1
Exhibit 10.2
STOCK PURCHASE AGREEMENT
BY AND AMONG
DFF HOLDINGS, INC.,
DFF ACQUISITION SUB, INC.,
XXXX L.L.C.,
XXXX FAMILY L.L.C.
AND
XXXX DEVELOPMENTS L.L.C.
DATED JANUARY 17, 1995
RELATING TO THE SALE AND PURCHASE OF THE
OUTSTANDING CAPITAL STOCK OF
XXXX, INC.
2
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 Action . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Affiliate . . . . . . . . . . . . . . . . . . . . . . 2
1.3 Agreement . . . . . . . . . . . . . . . . . . . . . . 2
1.4 Asset Transfer Agreement . . . . . . . . . . . . . . . 3
1.5 Authorizations . . . . . . . . . . . . . . . . . . . . 3
1.6 Balance Sheet . . . . . . . . . . . . . . . . . . . . 3
1.7 Balance Sheet Date . . . . . . . . . . . . . . . . . . 3
1.8 Closing . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 Closing Date . . . . . . . . . . . . . . . . . . . . . 3
1.10 Code . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 Contracts . . . . . . . . . . . . . . . . . . . . . . 3
1.12 Covered Liabilities . . . . . . . . . . . . . . . . . 3
1.13 Defects . . . . . . . . . . . . . . . . . . . . . . . 3
1.14 Dominick's Group . . . . . . . . . . . . . . . . . . . 4
1.15 Employee Pension Benefit Plan . . . . . . . . . . . . 4
1.16 Employee Welfare Benefit Plan . . . . . . . . . . . . 4
1.17 Environmental Laws . . . . . . . . . . . . . . . . . . 4
1.18 ERISA . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 Evaluation Material . . . . . . . . . . . . . . . . . 4
1.20 Excluded Affiliates' Property . . . . . . . . . . . . 5
1.21 Excluded Assets . . . . . . . . . . . . . . . . . . . 5
1.22 Excluded Dominick's Property . . . . . . . . . . . . . 5
1.23 Excluded Liabilities . . . . . . . . . . . . . . . . . 5
1.24 Excluded Subsidiaries . . . . . . . . . . . . . . . . 6
1.25 Excluded Properties Leases . . . . . . . . . . . . . . 6
1.26 Financial Statements . . . . . . . . . . . . . . . . . 6
1.27 Funded Indebtedness . . . . . . . . . . . . . . . . . 6
1.28 Xxxxxxx Letter Agreement . . . . . . . . . . . . . . . 6
1.29 Hazardous Materials . . . . . . . . . . . . . . . . . 6
1.30 HSR Act . . . . . . . . . . . . . . . . . . . . . . . 6
1.31 Interim Balance Sheet . . . . . . . . . . . . . . . . 7
1.32 Interim Balance Sheet Date . . . . . . . . . . . . . . 7
1.33 Interim Statements . . . . . . . . . . . . . . . . . . 7
1.34 Leased Real Property . . . . . . . . . . . . . . . . . 7
1.35 Leases . . . . . . . . . . . . . . . . . . . . . . . . 7
1.36 Liens . . . . . . . . . . . . . . . . . . . . . . . . 7
1.37 Multiemployer Plan . . . . . . . . . . . . . . . . . . 7
1.38 Other Transaction Documents . . . . . . . . . . . . . 7
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1.39 Other Transaction Parties . . . . . . . . . . . . . . 8
1.40 Owned Real Property . . . . . . . . . . . . . . . . . 8
1.41 Permits . . . . . . . . . . . . . . . . . . . . . . . 8
1.42 Personnel . . . . . . . . . . . . . . . . . . . . . . 8
1.43 Plans . . . . . . . . . . . . . . . . . . . . . . . . 8
1.44 Real Property . . . . . . . . . . . . . . . . . . . . 8
1.45 Restructuring Transactions . . . . . . . . . . . . . . 8
1.46 Shares . . . . . . . . . . . . . . . . . . . . . . . . 8
1.47 Shareholder Property . . . . . . . . . . . . . . . . . 8
1.48 Shareholder Lease . . . . . . . . . . . . . . . . . . 8
1.49 Software . . . . . . . . . . . . . . . . . . . . . . . 8
1.50 Stock Encumbrances . . . . . . . . . . . . . . . . . . 9
1.51 Stock Redemption . . . . . . . . . . . . . . . . . . . 9
1.52 Subsidiaries . . . . . . . . . . . . . . . . . . . . . 9
1.53 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 9
1.54 Tax Matters Agreement . . . . . . . . . . . . . . . . 9
1.55 Tax Survival Period . . . . . . . . . . . . . . . . . 9
1.56 Third Party Leases . . . . . . . . . . . . . . . . . . 9
1.57 Third Party Real Property . . . . . . . . . . . . . . 10
1.58 Title Company . . . . . . . . . . . . . . . . . . . . 10
1.59 Transactions . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II - STOCK PURCHASE TRANSACTION . . . . . . . . . . . . . . . . 10
2.1 Agreement to Purchase and Sell Shares . . . . . . . . 10
2.2 Payment of Purchase Price . . . . . . . . . . . . . . 10
2.3 Post-Closing Contingent Payment . . . . . . . . . . . 10
2.4 Merger Transactions . . . . . . . . . . . . . . . . . 11
2.5 Closing . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Alternative Transaction . . . . . . . . . . . . . . . 11
ARTICLE III - WARRANTIES OF SHAREHOLDERS . . . . . . . . . . . . . . . 11
3.1 Authority . . . . . . . . . . . . . . . . . . . . . . 12
3.2 Organization and Qualification . . . . . . . . . . . . 12
3.3 Capital Structure of the Dominick's Group . . . . . . 13
3.4 Title to Shares and Stock of Dominick's and the
Subsidiaries . . . . . . . . . . . . . . . . . . . . . 13
3.5 Other Investments . . . . . . . . . . . . . . . . . . 13
3.6 Financial Statements . . . . . . . . . . . . . . . . . 14
3.7 Events Subsequent to the Balance Sheet Date . . . . . 14
3.8 Liabilities . . . . . . . . . . . . . . . . . . . . . 17
3.9 Accounts and Notes Receivable . . . . . . . . . . . . 17
3.10 Inventories . . . . . . . . . . . . . . . . . . . . . 17
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3.11 Real Property . . . . . . . . . . . . . . . . . . . . 17
3.12 Tangible Personal Property . . . . . . . . . . . . . . 20
3.13 Contracts . . . . . . . . . . . . . . . . . . . . . . 20
3.14 Intellectual Property . . . . . . . . . . . . . . . . 21
3.15 Compliance with Law . . . . . . . . . . . . . . . . . 22
3.16 Environmental Matters . . . . . . . . . . . . . . . . 22
3.17 Litigation . . . . . . . . . . . . . . . . . . . . . . 22
3.18 No Restrictions; Consents . . . . . . . . . . . . . . 23
3.19 Authorizations . . . . . . . . . . . . . . . . . . . . 23
3.20 Taxes . . . . . . . . . . . . . . . . . . . . . . . . 23
3.21 Compensation . . . . . . . . . . . . . . . . . . . . . 25
3.22 Labor Relations . . . . . . . . . . . . . . . . . . . 25
3.23 ERISA and the Plans . . . . . . . . . . . . . . . . . 26
3.24 Insurance . . . . . . . . . . . . . . . . . . . . . . 27
3.25 Related Party Transactions . . . . . . . . . . . . . . 28
3.26 Bank Accounts . . . . . . . . . . . . . . . . . . . . 28
3.27 No Conflict or Violation . . . . . . . . . . . . . . . 28
ARTICLE IV - WARRANTIES OF PURCHASER AND HOLDINGS . . . . . . . . . . . 29
4.1 Authority . . . . . . . . . . . . . . . . . . . . . . 29
4.2 Organization, Standing and Corporate Authority . . . . 29
4.3 Holdings Preferred Stock . . . . . . . . . . . . . . . 29
4.4 Purchase for Investment . . . . . . . . . . . . . . . 29
4.5 No Restrictions; Consents . . . . . . . . . . . . . . 29
4.6 No Conflict or Violation . . . . . . . . . . . . . . . 30
4.7 Commitments . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE V - COVENANTS OF SELLERS . . . . . . . . . . . . . . . . . . . 30
5.1 Conduct of Business . . . . . . . . . . . . . . . . . 30
5.2 Access Pending Closing . . . . . . . . . . . . . . . . 32
5.3 Further Assurances and Cooperation . . . . . . . . . . 32
5.4 Surveys; Title Insurance . . . . . . . . . . . . . . . 32
5.5 Restructuring Transactions . . . . . . . . . . . . . . 34
5.6 Excluded Properties Leases . . . . . . . . . . . . . . 34
5.7 Alternative Proposals . . . . . . . . . . . . . . . . 34
5.8 Financial Information . . . . . . . . . . . . . . . . 34
5.9 Environmental Reports . . . . . . . . . . . . . . . . 34
5.10 Stock Redemption . . . . . . . . . . . . . . . . . . . 35
5.11 Stock Disposition . . . . . . . . . . . . . . . . . . 36
5.12 Closing . . . . . . . . . . . . . . . . . . . . . . . 36
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ARTICLE VI - COVENANTS OF PURCHASER . . . . . . . . . . . . . . . . . . 36
6.1 Books and Records . . . . . . . . . . . . . . . . . . 36
6.2 Confidentiality . . . . . . . . . . . . . . . . . . . 36
6.3 Excluded Properties Leases . . . . . . . . . . . . . . 37
6.4 Definitive Financing Agreements . . . . . . . . . . . 37
6.5 Closing . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VII - HSR ACT COMPLIANCE . . . . . . . . . . . . . . . . . . . 37
ARTICLE VIII - CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE . . . . . 38
8.1 Warranties . . . . . . . . . . . . . . . . . . . . . . 38
8.2 Performance . . . . . . . . . . . . . . . . . . . . . 38
8.3 Shares . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Corporate Books . . . . . . . . . . . . . . . . . . . 38
8.5 Proof of Good Standing . . . . . . . . . . . . . . . . 38
8.6 Certificate of Sellers . . . . . . . . . . . . . . . . 38
8.7 Opinion of Counsel . . . . . . . . . . . . . . . . . . 39
8.8 Title Assurances . . . . . . . . . . . . . . . . . . . 39
8.9 Restructuring Transactions . . . . . . . . . . . . . . 39
8.10 Excluded Properties Leases . . . . . . . . . . . . . . 39
8.11 Stock Redemption . . . . . . . . . . . . . . . . . . . 39
8.12 Financing . . . . . . . . . . . . . . . . . . . . . . 39
8.13 HSR Act . . . . . . . . . . . . . . . . . . . . . . . 39
8.14 Regulatory Consents, Authorizations, etc. . . . . . . 39
8.15 Injunctions . . . . . . . . . . . . . . . . . . . . . 40
8.16 Environmental Reports . . . . . . . . . . . . . . . . 40
8.17 Funded Indebtedness . . . . . . . . . . . . . . . . . 40
8.18 Stock Exchange Transactions . . . . . . . . . . . . . 40
8.19 Further Assurances . . . . . . . . . . . . . . . . . . 40
ARTICLE IX - CONDITIONS TO OBLIGATION OF SELLERS TO CLOSE . . . . . . . 40
9.1 Warranties . . . . . . . . . . . . . . . . . . . . . . 41
9.2 Performance . . . . . . . . . . . . . . . . . . . . . 41
9.3 Certificate of Officer . . . . . . . . . . . . . . . . 41
9.4 Opinion of Counsel . . . . . . . . . . . . . . . . . . 41
9.5 Purchase Price . . . . . . . . . . . . . . . . . . . . 41
9.6 Restructuring Transactions . . . . . . . . . . . . . . 41
9.7 Excluded Properties Leases . . . . . . . . . . . . . . 41
9.8 Stock Redemption . . . . . . . . . . . . . . . . . . . 41
9.9 HSR Act . . . . . . . . . . . . . . . . . . . . . . . 41
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9.10 Regulation Consents, Authorizations, etc. . . . . . . 41
9.11 Injunctions . . . . . . . . . . . . . . . . . . . . . 42
9.12 Further Assurances . . . . . . . . . . . . . . . . . . 42
ARTICLE X - TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . 42
10.1 Termination Rights . . . . . . . . . . . . . . . . . . 42
10.2 Effect of Termination . . . . . . . . . . . . . . . . 43
ARTICLE XI - SURVIVAL AND INDEMNIFICATION . . . . . . . . . . . . . . . 43
11.1 Survival . . . . . . . . . . . . . . . . . . . . . . . 43
11.2 Indemnification by Shareholders . . . . . . . . . . . 43
11.3 Indemnification by Purchaser . . . . . . . . . . . . . 44
11.4 Indemnification Procedures . . . . . . . . . . . . . . 44
11.5 No Right of Contribution . . . . . . . . . . . . . . . 45
11.6 Nature of Payments . . . . . . . . . . . . . . . . . . 45
11.7 Limitations on Indemnification Obligations . . . . . . 45
11.8 Payment of Indemnification Obligations and Right of
Offset . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE XII - SHAREHOLDERS' RESPONSIBILITY; POST CLOSING
DISTRIBUTIONS BY SHAREHOLDERS . . . . . . . . . . 46
12.1 Joint and Several . . . . . . . . . . . . . . . . . . 46
12.2 Net Worth Covenant . . . . . . . . . . . . . . . . . . 46
12.3 Distributions . . . . . . . . . . . . . . . . . . . . 46
ARTICLE XIII - POST CLOSING COVENANTS . . . . . . . . . . . . . . . . . 48
13.1 Tax Matters Agreement . . . . . . . . . . . . . . . . 48
13.2 Company Name Change . . . . . . . . . . . . . . . . . 48
13.3 Covenant Not to Compete . . . . . . . . . . . . . . . 48
ARTICLE XIV - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 49
14.1 Entire Agreement . . . . . . . . . . . . . . . . . . . 49
14.2 Severability . . . . . . . . . . . . . . . . . . . . . 49
14.3 Notices . . . . . . . . . . . . . . . . . . . . . . . 49
14.4 Counterparts . . . . . . . . . . . . . . . . . . . . . 50
14.5 Governing Law and Venue . . . . . . . . . . . . . . . 50
14.6 Successors and Assigns . . . . . . . . . . . . . . . . 51
14.7 Further Assurances . . . . . . . . . . . . . . . . . . 51
14.8 Gender, Number and Headings . . . . . . . . . . . . . 51
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14.9 Schedules . . . . . . . . . . . . . . . . . . . . . . . . 51
14.10 Waiver of Provisions . . . . . . . . . . . . . . . . . . 51
14.11 Expenses . . . . . . . . . . . . . . . . . . . . . . . . 51
14.12 Recitals . . . . . . . . . . . . . . . . . . . . . . . . 51
14.13 Knowledge of Sellers . . . . . . . . . . . . . . . . . . 51
14.14 No Third Party Beneficiaries . . . . . . . . . . . . . . 52
14.15 Broker Fees . . . . . . . . . . . . . . . . . . . . . . . 52
14.16 Public Announcements . . . . . . . . . . . . . . . . . . 52
Signature Page . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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EXHIBITS
1.4 Asset Transfer Agreement
1.25 Excluded Properties leases
1.54 Tax Matters Agreement
8.7 Opinion of Counsel Sellers and the Dominick's Group
9.4 Opinion of Counsel to Purchaser
SCHEDULES
3.2(b) Organization and Qualification
3.3 Subsidiary Capitalization
3.5 Other Investments
3.6(a) Financial Statements
3.7 Events Subsequent to the Balance Sheet Date
3.8 Liabilities
3.11(a) Owned Real Property
3.11(b) Leased Real Property
3.11(c) Third Party Real Property
3.11(d) Condition of Real Property; Compliance
3.11(f) Real Property Transactions
3.12 Tangible Personal Property
3.13 Contracts
3.14(a) Intellectual Property Registrations
3.14(b) Other Intellectual Property
3.14(c) License Agreements
3.14(d) Intellectual Property Matters
3.15 Compliance with Law
3.16 Environmental Matters
3.17 Litigation
3.18 No Restrictions; Consents
3.19 Authorizations
3.20 Taxes
3.21 Compensation
3.22 Labor Relations
3.23 ERISA and the Plans
3.24 Insurance
3.25 Related Party Transactions
3.26 Bank Accounts
3.27 No Conflict or Violation
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made and entered into as of
this 17th day of January 1995 by and among DFF Holdings, Inc., a Delaware
corporation ("HOLDINGS"), DFF Acquisition Sub, Inc., a Delaware corporation
("PURCHASER"), and Xxxx L.L.C., a limited liability company organized under the
laws of the State of Illinois ("XXXX"), Xxxx Family L.L.C., a limited liability
company organized under the laws of the State of Illinois ("DFLLC"), and Xxxx
Developments L.L.C., a limited liability company organized under the laws of
the State of Illinois ("DDLLC").
INTRODUCTION
Xxxx, DFLLC (together, the "SELLERS") and DDLLC (together with
the Sellers, the "SHAREHOLDERS"), collectively own 100% of the issued and
outstanding capital stock of Xxxx, Inc., a Delaware corporation (the
"COMPANY"), consisting of Series A Non-Cumulative Voting Preferred Stock, $.01
par value per share ("PREFERRED STOCK"), and Common Stock, $.01 par value per
share ("COMMON STOCK"). The Company currently owns (a) approximately 96.7% of
the issued and outstanding capital stock (the "DOMINICK'S CAPITAL STOCK") of
Dominick's Finer Foods, Inc., a Delaware corporation ("DOMINICK'S"), and (b)
100% of the issued and outstanding capital stock of Xxxx Developments, Inc.
("DDI") and Xxxx Properties, Inc. ("DPI"). The Company, through Dominick's and
the directly and indirectly wholly-owned subsidiaries of Dominick's, operates
two chains of retail food stores in the greater Chicago, Illinois area.
Concurrently herewith, Xxxx and Holdings have entered into a
separate Stock Exchange Agreement (the "STOCK EXCHANGE AGREEMENT") pursuant to
which, immediately prior to the Stock Purchase Transaction (as defined below),
Xxxx shall contribute 4,156 of the shares of the Common Stock held by it to
Holdings in exchange for shares of Holdings 15% Redeemable Exchangeable
Cumulative Preferred Stock, Series A (the "HOLDINGS PREFERRED STOCK"), having
an initial liquidation preference of $40 million, and having the other terms
and conditions set forth in the certificate of designation included as Annex A
to the Stock Exchange Agreement (the "STOCK EXCHANGE TRANSACTIONS"). The
Holdings Preferred Stock will be entitled to the benefit of certain
registration rights as provided in the form of registration rights agreement
included as Annex B to the Stock Exchange Agreement (the "REGISTRATION RIGHTS
AGREEMENT"). Contemporaneously with the Stock Exchange Transactions, certain
affiliates of The Yucaipa Companies and certain other institutional investors
(the "NEW EQUITY INVESTORS") will contribute approximately $100 million in cash
to Holdings in exchange for shares of its common stock (the "HOLDINGS COMMON
STOCK") such that immediately after the contributions by Xxxx and the New
Equity Investors, the New Equity Investors will own, in the aggregate, more
than 80% of the Holdings Common Stock and Xxxx will own 100% of the Holdings
Preferred Stock.
