obligations, debts or liabilities under this
agreement, other than those listed on Schedule
1.3
attached
to this agreement (the “Assumed
Contracts”).
It is
expressly understood and agreed that Buyer shall not be liable for any of
the
contracts, leases, obligations, debts or liabilities of Company of any kind
and
nature, other than those listed on Schedule
1.3,
if
any.
1.4
INVENTORY
ADJUSTMENT, PRORATIONS AND DEPOSITS
1.4(a) The
Closing Inventory Payment is based on Company’s average inventory. Immediately
after the close of business on the Closing Date, the parties shall determine
the
Inventory Cost in an agreed-upon manner. Within three (3) days after the
Inventory Cost is determined, (i) if the Inventory Cost exceeds the Closing
Inventory Payment, Buyer shall pay Company the difference between the Inventory
Cost and the Closing Inventory Payment, and (ii) if the Closing Inventory
Payment exceeds the Inventory Cost, then Selling Parties shall pay Buyer
the
difference between the Closing Inventory Payment and the Inventory
Cost.
1.4(b) Rents,
utility charges, prepaid items and other appropriate items with respect to
the
Acquired Assets shall be prorated as of the Closing Date under
the
principle that the income, expense and liabilities attributable to the Acquired
Assets through 11:59 p.m. of the Closing Date shall be for the account of
Company and thereafter such items shall be for the account of Buyer, and
taking
into account the number of days before and after the Closing Date to prorate
any
costs incurred during a period which includes days before and after the Closing
Date. Further detail regarding the parties’ administration of this Section
1.4(b) is set forth on Schedule 1.4.
1.4(c) Within
ten (10) days after the Closing, Buyer shall deliver to the landlord for
the
location at 0000 00xx
Xxxxxx,
X.X., Xxxxx 000, Xxxxxxxxxx, XX (the “19th
Street Landlord”)
a
letter of credit satisfactory to the 19th
Street
Landlord, or cash (via cashier’s check or wire transfer), in the amount of the
letter of credit most recently provided by Selling Parties to the 19th
Street
Landlord (the “High
Noon LC”),
and
ask the 00xx
Xxxxxx
Landlord to return the High Noon LC directly to Company.
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1.5
ALLOCATION
OF PURCHASE PRICE
The
purchase price of the Acquired Assets shall be allocated as
follows:
|
1.
|
Inventory
|
Inventory
Cost plus Supply Cost
|
|
2.
|
Furniture,
Fixtures and Equipment
|
$186,000
|
|
3.
|
Goodwill,
Trade Name and Intangible Assets
|
$3,564,000
|
|
4.
|
Cash
and Deposits
|
Purchase
Price Credits
|
|
Total
Purchase Price
|
$3,750,000
plus
Purchase Price Credits,
Inventory
Cost and Supply Cost
|
Each
of
the parties shall report this transaction for federal and state tax purposes
in
accordance with this allocation of the purchase price.
1.6
TAXES
Buyer
shall pay all sales, use, and other transfer taxes arising out of the transfer
of the Acquired Assets, if any, and Company shall pay its portion, prorated
as
of the Closing Date, of state and local real and personal property taxes,
and
all other taxes of Company. Buyer shall not be responsible for any business,
sales, occupation, withholding, or similar tax, or any taxes of any kind
related
to any period before the Closing Date.
ARTICLE
2
SELLING
PARTIES’ REPRESENTATIONS AND WARRANTIES
Selling
Parties, jointly and severally, represent and warrant that except as set
forth
in the Disclosure Schedule attached to this agreement as Schedule
2:
2.1
ORGANIZATION,
STANDING AND QUALIFICATION OF COMPANY
Company
is a limited liability company duly organized, validly existing, and in good
standing under the laws of the State of Delaware, has all necessary powers
to
own its properties and to operate its business as now owned and operated
by it,
and is duly qualified to transact business and is in good standing in those
jurisdictions in which the nature of Company’s business or of its properties
makes such qualification necessary, which are the District of Columbia and
Virginia.
2.2
OWNERSHIP
OF COMPANY
Member
is
the sole member of Company.
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2.3
SUBSIDIARIES
Company
does not own, directly or indirectly, any interest or investment (whether
equity
or debt) in any corporation, partnership, limited liability company, business,
trust, or other entity.
2.4
FINANCIAL
STATEMENTS
Section
2.4 of Schedule 2 to this
agreement includes the unaudited balance sheets of Company as of January
27,
2008 and January 28, 2007 together with related unaudited statements of income
and retained earnings for the periods then ended (collectively, the
“Financial
Statements”).
The
Financial Statements fairly present in all material respects the financial
position of Company as of the respective dates of the balance sheets included
in
the Financial Statements, and the results of its operations for the respective
periods indicated, provided that (i) the
Financial Statements have not been
prepared
in accordance with generally
accepted accounting principles (“GAAP”)
and
(ii) the Financial Statements include allocations of costs with Member that
do
not reflect the actual costs to the Company.
2.5
ABSENCE
OF SPECIFIED CHANGES
Except
as
described in Section 2.5 of Schedule
2,
since
January 27, 2008, there has been no:
2.5(a) Capital
expenditure by Company exceeding $25,000;
2.5(b) Material
adverse change in the financial condition, liabilities, assets or business
of
Company taken as a whole;
2.5(c) Destruction,
damage to, or loss of any asset of Company (whether or not covered by insurance)
that materially and adversely affects the financial condition or business
of
Company;
2.5(d) Labor
trouble of any character materially and adversely affecting the financial
condition, business or assets of Company;
2.5(e) Material
change in accounting methods or practices (including, without limitation,
any
change in depreciation or amortization policies or rates) by
Company;
2.5(f) Revaluation
by Company of any of its assets;
2.5(g) Increase
in the salary or other compensation payable or to become payable by Company
to
any of its officers, directors,
or employees, or the declaration, payment, or commitment or obligation of
any
kind for the payment, by Company, of a bonus or other additional salary or
compensation to any such person, in each case, other than in the ordinary
course
of business (provided that salary increases have not exceeded five percent
(5%)
in the aggregate);
2.5(h) Sale
or
transfer of any asset of Company, except in the ordinary course of
business;
2.5(i) Amendment
or termination of any contract, agreement, or license to which Company is
a
party, except in the ordinary course of business;
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2.5(j) Loan
by
Company to any person or entity, or guaranty by Company of any
loan;
2.5(k) Mortgage,
pledge, or other encumbrance of any asset of Company;
2.5(l) Waiver
or
release of any right or claim of Company except in the ordinary course of
business;
2.5(m) Commencement
or notice of commencement of any civil litigation or any governmental proceeding
against or investigation of Company or its affairs; or
2.5(n) Agreement
entered into by Company to do any of the things described in the preceding
clauses (a) through (n).
2.6
TAX
RETURNS AND AUDITS
Within
the times and in the manner prescribed by law, Company has filed all federal,
state, and local payroll, sales, use and property tax returns required by
law
and has paid all such taxes, assessments, and penalties due and payable.
There
are no present disputes as to taxes of any nature payable by Company. All
tax
returns and reports filed by Company are true, correct and complete. All
taxes
that Company is or was required to withhold, deduct or collect have been
withheld, deducted and collected and, to the extent required, have been paid
to
the proper government agency or other depository.
