ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made this 23rd day of December, 1999, by
and among ULTRA MART, INC., a Wisconsin corporation (being
referred to hereinafter as "Seller"); Xxxxxx X. Xxxxxxx, Xxxxx X.
Xxxxx (being referred to hereinafter collectively as the
"Principal Shareholders" and individually as a "Principal
Shareholder"), ULTRA MART FOODS, INC., a Wisconsin corporation
(being referred to hereinafter as "Buyer"); and XXXXXX'X, INC., a
Wisconsin corporation (being referred to hereinafter as
"Xxxxxx'x");
RECITALS:
WHEREAS, Seller owns and operates a total of seven (7)
grocery supermarkets at the locations set forth in Exhibit A
attached hereto (each such supermarket being hereinafter
individually referred to as a "Store" and all such supermarkets
being collectively referred to as the "Stores" and the business
conducted in the Stores being hereinafter referred to as the
"Business");
WHEREAS, Seller desires to sell and Buyer desires to
purchase the Business and substantially all of Seller's assets
used in the conduct of the Business at all of the Stores upon the
terms and conditions set forth in this Agreement; and
WHEREAS, the Principal Shareholders collectively own
approximately eighty one percent (81%) of the outstanding common
stock of Seller, and as such will benefit substantially by the
Seller's consummation of the transactions contemplated hereby,
and Buyer and Xxxxxx'x are unwilling to purchase the Stores and
the Business unless the Principal Shareholders join with Seller
in this Agreement on the terms set out herein;
WHEREAS, Buyer is a wholly-owned subsidiary of Xxxxxx'x and
Xxxxxx'x is therefore willing to join with Buyer as a party to
this Agreement and guaranty the obligations of Buyer hereunder;
THEREFORE, in consideration of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
AGREEMENT:
1. SALE OF ASSETS.
(a) Assets Sold. On the Closing Date (as hereinafter
defined), subject to the terms and conditions set forth in this
Agreement, Seller shall sell, convey, transfer, assign and
deliver to Buyer and Buyer shall purchase the following assets
(collectively the "Purchased Assets"):
(i) Inventory. All inventory (including video
tapes) owned by Seller and held for sale (or rental) in the
ordinary course of business, and all store supplies, at the
Stores as of the Effective Time, to the extent such
inventory is usable, saleable, and not outdated or damaged
(the "Inventory");
(ii) Cash. All operating cash (including for this
purpose all food stamps and any unsold gift certificates
purchased by Seller from Xxxxxx'x, but excluding checks and
coupons) on hand (the "Cash on Hand") and located in the
Stores as of the Effective Time;
(iii) Trademarks, Trade Names and Other
Intellectual Property. All intellectual property owned by
Seller or in which Seller has any rights, and utilized in
the operation of the Business (including but not limited to
all trademarks, service marks, trade names, pending
trademark, service xxxx and trade name applications and
registrations, copyrights, the corporate name "Ultra Mart,"
and the Seller's rights to its internet domain name
"xxxxxxxxxx.xxx") ("Intellectual Property");
(iv) Equipment. All fixtures, equipment,
furniture, machinery, tools, racks, partitions, shelving,
exterior signs, refrigeration equipment, leasehold
improvements, computer hardware, terminals and peripheral
equipment and scanning systems owned by Seller or in which
Seller has any interest, including any leasehold interest,
located at the Stores and used in the operation of the
Business (the "Equipment");
(v) Assigned Contracts. All right, title and
interest of the Seller in, to and under the "Assigned
Contracts" (as hereinafter defined);
(vi) Permits. Only to the extent transferable,
all right, title and interest of Seller in, to and under all
transferable licenses, permits, orders, certificates,
approvals and other government authorizations owned by
Seller exclusively in connection with Seller's occupancy or
operation of the Stores;
(vii) Corporate Office Assets. Those assets
located at Seller's corporate offices that are listed on
Section 1(a)(vii) of the Disclosure Schedule; and
(viii) Other Personal Property. All other
personal property of every nature or description owned by
Seller, and located at the Stores and used in the operation
of the Business, including, but not limited to, general
intangibles, and the goodwill and going concern value of the
Business.
(b) Excluded Assets. Notwithstanding anything in
Section 1(a) above to the contrary, the following assets, rights,
interests and other properties of the Seller (the "Excluded
Assets") shall not be sold, transferred, assigned, conveyed or
delivered to Buyer:
(i) Cash and Cash Equivalents. All cash and cash
equivalents other than Cash on Hand, including all bank
deposits, checking and saving accounts and the like;
(ii) Accounts Receivable. All of Seller's
accounts receivable (including checks and coupons) relating
to any of the Stores;
(iii) Prepaid Expenses. All prepaid expenses
relating to any of the Stores other than prorated prepaid
expenses (the "Prepaid Expenses");
(iv) Xxxxxx'x Stock. Any stock of Xxxxxx'x, Inc.
owned by the Seller;
(v) Corporate Records. All corporate and
financial books and records, Seller's corporate charter and
similar items;
(vi) Insurance Policies. All insurance policies
owned by Seller;
(vii) Non-Operating Assets. Except for the
assets set forth in Section 1(a)(vii) of the Disclosure
Schedule, all assets located at Seller's corporate offices;
and
(viii) Equipment of Non-Assigned Leases. All
equipment leased under a lease which is not an "Assigned
Contract" (as hereinafter defined).
(c) Assignment and Assumption of Contracts. The
"Assigned Contracts" consist of all of those leases, subleases,
contracts and agreements that are set forth on Section 6(e) of
the Disclosure Schedule hereto and which are designated thereon
as "Assigned Contracts," as well as Seller's obligation to accept
and pay for supplies and Inventory ordered by Seller prior to the
Effective Time in the ordinary course of business and in
quantities consistent with Seller's past practices, but not yet
received as of the Effective Time. At the Closing, effective as
of the Effective Time (as hereinafter defined) Seller will assign
and transfer to Buyer all of Seller's right, title and interest
in, to and under the Assigned Contracts, and Buyer will assume,
perform and discharge all of Seller's obligations and liabilities
arising after the Effective Time (and attributable to time
periods after the Effective Time) under the Assigned Contracts
(hereinafter "Contract Liabilities"); provided, that the Contract
Liabilities assumed by Buyer shall not in any event include:
(i) any liability or obligation of Seller under
any employment agreement, collective bargaining agreement,
agreements, plans or arrangements concerning employee
bonuses, insurance, or other agreement with any employee,
officer, or shareholder of Seller; or any other liability or
obligation of any nature whatsoever of Seller to any
employee or former employee, whether pursuant to contract,
arising by operation of law, or otherwise; or
(ii) any liability or obligation attributable to
or arising as a result of any breach, violation, or non-
performance of any Assigned Contract by Seller prior to and
through the Effective Time, including, without limitation,
any breach or violation arising as a result of the
transactions contemplated by this Agreement, except as
provided in Section 10(m)(vi) .
(d) Assumption of Employee Accruals. Buyer will
assume the liability of Seller for vacation pay due from Seller
to the "Transferred Employees" (as that term is defined in
Section 12(b)), but only in the amount and to those persons for
which Buyer receives a credit as provided in Section 12(b) herein
(the "Assumed Employee Accruals").
(e) Fox Point Lease. Seller is currently a sublessee
of Jondex Corp. (an affiliate of Buyer) under a sublease (as
amended) relating to a store site previously operated by Seller
at 000 Xxx Xxxxx Xxxxx, Xxxxxx, Xxxxxxxxx (the "Fox Point
Sublease"). At the Closing, Xxxxxx'x will cause Jondex Corp. to
release Seller and the Principal Shareholders from any further
liability under the Fox Point Sublease (to the extent such
liability and costs relate to periods following the Effective
Time), in consideration of which Xxxxxx X. Xxxxxxx will
personally indemnify Jondex Corp. and Xxxxxx'x against any
liability they may incur (for payment of rent, other payments due
the landlord under the Prime Lease (as hereinafter defined), and
other costs incurred under the Prime Lease or associated with the
occupancy of the premises) under the prime lease between Jondex
Corp. and the owner of the subject property (the "Prime Lease")
relating to the time periods after December 31, 2004 through
December 31, 2008. Such release and indemnification agreement
will be in the form of that attached hereto as Exhibit 1(c)(iii)
(the "Fox Point Sublease Agreement"). The Fox Point Sublease
Agreement will provide further that if Xxxxxx'x desires to
terminate the Prime Lease (on terms acceptable to Xxxxxx'x in its
sole discretion) in exchange for the payment of consideration to
the prime lessor, and the amount of such consideration (the
"Release Price") exceeds the then present value (using a discount
rate of 9%) of the remaining rent and other payments and
financial obligations due under the Prime Lease through December
31, 2004 (the "Remaining Xxxxxx'x Costs"), then Xx. Xxxxxxx will
contribute to the Release Price an amount equal to the lesser of
(i) the excess of the Release Price over the Remaining Xxxxxx'x
Costs, and (ii) fifty percent (50%) of the present value (as of
the later of January 1, 2005 or the date of termination of the
Prime Lease) (using a discount rate of 9%) of the remaining rent
and other payments and financial obligations due under the Prime
Lease from January 1, 2005 through December 31, 2008 (the
"Remaining Xxxxxxx Costs"). Xxxxxx'x will use its reasonable
efforts, in good faith, to negotiate a termination of the Prime
Lease provided that the terms of such termination include a deed
restriction or other provision, reasonably acceptable to
Xxxxxx'x, which precludes the operation of a full line retail
grocery store on the premises or elsewhere in the shopping center
of which the premises are a part, for a term through December 31,
2018 (or shorter term acceptable to Xxxxxx'x in its sole
discretion) (the "Deed Restriction"). Except as provided in the
preceding sentence, Xxxxxx'x will be under duty or obligation to
terminate the Prime Lease.
2. LIABILITIES; SETTLEMENT OF ACCOUNTS BETWEEN SELLER AND
XXXXXX'X.
(a) Except for the Contract Liabilities expressly
assumed by Buyer under Section 1(c) above and the Assumed
Employee Accruals assumed by Buyer pursuant to Section 1(d)
above, Buyer shall not in any manner assume nor be liable or
responsible for any of the liabilities, debts, or obligations of
Seller or any Principal Shareholder, of any nature whatsoever,
including, but without limiting the generality of the foregoing,
the following:
(i) Past, current and future liabilities and
obligations of Seller for federal, state or local taxes of
any nature, including, without limitation, any interest,
penalties, additions to tax or costs of defense, and
including any taxes occasioned by the sale contemplated by
this Agreement, except for real and personal property taxes
to be pro-rated between Buyer and Seller as provided in
Section 12 hereof; or
(ii) Liabilities or obligations of Seller of any
nature to employees or former employees relating to services
performed prior to the Effective Time, including, without
limitation, liabilities or obligations for wages,
withholding and employment taxes, vacation, sick pay,
bonuses, severance pay, retirement and fringe benefits, and
"Pre-Closing Claims" under "Seller's Health and Dental Plan"
(as those terms are defined in Section 15 hereof ) incurred
prior to and through the Closing Date, except for Assumed
Employee Accruals; or
(iii) Any liability of Seller for the costs
incurred in connection with the recent remodeling of
Seller's store on Good Hope Road in Milwaukee.
(b) Seller shall pay and discharge, when due (except
to the extent the same are being contested in good faith), any
and all of the debts, liabilities and obligations of Seller which
are not assumed by Buyer.