Sellers desire to sell to Purchaser and Purchaser desires to
purchase from Sellers, all of the Preferred Stock and all of the Common Stock
(after giving effect to the Stock
10
Exchange Transactions) Sellers hold, on the terms and subject to the conditions
set forth in this Agreement (the "STOCK PURCHASE TRANSACTION").
At least one business day before the consummation of the Stock
Purchase Transaction, the Company will, or, as the case may be, will cause
Dominick's to distribute to DDLLC, in exchange for the surrender of all of the
Common Stock held by DDLLC, (a) substantially all of the assets of DDI and DPI,
subject to all of the liabilities of DDI and DPI, and (b) Dominick's ownership
interest in certain parcels of real property.
At least one business day before the consummation of the Stock
Purchase Transaction and immediately after the transactions described in the
preceding paragraph, the Company intends to sell all of the issued and
outstanding capital stock of DDI and DPI.
In addition, at least one business day before the consummation
of the Stock Purchase Transaction, the Company will cause Dominick's to acquire
the Dominick's Capital Stock not currently owned by the Company. After giving
effect to the foregoing transactions, the Company will own (a) directly 100% of
the Dominick's Capital Stock, and (b) indirectly 100% of the issued and
outstanding capital stock of Dominick's directly and indirectly wholly-owned
subsidiaries.
Immediately after the transactions described in the preceding
paragraphs, (a) Purchaser will merge with and into the Company, with the
Company being the surviving corporation, and (b) DFF Acquisition Sub Two, Inc.,
a Delaware corporation ("PURCHASER SUB") and a wholly-owned subsidiary of
Purchaser, will merge with and into Dominick's, with Dominick's being the
surviving corporation (the "MERGER TRANSACTIONS").
IT IS, THEREFORE, AGREED:
ARTICLE I
DEFINITIONS
In addition to the terms defined above and the other terms
defined in the body of this Agreement, the following terms shall have the
meanings set forth in this Article I for purposes of this Agreement:
1.1 ACTION. The term "ACTION" shall have the meaning set
forth in Section 3.17.
1.2 AFFILIATE. The term "AFFILIATE" shall mean, with
respect to any party, any individual, corporation, partnership, limited
liability company or other entity that directly, or through one or more
intermediaries, controls or is controlled by or is under common control with,
such party.
1.3 AGREEMENT. The term "AGREEMENT" shall mean this
Stock Purchase Agreement.
2
11
1.4 ASSET TRANSFER AGREEMENT. The term "ASSET TRANSFER
AGREEMENT" shall mean the Asset Transfer Agreement in the form of Exhibit 1.4
hereto, to be entered into at least one business day before the consummation of
the Stock Purchase Transaction.
1.5 AUTHORIZATIONS. The term "AUTHORIZATIONS" shall have
the meaning set forth in Section 3.19.
1.6 BALANCE SHEET. The term "BALANCE SHEET" shall mean
Dominick's consolidated balance sheet at October 29, 1994.
1.7 BALANCE SHEET DATE. The term "BALANCE SHEET DATE"
shall mean October 29, 1994.
1.8 CLOSING. The term "CLOSING" shall mean the
consummation of the Stock Purchase Transaction.
1.9 CLOSING DATE. The term "CLOSING DATE" shall mean the
date on which the Closing occurs, which date shall be 60 days after the date
hereof, or such earlier or later date as of which all of the conditions to
Closing shall have been fulfilled or waived, or such other date upon which
Purchaser and Sellers may hereafter mutually agree in writing.
1.10 CODE. The term "CODE" shall mean the Internal
Revenue Code of 1986, as amended.
1.11 CONTRACTS. The term "CONTRACTS" shall have the
meaning set forth in Section 3.13.
1.12 COVERED LIABILITIES. The term "COVERED LIABILITIES"
shall mean any and all debts, losses, claims, damages, costs, demands, fines,
judgments, contracts (implied and expressed, written and unwritten), penalties,
obligations, payments, liabilities of every type and nature actually incurred
(including without limitation, those arising out of any Action), together with
any reasonable costs and expenses (including, without limitation, reasonable
attorneys' fees and out-of-pocket expenses) incurred in connection with any of
the foregoing (including, without limitation, reasonable costs and expenses
incurred in investigating, preparing or defending any Action).
1.13 DEFECTS. With respect to any parcel of Owned Real
Property, the term "DEFECTS" shall mean Liens, claims, exceptions, conditions
or matters affecting such parcel, other than: (a) the liens, claims,
exceptions, conditions, or matters described on SCHEDULE 3.11(A); (b) the Third
Party Leases; (c) real estate taxes and assessments not yet due and payable;
(d) roads and highways, spurs and switch tracks and rights of way of any
railroad serving or crossing the Owned Real Property, municipal and zoning
ordinances, easements, rights of way, covenants, conditions and restrictions of
record and encroachments that do not materially interfere with the conduct of
retail operations (or, if not a store, other operations) currently conducted by
the Dominick's Group or materially detract from the value of said parcel;
3
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and (e) unrecorded easements for any utilities providing utility service to the
Owned Real Property.
1.14 DOMINICK'S GROUP. The term "DOMINICK'S GROUP" shall
mean the Company, Dominick's and the Subsidiaries, taken as a whole.
1.15 EMPLOYEE PENSION BENEFIT PLAN. The term "EMPLOYEE
PENSION BENEFIT PLAN" shall mean a plan as defined in Section 3(2) of ERISA,
but not including any Multi-Employer Plan.
1.16 EMPLOYEE WELFARE BENEFIT PLAN. The term "EMPLOYEE
WELFARE BENEFIT PLAN" shall mean a plan as defined in Section 3(1) of ERISA,
but not including any Multi-Employer Plan.
1.17 ENVIRONMENTAL LAWS. The term "ENVIRONMENTAL LAWS"
shall mean any federal, state or local law, statute, ordinance, order, decree,
rule or regulation relating to releases, discharges, emissions or disposals to
air, water, land or groundwater, to the withdrawal or use of groundwater, to
the use, handling or disposal of polychlorinated biphenyls, asbestos or urea
formaldehyde, to the treatment, storage, disposal or management of Hazardous
Materials, to exposure to toxic, hazardous or other controlled, prohibited or
regulated substances, and to the transportation, release or any other use of
Hazardous Materials, including the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Section 9601, et seq. ("CERCLA"),
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et seq.
("RCRA"), the Toxic Substances Control Act, 15 U.S.C. Section 2601, et seq.
("TSCA"), the Occupational, Safety and Health Act, 29 U.S.C. Section 651, et
seq., the Clean Air Act, 42 U.S.C. Section 7401, et seq., the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251, et seq., the Safe Drinking
Water Act, 42 U.S.C. Section 300f et seq., the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1802 et seq., ("HMTA") and the
Emergency Planning and Community Right to Know Act, 42 U.S.C. 11001 et seq.
("EPCRA"), and other comparable state laws and all rules, regulations and
guidance documents promulgated pursuant thereto or published thereunder.
1.18 ERISA. The term "ERISA" shall mean the Employee
Retirement Income Security Act of 1974, as amended.
1.19 EVALUATION MATERIAL. The term "EVALUATION MATERIAL"
shall mean (a) information obtained from reviewing the books and records of any
member of the Dominick's Group or DDI or DPI, (b) information obtained from
reviewing the assets and properties of the Dominick's Group or DDI or DPI, (c)
any other information furnished to either Holdings, Purchaser or their
directors, officers, partners, employees, agents, representatives or advisors
(whether orally, in writing or in any other form) by any of the Shareholders or
any member of the Dominick's Group or DDI or DPI, their representatives,
employees, agents or advisors, and (d) all notes, analyses, computations,
studies or other documents possessed by either Holdings, Purchaser or their
directors, officers, partners, employees, representatives or advisors, whether
prepared by Holdings, Purchaser or others, which contain material amounts of
any such information. Notwithstanding the foregoing, the term "Evaluation
Material" does not include information which (a) is already in Holdings' or
Purchaser's possession, provided that such
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information is not known by Holdings or Purchaser to be subject to a
confidentiality agreement with or other obligation of secrecy to any of the
Shareholders or any member of the Dominick's Group, (b) becomes generally
available to the public other than as a result of a disclosure by Holdings or
Purchaser or their directors, officers, partners, employees, agents or
advisors, or (c) becomes available to Holdings or Purchaser on a
non-confidential basis from a source other than any of the Shareholders or a
member of the Dominick's Group or their advisors, provided that such source is
not known by Holdings or Purchaser to be bound by a confidentiality agreement
with or other obligation of secrecy to any of the Shareholders or a member of
the Dominick's Group.
1.20 EXCLUDED AFFILIATES' PROPERTY. The term "EXCLUDED
AFFILIATES' PROPERTY" shall mean the real estate and other properties defined
in the Asset Transfer Agreement as the DDI Property and the DPI Property.
1.21 EXCLUDED ASSETS. The term "EXCLUDED ASSETS" shall
mean (a) the Excluded Affiliates' Property, the Excluded Dominick's Property,
and all other properties and assets transferred to DDLLC pursuant to the Asset
Transfer Agreement, and (b) the capital stock of the Excluded Subsidiaries.
1.22 EXCLUDED DOMINICK'S PROPERTY. The term "EXCLUDED
DOMINICK'S PROPERTY" shall mean the real estate and other properties defined in
the Asset Transfer Agreement as the Dominick's Property.
1.23 EXCLUDED LIABILITIES. The term "EXCLUDED
LIABILITIES" shall mean, collectively, all Covered Liabilities attributable to
or arising from (a) the Excluded Assets individually or taken as a whole,
except to the extent allocated to Purchaser, the Dominick's Group or any of
their Affiliates under the Tax Matters Agreement or allocated to Dominick's
under the Asset Transfer Agreement, (b) the Excluded Subsidiaries or the
business conducted by either of them prior to or following the Closing Date
except to the extent allocated to Purchaser, the Dominick's Group, or any of
their Affiliates under the Tax Matters Agreement or allocated to Dominick's
under the Asset Transfer Agreement, (c) the transfer of the Excluded Assets and
the Excluded Subsidiaries pursuant to the Asset Transfer Agreement except to
the extent allocated to Purchaser, the Dominick's Group, or any of their
Affiliates under the Tax Matters Agreement or allocated to Dominick's under the
Asset Transfer Agreement, (d) all other liabilities assumed by the Shareholders
under the Asset Transfer Agreement, and (e) all liabilities of the Company on
the Closing Date (other than those referenced in Section 3.6(b)(iii) hereof to
the extent allocated to Purchaser, any member of the Dominick's Group or any of
their Affiliates under the Tax Matters Agreement), and (f) any liabilities of
the Dominick's Group to the minority shareholders of Dominick's or the holders
of the stock appreciation rights relating to the Dominick's capital stock in
respect of such rights or stock, which, in either case, are outstanding
immediately prior to the consummation of the Stock Redemption (other than the
obligation of Dominick's to effect the transactions contemplated by Section
5.10 hereof and other than such liabilities and obligations as Holdings,
Purchaser, or any member of the Dominick's Group or any of their Affiliates may
have as a result of or in connection with its issuance to any such holder of
any stock appreciation rights, options, stock, or other security in exchange
for all or any portion of such holders' stock appreciation rights or stock),
and including liabilities
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which the Dominick's Group may incur with respect to any obligation it may have
to indemnify or reimburse any employee with respect to, or for, any excise tax
under Section 4999 of the Code under the employment contracts specified in part
2(f) of SCHEDULE 3.21 (but not any amendments thereto after the Closing Date).
1.24 EXCLUDED SUBSIDIARIES. The term "EXCLUDED
SUBSIDIARIES" means DDI and DPI.
1.25 EXCLUDED PROPERTIES LEASES. The term "EXCLUDED
PROPERTIES LEASES" shall mean the Real Estate Leases, each in the form set
forth in Exhibit 1.25 hereto, to be entered into contemporaneously with the
consummation of the Restructuring Transactions, by and between DDLLC and
Dominick's in respect of the Excluded Dominick's Property.
1.26 FINANCIAL STATEMENTS. The term "FINANCIAL
STATEMENTS" shall mean (a) the Interim Statements, and (b) Dominick's audited
consolidated financial statements, including consolidated balance sheet,
consolidated statement of income, consolidated statement of changes in
stockholders' equity, consolidated statement of cash flows, and all notes
thereto, for the fiscal years ended November 2, 1991, October 31, 1992, October
30, 1993, and October 29, 1994, all examined and reported on by Ernst & Young,
independent certified public accountants.
1.27 FUNDED INDEBTEDNESS. The term "FUNDED INDEBTEDNESS"
shall mean the sum of (a) the amount of all long-term debt (including capital
lease obligations) of the Dominick's Group, plus (b) the amount of the current
portion of the long-term debt (including capital lease obligations) of the
Dominick's Group, plus (c) the amount of any other current liabilities of the
Dominick's Group which represent indebtedness for borrowed money or other
interest bearing obligations.
1.28 GOLDMAN LETTER AGREEMENT. The term "GOLDMAN LETTER
AGREEMENT" shall mean the letter agreement between Dominick's and Xxxxxxx,
Xxxxx & Co. listed in part 1(h)(i) of Schedule 3.13.
1.29 HAZARDOUS MATERIALS. The term "HAZARDOUS MATERIALS"
shall mean each and every element, compound, chemical mixture, contaminant,
pollutant, material, waste or other substance which is defined, determined or
identified as hazardous or toxic under Environmental Laws or the release of
which is regulated under Environmental Laws. Without limiting the generality
of the foregoing, the term includes: "hazardous substances" as defined in
CERCLA; "extremely hazardous substances" as defined in EPCRA; "hazardous waste"
as defined in RCRA; "hazardous materials" as defined in HMTA; "chemical
substance or mixture" as defined in TSCA; crude oil, petroleum products or any
fraction thereof; radioactive materials including source, byproduct or special
nuclear materials; asbestos or asbestos-containing materials; and radon.
1.30 HSR ACT. The term "HSR ACT" shall mean the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended.
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1.31 INTERIM BALANCE SHEET. The term "INTERIM BALANCE
SHEET" shall mean Dominick's unaudited consolidated balance sheet as of
November 26, 1994.
1.32 INTERIM BALANCE SHEET DATE. The term "INTERIM
BALANCE SHEET DATE" shall mean November 26, 1994.
1.33 INTERIM STATEMENTS. The term "INTERIM STATEMENTS"
shall mean Dominick's unaudited consolidated financial statements, including
consolidated balance sheet, consolidated statement of earnings and retained
earnings and consolidated statement of changes in financial position, for the
four week periods ended November 27, 1993 and November 26, 1994.
1.34 LEASED REAL PROPERTY. The term "LEASED REAL
PROPERTY" shall mean all real property leased or subleased by any member of the
Dominick's Group and all easements and other rights appurtenant thereto,
including the Excluded Dominick's Property.
1.35 LEASES. The term "LEASES" shall mean the agreements
pursuant to which a member of the Dominick's Group holds a possessory interest
in any of the Leased Real Property, and all amendments thereto and renewals or
extensions thereof.
1.36 LIENS. The term "LIENS" shall mean all liens,
claims, security interests, options, leases, restrictions, mortgages, pledges,
conditional sale or other title retention agreements or other encumbrances
affecting any member of the Dominick's Group or any of their respective
properties or assets, other than: (a) encumbrances for taxes or governmental
charges or assessments or claims, the payment of which is not yet due or which
are being contested in good faith by appropriate proceedings; (b) statutory
encumbrances of landlords, carriers, warehousers, mechanics, materialmen and
other similar persons arising in the ordinary course of business for sums not
yet delinquent or being contested in good faith; (c) encumbrances relating to
security, escrow or other deposits made in the ordinary course of business; (d)
the interests of lessors in properties used or held by the Dominick's Group
under leases; (e) roads and highways, spurs and switch tracks and rights of way
of any railroad serving or crossing the Real Property, municipal and zoning
ordinances, and easements, rights of way, covenants, conditions, and
restrictions of record and encroachments that do not materially interfere with
the conduct of retail operations (or, if not a store, other operations)
currently conducted by the Dominick's Group on any parcel of the Real Property
or materially detract from the value of such parcel; and (f) unrecorded
easements for any utilities providing utility service to the Real Property,
provided that to the extent any such encumbrance described in the preceding
clauses (a) through (f) secures payment of a liability of the Dominick's Group,
such liability is accrued on the books and records of the Dominick's Group.
1.37 MULTIEMPLOYER PLAN. The term "MULTIEMPLOYER PLAN"
shall mean a plan as defined in Section 4001(a)(3) of ERISA.
1.38 OTHER TRANSACTION DOCUMENTS. The term "OTHER
TRANSACTION DOCUMENTS" shall mean the Asset Transfer Agreement and the
appendices thereto, the Tax
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Matters Agreement, the Excluded Properties Leases, the Stock Exchange
Agreement, the Registration Rights Agreement and any other documents
contemplated thereby.
1.39 OTHER TRANSACTION PARTIES. The term "OTHER
TRANSACTION PARTIES" shall mean each person, other than Holdings, Purchaser,
Purchaser Sub and the Shareholders, that is a signatory to any of the Other
Transaction Documents.
1.40 OWNED REAL PROPERTY. The term "OWNED REAL PROPERTY"
shall mean all of the real property owned by the Dominick's Group or any member
thereof (or, as the case may be, owned by a land trust of which any member of
the Dominick's Group is the sole beneficiary), other than the Excluded
Dominick's Property, and all easements and other rights appurtenant thereto.
1.41 PERMITS. The term "PERMITS" shall mean the permits,
inspections, licenses and other authorizations required under Environmental
Laws.
1.42 PERSONNEL. The term "PERSONNEL" shall have the
meaning set forth in Section 3.7(d).
1.43 PLANS. The term "PLANS" shall mean any Employee
Pension Benefit Plan or any Employee Welfare Benefit Plan.
1.44 REAL PROPERTY. The term "REAL PROPERTY" shall mean
all of the Leased Real Property, Owned Real Property and Third Party Real
Property.
1.45 RESTRUCTURING TRANSACTIONS. The term "RESTRUCTURING
TRANSACTIONS" shall mean the distribution to the Company and the assignment,
conveyance and distribution or sale by the Company, to DDLLC or a transferee or
transferees designated by DDLLC, of the Excluded Assets, all in accordance with
the Asset Transfer Agreement.
1.46 SHARES. The term "SHARES" shall mean all of the
issued and outstanding shares of Preferred Stock and Common Stock of the
Company held by the Shareholders, together with all rights incident thereto.
1.47 SHAREHOLDER PROPERTY. The term "SHAREHOLDER
PROPERTY" shall mean any of the Leased Real Property which, after giving effect
to the Stock Purchase Transaction and Restructuring Transactions, is directly
or indirectly owned by any Shareholder (or Affiliate thereof) or any other real
property directly or indirectly owned by any Shareholder (or Affiliate thereof)
that is hereafter leased to any member of the Dominick's Group.
1.48 SHAREHOLDER LEASE. The term "SHAREHOLDER LEASE"
shall mean the agreement pursuant to which a member of the Dominick's Group
holds a possessory interest in any of the Shareholder Property.
1.49 SOFTWARE. The term "SOFTWARE" shall mean all of the
computer software owned or used by the Dominick's Group in the conduct of its
business.
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1.50 STOCK ENCUMBRANCES. The term "STOCK ENCUMBRANCES"
shall mean all Liens, ownership claims, pledges, security interests, options,
redemption agreements, restrictions on voting rights or other incidents of
ownership, prior assignments, other restrictions, liabilities, obligations,
charges, encumbrances and claims other than restrictions on transfer imposed
under applicable federal and state securities laws.