2.7
REAL
PROPERTY
The
Company owns no real property. A complete list of all real property leased
to
Company is provided in Section 2.7 of Schedule
2
to this
agreement. Except as otherwise disclosed in Section 2.7 of Schedule
2, the
Company has a valid and enforceable leasehold interest in all leased real
property. Except as disclosed in Section 2.7 of Schedule
2,
to the
knowledge of the Selling Parties, each
parcel of leased real property and any improvements thereon conforms in its
current use and occupancy to all material zoning requirements without reliance
upon a variance issued by any governmental authority or a classification
of the
parcel in question as a nonconforming use.
2.8
HAZARDOUS
MATERIALS.
To
the
knowledge of Selling Parties, (a) there are no underground storage tanks
located
on the real property described in Section 1.3 of Schedule
2
in which
any hazardous material, as defined below, has been or is being stored, nor
has
there been any spill, disposal, discharge or release of any hazardous material
into, upon, from or over that real property or into or upon ground or surface
water on that real property, and (b) there are no asbestos-containing materials
incorporated into the buildings or interior improvements that are part of
that
real property, or into other assets of Company, nor is there any electrical
transformer, fluorescent light fixture with ballasts or other equipment
containing Polychlorinated Biphenyls (PCB’s) on that real property. As used in
this paragraph, “hazardous material” means any hazardous or toxic substance,
material or waste that is regulated by any federal authority or by any state
or
local governmental authority where the substance, material or waste is
located.
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2.9
ENVIRONMENTAL
Except
as
disclosed in Section 2.9 of Schedule
2,
(i)
Company is in material compliance with all applicable federal, state or local
environmental, health and safety statutes and regulations, (ii) Company is
not
the subject of any pending judicial or administrative proceeding alleging
the
violation of any federal, state or local environmental, health or safety
statute
or regulation, (iii) Company is not the subject of any known federal or state
investigation evaluating whether any remedial action is needed to respond
to a
release of any hazardous or toxic waste, substance or constituent, or other
substance into the environment, (iv) Company has not filed any notice under
any
federal or state law indicating past or present treatment, storage or disposal
of hazardous waste, or reporting a spill or release of a hazardous or toxic
waste, substance or constituent, or other substance into the environment,
nor
does Company have or has it had any known problems relating to toxic or
hazardous wastes, and (v) Company does not have any known contingent liability
in connection with any release of any hazardous or toxic waste, substance
or
constituent, or other substance into the environment.
2.10
INVENTORY
The
inventories of raw materials and finished goods (collectively, “Inventories”)
shown
on Company’s balance sheet as of January 27, 2008, included in the Financial
Statements, consist of items that are usable and salable in the ordinary
course
of business by Company. The value of the Inventories has been determined
based
on the most recent cost consistent with prior years. Except for sales made
in
the ordinary course of business since that date, all the Inventories are
the
property of Company. No items are subject to any security interest, except
for
Permitted Liens or as set forth in Section 2.10 of Schedule
2.
2.11
OTHER
TANGIBLE PERSONAL PROPERTY
The
books
and records of Company contain a complete and accurate description in all
material respects, and specify the location, of all motor vehicles, machinery,
equipment, furniture, supplies, tools, and all other tangible personal property
owned by, in the possession of, or used by Company in connection with its
business. The tangible personal property reflected in those books and records
constitutes all such tangible personal property necessary for the conduct
by
Company of its business as now conducted. No personal property used by Company
in connection with its business is held under any lease, security agreement,
conditional sales contract, or other title retention or security arrangement,
or
is other than in the possession and under the control of Company except for
Permitted Liens or as stated in Section 2.11 of Schedule
2.
All
such personal property, taken as a whole, is adequate and in a condition
sufficient to permit Company to conduct its business in substantially the
same manner as it is currently being conducted, subject to ordinary wear
and
tear and routine maintenance.
2.12
INTELLECTUAL
PROPERTY
A
schedule of all intellectual property, including without limitation, trade
names, trademarks, service marks, copyrights, patents and trade secrets and
their registrations as applicable, if any, owned by Company or in which it
has
any rights or licenses, together with a brief description of each, is provided
in Section 2.12 of Schedule
2
(“Company
Intellectual
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Property”).
Except as set forth in Schedule
2,
Company
is not a party to any license, agreement or arrangement, whether as licensor,
licensee or otherwise, with respect to any intellectual property necessary
for
its business as now conducted by it (including without limitation those listed
in Section 2.12 of Schedule
2).
To the
knowledge of Selling Parties, Company has the right and authority to use
Company
Intellectual Property as currently used by it, and such current use does
not,
and will not, conflict with, infringe on, or violate any intellectual property
rights of others. Each trade secret’s documentation is current, accurate, and
sufficient in detail and content to identify and explain it, and to allow
its
full and proper use by Buyer without reliance on the special knowledge or
memory
of others. To Selling Parties’ knowledge, Company’s customer list has been kept
confidential and only used in connection with Company’s business.
2.13
TITLE
TO ASSETS
Company
has good and marketable title to all its assets and interest in assets, whether
real, personal, mixed, tangible, or intangible, which constitute all the
assets
and interests in assets that are used in the business of Company. All these
assets are free and clear of mortgages, liens, pledges, charges, encumbrances,
equities, claims, easements, rights of way, covenants, conditions, or
restrictions, except for (a) statutory liens for current taxes or
assessments not yet due and payable; (b) mechanics’, carriers’,
workers’, repairmen’s and other similar liens arising or incurred in the
ordinary course of business with respect to charges not yet due and payable;
and
(c) such other encumbrances which do not materially detract from or
interfere with the present use of the property subject thereto (“Permitted
Liens”).
2.14
CUSTOMERS
AND SALES
Correct
and current lists of Company’s twenty (20) largest
customers having accounts with Company together with summaries of the sales
made
to each customer during the fiscal years ending January 27, 2008 and January
28,
2007 are included in Section 2.14 of Schedule
2.
Except
as indicated in Section 2.14 of Schedule
2,
to the
Selling Parties’ knowledge, no customer intends to cease doing business with
Company or materially alter the amount of the business that such customer
is
presently doing with Company.
2.15
EMPLOYMENT
AGREEMENTS
A
list of
all employment agreements, severance agreements, pension, bonus, profit-sharing,
stock option, or other agreements providing for employee remuneration or
benefits to which Company is a party or is bound is included in Section 2.15
of
Schedule
2.
Company
is not a party to or bound by any collective bargaining agreement. All of
the
agreements described in this paragraph are in full force and effect, and
neither
Company, to the Selling Parties’ knowledge, nor any other party is in default
under any of these agreements. There is no pending nor, to Selling Parties’
knowledge, threatened labor dispute, strike, slowdown, employee grievance
process or work stoppage affecting Company’s business. There is no pending
organizational activity or other labor dispute against Company, nor is any
application or petition for an election of or for certification of a collective
bargaining agent pending. Except as set forth on Section 2.15 of Schedule
2,
Company
does not provide or sponsor any retirement plan or retirement benefits for
any
of its current or past employees.