(c) At the Closing Date it is expected that Seller
will be obligated for, among other things, rent, percentage rent,
tenant's shares of real estate taxes, common area maintenance
expenses and other payments ("Tenant Costs") payable by Seller
for periods prior to and through December 31, 1999 under the
Store subleases between Seller and Xxxxxx'x affiliate Jondex
Corp. (and the lease of the Store at Neenah (Green Bay Road)).
At the Closing Buyer will withhold from the portion of the
Purchase Price otherwise payable at the Closing the sum of
$500,000.00, as of the date hereof the estimated total of the
Seller's liability for Tenant Costs for periods through December
31, 1999 under such subleases in excess of amounts payable from
existing escrow arrangements under those subleases (the "Sublease
Obligations Holdback"). To the extent (if any) that the Tenant
Costs that comprised the estimated amount set forth in the
preceding sentence have been settled and paid by Seller prior to
the Closing, the amount of the Sublease Obligations Holdback will
be reduced accordingly. Following the Closing Date the parties
will cooperate in reconciling the actual amounts of these Tenant
Costs, and the difference between the net amount thereof finally
determined to be due from Seller and the amount of the Sublease
Obligations Holdback will be paid by Seller to Xxxxxx'x, or by
Xxxxxx'x to Seller, as the case may be.
3. PURCHASE PRICE. The purchase price to be paid by Buyer
to Seller for the Purchased Assets shall be Thirty Million Five
Hundred Thousand Dollars ($30,500,000), plus an amount equal to
(i) the Cash on Hand and (ii) the value of the Inventory (valued
and determined in accordance with Section 5 hereof) as of the
Applicable Inventory Date (as hereinafter defined), and adjusted
by the prorations provided for in Section 12 hereof (the
"Purchase Price").
4. PAYMENT AND ALLOCATION OF PURCHASE PRICE.
(a) Buyer shall pay the Purchase Price to Seller as
follows:
(i) At Closing, the sum of $30,500,000 plus the
portion of the Purchase Price attributable to Cash on Hand
and the Inventory (to the extent of the parties' agreement
as to the value thereof as of the Closing Date), less the
Sublease Obligations Holdback and the Health Insurance
Holdback (as defined in Section 15 below) shall be paid by
wire transfer of immediately available funds to an account
designated by Seller;
(ii) The balance of the Purchase Price, adjusted
as provided in this Agreement, shall be paid by wire
transfer of immediately available funds to an account
designated by Seller upon final determination of the value
of the Cash on Hand and the Inventory, and the approval by
Seller and Buyer of the final closing statement. If the
value of the Inventory and Cash on Hand has not been finally
determined within fourteen (14) days after the Closing Date,
the amount of the Purchase Price that is withheld with
respect to such unresolved Inventory and Cash on Hand value
shall bear interest at an annual rate of seven percent (7%),
beginning on the fifteenth day following the Closing Date.
Upon the parties' mutual approval of the final determination
of the Inventory and Cash on Hand and the final closing
statement, the amount of the Purchase Price as thus
determined shall be final and binding upon the parties.
(b) The Purchase Price shall be allocated as follows:
(i) A portion of the Purchase Price equal to the
Cash on Hand shall be allocated to cash;
(ii) A portion of the Purchase Price equal to the
value of the Inventory, as determined pursuant to Section 5
hereof, shall be allocated to Inventory;
(iii) $7,500,000 shall be allocated to
property and equipment;
(iv) $1,500,000 shall be allocated to the
leasehold improvements;
(v) The remainder of the Purchase Price shall be
allocated to goodwill and the going concern value of the
Business.
The parties agree that they will file any reports
required to be filed (including, without limitation, I.R.S. Form
8594) under Section 1060 of the Internal Revenue Code of 1986, as
amended (the "Code"), consistent with the foregoing allocation
and will not take a position for income tax purposes which is
inconsistent with this Agreement.
5. PHYSICAL INVENTORY; DETERMINATION OF INVENTORY AND CASH
ON HAND PRICE; CLOSING.
(a) As soon as practical after Buyer has received all
licenses and permits required for its ownership and operation of
the Stores (including, without limitation, liquor licenses, food
stamp permits and "WIC" permits), or, if later, when the waiting
period under the HSR Filings has duly expired, the parties will
jointly select a date, for each of the Stores, on which the
amount of Cash on Hand, inventory and store supplies at such
Store will be determined by a physical inventory tabulation (the
date of such inventory for each Store being hereinafter referred
to as the "Applicable Inventory Date" for that Store). Such
physical inventory and the necessary extensions of the costs for
such inventory and store supplies at each Store shall be
conducted by Star Inventory Service (the "Inventory Service")
(Buyer and Seller shall each have representatives present during
the physical inventory), and the expense thereof shall be borne
equally by Buyer and Seller. The physical inventory tabulation
(and the purchase price to be paid by Buyer for the Inventory)
shall not include inventory which is damaged, spoiled, outdated,
obsolete or otherwise unsalable at normal retail price in the
ordinary course of business at the Stores, as mutually determined
by the parties, and Buyer shall have no obligation to purchase
any of such inventory. At the Closing the parties will append to
this Agreement a schedule setting forth the Applicable Inventory
Date and the Effective Time (as defined below) for each of the
Stores.
(b) For purposes of this Agreement (including Section
3 hereof) the Inventory will be valued at Seller's cost thereof,
determined in the following manner:
(i) the cost of Inventory shall be the retail
selling price thereof as of the Applicable Inventory Date
less the margin percentage by department for the Stores as
set forth in Section 5(b) of the Disclosure Schedule
attached hereto, except for such meat, produce, deli,
bakery, seafood, supplies and other perishable items for
which the cost is readily ascertainable in which case the
actual cost of such items shall be used. The margin
percentages set forth in Section 5(b) of the Disclosure
Schedule reflect gross margins per department after
allocation to the several departments of the estimated
amount of Xxxxxx'x "Advantage" rebates and other vendor
rebates and allowances (but not Xxxxxx'x volume rebates or
patronage dividends) ("Estimated Rebate Amounts"),
notwithstanding the fact that in the preparation of its
regular financial statements and reports Seller does not
reflect such rebates and allowances in determining
departmental gross profit. The margin percentages set forth
on Section 5(b) of the Disclosure Schedule will not be
adjusted to account for differences between the Estimated
Rebate Amounts and the actual amounts of such rebates, when
they are known.
(ii) The video tape inventory shall be valued at
six dollars ($6.00) per tape.
(iii) Supplies will be valued at Seller's
actual cost.
(c) The complete inventory prepared by the Inventory
Service shall be prepared in accordance with the usual and
customary practices of the industry and shall show the amount of
Cash on Hand and the total cost of such Inventory and supplies
for each Store determined in the manner provided above. In the
event the parties do not agree on the value of the Inventory and
supplies for any Store because the parties disagree as to whether
certain items are damaged, spoiled, outdated, obsolete or
otherwise unsalable at normal retail prices in the ordinary
course of business or as to Seller's cost thereof, the opinion of
the Inventory Service shall be final and binding on the parties.
(d) Buyer shall be given physical possession of each
Store and the Business conducted thereon immediately upon
completion of the taking of the inventory at such Store. Unless
the Closing fails to occur (other than by reason of a breach of
this Agreement by Seller), all sales made and expenses incurred
after such time shall be for the account of Buyer.
(e) The transactions contemplated hereby will be
closed, and the sale and purchase of the Purchased Assets thereby
consummated, on a date, selected by agreement of the parties, as
soon as practical after the last of the Applicable Inventory
Dates (the "Closing" or "Closing Date"), but in no event later
than two (2) business days after the last of the Applicable
Inventory Dates. However, the Closing shall be deemed effective
as to each Store as of the time of completion of the physical
inventory at such Store on such Store's Applicable Inventory Date
(the "Effective Time"). This transaction shall be closed at the
offices of Xxxxx Xxxxxxxxxxx Xxxxx S.C., 000 Xxxx Xxxxxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxxxx, or at such other place as the
parties may mutually agree.
6. REPRESENTATIONS AND WARRANTIES OF SELLER AND THE
PRINCIPAL SHAREHOLDERS.
To induce Buyer to enter into this Agreement, Seller
and the Principal Shareholders, jointly and severally, make the
following representations and warranties:
(a) Corporate Organization. Seller is a corporation
duly organized and validly existing under the laws of the State
of Wisconsin, all filings necessary for the maintenance of its
corporate existence have been made, and there are no proceedings
pending for its dissolution. Seller has all requisite corporate
power and corporate authority to carry on the Business as it is
now being conducted and to own and lease the properties and
assets it now owns and leases.
(b) Authorization, Validity. Seller has all requisite
corporate power and authority to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery
of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by Seller's
stockholders and Board of Directors. No other corporate
proceedings on the part of Seller are necessary to authorize this
Agreement or the transactions contemplated hereby, and this
Agreement constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms.
(c) Compliance. Except for any necessary consents to
assignment that must be obtained, neither the execution nor
delivery of this Agreement by Seller nor the consummation by
Seller of the transactions contemplated hereby, will result in
any violation of or be in conflict with, or constitute a default
under, any provision of Seller's Articles of Incorporation or By-
Laws, or any contract, agreement, security agreement, pledge,
document, commitment, instrument, judgment, decree, order,
statute, rule or governmental regulation to which Seller or any
Principal Shareholder is a party or by which they are bound, or
which is applicable to Seller or any Principal Shareholder, the
Purchased Assets or the Business, or give any third party any
right to terminate or cancel any such contract, security
agreement, pledge, document, commitment or instrument, or
accelerate any obligation evidenced thereby.
(d) Good Title. The Purchased Assets (in the case of
leased assets, Seller's leasehold interests therein) are free and
clear of all security interests, encumbrances, liens, mortgages,
pledges, charges, conditional sale or title retention agreements
and restrictions, except liens for personal property taxes not
due and payable, and those security interests described in
Section 6(d) of the Disclosure Schedule for which full and
complete releases will be obtained by Seller at or prior to the
Closing. Except as set forth in Section 6(d) of the Disclosure
Schedule, there are no currently effective Uniform Commercial
Code financing statements of record covering any of the Purchased
Assets.
(e) Leases, Contracts, Etc. All material leases,
subleases, maintenance agreements, service agreements and all
other agreements of any nature, whether written or oral,
affecting any of the Stores or the Business or the Purchased
Assets ("Contracts") are listed on Section 6(e) of the Disclosure
Schedule attached hereto. Said Section 6(e) of the Disclosure
Schedule designates those of the Contracts that are Assigned
Contracts. Buyer has been provided with access to correct and
complete copies of the Assigned Contracts. Each such Assigned
Contract is in full force and effect and no event has occurred
which (with or without the lapse or passage of time and/or giving
of notice) would constitute a default thereunder by Seller, nor,
to the knowledge of the Seller or the Principal Shareholders,
would constitute a default thereunder by any other party.
(f) Inventory. The quantities and types of items
comprising the Inventory are reasonable in the present
circumstances of the Business and consistent with Seller's
historical practices.