1.51 STOCK REDEMPTION. The term "STOCK REDEMPTION" shall
mean the purchase by Dominick's of the 8,600 shares of Dominick's Capital Stock
not owned by the Company as of the date hereof, and the discharge and
satisfaction by Dominick's of all rights of the holders of stock appreciation
rights relating to Dominick's Capital Stock, all in accordance with the
requirements of Section 5.10.
1.52 SUBSIDIARIES. The term "SUBSIDIARIES" shall mean
Dominick's Finer Foods, Inc. of Illinois, Xxxx Hazelcrest, Inc., Xxxx'x of
Bloomingdale, Inc., Jerry's Deep Discount Centers, Inc., and Save-It Discount
Foods Corporation.
1.53 TAXES. The term "TAXES" shall mean all federal,
state, local, foreign and other taxes, levies, imposts, assessments,
impositions or other similar government charges, including, without limitation,
income, estimated income, business, occupation, franchise, real property,
payroll, personal property, sales, transfer, stamp, use, employment, commercial
rent or withholding, occupancy, premium, gross receipts, profits, windfall
profits, deemed profits, license, lease, severance, capital, production,
corporation, ad valorem, excise, duty or other taxes, including interest,
penalties and additions thereto.
1.54 TAX MATTERS AGREEMENT. The term "TAX MATTERS
AGREEMENT" shall mean the Tax Matters Agreement in the form of EXHIBIT 1.54
hereto, to be entered into contemporaneously with the consummation of the Stock
Purchase Transaction.
1.55 TAX SURVIVAL PERIOD. The term "TAX SURVIVAL PERIOD"
shall mean the period from the Closing Date until the date which is one month
following the latest of (a) the date upon which liability to which any claim
regarding Taxes pursuant to this Agreement and the Tax Matters Agreement may
relate is barred by all applicable statutes of limitations (after taking into
account any extensions thereto made in accordance with the Tax Matters
Agreement), (b) the date upon which any claim for refund or credit related to
any such claim is barred by all applicable statutes of limitations (after
taking into account any extension thereto made in accordance with the Tax
Matters Agreement), and (c) with respect to any Covered Liabilities arising
from Taxes for which indemnity is being sought under Article XI hereof at the
expiration of the periods described in the preceding clauses (a) and (b), the
date of a final determination in such proceeding with respect to such
indemnification claim.
1.56 THIRD PARTY LEASES. The term "THIRD PARTY LEASES"
shall mean the leases or other agreements for Third Party Real Property as
listed on SCHEDULE 3.11(C), and all amendments thereto and renewals or
extensions thereof.
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1.57 THIRD PARTY REAL PROPERTY. The term "THIRD PARTY
REAL PROPERTY" shall mean those portions of the Owned Real Property and Leased
Real Property that are leased or licensed, subleased or sublicensed,
respectively, by the Dominick's Group to a third party.
1.58 TITLE COMPANY. The term "TITLE COMPANY" shall mean
Lawyers Title Insurance Corporation or such other title insurance company as is
selected by Sellers and is reasonably acceptable to Purchaser.
1.59 TRANSACTIONS. The term "TRANSACTIONS" shall mean the
Stock Purchase Transaction and the transactions provided for under the Other
Transaction Documents.
ARTICLE II
STOCK PURCHASE TRANSACTION
2.1 AGREEMENT TO PURCHASE AND SELL SHARES. Subject to
the terms and conditions set forth in this Agreement, on the Closing Date DFLLC
shall sell the Preferred Stock and Xxxx shall sell 35,843 shares of the Common
Stock, respectively, to Purchaser, and Purchaser shall purchase the Preferred
Stock and Common Stock from DFLLC and Xxxx, respectively, free and clear of any
Stock Encumbrances.
2.2 PAYMENT OF PURCHASE PRICE. Subject to the terms and
conditions set forth in this Agreement, on the Closing Date Purchaser shall pay
$344,865,000 to Sellers, of which (a) an amount equal to $6,600,000 shall be
paid to DFLLC in consideration for its sale of the Preferred Stock to
Purchaser, and (b) an amount equal to $338,265,000 shall be paid to Xxxx in
consideration for its sale of 35,843 shares of the Common Stock to Purchaser.
Purchaser shall make such payments by bank wire transfer of immediately
available funds to the accounts designated in writing by DFLLC and Xxxx,
respectively.
2.3 POST-CLOSING CONTINGENT PAYMENT.
(a) On the first business day after the Closing Date,
Holdings shall cause the Dominick's Group to pay to Xxxx an amount
equal to the Company's cash balances determined immediately prior to
the Closing. Holdings shall cause the Dominick's Group to make such
payment by bank wire transfer of immediately available funds to the
account designated in writing by Xxxx.
(b) As soon as practicable following the Closing Date,
and in no event more than 90 days thereafter, the Purchaser will
prepare a statement itemizing the out-of-pocket expenses of the
Dominick's Group incurred or accrued subsequent to the Balance Sheet
Date in connection with the Transactions. To the extent that the
aggregate amount of such expenses exceeds $2,500,000 (but excluding
the fee (but not the reimbursable expenses) payable to Xxxxxxx, Xxxxx
& Co. pursuant to the Goldman Letter Agreement), Xxxx will pay the
amount of such excess to Dominick's. To the extent that the aggregate
amount of such expenses is less than $2,500,000, Purchaser will cause
the Dominick's
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Group to pay the difference between such lesser amount and $2,500,000
to Xxxx. Any such payments shall be made by bank wire transfer of
immediately available funds to the account designated in writing by
the person entitled to the receipt thereof within ten business days
after Dodi's receipt of the aforesaid statement.
(c) On the fifth business day after the later to occur of
the first anniversary of the Closing Date or the date on which the
funds referred to below are released from the trust related thereto,
Holdings shall cause the Dominick's Group to pay to Xxxx an amount
equal to the product of (i) .60 multiplied by (ii) the amount, if any,
by which $7,250,000 exceeds the out-of-pocket costs of the
compensation and benefits paid or payable by Dominick's to its senior
executive officers pursuant to the agreements identified in part 2(f)
of SCHEDULE 3.21 (but not any amendments thereto after the Closing
Date), to the extent such compensation and benefits are paid or
payable by reason of an employee's separation from service with
Dominick's within one year following the Closing Date. Holdings shall
cause the Dominick's Group to make such payment by bank wire transfer
of immediately available funds to the account designated in writing by
Xxxx.
(d) Any payments made pursuant to this Section 2.3 shall
be adjustments to the purchase price for the Shares.
2.4 MERGER TRANSACTIONS. Immediately following the
consummation of the Stock Purchase Transaction, Holdings shall cause the Merger
Transactions to be completed.
2.5 CLOSING. The Closing shall take place at the offices
of Jenner & Block, Xxx XXX Xxxxx, Xxxxxxx, Xxxxxxxx 00000, at 10:00 A M., local
time, on the Closing Date, or at such other location as the parties shall
agree.
2.6 ALTERNATIVE TRANSACTION. At the election of
Purchaser, the Stock Purchase Transaction may be restructured to such other
form of transaction as Purchaser may determine to be appropriate; provided that
in the reasonable judgment of the Shareholders any such other form of
transaction does not result in any consequences to the Shareholders which are
less favorable to the Shareholder than the consequences which would have
resulted from the Stock Purchase Transaction, and further provided that
appropriate conforming changes to this Agreement and the Other Transaction
Documents satisfactory to the Shareholders are made.
ARTICLE III
WARRANTIES OF SHAREHOLDERS
The Shareholders hereby represent and warrant to Purchaser,
jointly and severally, as of the date hereof and as of the Closing Date, as
follows:
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3.1 AUTHORITY.
(a) Each of the Shareholders is a limited liability
company duly organized and validly existing under the laws of the
State of Illinois. The execution, delivery, and performance of this
Agreement and the Other Transaction Documents and the consummation of
the Transactions by each of the Shareholders has been duly authorized
by all necessary action on the part of the members and managers of
each of the Shareholders. This Agreement has been duly executed on
behalf of each Shareholder and constitutes the valid and binding
agreement of each Shareholder, enforceable against each Shareholder in
accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights, or the availability of
equitable remedies.
(b) The execution, delivery, and performance of the Other
Transaction Documents and the consummation of the transactions
contemplated thereby by each of the Shareholders and Other Transaction
Parties has been duly authorized by all necessary action on the part
of the members and managers of each of the Shareholders a party
thereto and the officers, board of directors and shareholders of each
of the Other Transaction Parties a party thereto. The Other
Transaction Documents, when duly executed and delivered on behalf of
each of the Shareholders and Other Transaction Parties a party
thereto, will constitute valid and binding agreements of each of them,
enforceable against each such Shareholder and Other Transaction Party
in accordance with their respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights, or the
availability of equitable remedies.
3.2 ORGANIZATION AND QUALIFICATION.
(a) Each member of the Dominick's Group is a corporation
duly organized, validly existing and in good standing under the laws
of the state of its incorporation and possesses all necessary
corporate power and authority to (i) engage in the business in which
it is presently engaged, (ii) own all property currently owned by it,
(iii) lease all of the property currently used by it under lease, and
(iv) perform its obligations under the Other Transaction Documents
applicable to it. Sellers have caused the Dominick's Group to make
available to Purchaser complete and correct copies of the Certificate
or Articles of Incorporation and By-laws, as amended to date, and
minute books of each member of the Dominick's Group.
(b) Each member of the Dominick's Group is duly qualified
and in good standing in the jurisdictions in which the nature of its
business and properties requires such qualification as a foreign
corporation, except where the failure to so qualify would not have a
material adverse effect on the business or financial condition of the
Dominick's Group. SCHEDULE 32(B) sets forth with respect to each
member of the Dominick's Group the jurisdictions in which such member
is incorporated and currently qualified to do business as a foreign
corporation.
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3.3 CAPITAL STRUCTURE OF THE DOMINICK'S GROUP.
(a) The authorized capital stock of the Company consists
solely of (i) 100,000 shares of Common Stock, of which 40,000 shares
are outstanding and (ii) 100,000 shares of Preferred Stock, of which
66,000 shares are outstanding. All of the issued and outstanding
Shares of Common Stock and Preferred Stock of the Company are validly
issued, and fully paid and non-assessable. Other than the
Restructuring Transactions, there is no obligation binding upon the
Company to issue, sell, redeem, purchase or exchange any of its
capital stock or any right relating thereto.
(b) The authorized capital stock of Dominick's consists
solely of (i) 300,000 shares of common stock, $.10 par value per
share, of which 263,600 shares are outstanding as of the date hereof,
and 255,000 of which are owned of record by the Company, and (ii)
50,000 shares of Series B preferred stock, $.10 par value per share,
none of which are outstanding. All of the issued and outstanding
shares of capital stock of Dominick's are validly issued, fully paid
and non-assessable. Other than the Stock Redemption and stock
appreciation rights described in SCHEDULE 3.21, there is no obligation
binding upon Dominick's or any other member of the Dominick's Group to
issue, sell, redeem, purchase or exchange any of the Dominick's
Capital Stock or any right relating thereto.
(c) SCHEDULE 3.3 sets forth the capitalization of each
Subsidiary.
3.4 TITLE TO SHARES AND STOCK OF DOMINICK'S AND THE
SUBSIDIARIES. The Shareholders own beneficially and of record all of the
issued and outstanding shares of Preferred Stock and Common Stock, and on the
Closing Date assuming completion of the Restructuring Transactions, DFLLC and
Xxxx will own beneficially and of record all of the issued and outstanding
shares of Preferred Stock and Common Stock, respectively, and DFLLC and Xxxx
shall transfer to Purchaser at the Closing, good, valid and marketable title to
the Preferred Stock and Common Stock free and clear of any Stock Encumbrances.
The Company owns beneficially and of record 255,000 of the issued and
outstanding shares of the Dominick's Capital Stock free and clear of any Stock
Encumbrances and on the Closing Date and after giving effect to the Stock
Redemption, the Company will own beneficially and of record all of the issued
and outstanding capital stock of Dominick's free and clear of any Stock
Encumbrances. Dominick's or one of the Subsidiaries owns beneficially and of
record all of the issued and outstanding capital stock of each of the
Subsidiaries free and clear of any Stock Encumbrances. There is no obligation
binding upon any of such Subsidiaries, or any other member of the Dominick's
Group, to issue, sell, redeem, purchase or exchange any of such Subsidiaries'
capital stock or any right relating thereto.
3.5 OTHER INVESTMENTS. Except as set forth on SCHEDULE
3.5 and except for Dominick's, the Subsidiaries, DDI and DPI and the Excluded
Affiliates' Property, neither the Company nor any other member of the
Dominick's Group has any direct or indirect subsidiaries and does not own,
either directly or indirectly, any capital stock or other equity or ownership
interest in any corporation, partnership, limited liability company,
association, trust, joint venture or other entity.
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3.6 FINANCIAL STATEMENTS.
(a) SCHEDULE 3.6(A) contains a true copy of the Financial
Statements. Except as set forth on SCHEDULE 3.6(A): (i) all of the
Financial Statements have been prepared from, and are consistent with,
the books and records of Dominick's and the Subsidiaries, (all of
which books and records are true and correct), and (ii) all of the
Financial Statements fairly present the financial position, as of the
date indicated, and the results of operations and other financial
information included therein, for the periods indicated, of Dominick's
and the Subsidiaries on a consolidated basis, and were prepared in
accordance with generally accepted accounting principles, consistently
applied; provided, that it is understood that the Interim Financial
Statements remain subject to customary year-end audit adjustments in
accordance with the past practices of Dominick's.
(b) The Company has, or as of the Closing Date will have,
no assets or liabilities (absolute, accrued, contingent or otherwise)
other than (i) cash, (ii) 255,000 shares of the Dominick's Capital
Stock, (iii) the capital stock of DDI and DPI, and (iv) the income tax
liabilities of the Dominick's Group, DDI and DPI as a consolidated or
combined group.
3.7 EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE. Except
as set forth on SCHEDULE 3.7, there has not been since the Balance Sheet Date:
(a) Any damage, destruction, loss or forfeiture (whether
or not covered by insurance) materially and adversely affecting (i)
any store, office, plant, warehouse or other operating facility or any
other material properties or assets of the Dominick's Group, or (ii)
the business or financial condition of the Dominick's Group;
(b) Any sale or transfer of any assets or properties,
other than in the ordinary course of business, which individually or
in the aggregate are material to the business of the Dominick's Group;
(c) Any direct or indirect redemption, purchase or other
acquisition by any member of the Dominick's Group of any capital stock
of itself or any other member of the Dominick's Group, or any
declaration, set aside or payment of any dividend or distribution on
the capital stock of any member of the Dominick's Group;
(d) (i) Except for normal periodic increases in the
ordinary course of business consistent with past practice, any
increase in the compensation payable or to become payable by any
member of the Dominick's Group to any of its officers, employees or
agents whose total compensation for services rendered to any member of
the Dominick's Group is currently at an annual rate of more than
$80,000 (collectively "PERSONNEL"), (ii) any bonus, incentive
compensation, service award or other like benefit granted, made or
accrued, contingently or otherwise, for or to the credit of any of the
Personnel, (iii) any employee welfare, pension, retirement,
profit-sharing or similar payment or arrangement made or agreed to by
any member of the Dominick's Group for any Personnel except pursuant
to the existing plans and arrangements described in the
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Schedules hereto or (iv) any new employment agreement to which any
member of the Dominick's Group is a party;
(e) Any incurrence by any member of the Dominick's Group
of any indebtedness for borrowed money or of any other indebtedness or
of any liability in respect thereof, or any commitment by any member
of the Dominick's Group for such incurrence, except for the incurrence
of unsecured current liabilities (other than for borrowed money) and
borrowings under the existing revolving credit facilities in the
ordinary course of business;
(f) Any contractual commitment by any member of the
Dominick's Group to any third party, other than as provided in this
Agreement or arising in the ordinary course of business, relating to
(i) any material portion of the property, assets or business of the
Dominick's Group, (ii) the acquisition or disposition of any material
portion of the property or assets of the Dominick's Group, or (iii)
the acquisition or disposition of any real estate, other than renewals
of Leases in the ordinary course of business;
(g) Any transaction, other than at arm's length in the
ordinary course of business pursuant to agreements identified on
SCHEDULE 3.25 hereto, between any member of the Dominick's Group, on
the one hand, and any stockholder, director, officer or Affiliate of
any member of the Dominick's Group, on the other hand, or any waiver
or surrender by any member of the Dominick's Group of any valuable
right or property other than for fair consideration;
(h) Any unusual or novel method of transacting the
business of the Dominick's Group which has had, or is reasonably
likely to have, a material adverse effect on the assets or properties,
liabilities, financial condition or results of operations of the
Dominick's Group;
(i) Any change in any accounting procedures or practices
by the Dominick's Group;
(j) Any material adverse change in the assets or
properties, liabilities, financial condition, results of operations or
prospects of the Dominick's Group whether or not covered by insurance;
(k) Any addition to or modification of the employee
benefit plans, arrangements or practices described in the Schedules
hereto affecting employees other than (i) contributions made for the
year ended October 29, 1994 in accordance with the normal practices of
the Dominick's Group, or (ii) the extension of coverage to other
employees who became eligible after the Balance Sheet Date;
(l) Any forgiveness of any indebtedness due any member of
the Dominick's Group in excess of $50,000 or waiver of any rights of
substantial value to the Dominick's Group, whether or not in the
ordinary course of business;
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(m) Any amendment, cancellation or termination of any
Contract, license or other instrument material to the Dominick's
Group;
(n) Any capital expenditures in excess of $100,000 (in
the aggregate) or the execution of any lease involving annual payments
in excess of $50,000 or any incurring of liability therefor by the
Dominick's Group, involving payments not reflected in the budget
provided to Purchaser on the date hereof;
(o) Any failure to repay any material obligation of any
member of the Dominick's Group, except in the ordinary course of
business or where such failure would not have a material adverse
effect on the business or financial condition of the Dominick's Group;
(p) Any failure to operate the business of the Dominick's
Group in the ordinary course so as to use reasonable efforts to
preserve the business intact, to keep available to Purchaser the
services of the Personnel, and to preserve for Purchaser the goodwill
of the Dominick's Group's suppliers, customers and others having
business relations with it except where such failure would not have a
material adverse effect on the business or financial condition of the
Dominick's Group;
(q) The creation or incurrence of any Lien on any assets
of the Dominick's Group, material singly or in the aggregate, except
purchase money mortgages arising in the ordinary course of business;
(r) Any issuance by any member of the Dominick's Group
of, or commitment by any member of the Dominick's Group to issue, any
shares of stock or other equity securities or obligations or
securities convertible into or exchangeable for shares of stock or
other equity securities;
(s) Any payment, discharge or satisfaction of any
liabilities other than the payment, discharge or satisfaction (i) in
the ordinary course of business and consistent with past practice of
liabilities reflected or reserved against in the Balance Sheet or
incurred in the ordinary course of business and consistent with past
practice since the Balance Sheet Date, and (ii) of other liabilities
involving $100,000 or less singly and $500,000 or less in the
aggregate;
(t) Any new collective bargaining agreement or any
amendment or other modification of any existing collective bargaining
agreement;
(u) Any transfer of assets or liabilities or any other
material transaction between any member of the Dominick's Group, on
the one hand, and the Excluded Subsidiaries or any other Affiliate
(other than another member of the Dominick's Group) of the Dominick's
Group or the Shareholders, on the other hand;
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(v) Any agreement by any member of the Dominick's Group
to do any of the foregoing, except as expressly contemplated by this
Agreement or the Other Transaction Documents; or
(w) Any other event or condition of any character which
in any one case or in the aggregate has materially adversely affected,
or any event or condition known to Sellers (other than matters of
general public knowledge relating to general economic conditions or
the supermarket industry as a whole) which it is reasonable to expect
will, in any one case or in the aggregate, materially adversely affect
in the future, the condition (financial or otherwise), assets,
liabilities, working capital, reserves, earnings, business or
prospects of the Dominick's Group.