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2.16
OTHER
CONTRACTS
Except
for the agreements listed in Section 2.16 of Schedule
2,
copies
of which have been furnished or made available to Buyer, Company is not a
party
to, nor is its property bound by, any representative or agency agreement,
any
output or requirements agreement, any indenture, mortgage, deed of trust,
lease,
or any agreement requiring the performance by Company of any obligation for
a
period of time extending beyond six months from the Closing Date or calling
for
consideration of more than $25,000. There is no default or event that with
notice or lapse of time, or both, would constitute a default by Company or,
to
the Selling Parties’ knowledge, any other party to any of these agreements.
Company has received no written notice that any party to any of these agreements
intends to cancel or terminate any of these agreements or to exercise or
not
exercise any options under any of these agreements. Except as set forth in
Section 2.16 of Schedule
2,
no
consent or approval of any other party is required in connection with the
assignment to and assumption by Buyer of the agreements listed in Section
2.16
of Schedule
2.
2.17
COMPLIANCE
WITH LAWS
Company
has complied in all respects with, and is not in violation of, applicable
federal, state, and local statutes, laws, and regulations (including, without
limitation, any applicable employment, immigration, building, zoning or other
law, ordinance, or regulation) affecting or relating to its properties,
employees, or the operation of its business. Except as set forth on Section
2.17
of Schedule
2,
Company
has all material licenses and permits required to operate its business, and
no
governmental or third party approval is required to assign and transfer such
licenses and permits to Buyer pursuant to this Agreement.
2.18
LITIGATION
There
is
no suit, action, arbitration, or legal, administrative, or other proceeding,
or
governmental investigation, pending or, to the knowledge of the Selling Parties,
threatened, against or affecting Company or its businesses, assets, or financial
condition, except as set forth in Section 2.18 of Schedule
2.
Company
is not in default with respect to any order, writ, injunction, or decree
of any
federal, state, local, or foreign court, department, agency, or instrumentality.
Except as set forth in Section 2.18 of Schedule
2,
Company
is not presently engaged in any legal action to recover monies due to it
or
damages sustained by it.
2.19
AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
Except
as
set forth on Section 2.19 of Schedule
2,
the
consummation of the transactions contemplated by this agreement will not
result
in or constitute any of the following: (i) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation
of the
certificate of formation or operating agreement of Company or any material
lease, license, promissory note, conditional sales contract, commitment,
indenture, mortgage, deed of trust, or other agreement, instrument, or
arrangement to which Member or Company is a party or by which either of them
or
the property of either of them is bound; or (ii) the creation or imposition
of
any lien, charge or encumbrance on any of the properties of Company, other
than
Permitted Liens.
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2.20
AUTHORITY
AND CONSENTS
Selling
Parties have the right, limited liability company power, legal capacity,
and
authority to enter into, and perform their respective obligations under this
agreement. The execution and delivery of this agreement by the Selling Parties
has been duly authorized by all necessary limited liability company
action.
2.21
INTEREST
IN CUSTOMERS, SUPPLIERS, AND COMPETITORS
Neither
Member nor, to the Selling Parties’ knowledge, any officer or manager of Company
or any spouse or child of any of them, has any direct or indirect ownership
interest in any competitor, supplier, or customer of Company or in any person
from whom or to whom Company leases or licenses any real or personal property,
or in any other person with whom Company is doing business.
2.22
IDENTIFICATION
AND COMPENSATION
A
list of
all officers and employees of Company stating the rates of compensation payable
to them is included in Section 2.22 of Schedule 2.
2.23
COMPANY
DOCUMENTS
Selling
Parties have furnished to Buyer, for its examination, a copy of Company’s
certificate of formation.
2.24
ACQUISITION
OF SHARES FOR OWN ACCOUNT
The
Parent Shares are being acquired for investment for Member’s own account, not as
a nominee or agent, and not with a view to the resale or distribution of
any
part thereof. Member does not have any contract, undertaking, agreement or
arrangement with any person to sell, transfer or grant participations to
such
person or to any third person, with respect to any of the Parent
Shares.
2.25
DISCLOSURE
OF INFORMATION
Selling
Parties have had the opportunity to receive all of the information they consider
necessary or appropriate for deciding whether to acquire the Parent Shares.
Selling Parties have had an opportunity to ask questions and receive answers
from Buyer regarding the terms and conditions of the issuance of the Parent
Shares and the business, properties, prospects and financial condition of
Buyer
and Parent. The foregoing, however, does not limit or modify the representations
and warranties of Buyer and Parent in Article 3 of this agreement or the
right
of Selling Parties to rely thereon.
2.26 INVESTMENT
EXPERIENCE
Selling
Parties can bear the economic risk of the ownership of the Parent Shares,
and
have such knowledge and experience in financial or business matters that
they
are capable of evaluating the merits and risks of the acquisition of the
Parent
Shares.
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2.27 ACCREDITED
INVESTOR
Member
has more than $5,000,000 in total assets, and Member is an “accredited investor”
within the meaning of Securities and Exchange Commission (“SEC”) Rule 501 of
Regulation D, as presently in effect.
2.28 RESTRICTED
SECURITIES
Selling
Parties understand that the Parent Shares will be characterized as “restricted
securities” under the federal securities laws inasmuch as they are being
acquired in a transaction not involving a public offering and that under
such
laws and applicable regulations the
Parent Shares may be resold without registration under the Securities Act
of
1933 (the “Act”) only in certain limited circumstances.
Selling
Parties are familiar with SEC Rule 144, as presently in effect, and understand
the resale limitations imposed thereby and by the Act.
2.29 FURTHER
LIMITATIONS ON DISPOSITION
Without
in any way limiting the representations set forth above, Selling Parties
shall
not make any disposition of all or any portion of the Parent Shares unless
and
until:
2.29(a) There
is
then in effect a Registration Statement under the Act covering such proposed
disposition and such disposition is made in accordance with such Registration
Statement; or
2.29(b) (i)
Selling Parties shall have notified Buyer of the proposed disposition and
shall
have furnished Buyer with a detailed statement of the circumstances surrounding
the proposed disposition, and (ii) if reasonably requested by Buyer, Selling
Parties shall have furnished Buyer with an opinion of counsel, reasonably
satisfactory to Buyer, that such disposition will not require registration
of
such shares under the Act. Buyer will not require opinions of counsel for
transactions made pursuant to Rule 144.
2.29(c) Notwithstanding
subsections (a) and (b) above, no such registration statement or opinion
of
counsel shall be necessary for a transfer by Company to Member, if Member
agrees
in writing to be subject to the terms of this agreement to the same extent
as if
it were acquiring the Parent Shares directly pursuant to this
agreement.
2.30 LEGEND:
The Stock Certificate may bear the following legend:
"THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED
IN THE
ABSENCE OF A REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT
SUCH
REGISTRATION IS NOT REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OF SUCH
ACT."
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2.31 NO
ADVERTISEMENT
Selling
Parties acknowledge that the issuance of the Parent Shares has not been
accomplished by the publication of any advertisement.
2.32 FULL
DISCLOSURE
None
of
the representations and warranties made by Member or Company in this Agreement
contains any untrue statement of a material fact, or omits any material fact
the
omission of which would be misleading.