(g) Equipment. Section 6(g) of the Disclosure
Schedule is a true, correct and complete list of all items of
machinery, equipment and other personal property capitalized on
Seller's books in accordance with Seller's past practices (other
than Inventory and supplies, but including leasehold
improvements) that are used in the Business or included among the
Purchased Assets and owned or leased by Seller as of the date of
such list, indicating in each case whether owned or leased;
provided that some listed items may be located at a Store that is
different than the Store indicated on the list. All of the
assets set forth on such list (or, in the case of leased assets,
the leases pursuant to which they are leased) are included among
the Purchased Assets and Seller has not disposed of any such
assets since the date of such list, except for dispositions of
assets in the ordinary course of business, all of which, to the
extent material to the Business, have been replaced. All of the
tangible personal property included among the Purchased Assets
(as well as any that is leased pursuant to any of the Assigned
Contracts) is in good operating condition and repair (considering
its age), except for ordinary wear and tear and the requirement
of normal, routine maintenance, which maintenance Seller has not
deferred unreasonably, and suitable and adequate for the purposes
to which it is currently put in the conduct of the Business.
(h) Financial Statements. Seller has delivered to
Buyer copies of the audited financial statements of Seller for
the fiscal years ended December 28, 1996, January 3, 1998 and
January 2, 1999 and unaudited interim financial statements for
the period ended October 2, 1999 (such financial statements,
including all notes thereto, hereinafter being referred to
collectively as the "Financial Statements"). The Financial
Statements (i) have been prepared from and are consistent with
the books and records of the Company, (ii) are complete and
correct in all material respects, in accordance with generally
accepted accounting principles ("GAAP"), (iii) have been prepared
in accordance with GAAP consistently applied during the periods
covered thereby, and (iv) fairly and accurately present the
financial condition, results of operations and cash flows of the
Company as at the dates, and for the periods, stated therein;
provided, that the unaudited interim financial statements do not
reflect customary year end and audit adjustments and accruals
(including without limitation adjustments that would be required
based on physical inventories), none of which, individually or in
the aggregate, would be material to the financial condition or
results of operations of Seller for the period covered thereby.
Neither Seller nor either of the Principal Shareholders is making
any representation or warranty regarding the future performance
of the Business or the financial results of Buyer's operation of
the Stores.
(i) Absence of Certain Changes or Events. Since
January 2, 1999, Seller has conducted the Business solely in the
ordinary course and consistent with past practice, and, without
limiting the foregoing, except as set forth in Section 6(i) of
the Disclosure Schedule, (i) there has not been any material
adverse change in the financial condition or operation of the
Business and no event has occurred which materially and adversely
affects the Business or the Purchased Assets (provided that Buyer
hereby acknowledges the competitive nature of the grocery
supermarket business and the significant increase in the number
of entities operating grocery supermarkets in the state of
Wisconsin as well as the existence of several grocery
supermarkets stores in close proximity to the Stores), (ii)
Seller has not waived any rights which are material to the
Business, (iii) there has not been any damage, destruction or
loss (whether or not covered by insurance) which singly or in the
aggregate materially and adversely affects the Purchased Assets
or the Business, (iv) Seller has not entered into or terminated
any material agreement, lease, license or commitment which
relates to the Business or the Purchased Assets, (v) Seller has
not disposed of any material assets other than inventory sold in
the ordinary course of business, and (vi) Seller has not made any
material change in any method of accounting or accounting
practice.
(j) Litigation and Other Proceedings. Except for
those matters disclosed in Section 6(j) of the Disclosure
Schedule, no action, suit, proceeding or investigation before any
court, arbitrator, governmental authority or instrumentality is
pending against Seller or either Principal Shareholder, or to the
Seller's or either Principal Shareholder's knowledge is
threatened against Seller or any Principal Shareholder, which
involves the Business, the Purchased Assets or the consummation
by Seller of the transactions contemplated by this Agreement,
and, to Seller's and the Principal Shareholders' knowledge, no
valid basis exists for any such action, suit, proceeding or
investigation.
(k) Consents and Approvals. Except as set forth on
Section 6(k) of the Disclosure Schedule and except for the filing
of notices with the appropriate authorities under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act ("HSR Filings") and the
expiration of the waiting periods thereunder, no consent,
approval or authorization of, or declaration, filing or
registration with, any governmental or regulatory authority or
agency, whether federal, state or local, is required in
connection with the execution or delivery of this Agreement by
Seller or the consummation by Seller of any of the transactions
contemplated hereby. Except as set forth in Section 6(k) of the
Disclosure Schedule, no consent of any other entity, agency or
person is required in connection with the execution or delivery
of this Agreement by Seller or the consummation by Seller of any
of the transactions contemplated hereby, including, without
limitation, consents from any party to any Contract (whether or
not an Assigned Contract) to which Seller is a party, or which is
applicable to the Business or the Purchased Assets.
(l) Taxes. Except as set forth in Section 6(l) of the
Disclosure Schedule:
(i) Seller has properly and timely filed all
federal, state and local tax reports and returns required to
be filed by it, and all taxes, license fees, and charges and
levies of every kind, character and description (including,
without limitation, those due in respect to their
properties, income, franchise, occupations, licenses, sales
and payrolls), as shown by such reports or returns to be due
and payable, or levied, assessed or imposed on the Business
or Seller through the date hereof (except for those which by
their terms are not yet due and payable) have been paid. No
taxing authority has asserted against Seller any claim for
the assessment of any additional tax liability which has not
been resolved as of the date hereof.
(ii) There are no tax liens upon any property or
assets of Seller except liens for current taxes not yet due
and payable.
(iii) No examination or audit of any tax
return or report of Seller is in progress or to Seller's or
any Principal Shareholder's knowledge is contemplated.
(m) Condition of Leased Real Estate.
(i) The structures, plants, improvements, systems
and fixtures (including, without limitation, storage tanks
or other impoundment vessels, whether above or below ground)
located on the real estate where the Stores are located (the
"Real Estate") conform in all material respects with all
Federal, state and local statutes and laws and all
ordinances, rules, regulations and similar governmental and
regulatory requirements, and, considering their age, are in
good operating condition and repair, except for ordinary
wear and tear and the requirement of normal, routine
maintenance, which maintenance Seller has not deferred
unreasonably. Except as set forth on Section 6(m) of the
Disclosure Schedule, the Real Estate, in view of the
purposes for which it is currently used, conforms in all
material respects with all covenants or restrictions of
record and conforms in all material respects with all
applicable building codes and zoning requirements, and
current, valid certificates of occupancy (or equivalent
governmental approvals) have been issued for the Real Estate
to the extent required by law; and neither Seller nor either
of the Principal Shareholders is aware of any proposed
material change in any such governmental or regulatory
requirements or in any such zoning requirements.
Considering their age, all existing electrical, plumbing,
fire sprinkler, lighting, cooling, refrigeration, air
conditioning, heating, ventilation, elevator and other
mechanical systems located in or about the Real Estate are
in good operating condition and repair, except for ordinary
wear and tear and the requirement of normal, routine
maintenance, which maintenance Seller has not deferred
unreasonably.
(ii) Notwithstanding subsection 6(m)(i) above:
with respect to each parcel of Real Estate, Seller and the
Principal Shareholders make no representation or warranty
under this Section 6(m) with regard to liens, encumbrances,
building and use restrictions, covenants, easements, or
similar matters which are specifically disclosed in the
prime lease of the parcel affected thereby; and with respect
to each parcel of Real Estate other than the Neenah (Green
Bay Road) Store, Seller and the Principal Shareholders make
no representation or warranty under this Section 6(m) with
regard to the condition of or any matters affecting such
parcel with respect to which all of the following conditions
are met: (A) such matter or condition existed at the xxxx
Xxxxxx'x occupancy of such parcel commenced, (B) such matter
or condition is not attributable to and was not caused by
any act or omission of Seller, and (C) Seller and the
Principal Shareholders have no knowledge of such matter or
condition.
(n) Employment Practices. None of Seller's employees
is represented by any labor organization. During the five (5)
years preceding the date hereof, there has not been any request
by any employees of the Business for an election or certification
of a union to represent them, and there does not exist, and to
the Seller's and the Principal Shareholders' knowledge there is
not threatened or contemplated, any strike, slow-down, picketing
or work stoppage by any employees, or any lock-out by Seller of
any employees. During the preceding five (5) years, Seller has
not experienced any significant labor dispute. Seller is not
engaged in any unfair labor practice, no unfair labor practice
complaint has been asserted or is pending or, to the Seller's and
the Principal Shareholders' knowledge, threatened against Seller,
no grievance or arbitration proceeding is pending or, to the
Seller's and the Principal Shareholders' knowledge, is
threatened, and there is no claim, suit or proceeding filed or,
to the Seller's and the Principal Shareholders' knowledge,
threatened against Seller, alleging discrimination against any
past or present Employee based on age, sex, national origin,
religion or race, except as set forth in Section 6(n) of the
Disclosure Schedule. Seller has complied in all material
respects with all laws, statutes, rules and regulations
applicable with respect to employees in every one of the
jurisdictions in which it operates and/or does business. In
particular, Seller has complied in all material respects with all
laws, statutes, rules and regulations applicable to and/or
directed at discriminatory practices (including, without
limitation, discrimination based on race, age, sex or sexual
preference, in particular with respect to employment, equal pay
and/or discharge), labor standards and working conditions,
payment of minimum wages and overtime rates, or otherwise
relating to the conduct of employers with respect to its
employees or potential employees, and there have been no claims
made or, to the knowledge of the Seller and the Principal
Shareholders, threatened thereunder against Seller arising out
of, relating to or alleging any violation of any of the
foregoing. Seller has complied in all material respects with the
employment eligibility verification form requirements under the
Immigration and Naturalization Act, as amended ("INA"), in
recruiting, hiring, reviewing and documenting prospective
employees for employment eligibility verification purposes and
Seller has complied in all material respects with the record-
keeping and reporting provisions and anti-discrimination
provisions of the INA. To the knowledge of the Seller and the
Principal Shareholders, Seller is not currently employing any
workers unauthorized to work.
(o) Environmental Matters.
(i) Except (in the case of clauses (W) and (Y) of
this sentence) for Hazardous Substances (as hereinafter
defined) generated, stored, treated, manufactured, refined,
handled, produced, disposed of or used by Seller in the
ordinary course of its business, in compliance with the
requirements of currently applicable laws, rules and
regulations or otherwise in a manner which would not give
rise to any liabilities or obligations under such laws,
rules and regulations, (V) to the knowledge of the Seller
and the Principal Shareholders there are no tanks, vessels
or other containers used (or formerly used) for the storage
of Hazardous Substances on or below the surface of the Real
Estate and to the knowledge of the Seller and the Principal
Shareholders there is no asbestos nor are there any asbestos
containing materials contained in any of the buildings or
structures located on the Real Estate, (W) Seller has not,
and to the knowledge of the Seller and the Principal
Shareholders no other party has, caused any Hazardous
Substances (as that term is hereinafter defined) to be
present in, on or under any of the Real Estate of such a
nature or to such an extent that they could (1) have a
material adverse effect on the value of such Real Estate for
its present use, (2) limit the ability of Buyer to conduct
the Business on such Real Estate, or (3) limit the ability
of Buyer (or increase Buyer's cost) to expand, improve or
renovate the buildings and structures on such Real Estate
for continued use in the same business; (X) none of the Real
Estate has been designated, restricted or investigated by
any governmental authority as a result of the actual or
suspected presence, spillage, leakage, discharge or other
emission of Hazardous Substances, nor do the Principal
Shareholders or the Seller have any reason to believe that
there is any basis for any such designation, restriction or
investigation attributable to any act of Seller or, to their
knowledge, of any other party; (Y) no Hazardous Substances
have been generated, used, stored, treated, manufactured,
refined, handled, produced or disposed of in, on or under,
and no Hazardous Substances have been transported, released
or disposed of at, from or to, any of the Real Estate by
Seller or by any persons or agents operating under the
control, direction and supervision of Seller, including,
without limitation, all employees, agents and contractors of
Seller, nor to the Seller's and the Principal Shareholders'
knowledge, by any other party; and (Z) Seller has not
received any written or oral notice, order, inquiry,
investigation, environmental audit or assessment or any
lien, encumbrance, decree, easement, covenant, restriction,
servitude or proceeding concerning, or arising by reason of,
the actual or suspected presence, spillage, leakage,
discharge, disposal or other emission of any Hazardous
Substance in, on, under, around, about or in the vicinity
of, or the transportation of any Hazardous Substance at,
from or to, any of the Real Estate.