3.8 LIABILITIES. Except as set forth on SCHEDULE.3.8 or
on any of the other Schedules hereto, the Dominick's Group does not have any
material liabilities of a type normally reflected on a balance sheet (including
in the notes thereto) prepared in accordance with generally accepted accounting
principles that (a) if existing on the Balance Sheet Date, are not reflected on
the Balance Sheet, or (b) if existing on the Interim Balance Sheet Date, are
not reflected on the Interim Balance Sheet, or (c) if arising since the Interim
Balance Sheet Date, have not arisen in the ordinary course of business since
the Interim Balance Sheet Date.
3.9 ACCOUNTS AND NOTES RECEIVABLE. The accounts and
notes receivable of the Dominick's Group reflected on the Interim Balance Sheet
and the Balance Sheet and the accounts and notes receivable arising since the
Interim Balance Sheet Date and the Balance Sheet, respectively, arose from bona
fide transactions in the ordinary course of business.
3.10 INVENTORIES. The aggregate inventories reflected on
the Balance Sheet were properly stated therein and were valued in accordance
with the normal valuation policy of the Dominick's Group, consistently applied
and in accordance with generally accepted accounting principles. All items of
inventory reflected on the Balance Sheet, were acquired in the ordinary course
of business and as of the date thereof were usable and saleable in the ordinary
course of business of the Dominick's Group, except for normal shrinkage,
spoilage, and obsolescence. The inventories reflected on the books and records
of the Dominick's Group, considered in the aggregate, do not overstate the
inventories that would be verified by a physical inventory as of the date of
such records.
3.11 REAL PROPERTY.
(a) OWNED REAL PROPERTY. SCHEDULE 3.11(A) lists all of
the Owned Real Property. The Dominick's Group has good and marketable
fee simple title to the Owned Real Property (or, as the case may be,
the entire beneficial interest in the land trust holding title
thereto) free and clear of all Liens, subject only to the exceptions
set forth on SCHEDULE 3.11(A) and the Third Party Leases.
(b) LEASED REAL PROPERTY. SCHEDULE 3.11(B) lists all of
the Leased Real Property. The Dominick's Group's interest in each
parcel of Leased Real Property is
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a leasehold interest under a Lease. Sellers have caused the
Dominick's Group to make available to Purchaser complete, true, and
correct copies of all Leases, and to the knowledge of Sellers, the
summaries of certain terms of those Leases included in the Lease
summaries in SCHEDULE 3.11(B) accurately reflect the Lease terms
stated therein. Except as set forth on SCHEDULE 3.11(B): (i) each
Lease is a valid and binding obligation of the parties thereto in
accordance with its terms and is in full force and effect except as
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights or the availability of equitable remedies; (ii) no member of
the Dominick's Group is in material default under any material
provision of any Lease and, to the knowledge of Sellers (without
inquiry of third parties), no lessor under any Lease is in material
default of any material provisions of any Lease; (iii) no event has
occurred which through notice, the passage of time or otherwise would
become a material default by any member of the Dominick's Group or, to
the knowledge of Sellers (without inquiry of third parties), any other
party, under any Lease; (iv) each Lease will continue in full force
and effect on the same terms as currently exist, notwithstanding the
consummation of the transactions contemplated by this Agreement; (v)
the leasehold interest of the Dominick's Group with respect to each
parcel of Leased Real Property is free and clear of all Liens; and
(vi) leasing commissions or other brokerage fees due from or payable
by the Dominick's Group with respect to the Leases have been paid in
full.
(c) THIRD PARTY REAL PROPERTY. SCHEDULE 3.11(C) lists
all of the Third Party Leases. Sellers have caused the Dominick's
Group to make available to Purchaser complete, true, and correct
copies of all Third Party Leases, and to the knowledge of Sellers, the
summaries of certain terms of those Third Party Leases in the Third
Party Lease summaries included in SCHEDULE 3.11(C) accurately reflect
the Lease terms stated therein. Except as otherwise set forth on
SCHEDULE 3.11(C): (i) each Third Party Lease is a valid and binding
obligation of the parties thereto in accordance with its terms and is
in full force and effect except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights or the availability of
equitable remedies; (ii) no member of the Dominick's Group is in
material default under any material provision of any Third Party Lease
and, to the knowledge of Sellers (without inquiry of third parties),
no lessee or sublessee or licensee or sublicensee under any Third
Party Lease is in material default of any material provision of any
Third Party Lease; and (iii) no event has occurred which through
notice, the passage of time or otherwise would become a material
default by any member of the Dominick's Group or, to the knowledge of
Sellers (without inquiry of third parties), any other party under any
Third Party Lease.
(d) CONDITION OF REAL PROPERTY; COMPLIANCE. Except as
set forth on SCHEDULE 3.11(D), Sellers have no knowledge: (i) of any
material structural defect in any of the buildings or other
improvements situated on the Real Property; or (ii) that any building
system, structure, fixture or improvement, owned, leased or used by
any member of the Dominick's Group and required for the conduct of the
business as currently conducted (including the operation of any closed
stores) is not in all material respects in good condition and working
order (reasonable wear and tear excepted) and
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adequate in quality and quantity for the current normal operation of
the Dominick's Group's business. To the knowledge of Sellers, and
except as set forth on SCHEDULE 3.11(D), no part of the Real Property:
(i) is a nonconforming use, special use, or special exception not
permitted under, or is otherwise not in compliance with, applicable
zoning ordinances; or (ii) is located in a governmentally designated
flood plain, flood-prone area, flood-risk area or wetland or similarly
restricted area. There is presently full and free vehicular access to
and from public highways and roads to each parcel of the Real Property
to the extent required for the conduct of the retail operations (or,
if not a store, other operations) currently conducted by the
Dominick's Group. To the knowledge of Sellers, all utility companies
providing utilities to each parcel of the Real Property have adequate
rights of access to provide the services necessary for the conduct of
the business currently conducted by the Dominick's Group on the Real
Property. Except as set forth on SCHEDULE 3.11(D), to the knowledge
of Sellers: (i) the Real Property complies in all respects with all
federal state and municipal laws, ordinances, orders, regulations or
requirements, other than such laws, ordinances, orders, regulations or
requirements where the failure to comply would not have a material
adverse effect on the financial condition or results of operations of
the Dominick's Group; (ii) there are no special assessments, deferred
water or sewer charges or any deferred special assessments or special
charges pertaining to any portion of the Owned Real Property; and
(iii) neither the Real Property nor any material portion thereof, is
in violation of any building, zoning or other ordinance, building
code, or similar rule or regulation, other than such violations which
do not have a material adverse effect on the financial condition or
results of operations of the Dominick's Group. Except as set forth on
SCHEDULE 3.11(D), there are no pending legal actions, lawsuits or
administrative proceedings, including condemnation actions or rezoning
proceedings affecting all or any material portion of the Owned Real
Property or, to the knowledge of Sellers (without inquiry of third
parties), the Leased Real Property and, to the knowledge of Sellers,
none have been threatened against any portion of the Real Property.
To the extent that the foregoing provisions of this SECTION 3.11(D)
concerning compliance with laws, ordinances, orders, regulations,
codes, or rules relate to any Leased Real Property, the foregoing
representations shall be limited to the use of such Leased Real
Property by the Dominick's Group or to such other matters for which
any member of the Dominick's Group is responsible under a Lease or
other agreement.
(e) No member of the Dominick's Group has received
written, or to the knowledge of Sellers, other notice of any default
or breach by any member of the Dominick's Group under any covenants,
conditions, restrictions, rights-of-way, or easements which may affect
any parcel of the Real Property, and to the knowledge of Sellers, no
such default or breach now exists.
(f) Except for the Restructuring Transactions and except
as set forth in SCHEDULE 3.11(F), no member of the Dominick's Group is
a party to or bound by: (i) any agreement for the purchase by a
member of the Dominick's Group of any interest in real estate; (ii)
any agreement for the lease to a member of the Dominick's Group of any
interest in real estate not currently in possession of a member of the
Dominick's
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Group; or (iii) any agreement for the sale by a member of the
Dominick's Group of any of the Real Property.
3.12 TANGIBLE PERSONAL PROPERTY. Except as set forth on
SCHEDULE 3.12, the Dominick's Group has good and marketable title to the
equipment, computer hardware, furniture, vehicles, rolling stock and other
tangible personal property which is purportedly owned by the Dominick's Group
and which is either (a) reflected on the Balance Sheet (except for personal
property disposed of in the ordinary course of business after the Balance Sheet
Date), or (b) used by the Dominick's Group in the conduct of its business
(whether or not reflected on the Balance Sheet), free and clear of any Liens.
Except as set forth on SCHEDULE 3.12, to the knowledge of Sellers, all such
tangible personal property is in good working condition and repair and
constitutes the tangible personal property necessary to the operation of the
business of the Dominick's Group as currently conducted. Except as set forth
on SCHEDULE 3.12 or any other Schedule hereto, no member of the Dominick's
Group is a party to any agreement requiring the payment by such member of an
amount in excess of $200,000 in any 12-month period for the purchase or lease
of any machinery, equipment or other capital assets other than Leased Real
Property.
3.13 CONTRACTS. SCHEDULE 3.13 lists the following
contracts and agreements to which any member of the Dominick's Group is a party
or otherwise bound, or to which any of the material rights, properties or
assets of a member of the Dominick's Group are subject or bound (collectively
the "CONTRACTS"): (a) mortgage, indenture, note, installment obligation or
other instrument relating to the borrowing of money; (b) guarantee of any
obligation; (c) letter of credit, bond or other indemnity (excluding
endorsements of instruments for collection in the Dominick's Group's ordinary
course of business); (d) currency or interest rate swap, collar or hedge
agreement; (e) agreement for the sale or lease by any member of the Dominick's
Group to any person of any material amount of the Dominick's Group's personal
properties other than the retirement or other disposition of assets no longer
useful to the Dominick's Group in the conduct of its business; (f) distributor,
representative, broker or advertising contract that is not terminable by the
Dominick's Group at will, or by giving notice of thirty (30) days or less,
without liability; (g) joint venture agreement, partnership agreement or power
of attorney; (h) agreement requiring the payment by any member of the
Dominick's Group to any person (other than another member of the Dominick's
Group) of more than $200,000 in any 12-month period for the purchase of goods
or services; (i) agreement imposing non-competition or exclusive dealing
obligations on any member of the Dominick's Group; or (j) contract, agreement,
understanding or other arrangement to which any member of the Dominick's Group
is a party or otherwise bound that is either (i) not terminable without penalty
or payment of any premium or costs and expenses of any kind immediately upon
notice of termination by the Dominick's Group (or Purchaser after the Closing
Date) to the other party or parties thereto, or (ii) is material to the
financial condition or business of the Dominick's Group and that is not
otherwise reflected on SCHEDULE 3.13. Sellers have caused the Dominick's Group
to make available to Purchaser complete, true and correct copies of all written
Contracts and a written summary of the material terms of any oral Contract
required to be disclosed in SCHEDULE 3.13 all as in effect as of the date
hereof. Except as otherwise set forth on SCHEDULE 3.13, to the knowledge of
Sellers, the Contracts are valid and binding obligations of the parties thereto
in accordance with their terms and are in full force and effect except as may
be limited by
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applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights or the availability of equitable
remedies. No member of the Dominick's Group nor any other party, is in default
in the payment of any material obligation under any Contract and no event has
occurred which through notice, the passage of time or otherwise would become a
material default by any member of the Dominick's Group or, to the knowledge of
Sellers, any other party, under any Contract which would have a material
adverse effect on the financial condition or results of operations of the
Dominick's Group.
3.14 INTELLECTUAL PROPERTY.
(a) SCHEDULE 3.14(A) lists all patent and trademark
registrations and copyright registrations, and applications pending or
to be filed therefor, which are owned by any member of the Dominick's
Group.
(b) SCHEDULE 3.14(B) lists all trademarks, trade names,
service marks, and other marks used by any member of the Dominick's
Group and not listed in SCHEDULE 3.14(A).
(c) To the knowledge of Sellers, the Dominick's Group
either owns, has by license agreements or has acquired by implied
licenses in connection with the acquisition of the properties and
assets of the Dominick's Group, rights to use the inventions,
processes, know-how, formulas, customer lists, trade secrets, patents,
trademarks, trade names, brand names and copyrights which are used in
connection with the operation of the properties, assets, business and
affairs of the Dominick's Group as of the date hereof. SCHEDULE
3.14(C) lists all such written license agreements to which any member
of the Dominick's Group is a party.
(d) Except as set forth on SCHEDULE 3.14(D), to the
knowledge of Sellers, no invention, process, know-how, formula,
customer list, trade secret, patent, trademark, trade name, brand name
or copyright which is owned by the Dominick's Group or used or
required in the conduct of the business of the Dominick's Group, is
involved in, or the subject of, any pending or threatened
infringement, interference, opposition or similar action, suit or
proceeding, or has been declared invalid or otherwise limited by any
court.
(e) To the knowledge of Sellers, all of the Software is
either (i) owned by the Dominick's Group free and clear of any Liens
which materially and adversely affect the marketability of title
thereto, or (ii) used by the Dominick's Group pursuant to a license
which is currently in effect. To the knowledge of Sellers, no such
Software license shall terminate or become terminable as a result of
the transactions contemplated by this Agreement. There are no
infringement suits pending or, to the knowledge of Sellers, threatened
against the Dominick's Group with respect to any of the Software and,
to the knowledge of Sellers, no fact or condition exists which would
give rise to any such infringement suit.
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3.15 COMPLIANCE WITH LAW. Except as set forth on SCHEDULE
3.15, and excepting matters relating to compliance with Environmental Laws as
to which the Shareholders' representations and warranties are made in SECTION
3.16, to the knowledge of Sellers, no member of the Dominick's Group is in
violation of any applicable statute, law, ordinance, decree, order, rule,
regulation, franchise, permit or license of any governmental body, except for
such violations which do not, and will not, individually or in the aggregate
have a material adverse effect on the financial condition or results of
operations of the Dominick's Group.
3.16 ENVIRONMENTAL MATTERS. Except as set forth on
SCHEDULE 3.16:
(a) The Dominick's Group has obtained all Permits which
are required under Environmental Laws for the operation of its
business, except where the failure to so obtain would not have a
material adverse effect on the financial condition or results of
operations of the Dominick's Group. All such Permits are currently in
effect and the appropriate member of the Dominick's Group is in
compliance with all material terms and conditions of such Permits.
(b) No member of the Dominick's Group has received
written notice of any civil criminal or administrative action, suit,
claim, hearing, violation, investigation, proceeding or demand against
any member of the Dominick's Group relating in any way to the use of
Hazardous Materials or compliance with Environmental Laws.
(c) There are no orders from or agreements with any
governmental or private party relating to violations of or compliance
with the Environmental Laws by any member of the Dominick's Group.
(d) There has been no storage, treatment, generation,
discharge, incineration or disposal of Hazardous Materials (other than
any substances customarily sold in the retail grocery business and
cleaning and maintenance supplies which have been used, stored and
disposed of in accordance with all Environmental Laws) on the Real
Property by any member of the Dominick's Group or, to the knowledge of
Sellers (without inquiry of third parties), by any other person.
3.17 LITIGATION. Except as set forth on SCHEDULE 3.17,
there is no action, order, writ, injunction, judgment or decree outstanding or
claim, suit, litigation, proceeding, labor dispute (other than routine
grievance procedures or routine, uncontested claims for benefits under any
benefit plans for Personnel), arbitral action or investigation pending or, to
the knowledge of Sellers, threatened or anticipated against, relating to or
affecting (i) any member of the Dominick's Group, (ii) any benefit plan for
Personnel or any fiduciary or administrator thereof or (iii) the transactions
contemplated by this Agreement or the Other Transaction Documents, which, if
adversely decided, would have a material adverse effect on the Dominick's
Group, any such plan or the transactions contemplated hereby or thereby,
respectively (collectively, "ACTIONS"). Neither Sellers nor any member of the
Dominick's Group is in default with respect to any judgment, order, writ,
injunction or decree of any court or governmental agency, and there are no
unsatisfied judgments against Seller, the Dominick's Group or the business or
activities of the Dominick's Group. To the knowledge of Sellers, except as
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specifically noted on SCHEDULE 3.17, the Dominick's Group has not been advised
that there is a reasonable likelihood of an adverse determination of any Action
(or group of related Actions) which adverse determination, should it occur,
would have a material adverse effect on the business or financial condition of
the Dominick's Group.
3.18 NO RESTRICTIONS; CONSENTS. Except as set forth on
SCHEDULE 3.18, neither Sellers, nor any member of the Dominick's Group is
subject to any material restriction, agreement, law, judgment or decree which
would prohibit or be violated by the execution and delivery of this Agreement
or the Other Transaction Documents or the consummation of the Transactions, or
which would result in the acceleration of any material indebtedness of the
Dominick's Group. Except for such action as may be required pursuant to the
HSR Act and except as disclosed on SCHEDULE 3.18, SCHEDULE 3.11(B), SCHEDULE
3.11(C), or SCHEDULE 3.13, no member of the Dominick's Group is required to
obtain any consents or other approvals from any governmental agency or other
person (including, without limitation, any lessor, lender, or financial
institution) in order to avoid default as a result of the Transactions, except
for such consents or other approvals where the failure to so obtain does not
have a material adverse effect on financial condition or results of operations
of the Dominick's Group.
3.19 AUTHORIZATIONS. The Dominick's Group has all
authorizations, approvals and licenses, other than Permits, applicable to its
business or the use, ownership or occupancy of the Real Property necessary to
conduct the business of the Dominick's Group as it is presently conducted,
except for such authorizations, approvals, and licenses the lack of which would
not have a material adverse effect on the financial condition or results of
operations of the Dominick's Group ("AUTHORIZATIONS"). Except as set forth on
SCHEDULE 3.19, each Authorization is valid and in full force and effect, and
none of the Authorizations will be terminated or impaired or become terminable
as a result of the consummation of the Transactions. Neither Sellers nor any
member of the Dominick's Group has received written notice that any appropriate
governmental authority intends to cancel, terminate or not renew any
Authorization.
3.20 TAXES.
(a) FILING OF TAX RETURNS. To the knowledge of the
Shareholders, each of the Company, Dominick's, the Subsidiaries and
all members for income Tax purposes of any affiliated or combined
group of corporations (as defined in Section 1504(a) of the Code or
any analogous state, local or foreign provision) of which the Company
is the common parent (collectively, the "TAXPAYERS") have timely filed
(after giving effect to any extensions of time within which to make
such filing) with the appropriate taxing or other governmental
authorities all returns, reports, estimates, information returns and
statements required to be filed in respect of any Taxes (collectively,
"TAX RETURNS") on or before the Closing Date. The Tax Returns filed
are complete, correct and accurate in all material respects. Except
as set forth in SCHEDULE 3.20, none of the Taxpayers has requested any
extension of time within which to file such Tax Returns.