2.33 DISCLAIMER
OF OTHER REPRESENTATIONS AND WARRANTIES
EXCEPT
AS
EXPRESSLY SET FORTH IN THIS ARTICLE
2,
THE SELLING PARTIES MAKE NO REPRESENTATION OR WARRANTY, EXPRESSED OR
IMPLIED, AT LAW OR IN EQUITY IN RESPECT OF THE SELLING PARTIES, OR ANY OF
THEIR RESPECTIVE ASSETS, LIABILITIES OR OPERATIONS, INCLUDING WITHOUT
LIMITATION ANY IMPLIED WARRANTY OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE, AND ANY SUCH OTHER REPRESENTATIONS OR WARRANTIES ARE HEREBY EXPRESSLY
DISCLAIMED. BUYER AND PARENT HEREBY ACKNOWLEDGE AND AGREE THAT (A) EXCEPT
TO THE EXTENT SPECIFICALLY SET FORTH IN THIS ARTICLE 2 (AS QUALIFIED
BY THE DISCLOSURE SCHEDULE), BUYER IS ACQUIRING THE ASSETS AND
BUSINESS OF THE COMPANY ON AN "AS IS, WHERE IS" BASIS, AND
(B)
ANY
CLAIMS BUYER OR PARENT MAY HAVE FOR BREACH OF REPRESENTATION OR WARRANTY
MUST BE
BASED SOLELY ON THE REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS ARTICLE
2
(AS QUALIFIED BY THE DISCLOSURE SCHEDULE).
ARTICLE
3
BUYER’S
AND PARENT’S REPRESENTATIONS AND WARRANTIES
Buyer
and
Parent, jointly and severally, represent and warrant that:
3.1
ORGANIZATION,
STANDING AND QUALIFICATION OF BUYER AND PARENT
Buyer
and
Parent are each corporations duly organized, validly existing, and in good
standing under the laws of the State of Delaware and have all necessary powers
to own their properties and to operate their businesses as now owned and
operated by them. Buyer is duly qualified to transact business and is in
good
standing in Washington and in each other jurisdiction in which the nature
of
Buyer’s business or of its properties makes such qualification
necessary.
3.2 BUYER
AND BUYER’S NET WORTH
Parent
is
the sole stockholder of Buyer. Buyer has a tangible net worth (exclusive
of
goodwill) greater than $6,000,000.
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3.3 SEC
FILINGS; FINANCIAL STATEMENTS
3.3(a) Parent
has filed all forms, reports and documents required to be filed by it with
the
Securities and Exchange Commission (the “SEC”)
from
February 13, 2007 through the date of this agreement (collectively, the “Parent
SEC Reports”). As of the respective dates they were filed (and if amended or
superseded by a filing before the date of this agreement, then on the date
of
such filing), (i) the Parent SEC Reports complied in all material respects
with
the requirements of the Act or the Securities Exchange Act of 1934, as the
case
may be, and (ii) none of the Parent SEC Reports contained any untrue statement
of a material fact or omitted or state a material fact required to be stated
therein or necessary to make the statements made therein, in the light of
the
circumstances under which they were made, not misleading.
3.3(b) Each
of
the consolidated financial statements (including, in each case, any notes
thereto) contained in the Parent SEC Reports was prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods indicated (except as may be indicated in the notes
thereto or, in the case of unaudited statements, as permitted by Form 10-Q
or
8-K promulgated by the SEC) and each presented fairly, in all material respects,
the consolidated financial position of Parent and its consolidated subsidiaries
as at the respective dates thereof and for the respective periods indicated
therein, except as otherwise noted therein (subject, in the case of unaudited
statements, to normal and recurring year-end adjustments which were not and
are
not expected, individually or in the aggregate, to have a material adverse
effect).
3.3(c) Since
the
date of the most recent filing of Form 8-K with the SEC by Parent, there
has not
occurred any event that (singly or together with other such events) would
reasonably be expected to have a material adverse effect on the Buyer or
Parent.
3.4 TAX
RETURNS AND AUDITS
Within
the times and in the manner prescribed by law, Buyer and Parent each have
filed
all federal, state, and local tax returns required by law and have paid all
taxes, assessments, and penalties due and payable, including without limitation
all sales taxes. There are no present disputes as to taxes of any nature
payable
by Buyer or Parent.
3.5 COMPLIANCE
WITH LAWS
Buyer
and
Parent each have complied with and are not in violation of applicable federal,
state, or local statutes, laws, and regulations (including, without limitation,
any applicable employment, immigration, building, zoning, or other law,
ordinance, or regulation) affecting or relating to their properties, employees,
or the operation of its business.
3.6 LITIGATION
There
is
no material suit, action, arbitration, or legal, administrative, or other
proceeding, or governmental investigation, pending or threatened, to the
best
knowledge of Buyer or Parent, against or affecting Buyer or Parent or either
of
their businesses, assets, or financial condition. Neither Buyer nor Parent
is in
default with respect to any order, writ, injunction, or decree of
any
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federal,
state, local, or foreign court, department, agency, or instrumentality. Buyer
is
not presently engaged in any legal action to recover monies due to it or
damages
sustained by it.
3.7 AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
The
consummation of the transactions contemplated by this agreement will not
result
in or constitute any of the following: (i) a default or an event that, with
notice or lapse of time or both, would be a default, breach, or violation
of the
certificate of incorporation or bylaws of Buyer or Parent or any lease, license,
promissory note, conditional sales contract, commitment, indenture, mortgage,
deed of trust, or other agreement, instrument, or arrangement to which Buyer
or
Parent is a party or by either of them or their property is bound; or (ii)
the
creation or imposition of any lien, charge, or encumbrance on any of the
properties of Buyer or Parent.
3.8 AUTHORITY
AND CONSENTS
Buyer
and
Parent each have the right, power, legal capacity, and authority to enter
into,
and perform their obligations under, this agreement, and no approvals or
consents of any persons are necessary in connection with it. The execution
and
delivery of this agreement by Buyer and Parent and the performance by them
of
their respective obligations under this agreement have been duly authorized
by
all necessary corporate action of Buyer and Parent.
3.9 FULL
DISCLOSURE
None
of
the representations and warranties made by Buyer and/or Parent in this Agreement
contains any untrue statement of a material fact, or omits any material fact
the
omission of which would be misleading.
ARTICLE
4
OBLIGATIONS
OF THE PARTIES AFTER CLOSING
4.1 INDEMNIFICATION
4.1(a) Selling
Parties shall, jointly and severally, indemnify, defend, and hold Buyer harmless
against and in respect of any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages (including actual compensatory damages
for the
diminished value of the business acquired pursuant to this Agreement),
recoveries, and deficiencies, including without limitation, interest, penalties,
and reasonable attorneys’ fees but excluding any consequential, punitive,
special, incidental, indirect or exemplary damages (collectively, “Damages”),
incurred or suffered by Buyer that arise from, result from, or relate
to
any (i)
breach of, or failure by Selling Parties to perform, any of their
representations, warranties, covenants, or agreements in this agreement or
(ii)
any contract, debt, liability, or obligation of Company (other than performance
of obligations under the Assumed Contracts as described on Schedule
1.3).
4.1(b) Buyer
and
Parent shall, jointly and severally, indemnify, defend, and hold Selling
Parties
harmless against and in respect of any and all Damages incurred or suffered
by
any Selling Party that arise from, result from, or relate to (i) any breach
of,
or failure by Buyer or Parent to perform, any of their representations,
warranties, covenants, or agreements in this
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13 -
agreement,
(ii) any matter in any way related to or arising out of the ownership and/or
use
of the Acquired Assets or satisfaction and performance of the Assumed Contracts
after the Closing Date, or (iii) failure to have as of the Closing the lessor’s
consent to assignment and assumption of the lease for the location at 0000
Xxxxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxxx.