(ii) Neither Seller nor any Store premises nor
any aspect of the manner in which the Business is or has
been conducted is in material violation of, or subject to
any material liabilities as a result of any past or current
violations of, any existing federal, state or local law
(including common law), statute, ordinance, rule or
regulation of any federal, state or local governmental
authority relating to occupational health and safety or
relating to pollution or protection of the environment,
including, without limitation, statutes, laws, ordinances,
rules and regulations relating to the emission, generation,
discharge, spillage, leakage, storage, off-site dumping,
release or threatened release of Hazardous Substances into
ambient air, surface water, ground water or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Substances (collectively,
"Environmental Laws"), and, to the Seller's and the
Principal Shareholders' knowledge, no expenditures are
required in connection with the operation of the Business as
presently conducted in order to bring the Business into
compliance with any such Environmental Laws.
(iii) Notwithstanding subsections 6(n)(i) and
(ii) above, with respect to each parcel of Real Estate other
than the Neenah (Green Bay Road) Store, Seller and the
Principal Shareholders make no representation or warranty
under this Section 6(n) with respect to any matter or
condition described in the preceding paragraphs (i) and (ii)
affecting such parcel, with respect to which all of the
following conditions are met: (A) such matter or condition
existed at the xxxx Xxxxxx'x occupancy of such parcel
commenced, (B) such matter or condition is not attributable
to and was not caused by any act or omission of Seller, and
(C) Seller and the Principal Shareholders have no knowledge
of such matter or condition.
(iv) For purposes of this Agreement, the term
"Hazardous Substance" shall mean any product, substance,
chemical, contaminant, pollutant, effluent, waste or other
material, other than products offered for sale in the Stores
in the forms and quantities in which they are so offered for
sale, whose presence, nature, quantity and/or intensity of
existence, use, manufacture, disposal, transportation,
emission, discharge, spill, release or effect is either: (a)
regulated or monitored by any governmental authority or (b)
defined or listed in, or otherwise classified pursuant to,
any statute, law, ordinance, rule or regulation applicable
to the Real Estate or the Business as "hazardous
substances," "hazardous materials," "hazardous wastes,"
"infectious wastes" or "toxic substances". Hazardous
Substances shall include, but not be limited to, (a)(A) any
"hazardous substance" as defined in the Comprehensive
Environmental Response, Compensation and Liability Act, (B)
any "regulated substance" as defined in the Solid Waste
Disposal Act or (C) any substance subject to regulation
pursuant to the Toxic Substances Control Act, as such laws
are now in effect or may be amended through the Effective
Time and any rule, regulation or administrative or judicial
policy statement, guideline, order or decision under such
laws, (b) petroleum and refined petroleum products, (c)
asbestos, asbestos-containing products, and presumed
asbestos-containing material (as defined in 29 CFR
1910.1001(b), (d) flammable explosives, (e) radioactive
materials, (f) radon, (g) polychlorinated biphenyls, whether
contained or not, and (h) any other substance that is
regulated or classified as hazardous or toxic under any
federal, state or local law, statute, ordinance, rule or
regulation.
(p) All Necessary Assets. Except for the Excluded
Assets, the Purchased Assets comprise all of the assets,
properties and rights (including, without limitation,
intellectual property rights and any data processing equipment,
software and/or data files located at the corporate offices of
Seller) required to operate the Business in the manner in which
it has heretofore been operated by Seller.
(q) Compliance with Laws. Seller has complied in all
material respects with all applicable foreign or domestic laws
and statutes and all ordinances, codes, rules, regulations,
judgments, orders, injunctions, writs or decrees of any Federal,
state, local or foreign court or any governmental body or agency
thereof to which Seller is subject or which are applicable to or
otherwise affect the operations, Business or assets of Seller,
including, without limitation, rules or regulations of the Food
and Drug Administration and similar state, local and foreign
agencies (including, without limitation, all product labeling
requirements thereof). Neither Seller nor either of the
Principal Shareholders has any knowledge of any inquiry,
investigation or proceeding relating thereto.
(r) Permits and Licenses. Seller has in force and
effect, and has complied with all of the conditions and
requirements imposed by, all material permits, licenses,
exemptions, consents, authorizations and approvals used in or
required for the conduct of its Business as currently conducted
("Licenses and Permits"). Section 6(r) of the Disclosure
Schedule contains a list by each Store location of all Licenses
and Permits currently used in the Business or required for the
conduct of the Business as currently conducted. Neither Seller
nor either of the Principal Shareholders has received any notice
of, nor has any knowledge of, any intention on the part of any
appropriate authority to cancel, revoke or modify, or any
inquiries, proceedings or investigations the purpose or possible
outcome of which is the cancellation, revocation or modification
of any such material permit, license, exemption, consent,
authorization or approval.
(s) Patents, Trademarks, Etc. Seller uses the trade
names and trademarks set forth on Section 6(s) of the Disclosure
Schedule (collectively, the "Intangible Rights"), in the
operation of the Business. To the Seller's and the Principal
Shareholders' knowledge, no aspect of the Seller's Business
(including, without limitation, Seller's use of the Intangible
Rights) conflicts with any intellectual property or similar
rights of others. There are no licenses, agreements or
commitments outstanding or effective granting any other person
any right to use, operate under, license or sublicense, or
otherwise concerning, the Intangible Rights. To the knowledge of
Seller and the Principal Shareholders, there is no material
infringement or violation by any other person of Seller's rights
in any of the Intangible Rights. Notwithstanding the foregoing,
Seller makes no representation or warranty with respect to any
trademarks or trade names of other parties attached to or forming
a part of the merchandise offered for sale by Seller.
(t) Brokers' Fees. Except for commissions due to KPMG
Peat Marwick, LLP (which commissions will be paid by Seller and
against which Seller will indemnify Buyer) Seller and the
shareholders of Seller have no liability or obligation to pay any
fees or commissions to any broker, finder, or agent with respect
to the transactions contemplated by this Agreement for which the
Buyer could become liable or obligated.
(u) Transactions with Related Parties. Section 6(u)
of the Disclosure Schedule contains an accurate and complete list
of all agreements, arrangements and understandings relating to
the provision of services (other than services as an employee on
normal, arms-length terms), use or transfer or property or
assets, or outstanding indebtedness which are currently in effect
or which were in effect or occurred at any time after January 1,
1996 between the Seller and any of the following (each, a
"Related Party"): (i) each person who is now or at the time in
question was a shareholder, director or officer of Seller; (ii)
the spouses, children, grandchildren, siblings, parents,
grandparents, uncles, aunts, nieces, nephews or first cousins of
any person described in (i) (collectively, "near relatives");
(iii) any trust for the benefit of any person described in (i) or
any of their respective near relatives; and (iv) any corporation,
partnership, joint venture or other entity owned or controlled by
any person described in (i) or any of their respective near
relatives.
(v) Year 2000 Compliance. Except to the extent
disclosed on Section 6(e) of the Disclosure Schedule, to the
Seller's and the Principal Shareholders' knowledge, all devices,
systems, machinery, information technology, computer software and
hardware, and other date sensitive technology that are included
in the Purchased Assets (the "Systems") are "Year 2000
Compliant." "Year 2000 Compliant" means, with respect to any
System or Systems, that such System or Systems are designed to be
used prior to, during and after the Gregorian calendar year 2000
A.D. and will operate during each such time period without error
relating to date data, specifically including any error relating
to, or the product of, date data which represents or references
different centuries or more than one century, in each case to any
extent that could result in a material disruption of any aspect
of the Business.
(w) Computer Software. No computer programs or
software used by Seller in the conduct of the Business and
material to the conduct of the Business have been written or
designed or materially modified specifically for Seller. All
computer software used by Seller or installed on any computers
owned or used by Seller is either (i) owned by Seller or (ii)
used pursuant to valid and effective licenses from the owners
thereof. Seller is not in breach or default under any of such
licenses, and has not received any notice suggesting or alleging
that any such breach or default has occurred or that Seller is
using or has used any computer software without an appropriate
license therefor.
(x) Knowledge of Seller and Principal Shareholders.
For those warranties and representations set forth in this
Section 6 which are qualified by reference to the Seller's and or
the Principal Shareholders' "awareness" or "knowledge," the
Seller and the Principal Shareholders shall be deemed to have
knowledge and be aware of (i) any matter, fact, or thing that is,
as of the date hereof or the Closing Date, actually known to any
Principal Shareholder or to any officer or director of the
Seller; and (ii) any matter, fact or thing which reasonably
should be known by any Principal Shareholder after "due inquiry"
by such Principal Shareholder, taking into account any and all
roles or positions which such Principal Shareholder may hold with
the Seller and any and all duties and responsibilities he or she
may have vis-a-vis the Seller and its business. For this
purpose, "due inquiry" shall include a review of the accounting
and financial records and books of account of the Seller; a
review of the Seller's regularly maintained files and records
relating to its assets, liabilities, and business; a review of
the minute books and stock records of the Seller; a visual
inspection of the Seller's Real Property and tangible personal
property; and an inquiry of the managers of Seller's departments
of Information Services, Human Resources, Finance and Operations,
and Seller's Maintenance and Repair Support Specialist, Director
of Meat, Director of Perishables, Director of Marketing and
Advertising, Grocery Store Specialist, and Seller's principal law
firm and outside auditing firm.
7. REPRESENTATIONS AND WARRANTIES OF BUYER AND XXXXXX'X.
To induce Seller and the Principal Shareholders to enter into
this Agreement, Buyer and Xxxxxx'x, jointly and severally, make
the following representations, warranties and agreements:
(a) Corporate Organization. Buyer and Xxxxxx'x are
each corporations duly organized and validly existing under the
laws of the State of Wisconsin, all filings necessary for the
maintenance of their corporate existence have been made, and
there are no proceedings pending for their dissolution. Buyer
and Xxxxxx'x have all requisite corporate power and corporate
authority to carry on their businesses as they are now being
conducted and to own and lease the properties and assets they now
own and lease.
(b) Authorization; Validity. Buyer and Xxxxxx'x each
have all requisite corporate power and authority to enter into
this Agreement and to carry out their obligations hereunder, and
the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized
by their Boards of Directors. No other corporate proceedings on
the part of Buyer or Xxxxxx'x are necessary to authorize this
Agreement or the transactions contemplated hereby and this
Agreement constitutes the valid and legally binding obligation of
Buyer and Xxxxxx'x, enforceable in accordance with its terms.