(b) PAYMENT OF TAXES. All Taxes for which any of the
Taxpayers are or may be liable or that are or may become due or
payable with respect to all taxable periods or
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portions thereof ending on or before the Closing Date, other than as a
result of the Stock Purchase Transaction or the Merger Transactions,
have been timely paid, or will have been paid when due or within
applicable extensions of the time for payment thereof. The Taxpayers
have made, or as of the Closing Date will have made, adequate
provision, in conformity with generally accepted accounting
principles, consistently applied, for the payment of all Taxes which
may subsequently become due through the Closing Date other than as a
result of the Stock Purchase Transaction or the Merger Transactions.
All Taxes which any Taxpayer has been required to collect or withhold
have been duly collected or withheld and, to the extent required when
due, have been or will be duly paid to the proper taxing or other
governmental authorities.
(c) AUDIT HISTORY. Except as set forth in SCHEDULE 3.20,
no material deficiencies for Taxes of any of the Taxpayers have been
claimed, proposed or assessed by any taxing or other governmental
authority which have not been paid or discharged. Except as set forth
in SCHEDULE 3.20, there are no pending or, to the Sellers' knowledge
(without inquiry of third parties) threatened audits, investigations,
claims or assessments for or relating to any material liability in
respect of Taxes of any of the Taxpayers, and there are no matters
under discussion with any taxing or other governmental authorities
with respect to Taxes that are reasonably likely to result in an
additional liability for Taxes. Audits of federal state and local Tax
Returns by the relevant taxing authorities have been completed for the
period set forth in SCHEDULE 3.20 and, except as set forth in SCHEDULE
3.20, none of the Taxpayers has been notified that any taxing
authority intends to audit a Tax Return for any other period. Except
as set forth in SCHEDULE 3.20, no extension of a statute of
limitations relating to Taxes is in effect with respect to any of the
Taxpayers.
(d) TAX ELECTIONS. All elections with respect to Taxes
affecting any of the Taxpayers as of the date hereof are set forth in
SCHEDULE 3.20. No new elections with respect to Taxes, or any changes
in current elections with respect to Taxes, affecting any of the
Taxpayers shall be made after the date of this Agreement without
Purchaser's prior written consent. None of the Taxpayers (i) has made
or will make a deemed dividend election under former Treas. Reg.
Section 1.1502-32(f)(2) or a consent dividend election under Section
565 of the Code; (ii) has consented at any time under Section
341(f)(1) of the Code to have the provisions of Section 341(f)(2) of
the Code apply to any disposition of any of the Taxpayer's assets;
(iii) has agreed, or is required, to make any adjustment under Section
481(a) of the Code by reason of a change in accounting method or
otherwise; (iv) has made an election, or is required, to treat any
asset of any Taxpayer as owned by another person pursuant to the
provisions of Section 168(f) of the Code or as tax-exempt bond
financed property or tax-exempt use property within the meaning of
Section 168 of the Code; or (v) has made any of the foregoing
elections or is required to apply any of the foregoing rules under any
comparable state or local Tax provision.
(e) PRIOR AFFILIATED GROUPS. Except as set forth in
SCHEDULE 3.20 and except for the affiliated group in which the
Taxpayers are now members, none of the Taxpayers has at any time been
a member of an Affiliated group of corporations within the meaning of
Section 1504 of the Code.
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(f) TAX SHARING AGREEMENTS. All Tax-sharing agreements
or similar arrangements with respect to or involving the Taxpayers are
set forth in SCHEDULE 3.20. All Tax-sharing agreements or similar
arrangements (other than the Tax Matters Agreement) with respect to or
involving any of the Taxpayers shall be terminated prior to the
Closing Date, and, after the Closing Date, none of the Taxpayers shall
be bound thereby or have any liability under such agreements or
arrangements for amounts due in respect of periods prior to the
Closing Date.
(g) PARTNERSHIPS. Except as set forth in SCHEDULE 3.20,
none of the Taxpayers is subject to any joint venture, partnership, or
other arrangement or contract which is treated by the Taxpayers as a
partnership for federal income Tax purposes.
(h) FIRPTA WITHHOLDING. The Company is not, and was not
at any time during the five-year period ending on the date hereof, a
"United States real property holding corporation" as such term is
defined by Section 897(b)(2) of the Code. As a result, the Preferred
Stock and Common Stock does not constitute a "United States real
property interest" as such term is defined by Section 897(c)(1) of the
Code, and Purchaser will not be required to withhold any portion of
the Purchase Price pursuant to Section 1445 of the Code. The Sellers
agree to provide Purchaser prior to the Closing Date any certificate
necessary to substantiate exemption from such withholding.
3.21 COMPENSATION. SCHEDULE 3.21 contains a list, as of
the date hereof, of (a) each employee of the Dominick's Group whose present
base salary on an annualized basis is in excess of $80,000 and (b) the
aggregate amount of each such employee's current annual salary and most recent
bonus. SCHEDULE 3.21 also contains a list of the material benefits, other than
the Plans, that are available to the employees of the Dominick's Group who are
not members of a collective bargaining unit with which a member of the
Dominick's Group has entered into a collective bargaining agreement. No member
of the Dominick's Group is a party to or bound by any express employment or
consulting agreement or other agreement providing for severance payments or
other additional rights or benefits (whether or not optional) in the event of a
sale of such member or any other member of the Dominick's Group, other than the
Stock Redemption and those listed on SCHEDULE 3.21.
3.22 LABOR RELATIONS. SCHEDULE 3.22 contains a list of
each collective bargaining agreement to which any member of the Dominick's
Group is a party or otherwise bound. The Company has made available to
Purchaser complete, true, and correct copies of each collective bargaining
agreement listed on SCHEDULE 3.22. Except as set forth on SCHEDULE 3.22, as of
the date of this Agreement there is neither pending nor, to the knowledge of
Sellers, threatened any labor dispute, labor organizing activity, election
petition or proceeding, proceeding preparatory thereto, strike, or work
stoppage which affects or which may affect the Dominick's Group's business, or
which may interfere with their continued operations, and no member of the
Dominick's Group nor any officer, director, employee or agent of any thereof
has committed any material unfair labor practice as defined in the National
Labor Relations Act of 1947, as amended.
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3.23 ERISA AND THE PLANS.
(a) Except as listed on SCHEDULE 3.23, no member of the
Dominick's Group (or any other corporation or business entity which is
at the time aggregated with any member of the Dominick's Group under
Section 414 of the Code or Title IV of ERISA (an "ERISA AFFILIATE"))
maintains or otherwise contributes to or has an obligation to
contribute to, or may incur a liability under, and since January 1,
1989, has not maintained or contributed to or has had an obligation to
contribute to or has incurred a liability under, any Plans or
Multiemployer Plans. Any Multiemployer Plan to which any member of
the Dominick's Group is required to make contributions has been so
identified on SCHEDULE 3.23.
(b) With respect to each Plan, the Company has furnished
to Purchaser, to the extent applicable, true, complete and correct
copies of: (i) the Plan document; (ii) the most recent annual report
(Form 5500); (iii) the summary plan description; (iv) any applicable
trust agreement or insurance contract; and (v) any other documents
relating to such Plan filed with any governmental agency since January
1, 1994.
(c) Each member of the Dominick's Group, as applicable,
has operated and administered each of the Plans in compliance with
ERISA, the Code, the Age Discrimination in Employment Act and other
applicable laws and regulations and other authority promulgated
thereunder in all material respects.
(d) Other than as may be required by applicable federal
or state statute, the Plans do not provide health or medical benefits
for former employees or their dependents.
(e) Except as expressly set forth on SCHEDULE 3.23, no
member of the Dominick's Group and no ERISA Affiliate maintains any
deferred compensation or other executive compensation Plan with
respect to which there is any material unfunded liability.
(f) None of the Employee Pension Benefit Plans is a plan
which is subject to Section 412 of the Code or Title IV of ERISA.
Each Employee Benefit Pension Plan and each related trust agreement,
annuity contract or other funding instrument is qualified and
tax-exempt under the provisions of Code Sections 401(a) and 501(a) and
has been so qualified during the period from its adoption to date.
(g) No member of the Dominick's Group and no ERISA
Affiliate has, at any time, withdrawn from a Multiemployer Plan in a
"complete withdrawal" or a "partial withdrawal" as defined in Sections
4203 and 4205 of ERISA, respectively, so as to result in a liability,
contingent or otherwise (including, but not limited to, the
obligations pursuant to an agreement entered into in accordance with
Section 4204 of ERISA) of any member of the Dominick's Group or any
ERISA Affiliate. To the knowledge of Sellers (without inquiry of
third parties), if, as of the Closing, all members of the Dominick's
Group and all ERISA Affiliates were to withdraw from all Multiemployer
Plans to which
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they (or any of them) have contributed or have been obligated to
contribute, they would incur no liability to such plans under Title IV
of ERISA which would be material to the business or financial
condition of the Dominick's Group. To the Sellers' knowledge (without
inquiry of third parties), with respect to each Multiemployer Plan:
(i) no such Multiemployer Plan has been terminated or has been in
reorganization under ERISA so as to result, directly or indirectly, in
any liability, contingent or otherwise, of the Company or any ERISA
Affiliate under Title IV of ERISA, (ii) no proceeding has been
initiated by any person (including the Pension Benefit Guaranty
Corporation) to terminate any such Multiemployer Plan, (iii) Sellers
have no reason to believe that any Multiemployer Plan will be
terminated or will be reorganized under ERISA and (iv) no member of
the Dominick's Group and no ERISA Affiliate has any present intention
to withdraw from any Multiemployer Plan or any expectation that such a
withdrawal may occur.
(h) Except as disclosed by Sellers to Purchaser with
respect to the Company's Key Manager Stock Ownership Plan, Key Manager
Stock Appreciation Rights Plan and the employment contracts identified
in part 2(f) of SCHEDULE 3.21, neither the execution and delivery of
this Agreement nor the consummation of the Transactions will result in
the acceleration or creation of any rights of any person to benefits
under any of the Plans or any other plan, policy, arrangement or
agreement maintained by or entered into by any member of the
Dominick's Group, including but not limited to the acceleration of the
exercisability of any stock options, the acceleration of the vesting
of any restricted stock, the acceleration of the accrual or vesting of
any benefits under any Plan or the creation of rights under any
severance, parachute or change of control agreement.
(i) No event has occurred and, to the best knowledge of
Sellers, there exists no condition or set of circumstances, in
connection with which any member of the Dominick's Group or any ERISA
Affiliate or any Plan, directly or indirectly, could be subject to any
material liability (except liability for benefits claims and funding
obligations payable in the ordinary course) (i) under ERISA, the Code,
or any statute, regulation or governmental order relating to the Plans
or (ii) pursuant to any obligation to indemnify any person against any
liability incurred under ERISA, the Code, or any statute, regulation
or governmental order relating to the Plans.
3.24 INSURANCE. SCHEDULE 3.24 lists all insurance
policies and bonds providing coverage for any member of the Dominick's Group
for losses or other events since October 31, 1993 on the assets, properties or
operations of any member of the Dominick's Group and the amounts and nature of
coverage with respect to each such policy. To the knowledge of Sellers, all of
such policies are sufficient for compliance with all requirements of law and of
all Contracts to which the Dominick's Group is a party. To the knowledge of
Sellers, the Dominick's Group is not in default under any of such policies or
binders, and the Dominick's Group has not failed to give any notice or to
present any claim under any such policy or binder in a due and timely fashion.
To the knowledge of Sellers, no coverage requested by the Dominick's Group in
the past five years has been denied and there are no facts upon which an
insurer might be justified in reducing coverage or increasing premiums on
existing policies or binders.
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3.25 RELATED PARTY TRANSACTIONS. Except as set forth on
SCHEDULE 3.25 hereto and except for this Agreement and the Other Transaction
Documents, no member of the Dominick's Group is a party to any agreement or
arrangement with or for the benefit of: (a) any director or officer of any
member of the Dominick's Group, (b) DDI, DPI, or any of the Shareholders, (c)
any director or officer of DDI or DPI, (d) any member or manager of any of the
Shareholders, or (e) any Affiliate of any of the Shareholders (other than
another member of the Dominick's Group).
3.26 BANK ACCOUNTS. SCHEDULE 3.26 contains a true and
complete listing of all bank deposit accounts or other depositary accounts
maintained by any member of the Dominick's Group and the authorized signatories
thereto.
3.27 NO CONFLICT OR VIOLATION. Except as set forth in
SCHEDULE 3.27 (or, with respect to clause (d) below, SCHEDULES 3.11(B),
3.11(C), 3.13, 3.18, OR 3.21), neither the execution and delivery of this
Agreement or the Other Transaction Documents, nor the performance by the
Shareholders or the members of the Dominick's Group of their respective
obligations hereunder and thereunder, nor the consummation of the Transactions,
will (a) conflict with the charter documents or bylaws of the Shareholders or
the members of the Dominick's Group; (b) assuming satisfaction of the
requirements set forth in clause (c) below, violate any statute, law,
ordinance, rule or regulation, applicable to the Shareholders, the Company or
any other member of the Dominick's Group or any of their respective properties
or assets; (c) except for (i) requirements arising out of the HSR Act, (ii)
requirements of state liquor licensing, pharmacy and similar licensing laws,
and (iii) such as may be required because Holdings or Purchaser is a party to
this Agreement, require any consent or approval of, of filing with or notice
to, any public body or authority, domestic or foreign, under any provision of
law applicable to the Dominick's Group; (d) require any consent, approval or
notice under, or violate, breach, be in conflict with or constitute a default
(or an event which, with notice or lapse of time or both, would constitute a
default) under, or permit the termination of any provision of, or result in the
termination of, the acceleration of the maturity of, or the acceleration of the
performance of any obligation of the Dominick's Group or result in the creation
or imposition of any lien upon any properties, assets or business of the
Dominick's Group under, any Lease, Third Party Lease, Contract or other
material agreement to which any member of the Dominick's Group is a party, or
any order, judgment or decree to which any member of the Dominick's Group is a
party or by which any member of the Dominick's Group or any of their respective
assets or properties is bound or encumbered, except for such violations,
conflicts, defaults or other occurrences which, in the aggregate would not
have, and could not reasonably be expected to have, a material adverse effect
on the Dominick's Group, and would not prevent or delay the Stock Purchase
Transaction or otherwise prevent the Shareholders from performing their
obligations under this Agreement.
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ARTICLE IV
WARRANTIES OF PURCHASER AND HOLDINGS
Purchaser and Holdings hereby represent and warrant to Sellers,
jointly and severally, as of the date hereof and as of the Closing Date, as
follows:
4.1 AUTHORITY. The execution, delivery and performance
of this Agreement and all other agreements and instruments to be executed in
connection herewith or pursuant hereto, and the consummation of the
transactions contemplated hereby by each of Purchaser and Holdings have been
duly authorized by all necessary action on the part of each of Purchaser and
Holdings, and this Agreement and such other agreements and instruments
constitute the valid and binding obligations of each of Purchaser and Holdings,
enforceable in accordance with the terms thereof, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights or the availability of equitable
remedies.
4.2 ORGANIZATION, STANDING AND CORPORATE AUTHORITY. Each
of Purchaser and Holdings is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and possesses all
necessary corporate power and authority to perform its obligations under this
Agreement and all other agreements and instruments to be executed in connection
herewith or pursuant hereto.
4.3 HOLDINGS PREFERRED STOCK. The Holdings Preferred
Stock, upon issuance and delivery and payment therefor in the manner described
herein and in the Stock Exchange Agreement, will be duly authorized, validly
issued, fully paid and non-assessable.
4.4 PURCHASE FOR INVESTMENT. Purchaser is purchasing the
Shares for investment and not with a view to any public resale or other
distribution thereof Purchaser has no intention of selling the Shares in a
public distribution in violation of federal securities laws or any applicable
state securities laws. Purchaser acknowledges that the Shares have not been
registered under the Securities Act of 1933, as amended, or any state
securities laws, and that the Shares may not be resold absent such registration
or unless an exemption therefrom is available.
4.5 NO RESTRICTIONS; CONSENTS. Neither Purchaser nor
Holdings is subject to any material restriction, agreement, law, judgment or
decree which would prohibit or be violated by either (a) the execution and
delivery of this Agreement and all other agreements and instruments to be
executed in connection herewith or pursuant hereto, or (b) the consummation of
the transactions contemplated by this Agreement or any of the other agreements
and instruments to be executed in connection herewith or pursuant hereto.
Except for such actions as may be required pursuant to the HSR Act, neither
Purchaser nor Holdings is required to obtain any consents or other approvals
from any governmental agency or other person (including, without limitation,
any lessor, lender, or financial institution) in order to avoid default as a
result of the transactions contemplated by this Agreement or any of the other
agreements and instruments to be executed in connection herewith or pursuant
hereto.
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4.6 NO CONFLICT OR VIOLATION. Neither the execution and
delivery of this Agreement or any of the other agreements and instruments to be
executed in connection herewith or pursuant hereto, nor the performance by
Purchaser or Holdings of their respective obligations hereunder or thereunder,
nor the consummation of the transactions contemplated hereby and thereby, will
(a) conflict with the charter documents or bylaws of Purchaser or Holdings, (b)
violate any statute, law, ordinance, rule or regulation applicable to Purchaser
or Holdings, or (c) except for requirements arising out of the HSR Act, require
any consent or approval of, or filing with notice to, any public body or
authority, domestic or foreign, under any provision of law applicable to
Purchaser or Holdings.
4.7 COMMITMENTS. Purchaser has delivered to sellers true
and correct copies of letters (the "COMMITMENT LETTERS") and received from
Bankers Trust Company and The Chase Manhattan Bank, N.A. (dated January 11,
1995) with respect to certain secured bank facilities and from Bankers Trust
New York Corporation and Chase Securities, Inc. (dated January 12, 1995) with
respect to certain unsecured, subordinated debt financing (such persons, or
such other reputable financial institutions delivering replacement commitments
no less favorable to Sellers, being collectively referred to as the "FINANCING
SOURCES"). Upon the acceptance thereof by the Purchaser and Holdings, the
Commitment Letters will be in full force and effect and, along with the
Holdings Preferred Stock and the funds to be provided by the New Equity
Investors at the Closing, provide for all of the financing needed by Purchaser
to consummate the transactions contemplated hereby and to fund the anticipated
working capital requirements of the Dominick's Group after the Closing.
ARTICLE V
COVENANTS OF SELLERS
5.1 CONDUCT OF BUSINESS.
(a) Except as may be otherwise required by this Agreement
or any of the Other Transaction Documents, or except as Purchaser may
otherwise consent in writing, between the date hereof and the Closing
Date, Sellers will cause each member of the Dominick's Group to: (i)
in all material respects, operate its business only in the ordinary
course; (ii) use its best efforts to preserve intact its business
organization; (iii) refrain from opening or closing stores except
pursuant to its existing business plans as disclosed to Purchaser; or
(iv) maintain its material properties and equipment in sufficient
operating condition and repair to enable it to operate in all material
respects in the manner in which it has operated during the
twelve-month period immediately preceding the date hereof, except for
maintenance required by reason of fire, flood or acts of God; (v)
continue all its material existing policies of insurance (or
comparable insurance) in full force and effect at commercially
reasonable rates and to diligently pursue all claims related thereto;
(vi) maintain inventories consistent with past practices; (vii) pay
amounts due to vendors consistent with past practices; and (viii) use
its best efforts to preserve its material relationships with its
lenders, suppliers, customers, licensors, and licensees
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and others having material business dealings with it such that its
business will not be impaired.