4.1(c) A
party
that desires to assert a claim for indemnity (an “Indemnified
Party”)
shall
provide prompt written notice to each party from whom it seeks indemnification
(an “Indemnifying
Party”)
of the
existence of any claim, demand, suit, proceeding or other matter (an
“Action”)
which
the Indemnified Party believes may give rise to a claim for indemnification
under this Section 4.1. Thereafter, the Indemnified Party shall furnish to
the
Indemnifying Party, in reasonable detail, such information as it may have
with
respect to such Action or other event, including copies of any summons,
complaint or other pleading which may have been served upon any Indemnified
Party or any written Action, invoice, billing or other document evidencing
or
asserting the same. Provided the Indemnifying Party, within ten (10) business
days after receipt of such written notice from the Indemnified Party, shall
acknowledge in writing to the Indemnified Party assumption of full
responsibility for defense and indemnification with respect to such Action
(subject to the terms of this Agreement), the Indemnifying Party shall have
the
right to assume defense of such Action through counsel selected by the
Indemnifying Party and reasonably satisfactory to the Indemnified Party,
at the
Indemnifying Party’s expense, and to contest such Action, and the Indemnifying
Party shall not be liable to the Indemnified Party for legal fees or other
expenses subsequently incurred by the Indemnified Party in defense of such
Action. Upon such assumption of defense by the Indemnifying Party, the
Indemnified Party shall reasonably cooperate with the Indemnifying Party
in the
Indemnifying Party’s conduct of such defense to the extent reasonably requested
by the Indemnifying Party and the Indemnified Party shall not settle or
compromise the same. Without the prior written consent of the Indemnified
Party,
which consent shall not be unreasonably withheld, the Indemnifying Party
shall
not be entitled to settle any Action, the defense of which has been assumed
by
the Indemnifying Party, if such settlement (i) could reasonably be expected
to
have a material adverse effect or impose any material condition or limitation
on
the business, operations or condition (financial or otherwise) on the business
of the Indemnified Party, or (ii) involves a criminal matter. Notwithstanding
the foregoing, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise or settle any Action if
the
Indemnifying Party is a Person against whom the claim is made and the
Indemnified Party determines in good faith that joint representation would
be
inappropriate. If the Indemnified Party assumes the defense of any Action
as
provided above: (i) the Indemnified Party will diligently defend the
Action, with counsel reasonably satisfactory to the Indemnifying Party and
shall
not settle such Action without the prior written consent of the Indemnifying
Party, which consent shall not be unreasonably withheld; (ii) the
Indemnifying Party may participate in the defense of the Action, at the
Indemnifying Party’s own cost and expense; and (iii) the Indemnified Party
and the Indemnifying Party will keep each other fully informed of the status
of
the Action, will cooperate with each other with respect to the defense of
the
Action, and will attempt to preserve in full any attorney-client privilege
and
work-product privileges.
4.1(d) Notwithstanding
any other provisions of this agreement, the following limitations to the
parties’ indemnification obligations shall apply:
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14 -
(i) Selling
Parties shall be obligated to indemnify Buyer only when the aggregate of
all
Damages suffered or incurred by Buyer as to which a right of indemnification
is
provided under this Section 4.1 exceeds Twenty-Five Thousand Dollars ($25,000)
(the “Basket
Amount”).
After
the aggregate of all Damages suffered or incurred by Buyer exceeds the Basket
Amount, Selling Parties shall be obligated to indemnify Buyer for all such
Damages exceeding the Basket Amount. In no event shall the aggregate liability
of Selling Parties under this Section 4.1 exceed Four Hundred Fifty Thousand
Dollars ($450,000) (the “Cap
Amount”).
Notwithstanding the above, the Basket Amount shall not apply to limit any
Damages that result from or arise out of (A) a breach of any of the
representations and warranties contained in Sections 2.1, 2.2, 2.6, 2.9,
or
2.20, or (B) Selling Parties’ failure to fully pay or satisfy a debt, liability
or obligation of Company, other than an Assumed Contract.
(ii) Buyer
and
Parent shall be obligated to indemnify Selling Parties only when the aggregate
of all Damages suffered or incurred by Selling Parties as to which a right
of
indemnification is provided under this Section 4.1 exceeds the Basket Amount.
After the aggregate of all Damages suffered or incurred by Selling Parties
exceeds the Basket Amount, Buyer and Parent shall be obligated to indemnify
Selling Parties for all such Damages exceeding the Basket Amount. In no event
shall the aggregate liability of Buyer and Parent under this Section 4.1
exceed
the Cap Amount. Notwithstanding the above, the Basket Amount shall not apply
to
limit any Damages that result from or arise out of (A) a breach of any of
the
representations and warranties contained in Sections 3.1, 3.2, 3.4, 3.5,
or 3.8,
or (B) Buyer’s failure to satisfy its obligations under any Assumed Contract.
The Basket Amount and the Cap Amount shall not apply to limit any Damages
that
result from or arise out of the circumstances described in clause
4.1(b)(iii).
(iii) Damages
shall be calculated net of any insurance recovery actually received prior
to
indemnification hereunder by the Indemnified Party seeking indemnification
for
the Damages. In the event, subsequent to payment of an indemnification claim
hereunder, the Indemnified Party actually realizes or receives any insurance
recovery applicable to the matter for which an indemnification payment was
made,
the Indemnified Party shall immediately reimburse and refund to the Indemnifying
Party the amount of the applicable prior indemnification payment.
(iv) No
claim
(whether such claim sounds in tort, contract, statute or otherwise) may be
made
after the date of this Agreement by any party against another party based
on any
claimed breach of any representation or warranty, covenant or agreement
contained in, or otherwise based upon, relating to or arising out of, this
Agreement or the transactions contemplated hereby (or any of the agreements
to
be executed and delivered by any party hereto), except to the extent and
in the
manner provided in this Section 4.1, which shall constitute the sole and
exclusive remedy of all the parties hereto and all persons who may claim
any
rights through such parties for any such claim. In addition, no claim may
be
made by any party against another party based on any alleged breach or
inaccuracy of a representation or warranty of the other party unless such
claim
is asserted within the survival period applicable to such representation
and
warranty as set forth in Section 4.2, and in the manner provided in this
Section
4.1.
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15 -
4.2
SURVIVAL
OF REPRESENTATIONS AND OBLIGATIONS
All
representations, warranties, covenants, and agreements of the parties contained
in this agreement shall survive the Closing as follows: (a) the representations
and warranties in Sections 2.20 (Authority and Consents) and 3.8 (Authority
and
Consents) shall survive indefinitely; (b) the representations and warranties
in
Sections 2.2 (Ownership of Company), 2.6 (Tax Returns and Audits), 2.8
(Environmental), 3.1 (Organization, etc.), and 3.4 (Tax Returns and Audits)
shall survive the Closing until the expiration of the applicable statute
of
limitations; (c) all other representations and warranties shall survive until
twelve (12) months after the Closing Date; (d) the obligations in Section
4.3
(Confidential Information) shall survive until thirty-six (36) months after
the
Closing Date; (e) the indemnification obligation described in clause 4.1(b)(iii)
shall survive until twenty-four (24) months after the Closing; and (f) all
other
covenants and agreements of the parties shall survive indefinitely.