(c) Compliance. Neither the execution nor delivery of
this Agreement by Buyer or Xxxxxx'x nor the consummation by Buyer
or Xxxxxx'x of the transactions contemplated hereby, will result
in any violation of or be in conflict with, or constitute a
default under, any provision of Buyer or Xxxxxx'x Articles of
Incorporation or By-Laws, or any contract, agreement, security
agreement, pledge, document, commitment, instrument, judgment,
decree, order, statute, rule or governmental regulation to which
Buyer or Xxxxxx'x is a party or by which either is bound, or
which is applicable to Buyer or Xxxxxx'x, or give any third party
any right to terminate or cancel any such contract, security
agreement, pledge, document, commitment or instrument, or
accelerate any obligation evidenced thereby.
(d) Litigation. There are no lawsuits, claims or
other proceedings pending or threatened against Buyer or Xxxxxx'x
which would adversely affect Buyer's or Xxxxxx'x ability to
perform their obligations hereunder.
(e) Consents and Approvals. Except for the filing of
notices with the appropriate authorities under the Xxxx-Xxxxx-
Xxxxxx Antitrust Improvements Act ("HSR Filings") and the
expiration of the waiting period thereunder, no consent approval
or authorization of, or declaration, filing or registration with,
any governmental or regulatory authority or agency, whether
federal, state or local, is required in connection with the
execution or delivery of this Agreement by Buyer and Xxxxxx'x or
the consummation by Buyer or Xxxxxx'x of any of the transactions
contemplated hereby. No consent of any other entity, agency or
person is required in connection with the execution or delivery
of this Agreement by Buyer and Xxxxxx'x or the consummation by
Buyer and Xxxxxx'x of any of the transactions contemplated
hereby.
(f) Brokers' Fees. Buyer and Xxxxxx'x have no
liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which Seller or the Principal
Shareholders could become liable or obligated.
(g) Resale. Buyer is purchasing the Inventory for
resale.
8. CONDUCT OF BUSINESS PRIOR TO CLOSING. Seller and the
Principal Shareholders, jointly and severally covenant that from
the date of this Agreement through the Effective Time, except
with the prior written consent of Buyer or as otherwise
specifically provided for by this Agreement, Seller shall:
(a) carry on the Business in the normal and ordinary
course in a manner consistent with the manner in which the
Business has heretofore been conducted (including but not limited
to maintaining the Stores and all leasehold improvements and
equipment contained therein in good condition, repair and working
order);
(b) not enter into any material contract (other than
for purchases of inventory and supplies in the usual and ordinary
course of business upon terms consistent with past practices);
(c) not encumber any of the Purchased Assets (except
for encumbrances that will be released at or prior to Closing) or
enter into any transaction or make any commitment relating to the
Purchased Assets or the Business, other than in the usual and
ordinary course of business;
(d) not hire any additional employees (except in the
ordinary course of business and consistent with past practices)
or grant any increase in the salaries or rates of pay of any
employee (except for normal periodic merit or seniority increases
under existing agreements or established policies and practices
of Seller and consistent in amount and timing with Seller's prior
practices), establish any new retirement or fringe benefit plan
or grant any increase in benefits under any existing plan;
(e) maintain all of its property, casualty, liability
and other insurance in effect as of the date hereof; and
(f) promptly pay when and as due all taxes, license
fees, charges, franchises and contributions required to be paid
by Seller to governmental agencies or taxing authorities, with
respect to the operation of the Business.
9. COVENANTS OF BUYER AND XXXXXX'X
(a) Resale Certificate. Buyer shall provide to Seller
at or before the Effective Time, a properly completed resale
certificate, in a form acceptable to Seller's counsel, with
respect to the Inventory.
(b) Applications for Permits and Licenses. In a
timely and expeditious manner, Buyer shall make all necessary
filings and applications and take all other appropriate steps to
obtain the permits, licenses, consents, approvals and the like
necessary for operation of the Business, as contemplated by
Section 10(g) below.
(c) Operation of Stores. From and after the Effective
Time though Closing, Buyer and Xxxxxx'x shall:
(i) with respect to each Store of which they have
possession, operate said Store in the normal and ordinary
course in a manner consistent with the manner in which the
Business has heretofore been conducted (including, without
limitation, maintaining said Stores, all leasehold
improvements and the Equipment contained therein and
adequate levels of inventory);
(ii) not enter into any material contract (other
than for purchases of inventory or services in the usual and
ordinary course of business upon terms consistent with past
practices);
(iii) not encumber or sell any of the assets
at the Stores (other than sales of inventory in the ordinary
course of business consistent with past practice);
(iv) maintain adequate property, casualty,
liability and other appropriate insurance coverage in
amounts consistent with Seller's past practice; and
(v) promptly pay when due all taxes, license
fees, charges, franchises and contributions required to be
paid to governmental agencies or taxing authorities in
connection with the Stores and between the Effective Time
and Closing.
10. CONDITIONS TO OBLIGATIONS OF BUYER AND XXXXXX'X. Buyer
and Xxxxxx'x obligation to purchase the Purchased Assets under
this Agreement shall be subject to the satisfaction, at or before
the Closing, of each of the following conditions, unless waived
in writing by Buyer:
(a) Representations and Warranties True. Each and
every representation and warranty of Seller and the Principal
Shareholders contained in Section 6 hereof, and in each
certificate and other document delivered or to be delivered by
Seller or its representatives pursuant hereto or in connection
with the transactions contemplated hereby, shall be true and
accurate in all material respects as of the date when made and as
of the Effective Time and the Closing Date (except to the extent
the inaccuracy of any such representation or warranty is
attributable solely to acts or omissions of Buyer in its conduct
of the Business between the Effective Time and the Closing Date),
as though such representation and warranty were made by Seller
and the Principal Shareholders at the Effective Time and at the
Closing Date.
(b) Performance. Seller and the Principal
Shareholders shall have performed and complied in all material
respects with each and every covenant, obligation and condition
required by this Agreement to be performed or complied with by
them at or prior to the Closing.
(c) No Proceedings or Litigation. As of the Closing,
no suit, action, investigation, inquiry or other proceeding by or
before any court or governmental body or other regulatory or
administrative agency or commission shall be threatened,
instituted or pending which questions the validity or legality of
this Agreement or the consummation of the transactions
contemplated hereby.
(d) No Injunction. As of the Closing, there shall not
be any effective injunction, writ, preliminary restraining order
or any order of any nature issued by a court, governmental or
regulatory agency directing that the transactions provided for
herein or any of them not be consummated as so provided or
imposing any condition on the consummation of any of the
transactions contemplated hereby.
(e) No Material Adverse Change. There shall have been
no material adverse change in the financial condition, results of
operations, cash flows, assets, liabilities, business or
operations of the Seller during the period between January 2,
1999 and the last Applicable Inventory Date, except for such
changes as are attributable solely to acts or omissions of Buyer
after each Store's Applicable Inventory Date. For this purpose,
any failure of the Seller's systems, or those of any third party
with which the Seller's systems interacts, to be Year 2000
Compliant (as defined in Section 6(v)) in any material respect
will constitute such a material adverse change, regardless of
whether such noncompliance or potential noncompliance is
disclosed on the Disclosure Schedule.
(f) Consents, Approvals, Permits, Etc. All consents,
authorizations, approvals, exemptions, licenses or permits of, or
registrations, qualifications, declarations or filings with, any
governmental body or agency thereof that are required in
connection with the sale and transfer of the Purchased Assets to
the Buyer pursuant to this Agreement and the consummation of the
transactions contemplated hereby shall have been duly obtained or
made in form and substance reasonably satisfactory to the Buyer
and its counsel and shall be effective at and as of the Closing
Date, including without limitation, the expiration of the waiting
periods under the HSR Filings.
(g) Permits, Licenses. Buyer shall have received all
necessary permits, licenses, consents, approvals and the like
from third parties and governmental and administrative agencies
necessary for Buyer's conduct of the Business as presently
conducted.
(h) Estoppel Certificate. Buyer shall have received
an estoppel certificate in form and substance satisfactory to
Buyer in its reasonable discretion from the landlord under the
lease for the Store located on Green Bay Road in Neenah,
Wisconsin (the "Estoppel Certificate").
(i) Termination and Release Agreement. Xxxxxx'x,
Seller and the shareholders of Seller shall have entered into an
agreement among them, in form and substance satisfactory to them
and their respective counsel, whereby all agreements (including
the "Pick `N Save" trademark license and supply agreements)
entered into between the parties (or their affiliates) prior to
the date hereof (the "Existing Agreements") are terminated and
the parties mutually release each other from and against any and
all claims, demands, causes of action, liabilities, costs,
expenses, or obligations (other than those arising out of this
Agreement) that any party may have against any other arising out
of or relating to the Existing Agreements or the business
relationships existing between the parties (the "Termination and
Release Agreement"). The Termination and Release Agreement will
not apply to the obligation of any party to pay any amount due to
the other party in the ordinary course of business and relating
to the purchase of merchandise by Seller from Xxxxxx'x or its
affiliates, including, by way of example, the purchase price of
merchandise purchased by Seller; rebates, discounts and
allowances due Seller by Xxxxxx'x; patronage dividends; "We Care"
payments; and similar matters.
(j) Conversion of Stock. The Class A Voting Stock of
Xxxxxx'x held by Seller (and the Voting Trust Certificates issued
in respect thereof under the Xxxxxx'x, Inc. Voting Trust) shall
have been canceled, and an equal number of new shares of Xxxxxx'x
Class B Stock shall have been issued in exchange therefor.
(k) Benefit of Stop Loss Policy. Buyer shall have had
extended to it the benefit of the "Stop Loss Policy" with respect
to "Post-Closing Claims" under the "Buyer's Health and Dental
Plan" (as those terms are defined in Section 15(b)), the form and
manner in which the same is effected and the coverage afforded to
Buyer thereunder to be consistent with the provisions of Section
15(b) and satisfactory to Buyer and its counsel;
(l) Employee Census Data. Seller shall have delivered
to Buyer, at least two weeks prior to Closing, a list by each
Store location of all of Seller's employees, both full and part
time, including their respective wages or salaries, and any other
employee related information that Buyer may reasonably request
for the purpose of entering the Transferred Employees into
Buyer's payroll system, complying with applicable employment and
employment tax laws and regulations, and similar purposes;
(m) Deliveries at or Prior to Closing. Seller shall
have delivered or caused to be delivered to Buyer the following
at or prior to the Closing, all in form reasonably satisfactory
to Buyer's counsel:
(i) Copies of resolutions of Seller's Board of
Directors and its shareholders authorizing the execution,
delivery and performance by Seller of this Agreement and the
consummation by Seller of the transactions contemplated
hereby, and authorizing Seller's officers, employees and
agents to carry out and perform the terms and provisions
hereof, certified by the corporate secretary of Seller.
(ii) a closing certificate from the President or a
Vice President of Seller certifying the fulfillment of the
conditions set forth in this Section.
(iii) a legal opinion from Seller's counsel in
substantially the form attached hereto as Exhibit
10(m)(iii).
(iv) a certificate of status of Seller issued by
the Department of Financial Institutions of the State of
Wisconsin, dated not more than ten (10) days prior to the
Closing Date.
(v) Documents in form and substance satisfactory
to Buyer to amend Seller's Articles of Incorporation to
eliminate from Seller's corporate name the words "Ultra
Mart" and any other words or terms confusingly similar
thereto.