(b) Except as may be otherwise required by this Agreement
or any of the Other Transaction Documents or except as Purchaser may
otherwise consent in writing, between the date hereof and the Closing
Date, the Shareholders will not permit the Dominick's Group to: (i)
incur any debt, liability or obligation, direct or indirect, whether
accrued, absolute, contingent or otherwise, on behalf of or with
respect to its business, other than unsecured current liabilities
(other than for borrowed money) and borrowings under the existing
revolving credit facilities incurred in the ordinary course of
business; (ii) assume, guarantee, endorse or otherwise become
responsible for the obligations of, or make any advances to any other
person, except in the ordinary course of business; (iii) mortgage,
pledge or otherwise encumber any material portion of its properties or
assets (including any parcel of Real Property); (iv) sell, license,
lease, transfer or dispose of any material portion of its properties
or assets (including any parcel of Real Property) or compromise,
release or assign any material indebtedness owed to it or any claims
held by it which relate to its business, in each case, other than in
the ordinary course of business; (v) make any material investment of a
capital nature whether by contributions to capital, property transfers
or otherwise, or by the purchase of any property or assets of any
other person; (vi) enter into, terminate or substantially amend or
supplement any Lease or enter into, terminate or substantially amend
or supplement any Contract or Third Party Lease other than in the
ordinary course of business consistent with past practice; (vii) enter
into, terminate, modify or supplement any collective bargaining
agreement; (viii) except for currently scheduled base salary increases
and except for reductions in force and other lay-offs consistent with
its current business plan, change in any material manner the
compensation or fringe benefits of any of the officers, directors or
employees employed in the Dominick's Group or establish or create any,
or modify as to benefits any existing, Plan or other compensation
plan, program or arrangement which relates to any officer, director or
employee employed in the Dominick's Group; (ix) take any action which
is inconsistent with any of the warranties or covenants of the
Shareholders contained in this Agreement; (x) waive or commit to waive
any rights of material value to the properties, assets, business,
operations or financial condition of the Dominick's Group; (xi)
declare or pay any dividend or distribution (other than (A) dividends
declared by Dominick's in the amount of $3.00 per share and share
equivalent, (B) dividends declared by DDI or DPI which are derived
from the operations of DDI or DPI in the ordinary course, and (C)
dividends declared by the Company of any amounts received by it
pursuant to sub-clause (A), (B) or (C) of this clause (xi) or other
dividends declared and paid by the Company after notice to Purchaser),
issue any capital stock or rights related thereto, or transfer any
property or assets to, or assume any liabilities from, DDI or DPI;
(xii) make or commit to make any capital expenditures in excess of
$250,000 in the aggregate, other than those identified in the budget
delivered on the date hereof and made consistent with the business
plan of the Dominick's Group and other than expenditures for routine
maintenance and repair; or (xiii) enter into a contract or commitment
to do any of the things described in the preceding clauses (i) through
(xii).
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5.2 ACCESS PENDING CLOSING. From the date hereof to and
including the Closing Date, Sellers shall cause each member of the Dominick's
Group to grant Purchaser, the New Equity Investors, and the Financing Sources
and their respective counsel, accountants and other representatives the right
to full and complete access to the books, records, offices and other facilities
of the Dominick's Group, during normal business hours, and to the officers and
agents of the Dominick's Group, for the purpose of making such investigation of
the financial condition and operations of the Dominick's Group as Purchaser,
the New Equity Investors, or such Financing Sources may reasonably deem
necessary. Sellers shall cause the Dominick's Group to furnish promptly to
Purchaser or such other persons all information concerning its business,
properties and Personnel as Purchaser or such other persons may reasonably
request. No investigation pursuant to this Section 5.2 or otherwise shall
affect the representations or indemnities of the Shareholders hereunder or the
conditions to Purchaser's obligation to consummate the Stock Purchase
Transaction.
5.3 FURTHER ASSURANCES AND COOPERATION. Subject to the
terms and conditions herein provided, the Shareholders agree to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the Transactions and to cooperate
with Purchaser in connection therewith, (a) to obtain all necessary waivers,
consents and approvals from other parties to material loan agreements, leases
and other contracts, (b) to defend any lawsuits or other legal proceedings
challenging this Agreement or the consummation of the Transactions, (c) to lift
or rescind any injunction or restraining order or other order adversely
affecting the ability of the parties to consummate the Transactions, (d) to
effect all necessary registrations and filings (including any registrations and
filings which may be required to be made by Purchaser or its Affiliates in
connection with the Financing or otherwise), (e) to obtain at the sole cost and
expense of the Purchaser all surveys and title reports, commitments and/or
policies for each parcel of Leased Real Property requested by Purchaser and
such estoppels as Purchaser may request, and (f) to fulfill all conditions to
this Agreement. Prior to the Closing, Sellers shall cause each member of the
Dominick's Group to use its best efforts to obtain, at its sole expense, all
consents and other approvals from any governmental agency, bureau or authority,
or any other person (including any lender or lessor), which are necessary in
connection with the Transactions by or on behalf of Sellers or the Dominick's
Group. Without limiting the foregoing, at the sole cost and expense of
Purchaser, Sellers shall cause the auditors for the Dominick's Group to deliver
to Purchaser's Financing Sources, if requested, customary comfort letters and
certificates, in form and substance reasonably acceptable to Purchaser, which
may be required in connection with the Financing.
5.4 SURVEYS; TITLE INSURANCE.
(a) SURVEYS. At least thirty (30) days prior to the
Closing Date, Sellers shall cause the Dominick's Group to furnish to
Purchaser, at the sole cost and expense of the Dominick's Group, a
current urban ALTA/ACSM Land Title Survey prepared by duly-licensed
land surveyors in form reasonably satisfactory to Purchaser, dated
within 180 days prior to the Closing for each parcel of Owned Real
Property. Without limitation of the foregoing, the survey shall
contain an ALTA certification, acceptable to the Title
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Company, sufficient to enable the Title Company to remove the standard
survey exceptions in the title insurance policy.
Purchaser shall have a period of twenty (20) days after
receipt of any survey pursuant to this Section 5.4 to notify Sellers
in writing as to any condition disclosed by such survey that
constitutes a Defect. Failure by Purchaser to deliver such written
notice to Sellers within such twenty (20) day period shall be deemed
acknowledgement by Purchaser that the survey does not disclose a
Defect.
(b) TITLE COMMITMENTS. At least thirty (30) days prior
to the Closing Date, Sellers shall cause the Dominick's Group to
furnish to Purchaser, at the sole cost and expense of the Dominick's
Group, a title insurance commitment, 1992 ALTA Form B, issued by the
Title Company, agreeing to issue to the party which holds or, as a
result of the consummation of the transactions contemplated by this
Agreement, will hold title to each parcel of Owned Real Property, an
owner's policy in the amounts reasonably determined by Purchaser and
showing title to each parcel of Owned Real Property to be free and
clear of all Defects, and containing such endorsements as Purchaser or
Purchaser's Financing Sources may require. The premium for all such
policies shall be paid by the Dominick's Group on or before the
Closing. Sellers shall cause the Title Company, at the sole expense
of the Dominick's Group to remove all standard exceptions from the
title insurance commitments on or before the Closing Date. Purchaser
shall have a period of twenty (20) days after receipt of any title
commitment pursuant to this Section 5.4 hereof to notify Sellers in
writing of the existence of any condition of title that constitutes a
Defect. Failure by Purchaser to deliver such written notice to
Sellers within such twenty (20) day period shall be deemed
acknowledgement by Purchaser that the title commitment does not
disclose a Defect.
(c) DEFECTS. If any of the surveys or title commitments
delivered by the Dominick's Group to Purchaser pursuant to this
Section 5.4 hereof disclose Defects, said Defects shall be cured, at
the sole cost and expense of Sellers, on or before the Closing Date or
within thirty (30) days after delivery to Sellers of written notice
from Purchaser disclosing the Defect(s), whichever date is earlier.
If Sellers decline to so cure all Defects, or if Sellers decline to
cause all Defects to be insured over by the Title Company in a manner
reasonably satisfactory to Purchaser, then Purchaser may, as its sole
and exclusive remedy, either (i) if the aggregate cost to cure or
insure over such Defects exceeds $1,000,000, terminate this Agreement
by written notice to Sellers given within ten (10) days after
expiration of the cure period, or (ii) proceed to close by (A)
deducting from the cash otherwise due Xxxx at Closing the amount
necessary to cure such Defects (if such Defects are of a liquidated
nature and an ascertainable amount of money) and/or (B) escrowing with
the Title Company the amount necessary (not to exceed $1,000,000 in
the aggregate) to cause the Title Company to insure and/or endorse
over such Defects, provided that the terms of such insurance and/or
endorsements are reasonably satisfactory to Purchaser.
Notwithstanding the foregoing, if the aggregate cost to cure or insure
over any one or more Defect(s) exceeds an amount equal to the greater
of $1,000,000 or ten percent (10%) of the current fair market value of
any parcel of Owned Real Property, Sellers shall have the right to
decline to cure such Defect(s) and
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terminate this Agreement by written notice to Purchaser given within
ten (10) days after expiration of the cure period.
5.5 RESTRUCTURING TRANSACTIONS. At least one business
day prior to the Closing, the Shareholders shall cause the Company and
Dominick's to consummate the Restructuring Transactions.
5.6 EXCLUDED PROPERTIES LEASES. Immediately subsequent
to the Restructuring Transactions, the Shareholders shall cause the new legal
title holder or holders of the Excluded Dominick's Property to execute and
deliver the Excluded Properties Leases to Purchaser and Dominick's.
5.7 ALTERNATIVE PROPOSALS. During the period that this
Agreement is in effect, none of the Sellers or any other members of the
Dominick's Group, or any of their respective officers, employees,
representatives or agents, will directly or indirectly, solicit or initiate any
discussions or negotiations with, or participate in any negotiations with or
provide any information to or otherwise participate in any negotiations with or
provide any information to or otherwise cooperate in any other way with any
corporation, partnership, person or other entity or group (other than Purchaser
and Holdings) concerning any merger, sale of substantial assets, sale of shares
of capital stock or similar transaction (other than the Transactions, to the
extent permitted by the other applicable provisions of this Agreement)
involving any member of the Dominick's Group or control thereof (all such
transactions being referred to herein as "ALTERNATIVE TRANSACTIONS"). Sellers
shall immediately notify Purchaser of the receipt of any offers with respect to
an Alternative Transaction and the identity of the person making such offer.
5.8 FINANCIAL INFORMATION. Seller shall deliver to
Purchaser as soon as available all interim financial statements and other
management reports generated in the ordinary course of business prepared by or
for the Dominick's Group. In addition, prior to the Closing, the Shareholders
shall cause Ernst & Young, the Company's independent public accountants, to
prepare and deliver to Purchaser at the joint cost and expense of Purchaser and
the Shareholders (in equal shares) audited financial statements of the Company
and its consolidated subsidiaries (other than the Excluded Subsidiaries) for
the three most recent full fiscal years covered by the Financial Statements.
5.9 ENVIRONMENTAL REPORTS.
(a) As soon as practicable after the date hereof,
Purchaser shall make such inspection of the Real Property as it deems
appropriate (and which may consist, in part, of a review by its
consultants of existing Dominick's reports) in order to determine the
presence, or potential presence, of hazardous, toxic or other
substances (including asbestos) and to determine compliance with
Environmental Laws, i.e., a customary "Phase I" inspection. The
inspection may also include "Phase II" inspections if deemed advisable
by Purchaser based on the advice of its consultants. Sellers will
cause the Dominick's Group to cooperate in such inspections, provided
that such inspections shall be performed at Purchaser's sole cost and
risk, and by an individual or firm identified
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by Purchaser and reasonably acceptable to Sellers, and such
inspections shall be completed within 30 days after the date hereof
and, in the event a "Phase II" inspection is undertaken, within 45
days after the date hereof. The inspector, after conducting its
inspection, shall first inform Sellers and Purchaser concurrently of
its findings orally. Any written report shall be marked "draft" and
shall be submitted simultaneously to counsel for each party for its
reasonable approval before being distributed to any third party, the
identity of which shall be subject to the reasonable approval of the
party not requesting such distribution. The findings of all such
reports and investigations shall be treated as Evaluation Material to
the extent permitted by applicable law.
(b) If the inspector's report identifies the presence, or
potential presence, of any Hazardous Materials or friable or damaged
asbestos on the Real Property (or on any other real property if it
appears that any member of the Dominick's Group may have
responsibility therefor), the remediation of which is required by the
Environmental Laws as reasonably determined by Purchaser and Sellers,
Purchaser and Sellers shall share the actual "remediation costs"
(which term shall not include any investigation or evaluation or other
similar costs incurred by Purchaser other than costs incurred by
Purchaser after the Closing Date to produce data used in the
characterization and remediation of the liability or obligation
subject to this Section 5.9) required by the Environmental Laws to be
expended to remediate such substances after the Closing Date in
accordance with the following allocation: Purchaser and Sellers shall
split equally such remediation costs up to $10,000,000; Sellers shall
pay 75% and Purchaser shall pay 25% of such remediation costs in
excess of $10,000,000 up to $20,000,000. The determination of the
scope and methodology of any such remediation shall be subject to the
reasonable approval of Sellers and consistent with the recommendations
contained in the reports, it being understood that any such scope and
methodology shall be designed to afford Purchaser reasonable use of
the property during the period of remediation. Sellers shall promptly
reimburse Purchaser for Seller's share of such costs upon the receipt
of any statement for such costs incurred by Purchaser to effect any
such remediation. In the event that any such remediation costs are
reasonably estimated to exceed $20,000,000, Purchaser shall be
entitled to terminate this Agreement on 10 days prior written notice
to Sellers, unless within 5 days after Sellers' receipt of such notice
Sellers agree in writing to pay 100% of such remediation costs in
excess of $20,000,000. Notwithstanding the foregoing, remediation
costs related to the Dominick's Excluded Properties shall be allocated
as provided in the Excluded Properties Leases and shall not be subJect
to the sharing arrangement provided in this Section 5.9(b).
5.10 STOCK REDEMPTION. At least one business day prior to
the Closing, Sellers will cause Dominick's to: (a) acquire all right, title
and interest in and to the 8,600 shares of Dominick's Capital Stock not already
owned by the Company, for an aggregate purchase price of $12,761,205 in cash;
and (b) discharge and satisfy all rights of Dominick's Group employees with
respect to the 20,860 stock appreciation rights relating to Dominick's Capital
Stock for an aggregate net cost to Dominick's of $26,930,919, payable, subject
to applicable withholding, in the form of a promissory note or notes due not
later than the fifth business day after the Closing Date and otherwise in form
and substance reasonably satisfactory to Purchaser and Sellers.
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5.11 STOCK DISPOSITION. At least one business day prior
to the Closing, Sellers will cause the Company to dispose of the capital stock
of DDI and DPI on terms and conditions satisfactory to Sellers and Purchaser.
5.12 CLOSING. Sellers shall use their best efforts to
cause the conditions specified in Article VIII hereof to be satisfied on or
before the Closing Date.
ARTICLE VI
COVENANTS OF PURCHASER
6.1 BOOKS AND RECORDS. In connection with either (a) any
tax audit of Sellers, the Excluded Affiliates' Assets or the Excluded
Properties, (b) the preparation of any tax return of the Shareholders, DDI,
DPI, the Excluded Affiliates' Assets or the Excluded Properties, (c) the
defense of any claim brought against the Shareholder, DDI, DPI, the Excluded
Affiliates' Assets or the Excluded Properties, or (d) for any other proper
purpose, Purchaser will cause the Dominick's Group to make available to the
Shareholders, at the Shareholders' request and expense from time to time, all
books and records of the Dominick's Group either existing on or relating to any
transaction on or prior to the Closing Date, for inspection or copying by the
Shareholders at any reasonable time for a period of six (6) years after the
Closing Date.
6.2 CONFIDENTIALITY.
(a) Unless and until the Closing shall have occurred,
neither Purchaser nor any of its Affiliates, employees or agents will
use any of the Evaluation Material for itself or for any other person,
firm, corporation, partnership or other entity, or disclose any of the
Evaluation Material to any person, firm, corporation, partnership or
other entity, except that (i) any of such information may be disclosed
to Purchaser's directors, officers, partners, and employees and the
New Equity Investors and the Financing Sources and their respective
representatives who need to know such information for the purpose of
evaluating any possible transaction between Sellers and Purchaser (i)
being understood that such directors, officers, partners, employees
and representatives shall be informed by Purchaser of the confidential
nature of such information and shall be directed by Purchaser to treat
such information confidentially), and (ii) disclosure of such
information may be made with the written consent of Sellers. Unless
and until the Closing shall have occurred, Purchaser shall furnish to
Sellers at their request, a List of all persons (other than
Purchaser's directors, officers, partners and employees) to whom
Purchaser has disclosed any Evaluation Material.
(b) Neither Purchaser nor any of its officers, directors,
partners, Affiliates, employees or agents will, at any time, use any
of the Evaluation Material which relates to the Shareholders, DDI,
DPI, the Excluded Affiliates' Assets, or the Excluded Properties for
itself or for any other person, firm, corporation, partnership or
other entity for any reason whatsoever except in connection with the
exercise of Purchaser's rights under Article XII hereof or under the
Tax Matters Agreement.
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(c) If this Agreement is terminated and abandoned as
provided in Article X hereof, then at Sellers' request Purchaser shall
return to Sellers all documents and materials supplied to Purchaser by
Sellers or any member of the Dominick's Group which contain any
Evaluation Material and Purchaser will not retain any copies, extracts
or other reproduction in whole or in part of any Evaluation Material.
All documents, memoranda, notes and other writings whatsoever prepared
by Purchaser or its advisors based on the information in the
Evaluation Material shall be destroyed, and such destruction shall be
certified in writing to Sellers by an authorized officer of Purchaser
supervising such destruction.
6.3 EXCLUDED PROPERTIES LEASES. Contemporaneously with
the Closing, Purchaser shall cause Dominick's to execute and deliver the
Excluded Properties Leases to DDLLC.
6.4 DEFINITIVE FINANCING AGREEMENTS. Purchaser and
Holdings shall use their best efforts to negotiate, prepare and enter into
definitive financing agreements (the "DEFINITIVE FINANCING AGREEMENTS") with
the Financing Sources to provide the financing set forth in the Commitment
Letters (the "FINANCING"). The amount of such Financing and the terms and
conditions of such Definitive Financing Agreements shall be consistent with the
amounts and terms contemplated by the Commitment Letters. All the parties
hereto shall use their best efforts to satisfy on or before the Closing Date,
all requirements of the Definitive Financing Agreements which are conditions to
closing the transactions constituting the Financing. Holdings shall promptly
notify Sellers of any material change to, or revocation of, any Commitment
Letter.
6.5 CLOSING. Purchaser will use its best efforts to
cause the conditions specified in Article IX hereof to be satisfied on or
before the Closing Date.