Notwithstanding the foregoing, a claim made under this Agreement shall survive
until resolution if it is made before expiration of the applicable survival
period.
4.3
CONFIDENTIAL
INFORMATION
The
Selling Parties shall not divulge, communicate, use to the detriment of Buyer
or
for the benefit of any other person or persons, or misuse in any way, any
confidential information or trade secret of Company, including without
limitation personnel information, know-how, customer lists or other technical
data other than information or a trade secret constituting an Excluded Asset
(“Confidential
Information”).
Any
information or data Selling Parties have acquired on any of these matters
or
items was received in confidence and as fiduciaries of Company. This Section
4.3
does not apply to that part of the Confidential Information that the Selling
Parties can demonstrate (a) was, is or becomes generally available to the
public
other than as a result of a breach of this Section 4.3; or (b) was, is or
becomes available to a third party on a nonconfidential basis from a party
not
bound by a confidentiality agreement or any legal, fiduciary or other obligation
restricting disclosure.
4.4
COMPANY
NOT TO USE NAMES
Immediately
after the Closing, Selling Parties shall not use or employ in any manner
directly or indirectly the trade names “High Noon”, “High Noon Fresh &
Ready,” “High Noon Always,” or any other names containing the same or similar
terms alone or in combination with any other words.
4.5
SECURITIES
MATTERS
Parent
agrees to use best efforts to satisfy the current public information
requirements of Rule 144(c)(1) under the Act for so long as such requirements
apply to a sale by the Selling Parties of the Parent Shares. Parent further
agrees to reasonably cooperate with the Selling Parties in removing legends
from
the Stock Certificate representing the Parent Shares in connection with a
sale
under Rule 144 under the Act, including the provision of a legal opinion
to the
transfer agent in such form as the transfer agent may require (to the extent
that legal counsel to Parent can reasonably provide such a legal
opinion).
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16 -
ARTICLE
5
THE
CLOSING
5.1
TIME
AND PLACE
The
transfer of the Acquired Assets by Company to Buyer (the “Closing”)
shall
occur on the date of this agreement, and shall be effective as of 11:59 p.m.
on
that date. The Closing shall occur at the offices of Organic To Go, Inc.,
0000
0xx
Xxxxxx
X, Xxxxx X, Xxxxxxx, Xxxxxxxxxx, unless the parties otherwise agree in writing.
That date, or if the Closing is advanced or postponed under this paragraph,
then
the date to which it is advanced or postponed, is called the “Closing
Date”.
5.2
SELLING
PARTIES' OBLIGATIONS AT CLOSING
At
the
Closing, Selling Parties shall deliver or cause to be delivered to
Buyer.
5.2(a) A
Xxxx of
Sale with respect to the Acquired Assets.
5.2(b) An
Assignment and Assumption of Lease signed by Company with respect to
0000
X
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
5.2(c) An
Assignment and Assumption of Lease signed by Company with respect to
0000
00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
5.2(d) An
Assignment and Assumption of Lease signed by Company with respect to
000
00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000, and an Amendment to Lease for that
location in a form satisfactory to Buyer and signed by Company and the
landlord.
5.2(e) An
Assignment and Assumption of and First Amendment to Retail Lease signed by
Company, with respect to 0000
Xxxxxx Xxxx., Xxxxxxxxx, XX 00000.
5.2(f) A
License
Agreement with respect to (i) recipes used by Company and (ii) the Caterease
software, in a form acceptable to Selling Parties and Buyer and signed by
Company (the “License
Agreement”).
5.2(g) An
Assignment of Names and Marks with respect to the trademarks and trade names
listed in Section 2.12 of Schedule
2.
5.2(h) An
Assignment and Assumption for the Corporate Food Services Agreement described
in
Section 2.16 of Schedule
2
(the
“Corporate
Food Services Assignment”).
5.2(i) Instruments
of assignment and transfer of all other Acquired Assets (if any).
Simultaneously
with the consummation of the transfer, Company, through its officers, agents,
and employees, will put Buyer into full possession and enjoyment of all
properties and assets to be conveyed and transferred by this
agreement.
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17 -
Selling
Parties, at any time after the Closing Date, shall execute, acknowledge,
and
deliver any further deeds, assignments, conveyances, and other assurances,
documents, and instruments of transfer reasonably requested by Buyer, and
will
take any other action consistent with the terms of this agreement that may
reasonably be requested by Buyer for the purpose of assigning, transferring,
granting, conveying, and confirming to Buyer, or reducing to possession,
any or
all property to be conveyed and transferred by this agreement. If requested
by
Buyer, Company shall prosecute or otherwise enforce in its own name for the
benefit of Buyer any claims, rights, or benefits that are transferred to
Buyer
by this agreement and that require prosecution or enforcement in Company's
name.
Any prosecution or enforcement of claims, rights, or benefits under this
paragraph shall be solely at Buyer's expense, unless the prosecution or
enforcement is made necessary by a breach of this agreement by the Selling
Parties, or any of them.
Buyer,
at
any time after the Closing Date, shall execute, acknowledge, and deliver
any
further assurances, documents, and instruments reasonably requested by Selling
Parties, and will take any other action consistent with the terms of this
agreement that may reasonably be requested by Selling Parties, for the purpose
of confirming to Company, or reducing to Company’s possession, any or all of the
Excluded Assets.
5.3
BUYER'S
OBLIGATIONS AT CLOSING
At
the
Closing, Buyer shall deliver the following instruments and
documents:
5.3(a) Wire
transfer to an account designated in writing by Company of immediately available
funds in the aggregate amount of $3,500,000 plus
the sum
of: (a) the Purchase Price Credits, (b) the Closing Inventory Payment, and
(c)
the Supply Cost.
5.3(b) An
Assignment and Assumption of Lease signed by Buyer with respect to 0000
X
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
5.3(c) An
Assignment and Assumption of Lease signed by Buyer with respect to 0000
00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
5.3(d) An
Assignment and Assumption of Lease signed by Buyer with respect to 000
00xx
Xxxxxx, X.X., Xxxxxxxxxx, X.X. 00000.
5.3(e) An
Assignment and Assumption of and First Amendment to Retail Lease signed by
Buyer, with respect to 0000
Xxxxxx Xxxx., Xxxxxxxxx, XX 00000.
5.3(f) The
License Agreement, signed by Buyer.
5.3(g) The
Corporate Food Services Assignment, signed by Buyer.
5.3(h) A
certificate signed by an officer of Buyer confirming that Buyer is not aware
of
any breach of a representation of warranty by any Selling Party.
The
Stock
Certificate for the Parent Shares shall be delivered within five (5) days
after
the Closing.
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18 -
5.4
EMPLOYMENT
5.4(a) Buyer
is
not obligated to hire any Company employee, but intends to initially employ
all
Company employees. Buyer’s expressed intention to extend offers of employment
shall not obligate Buyer to establish any employment relationship after the
Closing, nor shall it govern the terms and conditions of any employment
relationship which is established after the Closing. Any employment offered
by
Buyer shall be “at will,” terminable by Buyer or the employee at any time for
any reason.