(vi) The written consents of all parties that are
required for the assignment by Seller to Buyer of the
Assigned Contracts (including without limitation the consent
of the lessor under the lease of the Store site on Green Bay
Road in Neenah); provided that, if with respect to any
Assigned Contract, Buyer waives the receipt of any such
consent and agrees to proceed with the Closing in the
absence thereof, then Buyer shall indemnify Seller for any
liabilities arising under such Assigned Contract due to the
failure to obtain such waived consent.
(vii) The Fox Point Sublease Agreement, duly
executed by Seller and Xxxxxx X. Xxxxxxx.
(viii) All other instruments and documents
required by this Agreement to be delivered by Seller or the
Principal Shareholders to Buyer, and such other instruments
and documents which Buyer or its counsel may reasonably
request not inconsistent with the provisions hereof so as to
effectively transfer to Buyer all of Seller's right, title
and interest in and to the Purchased Assets as provided by
this Agreement, including, without limitation:
(A) a warranty xxxx of
sale for the Purchased Assets;
(B) an assignment of the
Assigned Contracts;
(C) assignments of the
Intellectual Property;
(D) certificates of
title to any motor vehicles constituting
Purchased Assets.
11. CONDITIONS TO OBLIGATIONS OF SELLER. Each and every
obligation of Seller and the Principal Shareholders under this
Agreement (other than those contained in Section 8) to be
performed at or before the Closing shall be subject to the
satisfaction, at or before the Closing, of each of the following
conditions, unless waived in writing by Seller:
(a) Representations and Warranties True. Each and
every representation and warranty of Buyer and Xxxxxx'x contained
in Section 7 hereof, and in each certificate and other document
delivered or to be delivered by Buyer or Xxxxxx'x or its
representatives pursuant hereto or in connection with the
transactions contemplated hereby, shall be true and accurate in
all material respects as of the date when made and as of the
Closing Date as though such representation and warranty were made
by Buyer and Xxxxxx'x on the Closing Date.
(b) Performance. Buyer and Xxxxxx'x shall have
performed and complied in all material respects with each and
every covenant, obligation and condition required by this
Agreement to be performed or complied with by them at or prior to
the Closing.
(c) No Proceedings or Litigation. As of the Closing,
no suit, action, investigation, inquiry or other proceeding by or
before any court or governmental body or other regulatory or
administrative agency or commission shall be threatened,
instituted or pending which questions the validity or legality of
this Agreement or the consummation of the transactions
contemplated hereby.
(d) No Injunction. As of the Closing, there shall not
be any effective injunction, writ, preliminary restraining order
or any order of any nature issued by a court, governmental or
regulatory agency directing that the transactions provided for
herein or any of them not be consummated as so provided or
imposing any condition on the consummation of any of the
transactions contemplated hereby.
(e) Consents, Approvals, Permits, Etc. All consents,
authorizations, approvals, exemptions, licenses or permits of, or
registrations, qualifications, declarations or filings with, any
governmental body or agency thereof that are required in
connection with the sale and transfer of the Purchased Assets to
the Buyer pursuant to this Agreement and the consummation of the
transactions contemplated hereby shall have been duly obtained or
made in form and substance reasonably satisfactory to the Seller
and its counsel and shall be effective at and as of the Closing
Date, including without limitation, the expiration of the waiting
periods under the HSR Filings.
(f) Deliveries at Closing. Buyer shall have delivered
to Seller at the Closing:
(i) that portion of the Purchase Price payable at
the Closing, net of the Sublease Obligations Holdback and
the Health Insurance Holdback;
(ii) the Termination and Release Agreement and the
Fox Point Sublease Agreement, duly executed by Buyer and
Xxxxxx'x, as appropriate;
(iii) a closing certificate from the President
or a Vice President of Buyer and Xxxxxx'x certifying the
fulfillment of the conditions set forth in this Section 11;
and
(iv) a legal opinion from Xxxxxx'x counsel in
substantially the form attached hereto as Exhibit 11(f)(iv).
12. PRORATIONS and ACCRUALS.
(a) Personal property taxes applicable to the
Purchased Assets for the year (or other period) in which the
Effective Time occurs shall be prorated as of the Effective Time
on the basis of the personal property tax bills for the year
1999. Utility charges for the billing periods in which the
Closing occurs will be apportioned between Buyer and Seller based
on actual meter readings as of the Effective Time.
(b) Buyer will be entitled to a credit against the
Purchase Price for the amount of all accrued but unpaid vacation
pay due as of the Effective Time to those employees of the Stores
that accept Buyer's offer of employment ("Transferred
Employees"). For purposes of this Section 12(b), accrued
employee vacation pay for which Buyer will be entitled to a
credit will include that which each Transferred Employee has
earned but not used as of the Effective Time ("Earned Vacation
Pay"), as well as a pro-rata portion of that which each
Transferred Employee has accrued through the Effective Time, even
though the employee may not be entitled thereto unless he or she
would have remained employed by Seller for some additional time
after the Effective Time ("Accruing Vacation Pay"). For purposes
of this Section 12(b), the amount of Accruing Vacation Pay will
be reduced to reflect the amount thereof that would reasonably be
expected to be forfeited by Transferred Employees on account of
the termination of their employment before such Accruing Vacation
Pay has been earned, based on the Company's past experience. If,
notwithstanding Buyer's assumption of the Assumed Employee
Accruals, Seller is required to (and does) pay any amount
included therein for which Buyer received a credit as provided in
this Section 12(b), and as a result Buyer is relieved of any
obligation to pay such amount, then Buyer will reimburse Seller
for the amount Buyer would otherwise have been obligated to pay.
(c) All costs, charges or prepayments paid or payable
by or to Seller under any Assigned Contracts will be prorated as
of the Applicable Inventory Date.
(d) Rent, percentage rent, tenant's shares of real
estate taxes, common area maintenance expenses and other payments
payable by Seller under the leases and subleases for the Real
Estate ("Store Leases"), except to the extent the same are
settled through the Sublease Obligations Holdback as provided in
Section 2(c) above, shall be prorated as of the Effective Time
based on actual amounts incurred or assessed for the year 1999.
With respect to time periods between December 31, 1999 and the
Effective Time, such prorations will be determined on the basis
of actual amounts incurred or assessed for the year 1999, and
will not be adjusted after the Closing Date to reflect actual
amounts incurred or assessed for periods after December 31, 1999.
13. NONCOMPETITION.
(a) Seller and Principal Shareholder Xxxxxx X. Xxxxxxx
("Xxxxxxx") hereby covenant and agree with Buyer and Xxxxxx'x
that for the five (5) year period following the Closing, they
will not, directly or indirectly, as a principal, agent, owner,
employee, trustee, beneficiary, distributor, partner, co-
venturer, officer, director, shareholder or in any other
capacity, engage, own, operate, manage, join, finance, control or
participate in the ownership, management, operation or control
of, or be paid or employed by or acquire any securities of, or
otherwise become associated with or provide assistance to any
entity, business, activity or enterprise (other than as a 5% or
less shareholder of a publicly held corporation) which is engaged
within the state of Wisconsin in the business of operating one or
more retail grocery supermarkets ("Competing Business").
(b) Principal Shareholder Xxxxx X. Xxxxx ("Xxxxx")
hereby covenants and agrees with Buyer and Xxxxxx'x that for the
five (5) year period following the Closing, he will not, directly
or indirectly, own or have any financial or equity interest in
(other than as a 5% or less shareholder either (i) of a publicly
held corporation or (ii) through employee stock options, stock
purchase plans or similar arrangement), or control as a
principal, owner, trustee, beneficiary, partner, co-venturer or
shareholder, or acquire securities of any Competing Business.
(c) Seller and Xxxxxxx and Xxxxx acknowledge and agree
that the restrictions set forth in this Section 13 are founded on
valuable consideration and are reasonable in duration and
geographic area in view of the circumstances under which this
Agreement is executed and that such restrictions are necessary to
protect the legitimate interests of Buyer and Xxxxxx'x. In the
event that any provision of this Section 13 is determined to be
invalid by any court of competent jurisdiction, the provisions of
this Section 13 shall be deemed to have been amended and the
parties agree to execute any documents and take whatever action
is necessary to evidence such amendment, so as to eliminate or
modify any such invalid provision and to carry out the intent of
this Section 13 so as to render the terms of this Section 13
enforceable in all respects as so modified.
(d) Seller and Xxxxxxx and Xxxxx acknowledge and agree
that irreparable injury may result to Buyer and Xxxxxx'x in the
event Seller or Xxxxxxx or Xxxxx breaches any covenant contained
in this Section 13, and that the remedy at law for the breach of
any such covenant will be inadequate. Therefore, if Seller or
Xxxxxxx or Xxxxx engages or threatens to engage in any act in
violation of the provisions of this Section 13, Buyer and
Xxxxxx'x shall be entitled, in addition to such other remedies as
may be available to it at law or under this Agreement, to
injunctive relief to enforce the provisions of this Section 13.
14. FURTHER ASSURANCES; BOOKS AND RECORDS.
(a) From time to time after the Closing, Seller shall,
without cost to Buyer, execute and deliver to or cause to be
executed and delivered to Buyer such other and further transfer
documents and instruments, and take such other action as Buyer
may reasonably request to carry out more effectively the sale of
the Purchased Assets contemplated by this Agreement and to
protect Buyer's right, title and interest in and enjoyment of the
Purchased Assets and the Business.
(b) Following the Closing, for a period of five (5)
years, Seller will preserve those of its books, records, files
and other materials which are not part of the Purchased Assets
hereunder but that relate to the operation of the Stores and/or
the Purchased Assets, and will make the same available to Buyer,
during reasonable times and upon reasonable advance notice, for
Buyer's inspection and copying (at Buyer's cost), for purposes
reasonably related to Buyer's operation of the Business and/or
ownership of the Purchased Assets.
15. EMPLOYEES.
(a) Termination by Seller and Hiring By Buyer. Seller
shall terminate all of the employees employed by it at the Stores
immediately prior to the Effective Time. Buyer will offer
reasonably equivalent employment to substantially all of the
store level employees of Seller at each Store ("Store
Employees"). For purposes of this Agreement, the phrase
"substantially all" and "affected employees" are defined as
provided in Section 109.07 of the Wisconsin Statutes and the
regulations thereunder. Buyer shall offer employment to a
sufficient number of Store Employees so as to ensure that
(assuming all such offers of employment are accepted, and further
assuming that no employees of Seller who are not Store Employees
lose their employment with Seller) a notice is not required to be
given under the Worker Adjustment and Retraining Notification
Act, 29 U.S.C. Section 2101, et. seq. (the "WARN Act"). Seller
acknowledges that Buyer intends to hire only a limited number of
the corporate office employees and other non-store level
employees of Seller, and agrees that Seller will be solely
responsible for (and indemnify Buyer against) any liability under
any plant closing or similar law (including the federal WARN Act
and its Wisconsin counterpart) that may arise as a result of the
failure of Buyer to hire any such corporate office or non-store
level employees or the termination of their employment by Seller.
The employees of Seller hired by Buyer as of the Effective Time
are referred to herein as "Transferred Employees."
(b) Self-Insured Health Insurance. Seller maintains a
self-insured health insurance plan and a self-insured dental
insurance plan for certain of its employees (the "Seller's Health
and Dental Plan"), the health insurance plan being administered
by PrimeCare and the dental insurance plan being administered by
Delta Dental (PrimeCare and Delta Dental being collectively
referred to as the "TPA"). Seller also maintains excess loss
insurance coverage in connection with the Seller's Health and
Dental Plan through PrimeCare (the "Stop Loss Policy").