ARTICLE VII
HSR ACT COMPLIANCE
Purchaser and Shareholders agree that, with respect to each
reportable transaction to which it is a party, each will, as soon as reasonably
practicable, take all action (to the extent not previously taken) necessary in
order to file with the Federal Trade Commission and the Department of Justice
all filings, reports and other information required under the HSR Act in order
to commence the running of the waiting period thereunder, to continue the
running of said waiting period (including any extensions) and prevent or
minimize any tolling thereof, to cause such waiting period to expire without
enforcement action, and to provide to each other such cooperation as may be
necessary in order to cause such filings and reports to be prepared and duly
filed and all waiting periods to expire. Each party hereto shall promptly
inform the other of any material communication between such party and the
Federal Trade Commission, the Department of Justice or any other government or
governmental authority regarding this Agreement. If any party receives a
request for additional information or documentary material from any such
government or governmental authority, then such party shall endeavor in good
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faith to make, or cause to be made, as soon as reasonably practicable and after
consultation with the other party, an appropriate response to such request.
Notwithstanding the foregoing, in connection with proceedings under or relating
to the HSR Act, or any other federal or state antitrust law, all analyses,
appearances, presentations, memoranda, briefs, arguments, and opinions made or
submitted by or on behalf of any party hereto shall be subject to the joint
approval or disapproval and the joint control of Purchaser and the
Shareholders, acting with the advice of their respective counsel, provided that
nothing herein shall prevent any party hereto or their authorized
representatives from making or submitting any such analysis, appearance,
presentation, memorandum, brief, argument, or opinion in response to a subpoena
or as otherwise required by law.
ARTICLE VIII
CONDITIONS TO OBLIGATION OF PURCHASER TO CLOSE
The obligation of Purchaser hereunder to proceed with the
Closing is subject to the satisfaction on or before the Closing Date of each of
the following conditions, unless waived in writing by Purchaser:
8.1 WARRANTIES. The warranties of Sellers contained
herein shall be true and correct in all material respects on and as of the
Closing Date.
8.2 PERFORMANCE. Sellers shall have duly performed or
complied with all of the covenants, acts and obligations to be performed or
complied with by them hereunder at or prior to the Closing.
8.3 SHARES. Sellers shall have delivered to Purchaser
certificates representing the shares, duly endorsed by Sellers for transfer to
Purchaser or accompanied by a separate assignment of the Shares to Purchaser
duly executed by Sellers.
8.4 CORPORATE BOOKS. Sellers shall have caused the
Company to deliver to Purchaser the corporate seal, corporate minute books and
stock transfer records of each member of the Dominick's Group.
8.5 PROOF OF GOOD STANDING. Sellers shall have caused
the Company to deliver to Purchaser a Certificate of Good Standing with respect
to each member of the Dominick's Group, dated within five (5) days prior to the
Closing Date, from the state of such member's incorporation and from each
additional state in which such member of the Dominick's Group is qualified to
do business as a foreign corporation.
8.6 CERTIFICATE OF SELLERS. Purchaser shall have
received a certificate signed by a manager of each of the Sellers and dated as
of the Closing Date certifying without qualification or exception that the
conditions set forth in Section 8.1 and Section 8.2 hereof have been fully
satisfied.
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8.7 OPINION OF COUNSEL. Purchaser shall have received
from Jenner & Block, counsel to Sellers and the Dominick's Group, an opinion of
such counsel, dated the Closing Date as to the matters set forth on EXHIBIT 8.7
hereto.
8.8 TITLE ASSURANCES. Sellers shall have delivered or
cause to be delivered to Purchaser a title policy or marked-up title commitment
for each parcel of the Owned Real Property, dated as of the Closing Date and in
the amounts reasonably determined by Purchaser, insuring title to each parcel
of the Owned Real Property, issued pursuant to and conforming with the title
insurance commitment specified in Section 5.4(b).
8.9 RESTRUCTURING TRANSACTIONS. Sellers shall have
delivered to Purchaser counterparts of the Asset Transfer Agreement duly
executed by all parties thereto, and the Restructuring Transactions shall have
been consummated in accordance with the Asset Transfer Agreement.
8.10 EXCLUDED PROPERTIES LEASES. Sellers shall have
delivered or caused to be delivered to Purchaser counterparts of each Excluded
Properties Lease, duly executed by the person or entity that holds legal title
to the Excluded Dominick's Property immediately following and after giving
effect to the consummation of the Restructuring Transactions.
8.11 STOCK REDEMPTION. The Stock Redemption shall have
been consummated in accordance with Section 5.10 and all further rights of
Dominick's Group employees with respect thereto (including any rights to
acquire additional stock appreciation rights) shall have been released and
discharged.
8.12 FINANCING. The Definitive Financing Agreements shall
be in full force and effect and the conditions for the receipt of the Financing
contemplated thereby shall have been satisfied or waived.
8.13 HSR ACT. The waiting periods under the HSR Act
applicable to the consummation of the Stock Purchase Transaction and other
transactions contemplated hereby, and any extensions thereof, shall have
expired or been terminated in accordance with the provisions thereof without
action by the Justice Department or the Federal Trade Commission to prevent or
condition consummation of this Agreement including, without limitation, any
condition that requires Purchaser to sell or dispose of any assets of
Purchaser, any member of the Dominick's Group or any of their Affiliates or to
hold separate pending such sale or disposition any particular assets or
categories of assets, businesses or voting securities of any of the foregoing
or the voting securities of any of their subsidiaries, or which prohibits or
restricts the ownership or operation by Purchaser or any of its Affiliates of
any portion of its business or assets.
8.14 REGULATORY CONSENTS, AUTHORIZATIONS, ETC. All
consents, authorizations, orders and approvals of, and filings and
registrations with, any governmental commission, board or other regulatory body
or any nongovernmental third party which are required for or in connection with
the execution and delivery of this Agreement and the Other Transaction
Documents, and the consummation by each party hereto of the transactions
contemplated hereby,
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shall have been obtained or made, if the failure to make such filing or
registration or to obtain such consent, authorization, order or approval would
have a material adverse effect on Purchaser, or the Dominick's Group, or on
their respective abilities to conduct, after the Closing Date, their
businesses.
8.15 INJUNCTIONS. At the Closing there shall be no
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality outstanding against any party
hereto which prohibits, restricts or delays consummation of the acquisition or
limits in any material respect the right of Purchaser to control the Dominick's
Group or any material aspect of the business of the Dominick's Group after the
Closing.
8.16 ENVIRONMENTAL REPORTS. Purchaser shall have received
the reports of the environmental inspections undertaken pursuant to Section
5.9, which shall be in form and substance reasonably satisfactory to Purchaser
and the Financing Sources and shall not have identified the presence, or
potential presence, of any Hazardous Materials with respect to the Real
Properties or the violation of any Environmental Laws or otherwise as
contemplated by Section 5.9 which require additional remediation or other
expenditures which are reasonably estimated to be in excess of an aggregate
amount of $20,000,000 in accordance with applicable Environmental Laws, unless
the Shareholders shall have agreed to accept responsibility for all such
remediation costs in excess of $20,000,000 as contemplated by Section 5.9.
8.17 FUNDED INDEBTEDNESS. Sellers shall have delivered to
Purchaser a certificate confirming the total amount of Funded Indebtedness of
the Dominick's Group on the Closing Date, before giving effect to the
Transactions, plus the total amount of outstanding letters of credit for which
any member of the Dominick's Group is contingently liable, does not exceed the
total amount of such Funded Indebtedness and letters of credit on the Balance
Sheet Date.
8.18 STOCK EXCHANGE TRANSACTIONS. The Stock Exchange
Transactions shall have been consummated in accordance with the terms of the
Stock Exchange Agreement.
8.19 FURTHER ASSURANCES. Sellers shall deliver to
Purchaser such other documents and instruments as may be reasonably required to
consummate the transactions contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO OBLIGATION OF SELLERS TO CLOSE
The obligation of Sellers to proceed with the Closing is
subject to the satisfaction on or before the Closing Date of each of the
following conditions, unless waived in writing by Sellers:
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9.1 WARRANTIES. The warranties of Purchaser contained
herein shall be true and correct in all material respects on and as of the
Closing Date.
9.2 PERFORMANCE. Purchaser shall have duly performed or
complied with all of the covenants, acts and obligations to be performed or
complied with by Purchaser hereunder at or prior to the Closing.
9.3 CERTIFICATE OF OFFICER. Sellers shall have received
a certificate signed by the President of Purchaser and dated as of the Closing
Date certifying without qualification or exception that the conditions set
forth in Section 9.1 and Section 9.2 above have been fully satisfied.
9.4 OPINION OF COUNSEL. Sellers shall have received from
Xxxxxx & Xxxxxxx, counsel to Purchaser, an opinion of such counsel dated the
Closing Date, as to the matters set forth on Exhibit 9.4 hereto.
9.5 PURCHASE PRICE. Purchaser shall have delivered the
purchase price to Sellers in the manner provided for in Section 2.2 hereof.
9.6 RESTRUCTURING TRANSACTIONS. The Restructuring
Transactions shall have been consummated in accordance with the Asset Transfer
Agreement.
9.7 EXCLUDED PROPERTIES LEASES. Dominick's shall have
delivered to Sellers counterparts of each of the Excluded Properties Leases,
duly executed by an authorized officer of Dominick's.
9.8 STOCK REDEMPTION. The Stock Redemption shall have
been consummated in accordance with Section 5.10 and all further rights of
Dominick's Group employees with respect thereto shall have been released and
discharged.
9.9 HSR ACT. The waiting periods under the HSR Act
applicable to the consummation of the Stock Purchase Transaction and other
transactions contemplated hereby, and any extensions thereof, shall have
expired or been terminated in accordance with the provisions thereof without
action by the Justice Department or the Federal Trade Commission to prevent or
condition consummation of this Agreement, including, without limitation, any
condition that requires Purchaser to sell or dispose of any assets of Sellers,
the Dominick's Group or any of their Affiliates or to hold separate, pending
such sale or disposition, any particular assets or categories of assets,
businesses or voting securities of any of the foregoing or the voting
securities of any of their subsidiaries, or which prohibits or restricts the
ownership or operation by Sellers or any of its Affiliates of any portion of
its business or assets.
9.10 REGULATION CONSENTS, AUTHORIZATIONS, ETC. All
consents, authorizations, order and approvals of, and filings and registrations
with, any governmental commission, board or other regulatory body which are
required for or in connection with the execution and delivery of this
Agreement, and the consummation by the Shareholders of the Transactions, shall
have been obtained or made, if the failure to make such filing or registration
or to obtain such
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consent, authorization, order or approval would have a material adverse effect
on Sellers or DDI or DPI, or on their respective abilities to conduct, after
the Closing Date, their businesses.
9.11 INJUNCTIONS. At the Closing Date there shall be no
judgment, decree, injunction, ruling or order of any court, governmental
department, commission, agency or instrumentality outstanding against any party
hereto which prohibits, restricts or delays consummation of the Stock Purchase
Transaction or any of the conditions to the consummation of the Stock Purchase
Transaction.
9.12 FURTHER ASSURANCES. Purchaser shall deliver to
Sellers such other documents and instruments as may be reasonably required to
consummate the transactions contemplated by this Agreement.
ARTICLE X
TERMINATION
10.1 TERMINATION RIGHTS. This Agreement may be terminated
and abandoned, without limiting or waiving any other rights and remedies any
party may have at law or in equity, at any time prior to the Closing under the
following circumstances:
(a) By Sellers or Purchaser in accordance with Sections
5.4 or 5.9, as applicable;
(b) By Shareholders or Purchaser, if (i) the conditions
to their respective obligations hereunder are not capable of
satisfaction or (ii) the transactions contemplated hereby shall not
have been consummated on or before April 30, 1995 but, in either case,
only if the failure of such condition or the failure to so consummate
the Agreement on or before such date did not result from the breach by
the party seeking termination (or any of its Affiliates) of any
representation or warranty made by it herein or the failure by the
party seeking termination (or any of its Affiliates) to fulfill any
covenant provided for herein that is required to be fulfilled by such
person (or its Affiliates) prior to Closing;
(c) By Purchaser, if the Shareholders are in material
breach of their obligations under this Agreement, or by the
Shareholders if the Purchaser is in material breach of its obligations
under this Agreement; provided that no party shall be entitled to
terminate this Agreement by reason of this clause (c) if it or any of
its Affiliates is in material breach of its obligations under this
Agreement; or
(d) By Sellers, if within 21 calendar days after the date
hereof (or if such date is not a business day, on the next business
day), Purchaser has failed to deliver to Sellers written confirmation
that each of the Financing Sources has waived its right under such
Commitment Letter to withdraw its commitment (or to materially
adversely modify such
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commitment) as a result of any matters disclosed or discovered in its
due diligence review of the Dominick's Group completed through such
date.
10.2 EFFECT OF TERMINATION. In the event this Agreement
is terminated pursuant to Section 10.1, all further obligations of the parties
hereunder shall terminate, except for the obligations set forth in Sections
6.2, 14.11, 14.15 and 14.16, and except that nothing in this Section 10.2 shall
relieve any party hereto of any liability for the breach of this Agreement.
The foregoing provisions shall not limit or restrict the availability of
specific performance or other injunctive relief to the extent that specific
performance or such other relief would otherwise be available to a party
hereunder.
ARTICLE XI
SURVIVAL AND INDEMNIFICATION
11.1 SURVIVAL. Each warranty contained in this Agreement
shall survive the Closing until and shall expire on the first anniversary of
the Closing Date, without regard to any investigation made by any party hereto,
except that (a) the warranties in Sections 3.1, 3.16 and 4.1 shall expire on
the third anniversary of the Closing Date; (b) the warranties in Sections 3.3,
3.4 and 4.3 shall continue without expiration; (c) the warranties in Section
3.20 shall expire thirty (30) days after the expiration of the Tax Survival
Period; and (d) the warranties in Section 3.23 shall expire thirty (30) days
after the expiration of the applicable statute of limitations. Notwithstanding
the preceding sentence, with respect to any claim asserted by a party for a
breach of any warranty of the other party if, and only if, the claim is
asserted by timely written notice given in the manner and with the specificity
required under Section 11.3, then the warranty with respect to which the claim
is asserted shall survive beyond the date determined by the preceding sentence,
but such survival shall extend only with respect to such claim and the specific
grounds and dollar amount asserted with respect thereto in such notice. All
covenants contained in this Agreement shall survive until performed.
11.2 INDEMNIFICATION BY SHAREHOLDERS. Effective from and
after the Closing, the Shareholders shall jointly and severally indemnify, hold
harmless, and by virtue hereof, release the Purchaser and any of its direct or
indirect subsidiaries and each of their respective directors, officers,
employees and agents, and each of the heirs, executors, successors and assigns
of any of the foregoing (collectively, the "PURCHASER INDEMNIFIED PARTIES"),
from and against any and all Covered Liabilities arising from (a) any Excluded
Liabilities, (b) any breach or violation of any representation or warranty of
the Shareholders contained herein, or (c) the imposition of any and all Taxes
for which any Shareholder is or may be liable as set forth in the Tax Matters
Agreement; provided, however, that (i) there shall be excluded from the
indemnity obligations described in the preceding clauses (a) through (c) any
Covered Liabilities which Purchaser has expressly agreed to assume or with
respect to which Purchaser has agreed to indemnify the Shareholders or any
Seller Indemnified Party pursuant to the provisions of this Agreement or which
any of Holdings, Purchaser or a member of the Dominick's Group or any of their
Affiliates has expressly agreed to assume or retain under the Tax Matters
Agreement or the Asset Transfer Agreement; and (ii) the Shareholders shall not
be obligated to make any
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indemnification payments under this Article XI or under any other provision of
this Agreement for the amount of any Covered Liability which any of the
Sellers, DDLLC and/or their Affiliates have previously paid to any of Holdings,
Purchaser or a member of the Dominick's Group or any of their Affiliates under
the Tax Matters Agreement or the Asset Transfer Agreement.
11.3 INDEMNIFICATION BY PURCHASER. Effective from and
after the Closing, the Purchaser and Holdings shall jointly and severally
indemnify, hold harmless, and by virtue hereof, release the Shareholders and
each of their respective members, managers, employees and agents, and each of
the heirs, executors, successors and assigns of any of the foregoing
(collectively, the "SELLER INDEMNIFIED PARTIES"), from and against any and all
Covered Liabilities arising out of or in connection with or from (a) any breach
or violation of any representation or warranty of Purchaser or Holdings
contained herein, (b) any of the businesses, assets, operations or activities
of the Dominick's Group subsequent to the Closing Date other than the Excluded
Liabilities, or as otherwise expressly provided in this Agreement or the Other
Transaction Documents, or (c) the imposition of any and all Taxes for which
Purchaser, Holdings or any member of the Dominick's Group is or may be liable
as set forth in the Tax Matters Agreement.
11.4 INDEMNIFICATION PROCEDURES. If a claim by a third
party is made against a Purchaser Indemnified Party or a Seller Indemnified
Party (an "INDEMNIFIED PARTY"), and if such Indemnified Party intends to seek
indemnity with respect to under Section 11.2 or 11.3, such Indemnified Party
shall promptly give the indemnifying party (the "INDEMNIFYING PARTY") written
notice of the nature and amount of such claim. As part of such notice, the
Indemnified Party shall furnish the Indemnifying Party with copies of any
pleadings or correspondence relating thereto that either have been served upon
or delivered to the Indemnified Party or are otherwise in the Indemnified
Party's possession. The Indemnified Party's failure to promptly notify the
Indemnifying Party shall not release the Indemnifying Party, in whole or in
part, from its obligations to indemnify under this Article XI except to the
extent that the Indemnified Party's failure to so notify prejudices the
Indemnifying Party's ability to defend against such claim. At such time as the
Indemnifying Party acknowledges its liability (vis a vis the Indemnified Party)
under this Article XI with respect to such claim, then the Indemnifying Party
shall have the sole and exclusive right to defend against, settle or compromise
such claim; provided, that the Indemnifying Party shall proceed in good faith
with respect thereto; and provided further that the Indemnifying Party shall
not settle such claim for other than monetary consideration (unless the terms
of any such settlement do not constrain or otherwise affect the Indemnified
Party) without the consent of the Indemnified Party, which consent shall not be
unreasonably withheld; and provided further that if such claim is reasonably
likely to have a material adverse effect on the ongoing business or operations
of the Indemnified Party, the Indemnified Party may participate in the defense
of such claim at its own expense. If the Indemnifying Party does not
acknowledge to the Indemnified Party its liability (vis a vis the Indemnified
Party) hereunder prior to the earlier of (i) 15 days after the receipt of such
Indemnified Party's notice of a claim of indemnity hereunder, (ii) five days
prior to the deadline for filing any pleading in connection therewith, or
otherwise informs the Indemnified Party that it intends to proceed under a
reservation of its rights hereunder, the Indemnified Party shall have the right
to contest, settle or compromise the claim, but shall not thereby waive any
right to indemnity therefor pursuant to this Agreement and the Indemnifying
Party shall cooperate with
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the Indemnified Party in connection with defending against such claim; provided
that the Indemnifying Party shall have the right to participate, at its own
expense, in any such defense; and provided further, however, that the
Indemnified Party shall notify the Indemnifying Party of the terms of any
proposed settlement or compromise of any such claim prior to agreeing to the
same and afford the Indemnifying Party the opportunity to participate in the
settlement or assume the sole defense of such claims as provided in the fourth
sentence of this Section 11.4. The Indemnifying Party shall not, except with
the consent of the Indemnified Party, enter into any settlement that does not
include as an unconditional term thereof the giving by the person or persons
asserting such claim to the Indemnified Parties of an unconditional release
from all liability with respect to such claim or consent to entry of any
judgment.