5.4(b)
Effective immediately before the Closing, Company has terminated the employment
of all of its employees. For a period of two (2) years following the Closing
Date, neither Company nor Member shall solicit the employment or continued
employment of any person employed by Company immediately before the
Closing,
provided that this sentence does not prohibit (A) soliciting employment by
placement of general advertisements or postings for employees in newspapers
or
other means of general circulation,
or (B)
soliciting employment of persons who are not employed by Buyer within five
(5)
days after the Closing Date or who are employed by Buyer after the Closing
Date
but whose employment relationship with Buyer is subsequently terminated for
any
reason.
Company
shall be responsible for (i) the payment of all wages and other remuneration
due
to Company’s employees with respect to their services as employees of Seller
through the close of business on the Closing Date, including pro rata bonus
payments and all vacation pay earned before the Closing Date, (ii) any
termination or severance payments pursuant to Company policy or applicable
law,
and the provision of health plan continuation coverage in accordance with
the
requirements of COBRA, and (iii) all claims made or incurred by Company
employees and their beneficiaries under the plans listed in Section 2.15
of
Schedule
2.
All
Company employees who are participants in Company’s retirement plans shall
retain their accrued, vested benefits under those plans, and Company shall
retain sole liability for the payment of such benefits in accordance with
the
terms of those plans.
ARTICLE
6
MISCELLANEOUS
6.1
PUBLICITY
All
notices to third parties and all other publicity concerning the transactions
contemplated by this agreement shall be jointly planned and coordinated by
and
between Buyer and Selling Parties, except as required by applicable law.
None of
the parties shall act unilaterally in this regard without the prior written
approval of the others; this approval shall not be unreasonably withheld.
6.2
EXPENSES
Except
as
specifically provided herein, each of the parties shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing this
agreement and in closing and carrying out the transactions contemplated by
this
agreement, including without limitation any fees of counsel, brokers or finders
for such party.
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19 -
6.3
INTERPRETATION
AND EFFECT OF HEADINGS
This
agreement shall be construed as if drafted jointly by all the parties. The
subject headings of the paragraphs and subparagraphs of this agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.
6.4
ENTIRE
AGREEMENT; MODIFICATION; WAIVER
This
agreement (along with the Disclosure Schedules, exhibits and other documents
delivered pursuant to this Agreement) constitutes the entire agreement among
the
parties pertaining to the subject matter contained in it and supersedes all
prior and contemporaneous agreements, representations, and understandings
of the
parties with respect to such subject matter. No supplement, modification,
or
amendment of this agreement shall be binding unless executed in writing by
all
the parties. No waiver of any of the provisions of this agreement shall be
deemed, or shall constitute, a waiver of any other provision, whether or
not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall
be
binding unless executed in writing by the party making the waiver.
6.5
COUNTERPARTS
This
agreement may be executed in multiple counterparts, each of which constitutes
an
original, and all of which, collectively, constitute only one agreement.
The
signatures of all of the parties need not appear on the same counterpart,
and
delivery of an executed counterpart signature page by U.S. mail, overnight
courier, facsimile, or email is as effective as executing and delivering
this
agreement in the presence of the other parties to this agreement.
6.6
PARTIES
IN INTEREST
Nothing
in this agreement, whether express or implied, is intended to confer any
rights
or remedies under or by any reason of this agreement on any persons other
than
the parties to it and their respective successors and assigns, nor is anything
in this agreement intended to relieve or discharge the obligation or liability
of any third persons to any party to this agreement, nor shall any provision
give any third persons any right of subrogation or action over against any
party
to this agreement.
6.7
ASSIGNMENT
This
agreement shall be binding on, and shall inure to the benefit of, the parties
to
it and their successors and permitted assigns, but shall not be assignable
by
any party without the prior written consent of the other parties.
6.8
ARBITRATION
Any
dispute, claim or controversy arising out of or relating to this agreement
or
the breach, termination, enforcement, interpretation or validity thereof,
including the determination of the scope or applicability of this agreement
to
arbitrate, shall be determined by arbitration in Washington, D.C. The
arbitration shall be administered by JAMS pursuant to its Comprehensive
Arbitration Rules and Procedures. Judgment on the arbitration award may be
entered in any
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20 -
court
having jurisdiction. This clause shall not preclude the parties from seeking
provisional remedies in aid of arbitration from a court of appropriate
jurisdiction.
6.9
RECOVERY
OF LITIGATION COSTS
If
any
legal action, arbitration or other proceeding is brought for the enforcement
of
this agreement, or because of an alleged dispute, breach, default, or
misrepresentation in connection with any of the provisions of this agreement,
the successful or prevailing party or parties shall be entitled to recover
reasonable attorneys’ fees and other costs incurred in that action or
proceeding, in addition to any other relief to which it or they may be
entitled.
6.10
NOTICES
All
notices, requests, demands, and other communications under this agreement
shall
be in writing and shall be deemed to have been duly given on the date of
service
if served personally on the party to whom notice is to be given, or if mailed
to
the party to whom notice is to be given, five (5) days after being sent by
first
class mail, registered or certified, postage prepaid, or if sent by overnight
courier service, one (1) business day after being sent, in each case properly
addressed as follows:
|
To
Selling Parties at:
|
Xx.
Xxxxxxx Xxxxxxx
Chief
Executive Officer
Balducci’s
00000
Xxxxx Xxxx Xxxxx
Xxxxxxxx,
XX 00000
|
|
with
a copies to:
|
Xx.
Xxxxxxxx Xxxxx
Managing
Director - Merchant Banking
Bear
Xxxxxxx & Co. Inc.
000
Xxxxxxx Xxxxxx - 00xx
Xxxxx
Xxx
Xxxx, XX 00000
|
|
Xxxx
X. Xxxxxxx, Xx., Esq.
Xxxxxxx
Xxxxxx Xxxxxx & Dodge LLP
0000
Xxxxxxxxx Xxxxx
Xxxxxxxxxx,
XX 00000
|
|
|
To
Buyer at:
|
Mr.
Xxxxx Xxxxx
Chief
Executive Officer
Organic
To Go, Inc.
0000
0xx
Xxx. X, Xxxxx X
Xxxxxxx,
XX 00000
|
|
with
a copy to:
|
Xxxxxx
X. Xxxxxx, Esq.
Carr,
McClellan, Ingersoll, Xxxxxxxx & Xxxx, Professional Law
Corporation
000
Xxxx Xxxx
Xxxxxxxxxx,
XX 00000
|
-
21 -
Any
party
may change its address for purposes of this paragraph by giving the other
parties written notice of the new address in the manner set forth
above.
6.11
GOVERNING
LAW
This
agreement shall be construed in accordance with, and governed by, the laws
of
the State of Delaware.
6.12
SEVERABILITY
If
any
provision of this agreement is held invalid or unenforceable by any court
of
final jurisdiction, it is the intent of the parties that all other provisions
of
this agreement be construed to remain fully valid, enforceable, and binding
on
the parties.
REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK
-
22 -
[Signature
page to Asset Purchase Agreement]
IN
WITNESS WHEREOF, the parties to this agreement have duly executed it as of
the
day and year first above written.
|
ORGANIC
TO GO, INC.
a
Delaware corporation
By:
__________________________________
Name:
_______________________________
Title:
________________________________
ORGANIC
TO GO FOOD CORPORATION
a
Delaware corporation
By:
__________________________________
Name:
_______________________________
Title:
________________________________
|
HIGH
NOON HOLDINGS, LLC
a
Delaware limited liability company
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
XXXXXXXX’X,
LLC
a
Delaware limited liability company
By:
___________________________________
Name:
_________________________________
Title:
__________________________________
|
-
23 -
LIST
OF SCHEDULES
|
Schedule
|
Description
|
|
1
1.2
|
Assets
of Company
Purchase
Price Credits
|
|
1.3
|
Assumed
Liabilities
|
|
1.4
|
Prorations
of Certain Invoices
|
|
2
|
Disclosure
Schedule
|
|
2.5
|
Absence
of Specified Changes
|
|
2.6
|
Tax
Returns and Audits
|
|
2.7
2.9
2.10
|
Leased
Real Property
Environmental
Inventory
|
|
2.11
|
Other
Tangible Personal Property
|
|
2.12
2.14
|
Intellectual
Property
Top
20 Customers
|
|
2.15
2.16
2.17
|
Employment
Agreements
Other
Contracts
Compliance
with Laws
|
|
2.18
2.19
2.22
|
Litigation
No
Breach or Violation
Officers
and Employees
|
-
24 -
|
ARTICLE
1 PURCHASE AND SALE OF ASSETS
|
1
|
|
|
1.1
|
SALE
AND TRANSFER OF ASSETS
|
1
|
|
1.2
|
CONSIDERATION
FROM BUYER AT CLOSING
|
1
|
|
1.3
|
ASSUMPTION
OF LIABILITIES
|
2
|
|
1.4
|
INVENTORY
ADJUSTMENT, PRORATIONS AND DEPOSITS
|
2
|
|
1.5
|
ALLOCATION
OF PURCHASE PRICE
|
3
|
|
1.6
|
TAXES
|
3
|
|
ARTICLE
2 SELLING PARTIES’ REPRESENTATIONS AND WARRANTIES
|
3
|
|
|
2.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF COMPANY
|
3
|
|
2.2
|
OWNERSHIP
OF COMPANY
|
3
|
|
2.3
|
SUBSIDIARIES
|
4
|
|
2.4
|
FINANCIAL
STATEMENTS
|
4
|
|
2.5
|
ABSENCE
OF SPECIFIED CHANGES
|
4
|
|
2.6
|
TAX
RETURNS AND AUDITS
|
5
|
|
2.7
|
REAL
PROPERTY
|
5
|
|
2.8
|
HAZARDOUS
MATERIALS.
|
5
|
|
2.9
|
ENVIRONMENTAL
|
6
|
|
2.10
|
INVENTORY
|
6
|
|
2.11
|
OTHER
TANGIBLE PERSONAL PROPERTY
|
6
|
|
2.12
|
INTELLECTUAL
PROPERTY
|
6
|
|
2.13
|
TITLE
TO ASSETS
|
7
|
|
2.14
|
CUSTOMERS
AND SALES
|
7
|
|
2.15
|
EMPLOYMENT
AGREEMENTS
|
7
|
|
2.16
|
OTHER
CONTRACTS
|
8
|
|
2.17
|
COMPLIANCE
WITH LAWS
|
8
|
|
2.18
|
LITIGATION
|
8
|
|
2.19
|
AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
|
8
|
|
2.20
|
AUTHORITY
AND CONSENTS
|
9
|
-
i -
|
2.21
|
INTEREST
IN CUSTOMERS, SUPPLIERS, AND COMPETITORS
|
9
|
|
2.22
|
IDENTIFICATION
AND COMPENSATION
|
9
|
|
2.23
|
COMPANY
DOCUMENTS
|
9
|
|
2.24
|
ACQUISITION
OF SHARES FOR OWN ACCOUNT
|
9
|
|
2.25
|
DISCLOSURE
OF INFORMATION
|
9
|
|
2.26
|
INVESTMENT
EXPERIENCE
|
9
|
|
2.27
|
ACCREDITED
INVESTOR
|
10
|
|
2.28
|
RESTRICTED
SECURITIES
|
10
|
|
2.29
|
FURTHER
LIMITATIONS ON DISPOSITION
|
10
|
|
2.30
|
LEGEND:
The Stock Certificate may bear the following legend:
|
10
|
|
2.31
|
NO
ADVERTISEMENT
|
11
|
|
2.32
|
FULL
DISCLOSURE
|
11
|
|
2.33
|
DISCLAIMER
OF OTHER REPRESENTATIONS AND WARRANTIES
|
11
|
|
ARTICLE
3 BUYER’S AND PARENT’S REPRESENTATIONS AND WARRANTIES
|
11
|
|
|
3.1
|
ORGANIZATION,
STANDING AND QUALIFICATION OF BUYER AND PARENT
|
11
|
|
3.2
|
BUYER
AND BUYER’S NET WORTH
|
11
|
|
3.3
|
SEC
FILINGS; FINANCIAL STATEMENTS
|
12
|
|
3.4
|
TAX
RETURNS AND AUDITS
|
12
|
|
3.5
|
COMPLIANCE
WITH LAWS
|
12
|
|
3.6
|
LITIGATION
|
12
|
|
3.7
|
AGREEMENT
WILL NOT CAUSE BREACH OR VIOLATION
|
13
|
|
3.8
|
AUTHORITY
AND CONSENTS
|
13
|
|
3.9
|
FULL
DISCLOSURE
|
13
|
|
ARTICLE
4 OBLIGATIONS OF THE PARTIES AFTER CLOSING
|
13
|
|
|
4.1
|
INDEMNIFICATION
|
13
|
|
4.2
|
SURVIVAL
OF REPRESENTATIONS AND OBLIGATIONS
|
16
|
|
4.3
|
CONFIDENTIAL
INFORMATION
|
16
|
|
4.4
|
COMPANY
NOT TO USE NAMES
|
16
|
|
4.5
|
SECURITIES
MATTERS
|
16
|
|
ARTICLE
5 THE CLOSING
|
17
|
|
|
5.1
|
TIME
AND PLACE
|
17
|
|
5.2
|
SELLING
PARTIES' OBLIGATIONS AT CLOSING
|
17
|
-
ii -
|
5.3
|
BUYER'S
OBLIGATIONS AT CLOSING
|
18
|
|
5.4
|
EMPLOYMENT
|
19
|
|
ARTICLE
6 MISCELLANEOUS
|
19
|
|
|
6.1
|
PUBLICITY
|
19
|
|
6.2
|
EXPENSES
|
19
|
|
6.3
|
INTERPRETATION
AND EFFECT OF HEADINGS
|
20
|
|
6.4
|
ENTIRE
AGREEMENT; MODIFICATION; WAIVER
|
20
|
|
6.5
|
COUNTERPARTS
|
20
|
|
6.6
|
PARTIES
IN INTEREST
|
20
|
|
6.7
|
ASSIGNMENT
|
20
|
|
6.8
|
ARBITRATION
|
20
|
|
6.9
|
RECOVERY
OF LITIGATION COSTS
|
21
|
|
6.10
|
NOTICES
|
21
|
|
6.11
|
GOVERNING
LAW
|
22
|
|
6.12
|
SEVERABILITY
|
22
|
-
iii -