(i) Seller will retain liability to its covered
employees and to the TPA under the Seller's Health and
Dental Plan for all claims incurred by Seller's employees
pursuant to Seller's Health and Dental Plan (whether or not
reported, including claims reported but not fully paid)
prior to the Effective Time ("Pre-Closing Claims"), and
Buyer will not assume any liability of Seller whatsoever (to
its employees, to the TPA, or otherwise) in respect of any
Pre-Closing Claims. For this purpose a claim will be deemed
to have been "incurred" on the date on which the service
provider has provided to the insured the services for which
the reimbursement is sought by the insured, except that in
the case of an insured who is hospitalized on an inpatient
basis all claims for hospital charges incurred in connection
with such hospitalization and until the insured's discharge
will be deemed to have been incurred on the date such
hospitalization commenced (it being the parties intent that
with regard to the characterization of any claim as a "Pre-
Closing Claim" or a "Post-Closing Claim" (as hereinafter
defined), the matter will be resolved by reference to the
practices and customs employed by the health insurance
industry in the case of changes in an insured's coverage
from one insurer to another).
(ii) To facilitate uninterrupted health and dental
insurance coverage for the Transferred Employees, it is
Buyer's intention to implement and maintain a self-insured
health insurance plan and a self-insured dental insurance
plan for the Transferred Employees who participate in
Seller's Health and Dental Plan on terms and conditions
substantially identical to the Seller's Health and Dental
Plan (the "Buyer's Health and Dental Plan"), and to have the
Buyer's Health and Dental Plan administered by the TPA.
Deductible and co-pay obligations (if any) of the
Transferred Employees for the year in which the Effective
Time occurs will be treated under the Seller's Health and
Dental Plan and the Buyer's Health and Dental Plan as though
the two plans were a single plan. Buyer will have the
benefit of the Stop Loss Policy with respect to claims
incurred by Transferred Employees after the Effective Time,
and prior to the Closing Date Seller and Buyer will
cooperate in taking such actions as are necessary or
appropriate, and as may be required by the TPA, to extend
the benefit of the Stop Loss Policy to Buyer with respect to
Post-Closing Claims. Premiums on the Stop Loss Policy for
periods after the Effective Time will be paid by Buyer;
provided that Seller will reimburse Buyer for an allocable
portion of the premium attributable to any employees or
former employees of Seller other than Transferred Employees
with respect to whom the Stop Loss Policy continues to
afford coverage. There will be no waiting period for
Transferred Employees to participate in Buyer's Health and
Dental Plan, nor will coverage thereunder be excluded on the
ground that any otherwise-covered condition is a preexisting
condition of a Transferred Employee.
(iii) With respect to claims incurred by
Transferred Employees after the Effective Time ("Post-
Closing Claims"), Buyer and Seller will instruct the TPA to
seek payment and/or reimbursement from Buyer and not from
Seller. In any event, Seller will have no liability in
respect of such Post-Closing Claims, and Buyer will hold
Seller harmless from any such liability (to the TPA or to
any employee).
(iv) Subject to the following paragraph (v), Buyer
will have no liability (to the TPA or to any employee) in
respect of any Pre-Closing Claims, and Seller will hold
Buyer harmless from any such liability.
(v) Solely to facilitate the settlement of Pre-
Closing Claims with the TPA, Buyer will act as Seller's
agent after the Closing Date in making payments to the TPA
for any Pre-Closing Claims to the extent such claims are to
be paid pursuant to the terms of the Seller's Health and
Dental Plan, and will authorize the TPA to seek such
payments directly from Buyer. In consideration thereof,
Buyer will be entitled to a credit against that portion of
the Purchase Price otherwise due at the Closing for the
amount accrued or reserved on Seller's books as of the
Effective Time for incurred but not reported and reported
but not paid Pre-Closing Claims (such amount to be
determined on a consistent basis in the manner heretofore
employed by Seller in recording such accrual or reserve)
(the "Health Insurance Holdback"). Buyer will not be
required to investigate or inquire as to the propriety or
appropriateness of any Pre-Closing Claim submitted to it for
payment as Seller's agent, but rather may rely solely on the
advice of the TPA that all Pre-Closing Claims for which the
TPA requests reimbursement are properly payable under the
Seller's Health and Dental Plan. Any questions or
controversies that may arise regarding the propriety or
appropriateness of any such Pre-Closing Claim will be
resolved solely between Seller, the TPA, and the employee in
question, and Seller will indemnify and hold the Buyer
harmless from any liability it may incur in connection with
any such controversy (including, without limitation, any
costs incurred by Buyer in participating in or defending any
action or proceeding to which it may be made a party).
(vi) All amounts paid by Buyer in respect of Pre-
Closing Claims in the manner provided in the preceding
paragraph ("Buyer Payments") will be charged against the
Health Insurance Holdback, and Buyer will provide Seller
with an accounting thereof at reasonable intervals, and in
any event no less often than once each calendar quarter.
Following the expiration of one year after the Closing Date
(or, if later, after all Pre-Closing Claims have been fully
paid), Buyer will provide Seller with a final accounting of
all Buyer Payments, and the difference between the total of
the Buyer Payments and the Health Insurance Holdback will be
paid by Seller to Buyer, or by Buyer to Seller, as
appropriate; provided, that if the total Buyer Payments
exceed the Health Insurance Holdback prior to the expiration
of such one year period, Seller will pay such excess,
together with an estimate of the amount of the total
remaining Buyer Payments expected to be incurred with
respect to all then outstanding Pre-Closing Claims, to Buyer
upon Buyer's request.
(vii) Nothing herein shall be deemed an
assumption by Buyer of any liability of Seller (to its
employees or former employees, to the TPA or otherwise)
under or relating to Seller's Health and Dental Plan, it
being acknowledged that with respect to the payment of Pre-
Closing Claims as provided in the preceding paragraph, Buyer
is acting solely as Seller's agent for the convenience of
Seller and the TPA.
(viii) Nothing in this Agreement is intended to
impose on Buyer any obligation to maintain the Buyer's
Health and Dental Plan, or any terms, features or provisions
thereof, for any period of time following the Closing Date,
and Buyer retains the sole and absolute discretion to
discontinue, amend, modify, or replace the Buyer's Health
and Dental Plan at any time and from time to time.
(c) Insured Health Insurance. For those Transferred
Employees who do not participate in Seller's Health and Dental
Plan, but instead are insured by Seller under an insured health
plan, Buyer will provide reasonably equivalent health insurance
coverage effective immediately upon the commencement of their
employment by Buyer, with no waiting period nor any exclusions
from coverage for otherwise-covered conditions that are
preexisting.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITY.
(a) Survival. All representations and warranties of a
party contained in this Agreement or in any certificate or other
document delivered pursuant hereto shall survive the Closing Date
(regardless of any investigation by the other party to this
Agreement) for a period of two (2) years following the Closing,
except for the representations and warranties contained in
Subsections 6(a), (b), (c), (d), (k) and Subsections 7(a), (b)
(c) and (e) which shall survive indefinitely, and those contained
in Subsection 6(l) which shall survive until the expiration of
the applicable statutes of limitations (the period of survival
of any representation or warranty being referred to as its
"Survival Period").
(b) General. From and after the Closing, the parties
shall indemnify each other as provided in this Section 16. The
party seeking indemnification is sometimes referred to herein as
the "Indemnified Party" and the party from which indemnification
is sought is sometimes referred to as the "Indemnifying Party."
The remedies provided in this Section 16 shall be the exclusive
remedy of the parties with respect to any breach of any provision
of this Agreement (except as provided in Section 13).
(c) Seller's and Principal Shareholders'
Indemnification Covenants. It being acknowledged that although
the Principal Shareholders only own approximately eighty one
percent (81%) of Seller's outstanding stock, the Principal
Shareholders and Seller, jointly and severally, will indemnify
Buyer and Xxxxxx'x and their affiliates and hold them harmless
from and against one hundred percent (100%) of any and all
liabilities, demands, claims, suits, proceedings, actions or
causes of action, assessments, losses, penalties, costs, damages
and expenses, including reasonable attorneys' and expert witness
fees (collectively, "Damages"), sustained or incurred by Buyer or
Xxxxxx'x or their affiliates as a result of, arising out of or
incidental to:
(i) any breach or inaccuracy of any
representation or warranty made by Seller or either
Principal Shareholder in this Agreement or in any
certificate or other document or instrument delivered by
Seller or either Principal Shareholder to Buyer or Xxxxxx'x
in connection with the transactions contemplated hereby;
(ii) any failure of Seller or either Principal
Shareholder to comply with, or any breach or nonfulfillment
by Seller or either Principal Shareholder of, any covenant
of Seller or the Principal Shareholders set forth in this
Agreement or in any certificate or other document or
instrument delivered by Seller or either Principal
Shareholder to Buyer or Xxxxxx'x in connection with the
transactions contemplated hereby;
(iii) any failure of Seller or either
Principal Shareholder to timely pay, perform or discharge
when due any liability or obligation of Seller (including,
without limitation, any tax liabilities including sales and
withholding tax liabilities (whether or not the
representation and warranty contained in Section 6(l) hereof
is breached)), except for the Contract Liabilities and
Assumed Employee Accruals expressly assumed by Buyer
hereunder;
(iv) any failure of Seller to comply with the
requirements of any bulk sales or bulk transfer law; and
(v) any act or omission of Seller occurring prior
to the Effective Time, including, without limitation, any
liability for any infringement of the intellectual property
rights of others by Seller or by any of Seller's Intangible
Rights, to the extent such liability relates to time periods
prior to the Effective Time (whether or not the
representation and warranty contained in Section 6(s) hereof
is breached).
(d) Buyer's Indemnification Covenants. Buyer and
Xxxxxx'x, jointly and severally, will indemnify Seller and the
Principal Shareholders for and hold them harmless from and
against any and all liabilities, demands, claims, suits,
proceedings, actions or causes of action, assessments, losses,
penalties, costs, damages and expenses, including reasonable
attorneys' and expert witness fees (collectively, "Damages"),
sustained or incurred by Seller or the Principal Shareholders as
a result of, arising out of or incidental to:
(i) any breach or inaccuracy of any
representation or warranty made by Buyer or Xxxxxx'x in this
Agreement or in any certificate or other document or
instrument delivered by Buyer or Xxxxxx'x to Seller or the
Principal Shareholders in connection with the transactions
contemplated hereby;
(ii) any failure of Buyer or Xxxxxx'x to comply
with, or any breach or nonfulfillment by Buyer or Xxxxxx'x
of any covenant of Buyer or Xxxxxx'x set forth in this
Agreement or in any certificate or other document or
instrument delivered by Buyer or Xxxxxx'x to Seller or the
Principal Shareholders in connection with the transactions
contemplated hereby; or
(iii) any failure of Buyer to timely pay,
perform or discharge any of the liabilities of Seller
expressly assumed by Buyer hereunder.
(iv) any and all liabilities arising after
the Effective Time and attributable to Buyer's conduct of
the Business after the Effective Time.
(e) Claims for Indemnification.