11.5 NO RIGHT OF CONTRIBUTION. After the Closing, no
member of the Dominick's Group shall have any liability to indemnify the
Shareholders on account of the breach of any representation or warranty or the
nonfulfillment of any covenant or agreement of the Shareholders; and the
Shareholders shall have no right of contribution against any member of the
Dominick's Group. In addition to any other remedy which may be available at
law or in equity, the Purchaser shall be entitled to specific performance and
injunctive relief without posting bond or other security.
11.6 NATURE OF PAYMENTS. Amounts paid for indemnification
under this Agreement shall be adjustments to the purchase price for the Shares.
11.7 LIMITATIONS ON INDEMNIFICATION OBLIGATIONS. The
indemnification obligations under this Article XI (other than those referred to
in Sections 11.2(a), 11.2(c) and 11.3(c) shall not apply to any Covered
Liability being indemnified hereunder until the aggregate of all such Covered
Liabilities incurred by any Indemnified Party shall exceed $10,000,000.
However, in the event that the Covered Liabilities incurred by any Indemnified
Party do exceed $10,000,000, such Indemnified Party shall be entitled to
recover the full amount of the all Covered Liabilities it has incurred
(including those Covered Liabilities below $10,000,000) in excess of $5,000,000
from the Indemnifying Party. In no event shall such indemnification
obligations of the Shareholders (other than those referred to in clauses (a)
and (c) of Section 11.2) exceed, in the aggregate, $75,000,000.
11.8 PAYMENT OF INDEMNIFICATION OBLIGATIONS AND RIGHT OF
OFFSET. To the extent that any party incurs any expense or makes any payment
for which such party would be entitled to indemnification under this Article
XI, or otherwise has any claim for damages liquidated in amount for which such
party would be entitled to indemnification under this Article XI, in addition
to any other actions or remedies it may have in law or in equity, if the
Indemnifying Party does not pay the full amount of such indemnification
obligation to the Indemnified Party in immediately available funds within 15
days following written demand therefor by the Indemnifying Party, the
Indemnified Party may exercise a right of offset against any cash amounts then
payable or owing to the Indemnifying Party. Notwithstanding the foregoing, a
Purchaser Indemnified Party may only exercise such offset right against any
Shareholder Lease, if, and only so long as, (a) the Liquid Net Worth of Xxxx
(as defined under Section 12.2 hereof) is less than $25 million, or (b) such
Purchaser Indemnified Party's claim for indemnification under this Article XI
is a liquidated claim against DDLLC which has not
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been fully paid or satisfied (and then only to the extent of such unpaid
liquidated claim); provided, however, that in either such event no offset may
be made against any cash payments payable or owing by any Purchaser Indemnified
Party under (y) the Shareholder Lease for Store Xx. 00 (Xxxxxxxxxx), xx (x)
any Shareholder Lease for Shareholder Property from and after the date on which
(i) the fee simple interest in such Shareholder Property is transferred in a
bona fide transaction to a party which is not an Affiliate of any Shareholder,
or (ii) the mortgage debt encumbering the fee simple interest in such
Shareholder Property as of the Closing Date is refinanced, or (iii) the
unencumbered interest in the fee simple interest in such Shareholder Property
is encumbered with mortgage financing; and provided further, that the
limitations set forth in the immediately preceding clause (z) shall only apply
so long as, and to the extent that, the aggregate amount of all annual rental
payments due from Purchaser and/or its Affiliates (including the members of
Dominick's Group) under all Shareholder Leases (other than the those for Store
No. 62 and for Shareholder Property which has been transferred in bona fide
transactions to parties unrelated to the Shareholders or their Affiliates)
equals or exceeds $5 million. Further notwithstanding the foregoing: (a)
Purchaser shall not be entitled to any right of offset against any Shareholder
Lease at any time after the later of the dates specified in clauses (a) and (b)
of the second sentence of Section 12.2; and (b) Purchaser shall not be entitled
to any right of offset against any payments due with respect to the Holdings
Preferred Stock after such time as such Holdings Preferred Stock shall have
been transferred in a bona fide transaction to a party which is not an
Affiliate of any Shareholder.
ARTICLE XII
SHAREHOLDERS' RESPONSIBILITY; POST CLOSING
DISTRIBUTIONS BY SHAREHOLDERS
12.1 JOINT AND SEVERAL. The obligations of Shareholders
under this Agreement shall be joint and several.
12.2 NET WORTH COVENANT. Xxxx warrants that upon
consummation of the Stock Purchase Transaction its aggregate net worth
("AGGREGATE NET WORTH") and Liquid Net Worth (as defined below), both
determined in accordance with generally accepted accounting principles, shall
exceed $75 million and $25 million, respectively. Until the later of (a) the
third anniversary of the Closing Date, or (b) in the event any claim by
Purchaser for indemnification under Article XI remains unresolved and
outstanding on such third anniversary, the date on which such claim or claims
are satisfied, resolved, withdrawn or otherwise settled or discharged, Xxxx
shall not make any distribution of its assets to or on behalf of its members
that would cause its Aggregate Net Worth to be less than $75 million or its
Liquid Net Worth to be less than $25 million. As used herein the term "LIQUID
NET WORTH" shall mean that portion of the assets comprising Dodi's Aggregate
Net Worth which consists of cash, cash equivalents and/or marketable
securities.
12.3 DISTRIBUTIONS. Notwithstanding the provisions of
Section 12.2 above, from and after the end of the 18th month following the
Closing Date, Xxxx may make distributions to its members which reduce its
Aggregate Net Worth below $75 million if (i) Xxxx notifies
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Purchaser in writing of the proposed distribution and the amount thereof at
least sixty (60) days prior to such distribution (the "DISTRIBUTION NOTICE"),
and (ii) each member in respect of whom such distribution is proposed to be
made enters into a written agreement with Purchaser prior to such distribution
agreeing to be personally liable for any indemnification payments subsequently
determined to be due Purchaser under Article XI hereof up to an amount equal to
the net value of the proposed distribution to such member (the "DISTRIBUTION
VALUE"), and to maintain a net worth at least equal to such Distribution Value
until the later to occur of the events specified in clauses (a) and (b) of the
second sentence of this Section 12.2, as determined as follows:
(a) CASH. The Distribution Value of cash or cash
equivalents shall be the total amount of such cash or cash equivalents.
(b) PROPERTY. The Distribution Value of property other
than cash or cash equivalents ("DISTRIBUTION PROPERTY") shall be the
"fair market value" of the Distribution Property determined as
follows.
(i) The fair market value of Distribution
Property shall be the amount agreed to by the Purchaser and
the member to whom or in respect of whom the subject
distribution is proposed to be made within five (5) days after
Purchaser's receipt of the Distribution Notice.
(ii) If the Purchaser and such member cannot agree
on the fair market value of the Distribution Property within
such 5-day period, then the fair market value shall be
determined by appraisal of three independent appraisers,
selected within ten (10) days after the end of the aforesaid
5-day period, one selected by Xxxx, one selected by Purchaser
and the third selected by the two appraisers so selected. The
appraisers shall be directed to determine the fair market
value of the Distribution Property by mutual agreement within
ten (10) days after their selection. For purposes hereof, the
appraisers shall be deemed to "agree" if the individual
determinations of at least two of the appraisers do not vary
from each other by more than five percent (5%) of the lower or
lowest of such determinations, in which event the fair market
value of the Distribution Property shall be the average of the
individual determinations of those two or three appraisers.
(iii) If the appraisers do not agree and are not
deemed to "agree" on the fair market value of the Distribution
Property, such fair market value shall be the average of the
determinations by the three appraisers. The determination of
the appraisers shall be final and binding on the parties. The
fees of the first two appraisers shall be paid by the
appointing party or parties and the fees of the third
appraiser shall be divided equally between the Purchaser and
Xxxx.
Notwithstanding the foregoing provisions, however, Xxxx shall maintain a Net
Worth of at least $35 million until the later of (a) December 31, 1999, or (b)
in the event any claim by Purchaser for indemnification under Article XI for a
breach of the warranties in Section 3.20 remains
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unresolved, and outstanding as of December 31, 1999, the date on which such
claims are satisfied, resolved, withdrawn, or otherwise settled or discharged.
Xxxx agrees to deliver to Purchaser an annual certificate or other confirmation
of its independent auditors, and, from time to time at the request of
Purchaser, but not more frequently than once each calendar quarter, a
certificate of a manager or other authorized agent or employees of Xxxx,
confirming its compliance with the Aggregate Net Worth and Liquid Net Worth
requirements as set forth herein. Purchaser shall be entitled to the remedy of
specific performance with respect to the obligations of Xxxx under this Article
XII.
ARTICLE XIII
POST CLOSING COVENANTS
13.1 TAX MATTERS AGREEMENT. On the Closing Date
concurrently with the Closing, Holdings and Purchaser shall, and shall cause
Purchaser Sub and the members of the Dominick's Group to, execute and deliver
the Tax Matters Agreement, and Shareholders shall, and shall cause DDI and DPI
to, execute and deliver the Tax Matters Agreement.
13.2 COMPANY NAME CHANGE. Sellers shall retain the rights
to use the name "Xxxx" and, to effect the foregoing, promptly after the
Closing, the Purchaser shall cause the Company to change its name to a name
that does not include, or is not confusingly similar to, the word "Xxxx".
Notwithstanding the foregoing, Xxxx Hazelcrest, Inc. may retain and use the
name "Xxxx Hazelcrest, Inc." for all commercial purposes for which such name is
currently used. Upon or before the cessation of such purposes, Purchaser shall
cause Xxxx Hazelcrest, Inc. to take all actions as are necessary to change the
name of "Xxxx Hazelcrest, Inc." to a name which does not include the word
"Xxxx".
13.3 COVENANT NOT TO COMPETE. Sellers acknowledge and
agree that the business of the Dominick's Group is conducted primarily in the
State of Illinois and that its reputation and goodwill are an integral part of
its business success throughout the areas where it conducts its business. If
Sellers deprive Purchaser of any of Dominick's goodwill or in any manner
utilize its reputation and goodwill in competition with Dominick's, Purchaser
will be deprived of the benefits it has bargained for pursuant to this
Agreement. Although the parties hereto place no monetary value upon this
covenant not to compete, this covenant is necessary to transfer the business
and goodwill of Dominick's to Purchaser effectively. Accordingly, as an
inducement for Purchaser to enter into this Agreement, Sellers agree that for a
period of five years after the Closing, Sellers shall not, and shall not permit
any of their Affiliates, without Purchaser's prior written consent, directly or
indirectly, own, manage, operate, join, control or participate in the
ownership, management, operation or control of, or be connected as a director,
officer, employee, partner, consultant or otherwise with, any profit or
non-profit business or organization in the six-county area surrounding the City
of Chicago or otherwise within five miles of any store operated by Dominick's
and its Subsidiaries, which, directly or indirectly, competes with the business
of Dominick's. Sellers agree to maintain in confidence, and not to disclose to
any third party, any ideas, methods, developments, inventions, improvements and
business plans and information which are the confidential information of
Dominick's. In the
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event the agreement in this Section 13.3 shall be determined by any court of
competent jurisdiction to be unenforceable by reason of its extending for too
great a period of time or over too great a geographical area or by reason of
its being too extensive in any other respect, it shall be interpreted to extend
only over the maximum period of time for which it may be enforceable, and/or
over the maximum geographical area as to which it may be enforceable and/or to
the maximum extent in all other respects as to which it may be enforceable, all
as determined by such court in such action.
Sellers acknowledge that a breach of the covenants contained
in this Section 13.3 will cause irreparable damage to Purchaser and the
Company, the exact amount of which will be difficult to ascertain, and that the
remedies at law for any such breach will be inadequate. Accordingly, Sellers
agree that if Sellers breach the covenant contained in this Section 13.3, in
addition to any other remedy which may be available at law or in equity,
Purchaser or Dominick's shall be entitled to specific performance and
injunctive relief, without posting bond or other security. Sellers shall cause
Xxxxx X. XxXxxxxx to agree to be bound by the provisions of this Section 13.3
on or prior to the Closing Date.
ARTICLE XIV
MISCELLANEOUS
14.1 ENTIRE AGREEMENT. This Agreement sets forth the
entire understanding and supersedes all prior and contemporaneous oral or
written agreements among the parties hereto relating to the subject matter
contained herein, and merges all prior and contemporaneous discussions among
them. No party hereto shall be bound by any definition, condition, warranty,
covenant or provision other than as expressly stated in this Agreement or as
hereafter set forth in a written instrument executed by such party or by a duly
authorized representative of such party.
14.2 SEVERABILITY. The parties hereto expressly agree
that it is not the intention of any party hereto to violate any public policy,
statutory or common laws rules, regulations, treaties or decisions of any
government or agency thereof. If any provision of this Agreement is judicially
or administratively interpreted or construed as being in violation of any such
provision as applied to any fact or circumstance, such articles, sections,
sentences, words, clauses or combinations thereof shall be modified to the
minimum extent necessary to render it valid, and it shall not affect any other
provision of this Agreement or the same provisions applied to any other fact or
circumstance, and the remainder of this Agreement shall remain binding upon the
parties hereto.
14.3 NOTICES. Any and all notices and other
communications necessary or desirable to be served hereunder shall be either
(a) personally delivered, or (b) sent by either (i) telecopy, (ii) prepaid
same-day or overnight delivery service, proof of delivery requested, or (iii)
United States certified or registered mail, postage prepaid, return receipt
requested, addressed as follows:
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(a) If to Shareholders:
c/o Xxxxx X. XxXxxxxx
000 X. Xxxxx
Xxxxxx, Xxxxxxxx 00000
Telecopier No.: (000) 000-0000
With a copy to:
Jenner & Block
Xxx XXX Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx, Esq.
Telecopier No. (000) 000-0000
(b) If to Purchaser or Holdings:
c/o The Yucaipa Companies
00000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopier No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxxx
000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq
Telecopier No.: (000) 000-0000
or to such other address, addresses or telecopier number as either party hereto
may designate or itself from time to time in a written notice served upon the
other party hereto in accordance herewith. Any notice sent as hereinabove
provided shall be deemed delivered upon receipt or refusal of delivery, except
in the case of certified or registered United States mail which shall be deemed
delivered on the third (3rd) business day next following the postmark date
which it bears.
14.4 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and each counterpart shall constitute an original
instrument, but all such separate counterparts shall constitute one and the
same agreement.
14.5 GOVERNING LAW AND VENUE. The validity, construction
and enforceability of this Agreement shall be governed in all respects by the
laws of the State of Illinois without regard to its conflict of laws rules.
Any action brought in connection with this Agreement shall be brought before a
court of competent jurisdiction in Xxxx County, Illinois.
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14.6 SUCCESSORS AND ASSIGNS. Neither this Agreement, nor
any of the rights, duties ar obligations hereunder, may be assigned by
operation of law or otherwise by the parties hereto without the prior written
consent of all other parties hereto. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective permitted
successors and assigns.
14.7 FURTHER ASSURANCES. At any time on or after the
Closing, the parties hereto shall each perform such acts, execute and deliver
such instruments, assignments, endorsements and other documents and do all such
other things consistent with the terms of this Agreement as may be reasonably
necessary to accomplish the transactions contemplated by this Agreement or
otherwise to carry out the purpose of this Agreement.
14.8 GENDER, NUMBER AND HEADINGS. The masculine, feminine
or neuter pronouns used herein shall be interpreted without regard to gender,
and the use of the singular or plural shall be deemed to include the other
whenever the context so requires. The headings in this Agreement are inserted
for convenience or reference only and are not a part of this Agreement.
14.9 SCHEDULES. The Schedules referred to herein and
attached hereto are incorporated herein by such references as if fully set
forth in the text hereof.
14.10 WAIVER OF PROVISIONS. The terms, covenants, warranties
and conditions of this Agreement may be waived only by a written instrument
executed by the party waiving compliance. The failure of any party at any time
to require performance of any provision hereof shall in no manner, affect the
right at a later date to enforce the same. No waiver by any party of any
condition, or breach of any provision, term, covenant or warranty contained in
this Agreement, whether by conduct or otherwise, in any one or more instances,
shall be deemed to be or construed as a further or continuing waiver of any
such condition or of the breach of any other provision, term, covenant or
warranty of this Agreement.
14.11 EXPENSES. The Company may pay, or may cause Dominick's
to pay the reasonable legal, accounting and other expenses incurred in
connection with the transactions contemplated by this Agreement. Except as
otherwise expressly provided herein, each party shall bear its own expenses
incident to this Agreement and the transactions contemplated by this Agreement,
including without limitation, all fees of counsel, accountants and consultants.
14.12 RECITALS. The recitals set forth above on the initial
page of this Agreement are incorporated herein by this reference, and this
Agreement shall be construed in light thereof.
14.13 KNOWLEDGE OF SELLERS. Except as otherwise expressly
set forth herein, for purposes of this Agreement the knowledge of Sellers or
the Shareholders shall mean only the actual (and not imputed) knowledge of (a)
members and managers of the Shareholders, and (b) any director or executive
officer of either the Company, Dominick's or any Subsidiary, following
reasonable inquiry. As used in this Agreement with respect to the knowledge of
the Shareholders or Sellers, the phrase "without inquiry of third parties"
shall mean that no inquiry is required to have been made of persons who are not
employees of the Dominick's Group.
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14.14 NO THIRD PARTY BENEFICIARIES. This Agreement is made
solely for the benefit of the parties hereto and shall not give rise to any
rights of any kind to third parties except as expressly provided herein.
14.15 BROKER FEES. Except for the fees and expenses of
Xxxxxxx Xxxxx & Co. payable by Dominick's pursuant to the Goldman Letter
Agreement, each of the Sellers on the one hand, and Purchaser on the other
hand, hereby agrees to be solely responsible for and to indemnify and hold the
other harmless against and in respect of, any obligation or liability,
contingent or otherwise, for brokerage or finder's fees or agents commissions
or other like payment in connection with this Agreement or the transactions
contemplated hereby which are based in any way on agreements, arrangements or
understandings made or claimed to have been made by such party with any third
party.
14.16 PUBLIC ANNOUNCEMENTS. Holdings, Purchaser and the
Shareholders shall not, and shall cause their Affiliates not to, make, issue or
release any public announcement, press release, statement or acknowledgement of
the existence of, or reveal publicly the terms or conditions and/or status of
the transactions provided for herein, without the prior consent of the ether
party as to the content and time of release of and the media in which such
statement or announcement is to be made. Each party hereto agrees that it will
not unreasonably withhold Xx xxxxx any such consent.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first written above.
DFF HOLDINGS, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------------
Its Chief Executive Officer
DFF ACQUISITION SUB, INC.
By /s/ Xxxxxx X. Xxxxxx
------------------------------
Its Chief Executive Officer
XXXX L.L.C.
By /s/ Xxxxx X. XxXxxxxx
------------------------------
Xxxxx X. XxXxxxxx, Manager
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XXXX FAMILY L.L.C.
By /s/ Xxxxx X. XxXxxxxx
------------------------------
Xxxxx X. XxXxxxxx, Manager
XXXX DEVELOPMENTS, L.L.C.
By /s/ Xxxxx X. XxXxxxxx
------------------------------
Xxxxx X. XxXxxxxx, Manager
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