(i) Promptly upon an Indemnified Party's
obtaining knowledge of any facts causing it to believe that
it has or will have a claim for indemnification against any
Indemnifying Party or Parties hereunder, the Indemnified
Party shall give written notice of such claim to the
Indemnifying Party or Parties. Such written notice shall
set forth the nature and (to the extent then known) the
amount of Damages incurred by or threatened against the
Indemnified Party. Notwithstanding the foregoing, the right
of indemnification hereunder shall not be affected by any
failure of the Indemnified Party to give or by its delay in
giving such notice unless, and then only to the extent that,
the rights of the Indemnifying Party are prejudiced as a
result of such failure or delay.
(ii) The Indemnified Party shall tender to the
Indemnifying Party the defense of any claim, suit,
proceeding, action or assessment brought by any third party
(hereinafter "Third Party Claim"). Failure by the
Indemnifying Party to notify the Indemnified Party of its
election to defend any such Third Party Claim within ten
(10) days after the Indemnified Party's notice to the
Indemnifying Party of the same shall be deemed a waiver by
the Indemnifying Party of its right so to defend. If the
Indemnifying Party assumes such defense, the obligations of
the Indemnifying Party hereunder as to such Third Party
Claim shall include taking all steps reasonably necessary in
the defense or settlement thereof and holding the
Indemnified Party harmless from and against any and all
Damages sustained or incurred by the Indemnified Party which
result from, arise out of or are incidental to any
settlement approved by the Indemnifying Party or any
judgment in connection therewith. Legal counsel engaged by
the Indemnifying Party to defend such claim shall be
reasonably acceptable to the Indemnified Party. Except with
the written consent of the Indemnified Party, the
Indemnifying Party, in the defense of any such Third Party
Claim, shall not consent to the entry of any judgment
against or adversely affecting the Indemnified Party (other
than a judgment of dismissal on the merits and without
costs) or enter into any settlement unless such settlement
provides that the Indemnified Party is fully released by the
third party as to such Third Party Claim.
(iii) If the Indemnifying Party does not
assume the defense of any such Third Party Claim as provided
herein, the Indemnified Party may defend against such Third
Party Claim in such manner as the Indemnified Party deems
advisable or appropriate and may settle such Third Party
Claim or consent to the entry of judgment with respect
thereto upon such terms as it deems advisable or
appropriate, and in such event the Indemnifying Party shall
promptly reimburse the Indemnified Party for the amount of
such settlement or judgment and for any and all Damages
sustained or incurred by the Indemnified Party which result
from, arise out of or are incidental to the defense or
settlement of such Third Party Claim.
(f) Time Limitations on Claims. An Indemnified Party
shall not be entitled to indemnification pursuant to this Section
16 with respect to any claim for indemnification pursuant to
subparagraph 16(c)(i) or Subparagraph 16(d)(i) unless written
notice of such claim is given by the Indemnified Party to the
Indemnifying Party within the applicable Survival Period.
(g) Indemnification Threshold and Cap.
Notwithstanding anything to the contrary herein and except as
provided in Section 16(h): (i) any claim by an Indemnified Party
against any Indemnifying Party under Sections 16(c)(i) or
16(d)(i) shall be payable by the Indemnifying Party only in the
event and to the extent that the accumulated amount of all claims
against such Indemnifying Party shall exceed the amount of One
Hundred Thousand Dollars ($100,000) in the aggregate (the
"Indemnification Threshold"); and (ii) the maximum amount for
which an Indemnifying Party shall be obligated to provide
indemnification hereunder shall not exceed the Purchase Price
(the "Indemnification Cap"). In applying the Indemnification
Threshold and the Indemnification Cap, Buyer and Xxxxxx'x, on the
one hand, and all Seller and the Principal Shareholders, on the
other hand, shall be considered to be one "Indemnifying Party."
At such time as the aggregate amount of claims against an
Indemnifying Party shall exceed the Indemnification Threshold,
such party shall thereafter be liable on a dollar-for-dollar
basis for the full amount of all further claims beyond the
Indemnification Threshold, subject to the Indemnification Cap.
Further, the Indemnification Threshold shall not apply in the
case of any single claim or series of related claims that itself
or themselves exceed the Indemnification Threshold (provided,
that the Indemnification Threshold shall continue to be available
for all other claims to which this sentence does not apply).
(h) Zero-Threshold Claims. Notwithstanding the
preceding Section 16(g), the following categories of claims for
indemnification ("Zero-Threshold Claims") shall not be subject to
the Indemnification Threshold or the Indemnification Cap, but
shall be payable on a dollar-for-dollar basis without any
exclusion therefor or limitation thereon:
(i) any claims related to a breach of the
representations and warranties contained in Subsections
6(a), (b), (c), (d), (k) or Subsections 7(a), (b) and (c);
(ii) any claims by either party against the other
for payment or return of the Purchase Price or any portion
thereof, including any adjustments to the Purchase Price
payable under Section 4 or 5 hereof.
(i) Tax Effect of Losses; Insurance. In determining
the amount of any indemnification claim for purposes of this
Section 16: (A) there shall be taken into account any income or
other Tax benefit which the Indemnified Party may actually have
received or be entitled to receive (if in the future, at its
present value) as a result of the Damages forming the basis of
such claim, and there shall also be taken into account any income
or other Tax cost which the Indemnified Party would incur as a
result of its receipt of any indemnification payment from the
Indemnifying Party (including any such indemnification payment
which the Indemnified Party would be entitled to receive but for
the provisions of Section 16(g)); and (B) the Indemnifying Party
shall have the benefit of any insurance proceeds payable to the
Indemnified Party in respect of the Damages forming the basis of
such claim.
17. COUPONS. Buyer will not acquire hereunder any of the
rights of Seller to be reimbursed for any coupons accepted by
Seller from customers prior to the Effective Time, and Buyer does
not assume hereunder (and Seller will hold Buyer harmless from)
any liability of Seller relating to such coupons or the Seller's
acceptance thereof.
18. GENERAL PROVISIONS.
(a) Amendment and Modification. This Agreement may be
amended, modified and supplemented prior to the Closing only by
written agreement of the parties hereto or as otherwise provided
herein.
(b) Waiver of Compliance. Any failure of Buyer or
Xxxxxx'x or Seller or the Principal Shareholders to comply with
any obligation, covenant, agreement or condition contained herein
may be expressly waived in writing by an officer of Seller or an
officer of Buyer, respectively, but such waiver or failure to
insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or
estoppel with respect to, any subsequent or other failure.
(c) Fees and Expenses. Whether or not the
transactions contemplated by this Agreement are consummated, and
except as otherwise provided in this Agreement, all fees and
expenses incurred by a party in connection with this Agreement
shall be borne by such party, including, without limitation, all
fees of its counsel, consultants and accountants; provided,
however, that Seller shall be liable for and pay all sales taxes,
transfer taxes, and recording fees incurred in connection with
the transactions contemplated by this Agreement, and for any fee
or commission due any KPMG Peat Marwick LLP or any other broker,
finder or agent engaged by Seller or its shareholders.
(d) Notices. All notices, requests, demands and other
communications required or permitted hereunder shall be in
writing and shall be deemed to have been duly given when
personally delivered or when sent by U.S. certified or registered
mail, postage prepaid:
If to Buyer or to Xxxxxx'x, to:
Xxxxxx'x, Inc.
00000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
ATTN: Xxxxxx X. Xxxx, Vice President,
Secretary and Treasurer
with a copy to:
Xxxxx Xxxxxxxxxxx Xxxxx S.C.
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
ATTN: Xxxx X. Xxxxxxx
or to such other person or address as Buyer or Xxxxxx'x shall
furnish to Seller and the Principal Shareholders in writing in
accordance with this Section.
If to Seller, to:
Ultra Mart, Inc.
X000 X0000 Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
ATTN: Xxxxxx X. Xxxxxxx
with a copy to:
Xxxxxx Xxxxx
Xxxxx & Xxxxxxxx, S.C.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to Xxxxx X. Xxxxx, to:
Xxxxx X. Xxxxx
c/o Ultra Mart, Inc.
X000 X0000 Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxx
Xxxxx & Xxxxxxxx, S.C.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and:
Xxxxxx Xxxxxx
Reinhart, Boerner, Van Deuren,
Xxxxxx and Rieselbach, S.C.
0000 Xxxxx Xxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to Xxxxxx X. Xxxxxxx, to:
Xxxxxx X. Xxxxxxx
c/o Ultra Mart, Inc.
X000 X0000 Xx. Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxx, XX 00000
with a copy to:
Xxxxxx Xxxxx
Xxxxx & Xxxxxxxx, S.C.
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
or to such other person or address as Seller or the Principal
Shareholders shall furnish to Buyer and Xxxxxx'x in writing in
accordance with this Section.
Notwithstanding the foregoing, written notice given in any
manner shall nonetheless be effective upon its actual receipt by
the party or parties entitled thereto.
(e) Assignment. This Agreement and all of the
provisions hereof shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and
assigns, but neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other
party, whether by operation of law or otherwise; provided that
Buyer may, prior to the first Applicable Inventory Date assign
its rights and delegate its duties and obligations hereunder with
respect to the purchase of one or more of the Stores to one or
more affiliates of Buyer, provided further that no such
assignment or delegation by Buyer shall relieve Buyer or Xxxxxx'x
of any of their respective obligations or liabilities hereunder.
(f) Governing Law. This Agreement and the legal
relations among the parties hereto shall be governed by and
construed in accordance with the internal laws of the State of
Wisconsin.
(g) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same instrument.
(h) Captions. The section and paragraph headings
contained in this Agreement are for convenience only and shall
not be deemed to affect the meaning or interpretation of any
provision of this Agreement.
(i) Xxxxxx'x Guaranty. Xxxxxx'x hereby guarantees the
full, prompt and complete performance by Buyer of each and every
obligation of Buyer under this Agreement.
(j) Entire Agreement. This Agreement, including the
Disclosure Schedule and Exhibits hereto, and together with the
Fox Point Sublease Agreement, the Termination and Release
Agreement, and the other documents and certificates delivered
pursuant to the terms hereof, set forth the entire agreement and
understanding of the parties hereto in respect of the subject
matter contained herein, and supersede all prior agreements,
promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any
officer, employee or representative of either party hereto.
(k) Severability. The invalidity of any provision of
this Agreement or portion of a provision shall not affect the
validity of any other provision of this Agreement or the
remaining portion of the applicable provision.
(l) No Third Party Beneficiaries. Neither this
Agreement nor any provision hereof, nor any statement, schedule,
certificate, instrument or other document delivered or to be
delivered pursuant hereto, nor any agreement entered into or to
be entered into pursuant hereto or any provision thereof, is
intended to create any right, claim or remedy in favor of, or
impose any obligation upon, any person or entity other than the
parties hereto and their respective successors, personal
representatives, executors, heirs, beneficiaries, and permitted
assigns.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the day and year first written above.
SELLER: BUYER:
ULTRA MART, INC. ULTRA MART FOODS, INC.
By: By:
Xxxxxx X. Xxxxxxx, President Xxxxxxx X. Xxxxxxxx, Xx., Vice-
President
PRINCIPAL SHAREHOLDERS: XXXXXX'X, INC.
By:
Xxxxxx X. Xxxxxxx, Xxxxxxx X. Xxxxxxx, Vice-
Individually President - Sales & Development
Xxxxx X. Xxxxx,
Individually
Section ______ of the Disclosure to
Asset Purchase Agreement
dated December , 1999
between
Ultra Mart Foods, Inc.
Ultra Mart, Inc.
